ABSTRACT
Contracts are structured around clauses that express a specific duty. Duties include payment terms, warranties and indemnities, breach of contract, arbitration, taxation, force majeure, and termination or expiration. In a recording contract there are several clauses specific to the exploitation of recordings. Many include issues associated with copyright ownership, ownership of masters, advances, cross-collateralization, recording releases, promotion, distribution, accounting, and royalty statements. Each clause has a specific duty that the parties must complete. In a recording contract there are several unique clauses
associated with the production of commercial recordings. An option clause gives one party, usually the label, a specified option to renew a contract for a specified period. In many contracts the label will request four consecutive yearly renewal options. In most cases an option clause favors a label’s ability to hinder an artist renegotiating royalty rates at a higher level. The recording of masters clause deals with the quality, quantity, and type of masters an artist must record. The length of the recording that constitutes a master will also be established. Related to this clause is an important clause, the ownership of masters clause. In this clause the record label will own the masters fixed in a tangible form. Although the ownership of the masters is a negotiated item, except in the case of work-for-hire contracts where the artist automatically allows the record label to retain ownership of the masters, artists with a substantial recording career may retain the ownership rights to the masters. In these cases, the artist will lease only the manufacturing and distribution rights to the record label and retain all rights associated with owning the masters. Associated with this clause is the assignment of copyright clause. Within this section, the record label is granted the right to acquire all musical compositions authored by the artist. In some recording contracts the artist must assign all rights in copyright to a music publisher the record label designates. In most cases the publisher in question is an arm of the record label and the artist, in effect, is allowing the label to establish royalty rates. Many artists will insist on the inclusion of a release clause. This statement provides for the return of all rights in masters and sound recordings to the artist if certain events do not take place such as the label not commercially releasing an album within a specific period. A common clause included in recording and publishing contracts is the failure-to-release clause. This clause states the remedies if a label or publisher fails to release an author’s product within a stipulated time. Remedies for such action include the return of all rights to the author, financial reimbursement, and the suspension of all contractual relations. In an age of digital recordings an interesting clause that still persists in recording contracts is the packaging cost deduction clause. This article states the maximum number of packaging deductions allowable. In most cases the deduction is based on the suggested retail price of a recording and is withheld against an artist’s royalties.
