All About Deals - Music Rocks My World

What is copyright?
 
In a nutshell, copyright is where a songwriter or the creator of a piece of music or a song (or a "work") has exclusive rights over it. These rights can be licensed out – so for example the person who owns the copyright or a song can license someone else to record the song.
 
Copyright basically allows the person who created a work to have control over who uses it, how they use it and to have entitlement to financial royalties from it’s use. (Basically everything from the performance to the reproduction, distribution, adaptation of it.)
 
To be a copyright owner you must register the copyright of each of your songs with your government. This varies from country to country, so check online for what what applies to you. There is much more detail about copyright, but hopefully this is an overview.
 
What are royalties?
 
Royalties refer to the payments made to a songwriter or the creator of a song or piece of music for the use of that song (or piece of music). For example a radio station may pay a royalty to an artist for each spin of their song. When one of my songs is played on the radio, I get a royalty payment for that.
 
There are two main types of royalties – Mechanical and Performance. There are also digital performance royalties.

Me in Temple Lane Recording Studios, Dublin with some old-school recording equipment!

 
What are Mechanical Royalties?
 
Mechanical royalties are the payments made to songwriters and artists for CD sales and digital download sales and streaming sales. Usually, a songwriter will allocate a third party – a publisher or a PRO (or Performance Rights Organization) – to gather their royalties for them (more about this to follow).
 
What are Performance Royalties?
 
Performance royalties are the payments made when music is performed publicly. Music played on the radio or in a bar or venue or on Spotify is considered a performance of that song. PROs (Performance Rights Organizations) collect the performance royalties from the radio stations or bars or venues or from TV placements and pass the royalty payments on to the songwriters. There are also digital performance royalties.
 
Streaming services like Spotify are considered to involve both a ‘performance’ (mechanical royalty) and a ‘sale’ (mechanical royalty) so they pay performance and mechanical royalties to songwriters and artists. You can receive these royalties through services like Soundexchange or CD Baby.
 
What is a PRO?
 
A Performance Rights Organization (PRO) is an organization that works to collect copyright royalties owed to copyright owners and that then distributes them to the copyright owners/songwriters.
 
PROs are also referred to Performing Rights Societies, Copyright Collections Agencies or Collections Agencies.
 
The largest PROs are in the US – the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI). Other agencies include SESAC and SoundExchange.
 
Internationally there are national collections agencies in most countries that observe copyright. These include SOCAN (Society of Composers, Authors and Music Publishers of Canada) and my PRO, IMRO (Irish Music Rights Association).

What about record companies? What kinds of record companies are there?
 
This changes so much and so often, but hopefully this will give you a general understanding.
 
The main types of record companies are Majors and Independents (or “Indies”). There are also Sub-labels and Imprints.
 
Traditionally, record companies (or record labels) work to market the music and careers of their artists and generate the maximum exposure and sales/income from them. The label’s work generally involves funding and/or taking charge of promotion, marketing, distribution, branding and pretty much anything and everything else. The type of involvement by a label greatly depends on the contract and on the company in question.
 
According to Rolling Stone (in Feb 2019) there are only 3 Major labels in operation in the world at the moment – Sony Music, Warner Music Group and Universal Music Group. These house the hugest of the huge artists – from Metallica to Katy Perry to Linkin Park to Lady Gaga to U2 to whoever else you can name.
 
Independent Labels can be vary in size from very small to very large, and are those that do not fall under the umbrella of the 3 majors in existence at the moment. Every situation is different and depends on the specific contracts in operation. What a label will take charge of and to what degree, the percentage of royalties up for grabs - it all comes down to the contract you sign.

I think the general rule is that majors will take charge of more, offer a lower percentage of sales to artists, but they have a greater reach, established connections in all areas - including areas like TV and Radio - and have more funding. Indies may - but don't always - allow artists to retain the rights to their own music (majors do not) and can work more collaboratively with artists and with other companies (for distribution etc.)
 
You may also have heard of an “Imprint” label. This is usually a sub label within a record company.

There is much more detailed info about all of this online that you can research if you wish. Everything depends on the specific circumstances anyway - the specific label, specific band, specific contract in whatever specific circumstances. I write this for your information only and as a guide or a starting point.
 
So do I have to get a record deal?
 
In the past, a record deal – particularly a Major Label – was like the holy grail for musicians. A record deal of this kind signified the possibility of all doors opening.
 
At that time, though, record companies were willing to sign artists they believed in and who weren't established in any way - usually signed via A&R (Artist and Repertoire) scouts. Companies were willing to "develop" artists, investing time, skills, money and energy to "break" a band (get them to a point that they were successful in their own right and were gaining momentum). The idea was that the company's investment would be returned in time through record sales.
 
It's not the same situation now, for many reasons, but the main one being that music doesn't generate income in the way it used to, so a record company won't invest money and resources the way it used to.
 
In order to get a record deal now a band would need to have a lot put in place already - a loyal audience, a history of sales or show attendance, large numbers of followers on social media, something notable achieved (like a prominent placement in a TV show or movie) and so on - and all of that still doesn't necessarily mean you will get a deal. Also, if you have enough of that stuff in place, how much do you need a record deal?
 
What are the benefits of signing a record deal?
 
There are definitely many benefits to being with a label.
 
Major record companies and Indies alike have established connections in place for promotion (especially in areas like TV or mainstream radio, which it is much more difficult to access without going through traditional communication lines) as well as distribution connections and relationships with other established bands, producers, festivals etc. etc. Those benefits are undeniable.
 
Additionally, there is (potentially) a lot of money to fund a band’s career, but know that any advance given is just that – an advance. An artist will need to repay it from record sales and other income, and that takes time.
 
Also, it is likely that a band will only get top-notch treatment if that band is one of the label’s top earning acts. Many an artist has fallen through the cracks and been in a contract that meant they could not release their own music if not through that particular label, which was unwilling to release anything anyway. I know some people who are/have been in this situation.
 
Signing a record deal may mean giving control of master recordings of the music to the company and the record company will likely have the right to control or at least have right of approval over which artists a band can collaborate with. It all depends on the details of the contract (deal) being signed.
 
Typically, the signing artist or band will need to commit to a set number of (album) releases and/or a “term” (duration) and the record company may have a say in the creative process and can have the right to refuse to release music they aren’t happy with or don’t want to promote.
 
So all that is stuff to consider carefully and make sure when you sign any contracts you 1) are happy with all conditions and feel good about moving ahead and 2) have had an entertainment/music lawyer review the contracts in detail.

What is a 360 deal?
 
So, previously a record company made the largest part of its money through record sales. Given the dramatic decline in record sales, a deal called the “360 deal” emerged. In a 360 deal, a record company is entitled to a percentage of most, if not every, part of artist income – merchandise sales, record and digital download sales, tour income, publishing. In exchange, a label may offer an increased advance, a higher percentage of record sales or another incentive to the artist.
 
Why should I want a record deal?
 
It is more of a question of getting the “right” record deal for your band - with a company that is committed to you and to your music and career.
Benefits of a great deal include having an established network of industry insiders and contacts so it is much easier to get featured on mainstream radio, on movies/TV, on festivals, on tours with established acts and so on. You also have some money behind your band too.
 
Why shouldn’t I want a record deal?
 
Well, in the past, a record company was absolutely necessary to print and release CDs, fund videos and all sorts of other things. Now, it’s possible to do all of that yourselves without needing a record company.
 
As I mentioned before, when you have a record deal, the company has a say in the music you release, in the songs you include on your record, the musical direction you take and they can refuse to release your music. If you’re under a contract with them, they can prevent you from releasing music at all.
 
Obviously, if you don’t have a record deal, you can record exactly the music you want and release it in whatever way you want, you can keep any income you generate, you can fund your projects through crowdfunding campaigns or ongoing funding through something like Patreon (more about that in Online Shows & Funding). You can be your own boss and design your own ongoing musical career.
 
How do I make money in music?
 
It all begins with making the best music you can and getting your band/music “out there” and building your audience and network as much as possible.
 
Build your musical brand - who you are, what you stand for - and make the best music you can.
 
Ways to make money in music include publishing royalties, CD and digital sales, merchandise sales, playing shows/touring, music placements and licensing, endorsements, crowd-funding and donations.
 
As far as audience-based income goes, when you have a loyal audience, you can create options whereby you offer special opportunities to them for a small fee each month (new songs or versions of songs, Skype shows or similar). Get creative. Build your loyal audience, find out what they want and provide it for them.
 
Think of it this way, there’s a reason huge bands like Coldplay and U2 and Prince and Lady Gaga have given their music for free. They are making money in different ways.
You can too.

Photo shoot in Dublin, Ireland.

 
What is a licensing deal?
 
A licensing deal is whereby a company – usually another record label – will take over the manufacture, promotion and release of your album in their territory, where they may have more expertise and contacts. This is usually for a set fee, so they assume all the risk and if your album doesn’t sell, they shoulder the loss, but if your album hits big, they get the money for that.
 
What is a distribution deal?
 
Distribution specifically relates to the – you’ve guessed it – distribution of your music to shops. You remain responsible for manufacturing, promotion, and all the rest of it.
 
What is a publishing deal?
 
Publishing companies represent songwriters and their function is to place the songs and music their songwriters create with singers or in movies or ads or the like. They organize the licenses and collect the money.
 
Again, if you have a publishing company that is committed to working with you, you can get lots of great placements, connections with collaborators and so on. If not, you could find yourself slipping through the cracks and having your music tied up with people who aren't willing to work on your behalf. I know people who have been there and I have been there too and I'll tell you, it absolutely sucks.
 
Publishing companies provide advances and own control of whatever the songwriter writes when he/she is signed with them and until such time as the advance is repaid. They also take a percentage - usually 50% - of whatever you earn. 
 
Songwriters also have the option to retain ownership of their own publishing and self-publish instead. You'll keep all you earn but won't have access to the connections a Publishing Company promises.
 
How would I get a publishing deal?
 
Ordinarily to secure a publishing deal, and the advance that will likely come with it, you will need to have established yourself as a songwriter and had some level of success. There are different kinds of deals though.
 
We've already touched on these, but they are:
 
Traditional publishing deals – This is where an established company offers you an advance in exchange for you signing a publishing deal with them. This means that they will get a percentage of your publishing income for the duration of your contract with them. The idea is that they will work on your behalf to secure placements and to promote your music so, in theory, and when it works out, it’s a mutually beneficial arrangement.
 
Self-publishing - You set up your own publishing company, keep all the money, but you are the one who must find placements for yourself. This is ideal if you are already successful to some degree because people who want to feature your music will come to you.

Other options – you can sign a Publishing Administration deal through a company such as Tunecore, which enables you to keep all your publishing rights, pay out a lower percentage for Administration than for a full deal, and have them collect your royalties among other things.
 
What is a placement?
 
A “placement” refers to the use of your songs in a movie, TV, video game, advertisements or similar.

What is a synchronisation deal?
 
A synchronisation deal comes in to play when you give a third party permission to approach music supervisors or producers with your music to get it placed in movies, TV etc. Typically you will need to have full ownership of your songs (i.e. NOT have a publishing deal). Also, you typically agree that you pre-clear your music for placement, so if a music supervisor wants to use your song, your sync licensor has authority to allow them (because of your agreement) and they move straight to negotiating the payment.
 
It’s normal that a licensor will receive about 40 – 50% of your placement fee but all the royalties that will come through your collections agency will be 100% yours.
 
What is a management deal?
 
A Management deal is a contract you make with your business manager. Management typically involves having someone to negotiate on your behalf and have someone to “manage” your career in whatever way you agree between you.
 
You can also have a tour manager to specifically oversee and organize just your tour, but a Band Manager has an overall role and has a say in all aspects of the running of your band.
 
How would I go about getting a manager?
 
Again, this really comes back to you getting your music and everything else you are doing, particularly your live show, to be the very best it can be and to promote yourselves so that people become aware of your band and your music. You want it to be so that when they become aware of your band they are impressed and want to be involved.
 
If you think about it, your manager (or management company) will be investing significant time, resources, money and energy in your band and they’ll want to do that for their own benefit as much as yours. You demonstrate that your band is worth investing in by how well you do all you are doing and by your talent, commitment, professionalism and skill - and this is shown in how you approach everything you do.
 
How much would I have to pay a manager?
 
This varies. I’ve known situations where managers have taken an upfront monthly fee, I've known situations where managers have taken a percentage of all income for the band and I've known situations where managers have worked for a period of time free of charge while building a band. Each situation differs.
 
This is all about communication. Get clear about the role you want your manager to fill. What specifically do you want him/her to do? How much time are you expecting your Manager to work with you on a weekly basis?
 
Have honest conversations and make clear agreements. What does your Manager want from your arrangement? What are their thoughts on all of this? Work out what suits you all best.

Photo shoot in Dublin, Ireland

 
What is an endorsement deal?
 
Often, brands will team with bands in endorsement deals. Being an endorsed musician can mean that you commit to being loyal to that one brand of instrument, to appearing in promotional photos or similar with the brand. You may get reduced price or free instruments and the company may work to have their product waiting for you at venues to play.
 
Again, to be in a position where you are an endorsed musician presupposes that you have something to bring to the table – namely that your band has an audience for you to influence / for their product to be exposed to. So, again, it comes down to building your own career and spreading the word about your music first. Then you are in a stronger position to negotiate deals with the companies you really want to represent.
 
What is a sponsorship deal?
 
Sponsorship deals occur when a brand teams with your band. They get exposure to your audience, which will be an audience they want their product in front of and you get money, merch and/or cheap or free products from them.
 
Often in this situation, credibility is a factor - when an established brand is willing to team with you, it gives the impression that your band is credible and vice vearsa.
 
Also, there's the opportunity to cross promote (promote about yourselves to each other's audience).
 
Sponsorship deals can range from everything from soft drink to alcoholic drink brands, food chains to clothes labels, hotel chains to anything else… the possibilities are endless.
 
One note: Choose wisely who you affiliate yourself with so you can stand behind what you are recommending to your audience. Also, you will ideally want to partner with brands who have a similar ethos to your band and who match with what you are doing – your message, your music, your branding etc.

ALSO CHECK OUT:
 
BLOG: The Art of Landing Endorsements

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