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how do I protect myself???

Discussion in 'Studio Lounge' started by dirtysouthstunta, Dec 10, 2005.

  1. I'm have a record company, and one of my artists is being asked to sing on somebody's song on another label. If we sign a royalty contract with them saying we will make a certain percentage off of sales of that song, and it's all legal and signed, how do we keep up with their album sells and make sure they are paying us the correct amount. cd sales right out of the trunk of a car... there is no record of that, how do we know
     
  2. jeffery

    jeffery Guest

    Protecting Yourself

    As reguards how do you know how much cds they sell? Have a clause in the contract that states, you are allowed to check their account books.

    This way, you can see for sure how many cds were manufactured in the first instance, where they are shipped to, and how many are returned. Minus ones returned from ones manufactured and you will have an average of how many cds were actually distributed.

    Jeffery
     
  3. Calgary

    Calgary Active Member

    1. No record company is going to give dirtysouthstunta open access to their books.

    2. Contracts don't protect you against bootlegging, i.e. "car trunk sales".

    3. Enforcable contracts cost a lot of cash to create, maintain, and/or enforce.

    That all being said the answer to the question is self evident, obviously you will never know how many units are bootlegged.
     
  4. Calgary

    Calgary Active Member

    1. No record company is going to give dirtysouthstunta open access to their books. Period.

    2. Contracts don't protect you against bootlegging, i.e. "car trunk sales". I know of no example(s) of a record company using a contract enforcement action to successfully reconcile a bootlegging allegation against a rival record company. Please correct me if I'm wrong on that point.

    3. Enforcable contracts cost a lot of cash to create, maintain, and/or enforce. You're looking at several thousand minimum and it would be almost impossible to draft an enforcable contract in this context. Think about all the factors which would need to be in line in order to convince a court to render and enforce a judgement in your favor. No intelligent bootlegger is going to get caught in the manner you'd need to catch them for this to be actionable.

    That all being said the answer to the question is self evident, obviously you will never know how many units are bootlegged. :cool:
     
  5. McCheese

    McCheese Well-Known Member

    Open access to the books? no, but you can audit them for related documents. In the US they are legally obligated to provide documentation of production and sales of contract related materials. If they say they press 10,000 CD's, they need to show you where each and every one of them went, even if that means they're still sitting in the shipping boxes in a warehouse.

    In your situation, however, with the car trunk thing, you're getting into something unbelievably shady. In that situation I would rather get an up-front payment than go for royalties. Car trunk sales doesn't sound like anything close to a major act, since they don't have distribution, which is easy as hell to get. The downside to this is if the album explodes you might lose money. What are the real prospects for that?

    Sit down, figure out how many albums they could realistically sell, and figure out what your cut would be. Compare this to what you think a good up-front fee would be.

    Remember, if that band blows up and gets huge, most likely one of two things is going to happen. 1) your artist is going to leave you and go with them, if that's even an option, or 2) if the record company really likes the song, but doesn't want your artist for whatever reason, they'll just retrack it without him, unless he actually has writing credit.

    If you do decide to go for royalties, especially with writing credits, make sure you set up certain things in the contract. Payment schedules, details to be included in the payment (# of albums sold in the pay period, etc...). Get a lawyer.
     
  6. it's that easy huh? give me some easy info on how to get distribution because I thought it was pretty hard :lol:
     
  7. Calgary

    Calgary Active Member

    There's "distribution" and there's *distribution". Sugar Ray has absolutely massive distribution. In a recent interview he said just as the performer, after all is said and done, he nets less than one penny per copy from sales of their greatest hits CD. He projected total sales would probably add up to somewhere around 16,000,000 units, which should net him just over $100K for his performance share. Or somewhere in that ballpark. He wasn't begrudging it at all, he was just trying to share a sober perspective on the sales/distribution process these days.

    For an indy band these days it's hard to move 1,600 CDs let alone 16,000,000 CDs, on the other hand you net $5 per unit from your own sales so you only have to sell 20,000 units to net the same 100K as Sugar Ray off 16,000,000 units. Those are extremely approximate numbers, but you get the idea. It all comes down to your goals. If it's fame you seek then you need to work with the big dogs and admission isn't free, but if it's the cash you are focused on then definitely don't assume that the path most taken is the best strategy.

    On the other hand, if you are a young person with a record company on paper but not much experience, it could be more valuable to let someone else gulp up all the cash for a year or two as long as you are able to learn the game from them in the meantime. University is never free and the major markets are very clique-y. Sometimes the side door is better than the front door...
     

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