For all intents and purposes, master recordings are the 401Ks of the music industry. They are the source of catalog sales and future income that record labels continue to enjoy and own with a somewhat arrogant air of entitlement. Most recording contracts grant perpetual ownership of master recordings to the record label and not the artist.
The negotiations for master recordings usually take place at a point in time when the label wields most, if not all the power as it signs a new, unproven, unknown or faltering artist to recording deals. Currently, Taylor Swift is in master recording hell as she is forced to stand by helplessly as the control and ownership of her masters transfer to one of her alleged arch-enemies, Scooter Braun (Justin Bieber’s Manager). Taylor’s plight is not unusual.
Master ownership is “business as usual” for the labels and artists are usually willing to sign away almost anything to get the coveted deal done
Some of the biggest stars in the recording industry have signed away ownership of their masters as part of normal contract negotiations with labels. Master ownership is “business as usual” for the labels and artists are usually willing to sign away almost anything to get the coveted deal done.
For labels it is the quid pro quo; they release an artist’s music and front the costs of promoting it and in return, the artist turns over their masters to the label. This would be fine if the expenses incurred by the label on behalf of the artist were not recoupable against their income, but the truth of the matter is that artist’s earnings pay back those developmental expenses through an elaborate and deliberately confusing accounting formula. Remember that the music industry sells people, living breathing commodities and their masters represent the artist’s life work. It is both emotionally and economically loaded for the artist. It is simple to understand why artists are emotionally tied to their creative properties and why some are willing to pay astronomical amounts of money to buy them back. But labels are rarely willing to do so because catalog, generated from master recordings, is a key driver of a label’s earning potential.
The misery of losing one’s life work does not love company so here are a few tips that might spare, educate or in the best scenario vaccinate artists against losing their master recordings forever. So, it’s worth the attempt to negotiate an alternative to outright, perpetual ownership of masters by a record company.
Six tips the labels don’t want you to know:
1. If a label deal has been your life’s goal, don’t be blinded by your dreams coming true. Come from a place of abundance. Visualize and believe that you will be wildly successful and never weaken on your resolve to control your career as much as possible. Ask the hard questions. It’s better to know early on if you can retain or recover master ownership. If not, and there is no room for compromise on either side, and you are willing to walk away, then move on. I know it is easier said than done but this is business hard and ruthless. This is the record industry the real blood sport. But new technologies have granted many new powers to independent artists and spawned many hybrid deals between artists and labels that are far more power balanced.
2. If you like the label and cannot walk away from the opportunity, try to negotiate. See if the label will agree to a “lease” instead of “own” situation. You can negotiate the length of the lease and/or a sliding scale lease fee that decreases as sales increase with the lease ending after a certain period of time or, if a pre-determined sales criterion has been met or when the contract expires.
3. Ask to have reversion clause inserted into the contract. A reversion clause allows the label to own the masters under specific conditions and defines circumstances or events that would shift master ownership back to the artist. Events include but are not limited to; reaching a specific sales performance level, recoupment of expenses incurred by the label, inactivity, or triggers that are directly related to a shift in power from the label to the artist like winning a Grammy or a certification from the RIAA like a double Platinum award.
4. Tie master ownership to a “key person” clause. This type of positioning is quite rare and powerful if you can get it. This possibility is directly related to the power and corporate position of the individual that is your label mentor or has signed the artist to the label. The more powerful the person, the better your chances of getting the clause. Take note, the primary purpose of a “key person clause” is to allow an artist to leave a label if and when a certain executive decides to leave. Getting out of the deal if your champion leaves is often a matter of survival and taking the masters along with you would be the icing on the cake
5. Make sure any document that you sign gives you clear ownership of your masters. There are many professionals and entities involved in recording the masters; producers, engineers, recording studios. Make sure they do not have the grounds to lay claim to your masters.
6. If someone is negotiating the deal for you, make sure they understand that you want to maintain ownership of your masters. In addition, the individual must understand how to negotiate with knowledge, strength, and tact. They should be experienced and possess a smooth and powerful skill for “label speak.”
Your options on as diverse as your imagination. Dare to be different. You can also be creative on the business side of music. The labels are always finding new ways to monetize and capitalize on intellectual properties. You can be equally innovative and creative with the terms and conditions that will impact your professional life now and in the future. Ask. The tide will change, the power will shift if more artists refuse to relinquish master ownership. Band together and the labels will bend to the pressure.