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Electronic Music Contracts: 8 Key Clauses to Watch Out For

  • 22 February 2024
  • Studio Legal

Written by Sebastian Marcu and Jennifer Tutty.

Over the past few decades, electronic music has evolved from a niche subculture to a booming trend across the globe. Recently, this evolution has kicked into overdrive.

Electronic music dominates club and festival dance floors everywhere, and the artists in the scene are garnering more fans than ever before. As a result, electronic music contracts are also on the rise.

Naturally, the stakes are higher. Artists who are used to handshake deals are now receiving complex contracts from record labels, publishers, managers and other collaborators. Consequently, it’s more important than ever to understand what you’re signing!

In this blog, we break down 8 key contract clauses for electronic music artists to watch out for.

What is a Music Industry Contract?

A music industry contract is a binding agreement between you and another business in the music industry (such as a record label or publishing company).

These contracts generally grant the business the rights to commercialise your electronic music career.

Music industry contracts can include management agreements, recording agreements, master licence agreements, collaboration agreements, publishing agreements, booking agent agreements, 360 agreements, producer agreements, band partnerships and more.

Key Clauses in Electronic Music Contracts to Watch Out For and Understand

Before signing a contract, take a deep breath (you did it!).

It’s time to carefully read, consider and think about the contract. Not everyone can afford to do a T-Swift and re-record all of their albums, therefore, it’s important to get this right from the beginning!

Understanding the contract clauses is crucial to ensuring you’re entering into a fair agreement, which will benefit you and your career.

1. The Term

The term of a contract is the duration of time in which the contract will apply.

What constitutes a reasonable term will vary depending on the type of contract you are dealing with.

It is important to be mindful of the term (and when the term ends) so that you don’t lock yourself into an agreement for longer than is reasonable. Seek some advice if you’re unsure.

2. The Territory

The Territory is the region in which the contract will apply.

When a music contract states the territory as ‘The World’, think about the other party’s expertise, reputation and network overseas. Will you be able to benefit from this, by granting them worldwide rights?

If they have a solid track record of representing musicians locally and internationally, the answer may be yes. However, it may be of little use to give a record label or manager worldwide rights if they are unable to exercise them effectively.

3. Rights Granted

When thinking about rights granted, an important question to consider is: what are you giving and what are you receiving?

Take the time to identify exactly what it is that you are granting to the other party, be it a record label, manager, publisher or collaborator.

This is where it may be useful to consult a lawyer, so that they can explain what rights you are giving and what you will receive in return.

4. Exclusivity

Exclusivity is another important consideration in music contracts.

If you are granting ‘exclusive’ rights to the other party, you cannot grant these same rights to someone else. You also cannot exercise these rights yourself, unless the other party gives you permission.

Therefore, it’s important to be mindful of what rights you are granting on an exclusive basis and whether this is beneficial to you.

5. The Other Party’s Obligations

It’s important that the contract states clearly the obligations the other party has in holding up their end of the deal.

For example, a manager should be obligated to act in the best interests of the artist and a record label should be obligated to release your masters within a set time frame from acceptance of the masters.

If there are no positive obligations on the other side and you are looking to get out of the contract, it will be hard to show the other was ‘in breach’ if they had no obligations in the first place.

6. Clear your Samples!

Everyone loves a reworked classic!

Licence agreements and publishing deals will often include “warranties”, which are promises that the artist makes to the label or publisher.

A common warranty is that the music they provide will not contain any uncleared samples, and if it does, the artist will bear the costs of clearing the samples (or any loss that stems from the label or publishers release of that music containing uncleared samples).

The artist’s potential liability here can be high. The best approach is to chat to a lawyer if you are unsure whether you can use a sample in your music freely or if you need to seek a licence.

7. Approval Rights

When granting rights to third parties, you should consider the actions or decisions over which you want to have the final say.

Approval rights commonly include the accepting of bookings for performances, granting of synchronisation licences to third parties and using your music and trade marks in commercial advertising. Consider whether you want the final say over these matters, or whether you’re happy to leave it to the other party.

8. Breach and Termination Rights

Unfortunately, sticking with an agreement is not always preferable.

Before you sign on the dotted line, take a look at how the agreement can end. It’s important to make sure you will be able to terminate the agreement if things go pear-shaped.

Always ensure there is a ‘termination for breach’ right in the contract, so if the other side breaches the contract, you can get out of it. Also, identify what you need to do to validly terminate the contract and in what circumstances you can do so.

If you’re assigning exclusive rights, assess what your termination rights are if (in the future) you decide you’d like to work with someone else.

It is also important to consider what will happen after the term ends, such as post-term commissions, re-assignment of your ownership in your work and the other party’s ongoing right to receive a cut of royalties.

In Conclusion

Entering into new contractual arrangements is an exciting career step for anyone in the music industry!

Make the most out of each opportunity by reading your electronic music contracts carefully, understanding what it means and asking to negotiate where necessary.

Bonus: If you’d like some tips on how to negotiate, check our our blog: ‘Music Industry Contracts (Part 2): How to Negotiate Like A Pro’,

Further Information

If you work in the music industry and are looking for legal assistance, please contact us through our online form or via email at hello@studiolegal.com.au.

Looking for more? Check out some of our other blogs about the music industry:

How to Win at Copyright Law (Taylor’s Version)

IP News: Ed Sheeran Wins Copyright Case in the UK High Court

Written by Sebastian Marcu and Principal, Jennifer Tutty.

Published 23 January 2024.

Photo by Insung Yoon on Unsplash.

DISCLAIMER

The information in this article is of a general nature. It does not constitute formal legal advice, and should not be relied on as such. Please see the full disclaimer in our website terms. Please contact Studio Legal if you are seeking advice about a specific legal matter.