The recording contract series; (part 21) Non-controlled songs

Non-controlled songs

Sometimes, record companies seek to impose mechanical rate limits not only on controlled compositions, but on every song on the album, including outside songs. In most cases, this is impossible to agree to, because the owners of the outside songs may not agree to this (or even having their songs used at all). Artists should be very careful with this, because they might end up paying more than their contractual limit, in which case the record company will force them to pay the excess mechanical royalties for recording covers.

If there is any possibility of recording covers, the best is to negotiate no limit on outside songs, even if there is a 75% (or other) clause on controlled compositions.

Non-sampling warranty

In the non-sampling warranty clause, the artist is promising that he will not use any samples in the recording or, if he does, that he has received the appropriate permission and mechanical release to do so. (A sample is a copied clip of someone else’s recording, which can be digitally modified and used in a new recording). In other words, the record label is protecting itself, in this clause, from having to pay mechanicals to anyone (or his publisher or label) whose music you have sampled. You promise not to do it, and if you do, you will pay the mechanicals. A typical non-sampling warranty clause might read as follows:

“’Sampled material’, as used herein, shall be defined as the unauthorised use and reproduction of pre-existing recorded musical material, owned and controlled by any person, firm or corporation other than the Artist, which would not otherwise be subject to the Company’s rights hereunder. None of the masters delivered hereunder shall have been created with the use (whether partial or total) of sampled material. Where samples have been used, the Artist shall be solely responsible for obtaining all consents and licenses necessary for such use and reproduction, so that the Company shall enjoy the full and perpetual rights granted to the Company hereunder in respect of the artist’s own work. Where samples have been used, the artist shall furnish to the company all fully executed copies of any mechanical releases, consents, permissions, licenses and other related documentation. The Artist shall be solely responsible for and shall account for and pay to any and all persons, firms, corporations, or other entities who/which own or control sampled material any monies or other compensation to which such persons, firms, corporations or other entities are entitled as a result of any use hereunder by the Company of any Master embodying such sampled material.”

Termination

The contract should anticipate scenarios and circumstances where the parties are given the right to terminate the agreement. There should be safeguards where the label goes into liquidation, or fails to release the record, or where either side is in breach of contract, where royalties are not paid, or where recordings are not released.

If the record company does go into liquidation, you should be able to terminate the agreement and get the rights in your recordings back by way of a reversion clause. Otherwise your copyrights could become the property of third-party creditors fighting over the remains of the now defunct label. A similar provision, but much harder to obtain, is one that allows the artist the right of termination where the label is sold, merged, or taken over (a big problem where independents sell out to majors). Don’t forget: the label is still obliged to continue paying the artist on all recordings sold, even after termination.

In some cases, the label will simply give itself the right to terminate the agreement with a certain amount of notice (i.e. just because it feels like it). You should strongly resist this, unless you are given exactly the same right. Some contracts state that the agreement will continue in perpetuity unless cancelled by the label. Again, you should only accept this if you are given the same right.

There are other possible “opt-out” clauses (normally given to the label but not the artist) including disagreement, unprofitable sales figures, change of image, change of musical style, etc. Once again, you should fight to ensure that these clauses are not so one-sided that the label is given the choice. If they are given the power to cancel the contract with a few months’ notice, so should you be.