The recording contract series; (part 24) the development deal

The development deal is what might be offered where the label is prepared to invest in improving the artist, but isn’t quite ready to commit to a full album recording contract. Development deals might be the only option available to some young artists, but the advances and investment in recording are low (perhaps, say three to five songs), so the label will not spend much on other outlays such as a video, marketing, or supporting you on tour.

Despite this, the artist is still usually expected to assign any copyright on these songs to the company. If you enter into a development deal with a label, make sure that you insist that the copyrights are returned to you in the event that you do not reach a full exclusive recording deal with the label (though if you do this, the label will no doubt require that you will have to pay back some or all costs in return, or at least give it an “override” if you take the songs to another label).

The Independent Production Agreement

This is the contract that an independent label signs with a major when it uses the major to record, produce and distribute the artist’s records. They can be ‘single-artist’ or ‘multi-artist’ deals. Multi-artist deals are als referred to as ‘label deals’. Artists often do not like these deals, because they may have had reasons for signing with an independent, yet find themselves indirectly dealing with a major.

The joint venture

Sometimes, the two companies entering into an independent production agreement (or just two companies wishing to work together on an artist) can agree to share the income that comes in rather than pay and receive royalties to and from each-other. In this case, the companies become partners, and this type of agreement is called a ‘joint venture.’ Often, it is the artist himself who forms the one of the participating companies.

The Pressing and Distribution deal (P&D deal)

As its name would suggest, this is a contract entered into for the label only to manufacture and distribute the CD’s. This is the deal most often entered into when the artist owns a genuine record company (as, for example, Led Zeppelin did, towards the end of their career, with their label ‘Swansong’). This deal gives the artist the most control and profit. The artist therefore sells the records to the distribution company for a wholesale price less as agreed distribution fee of (usually) between 15% and 20% and his profit on each sale is therefore far higher than with a traditional record deal.

However, P&D deals have their downsides. Naturally, the immediate financial risk taken by the artist is much higher. Usually, there are no advances, and the artist has to pay the production costs before realising any income. These deals should therefore only be entered into by established artists who already have a successful track record and have a real record company infrastructure, because they will carry the manufacturing risk, and they will only get bald services from the distributor, who has no other interest in the product.

An even more extreme version of this is the Distribution Deal, where the artist sees even to the manufacture of the product, and the label simply distributes. Here, the royalty will be closer to 15% or even lower.

Conclusion

So there it is – the recording contract and its variations. While it has good reason to exist, it is not always the cause for champagne celebration that young artists think it will be. I hope that this series has succeeded in giving you a basic introduction to this daunting contract. Remember – everything is negotiable. What you lose on one clause, try to make up for in another, and strive for a balanced contract, overall. Above all, never, ever forget: caveat subscriptor.