The recording contract series; (part 3) The product commitment

For many years, industry players spoke about a "singles deal" or an "album deal." This was because, up to about 2000, when the single died for some time, artists would generally record an album and choose a song off the album to be released seperately on its own, both for airplay, and as a sales product. (The single is, of course now well and truly back with the advent of online digital downloads).

A 'singles deal' meant that the record company, rather than committing to make an album, would, instead, record one or two or sometimes three singles before having to make a decision to record additional tracks to make up an album. This "step by step" approach obviously cut down the record company's risk.

But from the artist's perspective, it was obviously much better to have an album deal, because this would entail a commitment from the label, from the outset, to make a full basket of songs and promote them properly. The fact is that, as the record company's risk and investment increases, so too will it increase the marketing muscle that it dictates to an artist.

The CD single, as a sales product, was a massive failure, so singles deals largely fell away in the early 2000's. However, they are not completely unheard of. More importantly, singles sales are today huge business because of the new customer trend of buying individual tracks online (sometimes instead of albums), largely driven by iTunes and other download sites.

Although there are no rules in this regard, it has, in recent years, become standard practice in recording contracts for the product commitment to be one album per year (i.e. three albums in the initial term and one in each period). But with newer artists, labels often tend to go for one year initial term, with one album, and six or so options. Obviously, this lets the label review how the artist has done after one album, and then decide whether to proceed.

Whatever the product commitment in the initial period is, the product commitment in each of the subsequent option periods will be usually at least one album. Consequently, if a record company actually exercises or "picks up" all its options the artist will end up recording six, seven or eight albums for that Company (depending on the number of options).

These might be guidelines, but contracts varying wildly from this are in existence, and the product commitment can be varied in any way by negotiation between the two parties. Some artists, like Guns 'n Roses, can take years (or in their case decades) to produce an album, and their product commitment might hypothetically read one album every five years. Anything can be negotiated.

Now that the digital online single is a real sales product, and because iTunes is the world's biggest music retailer, it is possible that newer product commitment clauses will list numbers of tracks or songs, rather than albums. This certainly seems to be happening in more and more contracts worldwide, but most South African contracts still refer to albums (in China, record deals almost never list albums - only numbers of songs).

Occasionally, when the artist is in a good negotiating position, he may get the record company to commit to make not one but two albums in the initial period (which will then probably be two years). This so-called "two albums firm" deal is seen to be good evidence of a record company's commitment to the artist but it is a rarity to see such a clause for a new artist. Three-albums firm deals are very rare, unless the artist is genuinely established or has somehow increased his bargaining power.

Of course, with successful artists, the record company may also release "Best Of" or "Greatest Hits" albums. This is referred to as "catalogue." In the 21st century, catalogue is becoming a more and more important source of revenue for the record industry and such albums are being released at ever-more frequent intervals than before. (Britney Spears released a "best of" catalogue at age twenty-four...) The "best of" debate is usually a very heated one, because, although a "best of" usually fills the coffers of the artist and the record company, it can have the effect of writing off a current artist as something of a "has been." In most cases (unless the artist is cash-strapped) it is only the record company that wishes to release a "best of" compilation early in the artist's career. ('Best Of's sell particularly well to new fans that are introduced to the artist late in the artist's career - often a big market).

There are many examples of artists that have refused to release greatest hits albums, including AC/DC, Tool and Metallica, (AC/DC, however has released two movie soundtrack compilation albums). Manic Street Preachers initially refused to do a greatest hits album, but in the end gave in. Radiohead also refused to do such a compilation, but upon their departure from Parlophone Records, "Radiohead: The Best of" was released without their co-operation. (This is a very common scenario, and one to negotiate in your contract right at the outset).

This was initially the situation Oasis found themselves in, but upon realising that the release was inevitable, the band grudgingly then requested direct involvement, selecting the track-listing, track order, and the artwork. A compromise solution was found by country music superstar Garth Brooks: he was avidly opposed to the release of a greatest hits collection by his label, but eventually agreed to it for a limited time only (the compilation, "The Hits", was released for a very short period and quickly deleted, but during that time, sold over ten million copies).

Joni Mitchell also resisted realising a greatest hits album for many years, because she felt that a greatest hits compilation release would lead her record label to take her actual studio albums out of print. She eventually had to give in because her contract clearly provided for a Greatest Hits release. Some Greatest hits compilations can boost a falling music career. For example, The Beautiful South's first greatest hits album, "Carry on up the Charts," was originally strongly opposed by the band, but on release became one of the fastest selling albums in chart history.

Additionally, an artist may want to record a "live" album or DVD which the record company will have the right to exploit. Whereas live albums require mechanical releases and mixing/mastering, the actual recording process (particularly with Pro Tools today recording directly out of VENUE live mixers) is minimal.

Fans see live albums as 'real' releases (as opposed to 'Best Of', "Greatest Hits" and "live" albums often does not usually require the payment of additional advances to the artist, or, in the case of established artists, the advances may be reduced. Record companies therefore love these releases. There are few or no recording costs to be paid (sometimes a little re-mixing or re-mastering), no producer's fees and smaller graphic design fees (normally) than normal studio albums.

But why should it be that the Artist does not receive an advance for this type of album? Surely it is worth negotiating this with the label? A live album or 'best of' is as much the artist's recognised work as any studio album, and even though no or few recording costs are incurred, there is no logical reason why the label should be able to exploit this very profitable part of the business without paying the artist an advance. (Also, it should be remembered that touring is expensive). So I would advise to close the door on this one.

You should not make the mistake of thinking that the product commitment just binds the record company and is always good news for the artist. Obviously, the artist is also obliged to deliver the product he has promised. If he fails to do so, he will be in breach of contract and can be sued for specific performance and/or damages