What Are Your Contractual Obligations in a Music Contract

Before signing any contract it’s important to know your obligations.

Too often songwriters, producers, and artists sign deals based upon how much money they will be advanced upon execution or in total and don’t pay nearly enough attention to what their obligations are in the contract. Knowing your obligations can help you determine the approximate time that you can expect to be bound to the contract and can hit the open market again.

The 3 things that you need to be aware of are the term, how much money you’re advanced, and how many songs, masters, or albums you’re required to deliver or release.

The first thing you need to know is the term of the contract.

The term will be broken down into the initial term and any exercised option periods. The initial term for most publishing, management, or production deals will be 2–3 years. Artist and label deals used to be much longer, closer to 5 years, but now with artists being required material more frequently to maintain relevance they’ve often been reduced to the same 2–3 years.

The option period, or periods, is additional time that you could be under contract. Option periods can be automatically exercised, exercised due to a party’s inaction. An option can also be up to one party to exercise, decided unilaterally, or bilaterally, both parties will need to agree to continue doing business together for the term to continue.

For example, if you sign a publishing deal that with a 2-year initial term with an automatic 1-year option and a 2nd 1-year option that is automatically executed unless the publisher opts out then you should expect to be signed to this publisher for at least 4 years. At least 4 years?

The clock can start when the contract is executed or it can start or end at the end of the calendar year depending on the language in that particular agreement which can extend the term even further. But that’s not the only obligation.
There’s also the matter of recouping the advance.

The more money that you’re advanced the longer you can expect to be bound to the contract. Here’s a link where I explain the concept of recouping.

The 3rd factor in how long you’re going to be bound to a deal is your delivery requirement. For a publishing deal, it will be compositions (more than likely they will need to be released on a major label or major label subsidiary or distributor). If it’s an artist deal it can be so many masters or/and a number of albums or mixtapes.

So you’ve done the math and figured out that between the initial period and option periods you’ll be bound to a publishing agreement for 4 years, but if you haven’t recouped or delivered the required number of compositions and the required number of masters have not been released then you’ll be bound to this publishing deal until these 2 requirements are satisfied.

Another example is say you come out of the gate and have a song, the hit song leads to a hit album and the artist is able to follow up with a hit 2nd released all in 18 months. The delivery requirement is fulfilled and you’ve recouped, and started collecting royalties.

Well if the initial contract period is 2 years (24 months) then you won’t be out of the contract for 6 more months and if they have an option period to extend you’ll be bound for that initial time also.

Remember all 3 requirements need to be fulfilled:

• The term, which is the length of time factoring in the initial period and option periods that are exercised.
• The money that was advanced needs to be recouped, and
• Any delivery requirements must be satisfied.