The music contract you should NEVER sign

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Production company contracts: good or bad?Attorney Steve Gordon continues his excellent masterclass in music contracts over at Digital Music News.

In the latest installment he tackles “production companies,” which usually consist of one or two people who will help you record some demos and try to shop you to labels with the hope of cashing in when you ink a big record deal.

If you can structure your arrangement with a production company to benefit both parties, excellent! But oftentimes production company contracts lock the artist into terrible terms. Steve says:

There are many differences between a production company and a real label, but they have at least the following in common: Both production companies and labels own or have access to recording studios and equipment, and they both have producers on payroll or relationships with indie producers who they can call on to make professional recordings.

A real label, however, has the following additional assets:

• Staffers and/or freelancers who provide both traditional marketing and publicity as well as online social networking support;

• Staffers and/or freelancers that continually pitch records to terrestrial radio – still a crucial element in breaking a new artist especially in pop, R&B, hip hop, rock, and country;

• A video department to produce, oversee and pay for the production of promo videos and electronic press kits (EPKs);

• Relationships with popular TV shows such as Saturday Night Live, The Tonight Show and Last Call to help the artist garner invaluable exposure;

• Relationships with leading digital services to promote an artist – for instance, by continually lobbying iTunes to feature the artist on its home page;

• Relationships with music supervisors and ad agencies to secure placements in TV shows, movies and ad campaigns;

• Distribution channels through all the big-box chains, such as Walmart, Best Buy and Target to sell physical copies of records;

• The ability to coordinate digital distribution to hundreds of digital music services throughout the world;

• The money necessary to pay staffers and freelancers to do the all the work above; and

• Perhaps most importantly, the financial capacity to pay the artist an advance on top of production costs so she can quit her day gig.

The production company… doesn’t. So when it comes to working with a production company: caution! And be sure to read Steve Gordon’s detailed breakdown of both good and bad production agreements.

Have you ever worked with a production company? What were the results? Did you feel like the arrangement was fair? Let me know in the comments below.

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