Did you know that most record deals for both new and midlevel
artists (and even some superstars) don't require the company
to even make a record? Almost all of their forms contain a
provision whereby the company, instead of recording the album,
can merely pay the artist a sum of money equal to (in the
first draft of their agreement) minimum union scale for an
album or (after negotiating) the difference between the recording
fund and the cost of the last album.
This is called a Pay-or-Play provision, meaning, as the name implies, that
the record company has the option of allowing you to play
your music or to pay you off. Should you come across this
and are unable to get it out of the deal, at least be sure
that once they pay you off, the deal is over. This shouldn't
be hard to get, but it isn't in any form agreement, and without
it, the copany could, in theory, hold you without making records.
(On the other hand, since they don't want your records, they
probably don't want you around, either. But it's cheap insurance
to add language making sure.)
Record deals are traditionally structured with the company having the smallest
obligation that it can negotiate, while keeping the option
to get as much product as possible. For example, a company
may commit to record one album of an artist and have the option
to require the artist to record an additional five to seven
albums, each one at the company's election.
Options in New Artist Deals
With new artists, the companies like to commit to only one album but insist
on the right to get six to eight albums total. This is an
improvement over recent years--the companies used to insist
on options for up to eight to ten albums. Optional albums
might be one at a time for the first, second and maybe third
albums, but thereafter I make the company take at least two
albums at a time (or else they have to let the artist go).
In other words, the company can opt out of the agreement after
the first, second, or perhaps even third album, but if the
deal continues beyond that point, the company must accept
the fourth and fifth albums before it can again opt out; similarly
with the sixth and seventh, etc. (If there's an extra left
over at the end, they of course only have to commit to that
Options Aren't Good for You
I remember a friend of mine from high school choir who came in jubilant one day because she had signed a "ten-album-deal" with Capitol Records. In reality, it turned out to be a deal for one single only, but she had given Capitol the option to require up to ten albums.
While my friend has faded into obscurity after recording only that one single, her attitude is not unusual. Many artists still think of record company options as being good for them, but in fact, this is never the case! If you're a flop, you'll never see the money; if you're a success, it will probably be less that you're worth. So train yourself to think of options only as the chance for the record company to get out of your deal. They are never good for you.
Making the Best of Options
Despite my high-mindrd speech, the reality is that you have to live with options
at all but the superstar levels--this industry custom is too
well-entrenched to buck. However, since you are giving the
company a chance to drop you after each album or two (to protect
their tushies if there's no success), I think you're entitled
to more goodies if they do keep you. This can be done in two
For optional albums, you should get increased royalties. Typically, the increase
is around .5% to 1%, both in your basic rate and in any escalated
You should also get increased recording funds for optional albums.
These new option numbers usually look very enticing to you
in the later option periods--but DON'T BE FOOLED. OPTIONS
ARE NEVER GOOD FOR YOU. They only mean you'll get dropped
if you're not worth the price or you'll get too little if
you're a smash! So repeat after me--OPTIONS ARE NEVER GOOD
FOR ME. Now write it on the blackboard twenty-five times!