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Thinking of changing my business model: Adding a label to the equation
Old 10th January 2014
Gear Head
Mitch Connor's Avatar

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Thinking of changing my business model: Adding a label to the equation

This winter marks the third official year of my location recording company. It's been an interesting ride, can't say too many bad things about it. Overall I am fairly happy and excited with where things are, or better yet, where they may end up going. Most of my time in the field has been spent with rock/live electronic/blues/jazz bands (no orchestral experience), some of which are small local acts, and others that are relatively big names in their respective genres. Interactions with my past clientele have been interesting to say the least. Sometimes I'm treated in a professional and respectful manner, and at other times, like I should be grateful for the the opportunity to record & mix their music.

I've learned a lot over the past years. For one, I know I'm not good at selling my services. I know what I'm worth (at least I think I do), but often feel very uncomfortable asking for my standard rate. Furthermore, I've done what many here have warned others not to do, and that is provide services at no cost to the client (to further build my portfolio and get exposure in different circles/genres). I've also learned over the years that some musicians get "cold feet" in a live recording setting just as some do in the studio. Now I try to be critical of myself and improve in areas that I have control of, but as in the case of poor performances, there's not much I can do.

And it's this area that I see myself losing out on a lot of money, due to clients not being confident enough in their performance to justify paying for the additional service of mixing the tracks down (I typically keep those services separate). I provide them with an "all faders up" stereo export for them to pick individual tracks for mixdown (if they choose to go with the a la carte approach), but often times they don’t even bother listening to them. Most of my money is made on the mixing side of things as it requires much more of my time and skill. So I hate when I end up with a recording that is dead in the water and not moving on to the next phase. This is especially frustrating when scattered within these not-so-perfect sets of music, lay some great performances, real gems that should be seeing the light of day. Often I'll throw together some rough mixes just for personal enjoyment, and many times I upload these rough cuts to my company's SoundCloud page.

So, lately I've been toying around with the idea of starting a small label that would digitally distribute my company's recordings on services like BandCamp, iTunes, etc. I would sell original tracks only, though it looks like I may have to obtain licenses for covers even if they're provided free of charge (seems to violate some T&C on many services too). I may just leave them out of any releases.

Anyone have some experience in this approach? I thought I recalled a member here who was hired to record a choir recital (or something similar) and instead of selling the masters to the client, opted to keep/obtain the mechanical rights to sell the final product to the parents/congregation.

I'm not expecting to make much money off of this, but a few dollars here and there is better than some good music sitting solely in my library collecting nothing. Plus it might allow me to offset some risk and record new talent without being completely taken advantage of. It might also be kind of fun!

There are a couple of questions I was hoping some of you could weigh in on.

  1. For artists/bands who publish their songs via ASCAP/BMI/SESAC, besides obtaining mechanical licenses from their publishers, is there anything else I would need to obtain written agreement for (using their name, likeness, etc.)? In my standard recording agreement I have a clause that states (under a section titled “Promotion”):

    For the purposes of promoting its business activities, [MY COMPANY’S NAME] shall have the following non-exclusive worldwide rights in perpetuity: (i) the right to use your name (both legal and professional, and whether presently or hereafter used by you), likeness, other identification, and biographical material concerning you; (ii) the right to include any Masters, or portions thereof, recorded or mixed hereunder on [MY COMPANY’S NAME]’s website, social media pages, demo tapes, CDs (or in other configurations now known or hereafter invented) distributed by [MY COMPANY’S NAME] at no charge for promotional purposes.
    I imagine something similar (dropping the promotional aspect) would need to be signed by the artist, no?

  2. It appears the standard protocol for obtaining mechanical licenses involves pre-paying royalties based on an estimated number of future sales (including digital distribution). Is there any way around this?

  3. How would a pre-payment of royalties work for models where songs/“units” are not always sold, but offered on a “pay what you want” model? Can we change the royalty to 0.091% of each unit’s actual sale price?

  4. For unpublished/self-published acts I would require a signed agreement establishing a mechanical license and anything else required from question 1. But do I have to obtain a signature from every member in the band that performed in the recording? How am I supposed to know who the composer(s) is/are (what if it’s not even agreed upon within the band)?

  5. In many of my recordings, numerous guests sit in on an artist's set. Would I need agreements/releases from them as well? Does it matter if a guest musician/singer is a signed artist?

  6. I wouldn't offer this to everyone and I haven't even figured out how this would affect my rates or how I'd package the deal. But how should I handle the transfer of rights to the Sound Recordings/Masters. The way I run things now is once a client pays the fee for the remote recording service, the multitracks are theirs, I relinquish all rights* (with certain caveats) to the raw tracks, or anything derived from them.

    Under this new scenario, if I'm entering into some type of one off record contract, would I even want to give up the rights? Are there any standard procedures here? Perhaps add a clause allowing for a buyout from the artist if certain criteria are met.

  7. Sort of a follow up to the previous question. Are there separate licenses/rights for the raw multitrack recordings and for the final mixes? I can't find anything that directly addresses this.


  8. For those published through ASCAP/BMI/SESAC I’m not sure if I can negotiate royalty rates, but for unpublished acts, I was thinking of keeping 100% for the first X number of units sold (or until my expenses are covered). After that I would enter into the standard US compulsory rates (9.10 cents if < 5 minutes or 1.75 cents/minute if > 5 minutes). Does this seem fair/standard?

    Furthermore, is it possible to enact similar clauses or licensing for those published with the performance rights organizations mentioned above? Or am I confusing this with a different side/level of royalty payout (I think I'm confusing this with all the different rights/licenses.)

I realize it’s not smart to solicit legal advice online, but perhaps some of you have been in similar circumstances and feel like sharing your experiences, and if you don’t feel qualified weighing in on these questions, perhaps you could point me in the right direction. The obvious answer is talk to a music attorney, but financial restrictions are making that option unlikely.

Essentially I'll be signing bands to some sort of one off, non-exclusive record contract covering the recorded performance in which only mechanical royalties are paid out, and that's only after sales have reached a certain amount to cover my expenses. Surely this can be accomplished relatively easily, no?

Best regards!
Old 10th January 2014
Lives for gear
hbphotoav's Avatar

I'd definitely seek actual LOCAL legal advice in this realm from someone specializing in entertainment law, BEFORE "selling" anything or creating any kind of contract... especially if the acts are largely cover bands, or include significant cover tunes in their repertoire. I much prefer directly-to-client relationships in this area of my business. I've dealt with copyrights and mechanicals enough over the past three decades in my parallel photo and AV production lives to know I want no part of it at this stage. And I'd not wish the concomitant accounting headaches on my worst enemy. Unless, of course, he was an accountant...

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