Music Business

The so-called music business is a very complicated matter. There is a lot of talk and promises, but watch out!!!

GS Records wants to sensitize and inform with this contribution. Before you sign anything you need to know what kind of contract it is. First of all, register with Suisa and secure your music and lyrics as an author. Never give exclusive rights to your copyrights unless you get 1 million. If you are about to sign a contract with a so-called label, consult an expert and do not sign immediately.

There are countless contracts, below you will find the most important explanations of the music contracts you need to know to exist in the so-called music business. Please don't send us any mails about these topics, because we are not a label or company, but have an independent status and exclude the financial aspects with unknowns.

Agency contract

The agency contract is concluded between the artist and the agent.
The agent arranges the artist's orders, i.e. concerts and other performance opportunities. He functions as a hub between the artist and the promoter and thus plays an important role for the artist and the manager. With his good contacts to all organizers, he procures the orders for his artists.

Arrangement contract

The arrangement contract is concluded between the tour organizer and the arranger.
When organizing a tour, the tour organizer relies on the help of so-called local arrangers. They prepare a single concert of the tour on the spot. Often the arrangers themselves are concert promoters in their region.

An arranger provides publicity, takes care of all concert preparations and supervises the execution of the event. The tasks and the corresponding financial participation of the arranger are defined by contract.

Tape Transfer Agreement

In the case of a tape takeover or licensing agreement, an economic producer (e.g. record company) or the artist himself produces a copyable master tape at his own expense and risk. The record company then acquires the licensing rights for a certain duration and a defined contractual territory. Under certain circumstances, sub-publishing or co-publishing rights are also granted, depending on the performance of the record company.

The record company is obligated to reproduce and distribute the master tape for the contract territory. The subject of the contract is the master tape. In return, the record company receives either exclusive or non-exclusive licensing for the duration of the contract. 

In the case of the tape transfer contract, the record company does not bear any production costs. Therefore, it receives a smaller percentage of the revenues and usually pays the producer an appropriate advance.

Artist contract

Artist contracts are concluded between producers or record companies and one or more artists. This means that the artist is exclusively bound to a record company for the duration of the contract and must publish all sound and image recordings with it.

The record company agrees to release a certain number of sound recordings with the artist during the contract period. It may also be that a certain sum is agreed for the production of several sound carriers (e.g. 500,000 Swiss francs for three albums). In return, the record company receives all rights of use for the artist's performances and achievements.

In an artist's contract, the artist and his or her works are the subject matter of the contract.
Title exclusivity may also be included in an artist's contract. In this case, the artist may not be permitted to re-record or exploit the works on which the contract recordings are based, either in whole or in part, even after the contract term has expired. For title exclusivity, the duration after the expiration of the contract is contractually specified (usually five years). The record company bears a greater risk with this add-on, but receives a higher share of the revenues in return.

Concert contract

A concert contract is concluded between the artist and the organizer.
With such an agreement, the artist undertakes to perform an artistic performance at the venue on a certain date for a fixed duration. The organizer must create the necessary conditions for this, including, for example, advertising for the concert. He is also obliged to pay the negotiated fee. 

The organizer may not influence the manner of the artist's actual performance. This should also be stated in the contract. Standard forms for concert contracts can be obtained from SUISA.

Management contract

The management contract is concluded between the artist and the manager for a specific period of time. This contract obligates the manager to the artist to provide a service with the aim of promoting the musician's career. 

The management contract includes the manager's duties and the manager's financial participation. Usually, this consists of a commission on the musician's earnings. The musician agrees to have all tasks that fall within the management area performed exclusively by the manager.

Merchandising contract

The following definition is used for merchandising in feature film productions:
"The merchandising right is the right to commercially exploit a production by producing and distributing merchandise of all kinds using incidents, names, titles, characters, images, and other contexts related to a production, and to advertise goods and services of all kinds using such elements or edited excerpts from the production."
(Handbook of the Music Industry, Dr. Stephan Schmidt, p. 861, para. 1) In order for someone to be able to conclude merchandising contracts, they must have the merchandising rights. In the case of an artist or band, the rights are on:

    • Name
    • Logo
    • Personality with the artist

However, this is only the case as long as they have not been contractually assigned. The artist can conclude a contract with a merchandising company in which he assigns the rights to the merchandiser in return for a certain share of the sales. He can assign these rights individually to different companies (e.g. textile company for T-shirts, production company for ballpoint pens, etc.) or as a lump sum to a merchandiser.

Producer contract

The producer contract is concluded between the "economic producer", a phonogram producer or the artist himself, and the "musical producer". 

Such a contract is drawn up for the production of sound recordings for one or more CDs. It covers the rights and obligations of the contracting parties and regulates the revenue share of the musical producer.
It also happens that a music producer concludes a producer contract with the artist directly, which is similar to the artist contract with labels, for example by guaranteeing the artist a certain number of recordings for a certain period of time free of charge. In return, the producer receives a higher revenue share. As with the label contract, the artist is bound to the producer for the duration of the contract.

Normal contract of the recording industry (industry contract)

In order for a phonogram producer to be allowed to produce a phonogram (record, CD, cassette), he must obtain permission from the respective collecting society each time for protected works and conclude individual usage agreements. 

The "standard contract of the sound carrier industry" forms an overall contract by which the actual usage permission is granted by the collecting society to the respective sound carrier producer. The overall agreement essentially regulates the content of the individual usage agreements. 

The most important point of the overall agreement is, of course, the regulation of the remuneration. When concluding an overall contract, the recording industry benefits from up to 20 percent lower remuneration rates for the usage tariffs. In return, the administrative burden for the collecting society is considerably simplified.

Tour contract

The tour contract is concluded between an artist and a tour organizer for several concerts held in succession at different venues.

Copyright contract

Anyone wishing to join a collecting society must conclude an authors' agreement or administration agreement with the society in question. 

With SUISA, an author first becomes a principal for at least one year. If the principal reaches a minimum amount of copyright remuneration fixed annually, he automatically becomes a member and receives the right to vote and to be elected. However, it has no influence on the protection of copyrights whether one is a principal or a member. 

With the copyright contract, an author assigns his rights to SUISA, whose task is to protect the rights and interests of the author. There is a kind of fiduciary relationship between SUISA and the author.

Publishing contract

Publishing contracts are interesting for composers who want to distribute their musical work in as many areas as possible (e.g. film, advertising, third-party performers). But also bands who want to get a record contract through a publisher would like to sign such a contract. In the past, the main task of a music publisher was to print and distribute the sheet music of a piece of music. Today, publishers are increasingly taking over the function of an A&R department, which used to be record companies' main task, i.e., finding and promoting young artists. More and more producers are founding their own publishing house, through which they offer their productions with various artists to the record companies. For this purpose, either producer contracts or artist contracts are concluded between authors and publishers. In the case of artist contracts, the producer/publisher assumes part of the production costs and receives a share of later revenues in return. In the publishing agreement, the author grants the publisher the exploitation and use rights to his work for various types of use. The publisher is obligated to reproduce and distribute the work, as well as to engage in the exploitation of the rights granted. The publisher usually tries to obtain the exploitation for all rights unlimited in time, space and content. However, the author's interests tend to lie in limiting the rights granted. In the publishing industry, title author agreements are predominantly negotiated. In these, only isolated pieces of music are handed over to the publisher for use. However, the author and publisher can conclude an author's contract in which the author's creative power is exclusively available to the publisher for a certain period of time. Thus, the author transfers all works to the publisher for exploitation during the contract period. In return, the publisher takes over these works for the duration of the contract.

Distribution agreement

A distribution agreement is concluded between an economic producer (artist) and a distribution company. 

Distribution is generally divided into the following areas:

      • Production of audio carriers
      • Distribution (sales)
      • Distribution of goods (Distribution)

Depending on whether the producer has its own sales department, the contracts are different. If he has:

own promotion and marketing department, he needs a distributor who produces, sells and distributes the sound carriers.
a distribution department, an external distributor takes over the production and distribution of the sound carriers
own sound recording company (or have it done), it shall transfer distribution, sales and distribution

The producer receives from the distributor the sales proceeds less various costs of distribution (manufacturing costs, copyright licenses, etc.) plus a commission.

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