Record company time limit on retaining masters?

[Nawor]

A friend of mine recently terminated his recording deal citing breach of contract. The company didn't have the funds to finance his next album so he did it himself and after some legal wrangling has left. Apart from claiming he stills owes them $40,000 (AUS) in unrecouped advances, the company haven't provided him with any meaningful figures in over four years (yes I know he should have pursued this earlier). He has been without a manager for the past eighteen months and this hasn't helped the situation. His previous manager figured he was almost recouped about two years ago. To get access to their books he has to pay to have them audited! Of course which 'books' they provide if he goes ahead with the audit is anyone's guess. It now appears he can never get access to the masters from his past two albums. I thought I read somewhere in his contract that the company retains the masters for ten years and then releases them to the artist, but his lawyer says he will never see them again. The company retains them FOREVER! Is this a normal deal? :confused: I've told him to go talk with his previous manager. He should still have something to go on. BTW how much has he seen in royalties in the past four years inspite of an ARIA award winning album??? (Australia) $00.00! Yep that's right...ZIP!!! It seems some of these deals are engineered so that the artist NEVER recoups no matter what!

[Bunny Knutson]

It's true. Generally speaking, the record company retains the right of ownership of the masters in perpetuity. The only avenue that your friend might be able to pursue is the supposed breach of contract by the company. That is going to be very expensive. It doesn't look good at all for your friend. :(

[Jotown]

In my humble opinion, once the label recoups the recording costs the ownership of the masters should transfer to the artist, with some kind of licensing deal between the two parties.

[Bunny Knutson]

That's an honorable sentiment, Jotown, but it's not the legal reality of the situation. Personally, I agree with you; I think artists should own their masters. But, in order to do this, the artist generally needs to pay for the production of their master. If the artist can't afford to pay for a quality master, that's when the sleazy label enters the equation. For better or worse.

[Jotown]

[quote]Originally posted by dBunny: [b]That's an honorable sentiment, Jotown, but it's not the legal reality of the situation. Personally, I agree with you; I think artists should own their masters. But, in order to do this, the artist generally needs to pay for the production of their master. If the artist can't afford to pay for a quality master, that's when the sleazy label enters the equation. For better or worse.[/b][/quote]In fact, the artist does pay for the production of their masters, as well as for the videos, and the promotion of the CD's made from their masters. The label fronts the money but before the artist sees penny one from the label, all of those costs are recouped. So in effect it's like buying a house and after the mortgage is payed off, the bank still owns the property. That would be deemed wrong in any business but the music business.

[Bunny Knutson]

[quote]Originally posted by Jotown: [b]That would be deemed wrong in any business but the music business.[/b][/quote]That statement is the crux of the discussion. Essentially, everything each of us has said is true. The reason the record company owns the master is because they fronted the money for the production costs. I agree that this is not how it [i]should[/i] be. I agree that if the recording cost is recoupable by the record company, then the ownership of the master should revert to the artist once the recording cost is recouped. Likewise, if the record company pays for the entire recording, and the cost is [i]not[/i] recoupable, then the record company should own the master in perpetuity. But it seems somehow unfair that record companies own all those masters forever, only because they fronted the cash for the recordings.

[Jotown]

In major, or even serious independent record deals, the cost of making the record is always recoupable. It's the way it's done. Recently some new models have emerged as to how a label gets it's money back, but they are very much in the minority. There is a current Rock star here in Detroit who I will not name. He is in the third CD of a three album deal with a very, very major label. He has to sell 1.8 million units to pay the label back for the recording fund, advance, video and promotional expenses. That means that if he sells anywhere less that 2 million units he would just break even. If the CD merely went platinum, he would owe the label money. A lot of money. He is not an exception, but the rule. That my friend is the reality of an act on a major label. That is also why you see all of those guys on VH-1 scratching their heads and saying, "what the fuck happened" Thats why I feel that an artist should get thier masters after the labels recoups the costs. After all, the artist ultimately pays those costs.

[Bunny Knutson]

We are in total agreement, Jotown. I didn't mean to suggest that it was common for a record label to NOT recoup the recording costs of a master. I was just offering a hypothetical example. Changing the industry is going to take a long time, I'm afraid. But I think it [i]is[/i] possible.

[Jotown]

I think that it is more likely that we as artists have to change the way that we do business, and to take more responsibility for or business transactions. I am all about being proactive, and finding a way as an artist to get paid for the proceeds my recordings generate. Things have been this way for so long that most artists believe that there is no other possible path. I ran into an acquaintance of mine that was in a big label band out of my area in the eighties. We are about he same age and he was telling me about a CD that he is working on with a studio owner/bloodsucking prick that I used to work for. I was advising him to be careful with this dude. He seemed to get a bit upset, and pretty much said, "what else am I going to do at this point in my career?" He feels trapped with no options but the status quo, even though the status quo has not been very good to him. I was trying to point some options out to him, but he wouldn't hear it. He is gonna sign another crappy deal to make a record that most likely will never come out. He does not have the eyes to see other possibilities. He is very typical of artists I know who are in a similar position.

[Gabriel E.]

Here's an analogy heard somewhere a few years ago: You go to the bank to borrow money to build a house. You use the money to build a house from the ground up. You supply the design and the contractors. After the house is built, you slowly pay off the mortgage (principal plus interest). After 20 years, the mortgage is completely paid off. But the Bank still owns the house. That's how major labels work. It's not fair but that's what artists agree to when they sign a contract. Unfortunately, people seem so fixated on "getting signed" that they don't realize that they are signing a contract that screws them royally. I think independent production and distribution are the way to go. I know a woman who paid the production costs on her own album and is selling it over the internet via her own label. She's not making any money but she's breaking even and even if she doesn't, she'll still own the rights to her music in the end. Rowan: Your friend could do what the Replacements did - break into the record company vault, steal the masters and throw them in a river.

[Mr Darling]

[quote]Originally posted by Gabriel E.: [b]Here's an analogy heard somewhere a few years ago: You go to the bank to borrow money to build a house. You use the money to build a house from the ground up. You supply the design and the contractors. After the house is built, you slowly pay off the mortgage (principal plus interest). After 20 years, the mortgage is completely paid off. But the Bank still owns the house. That's how major labels work. [/b][/quote]The noly problem with this anlogy is that banks don't risk much!!. If you stop payment - they should be able to sell the house and recoupe their advance. If a record doesn't sell - there is not much then label can do to recoupe its investment. By all means - go to the bank , lown the money and pay for your own recording etc... then just license to a label.

[Henchman]

I agree. Bands are all too happy to sign a deal that gives them one-tenth of the profits, yet they have to repay 100% of the costs from that one-tenth. And at the end of it, they still don't own their masters. This is an oudated, archaic business model. An dbefore people start to talk about the risks for a label, then maybe the labvles should eb a little more picky, and stop spending m,oney like it;s going out of style. Salaries to producers and label execs, should be based more on performance, not some huge, upfront amount of money, AND ppoints on the end. If I wa sto ever sign a deal with a label, I would only sign if the recoupment was from 100% income from sales, after that it's a 50-50 split. I would also limit what was recoupable. Trips by the A&R guy to shows, and five-star hotels, would not be included. I would not pay for their outlandish cost of doing business. video's, promo, would eb recoupable. And I would keep a close eye on who get's paid what when recording. No Bitchslap situations woukld eb allowed to occur.

[Jotown]

[quote]The noly problem with this anlogy is that banks don't risk much!!. If you stop payment - they should be able to sell the house and recoupe their advance. If a record doesn't sell - there is not much then label can do to recoupe its investment. [/quote]Thats simple enough. If the record doesnt recoupe you do not get your masters, but if it does, you should, because you payed for them.

[Jotown]

[quote]Originally posted by Gabriel E.: [b]Here's an analogy heard somewhere a few years ago: You go to the bank to borrow money to build a house........[/b][/quote]Ah, ah, ah. You could have said, "a few posts ago" had you read the whole thread :D :idea: :)