2.0 Product Commitment

2.1 Artistic Standards

As we have seen, the artist may have to deliver up to four or five albums. The recording agreement will be more precise about exactly what has to be delivered. Generally, the albums must be studio recorded, rather than live recordings. The company will want to set a minimum standard. At worst (for the artist), the company will be entitled to reject any recordings which the company (in its absolute discretion) decides are commercially unsatisfactory, whatever that means. Ideally, for the artist, the record company’s right to reject master recordings should only apply if they are technically unsatisfactory for records to be made from them. A suitable compromise is usually found.

2.2 Additional Material

In addition, the company may acquire the right to insist upon a minimum number of additional tracks for use as B-sides or bonus tracks. An album is generally defined as a minimum of twelve tracks (plus additional B-sides or bonus tracks if required) with a minimum playing time of perhaps forty or forty-five minutes. All of this is of particular significance for the artist if the advances to be paid are expressed to be inclusive of any recording costs (see Part IV).

2.3 Two Albums Firm

Sometimes a record company will agree (using accepted industry slang) to “two albums firm”. This means that the company does not have an option for a second album but commits to it from the outset. A company will only reluctantly agree to this and usually only in the face of fierce competition to sign an artist. On the face of it, two albums firm represents a victory for the artist; it shows real commitment from the record company. It shows that the company is taking a long term view and is prepared to proceed with the second album, even if the first does not immediately bring the anticipated level of success. However, in some respects a two album firm commitment can be a double-edged sword. If the company loses interest after the first album, the artist is nevertheless exclusively contracted for a significant further period. The record company may become obstructive in recording the second album or, perhaps worse, may allow it to be recorded but then put no effort into its promotion. Arguably, the artist might have been better off had the company only committed to one album and failed to pick up its option for the second. This would leave the artist free to pursue a career elsewhere. This is less true at the present time when record deals are more than usually difficult to come by. That said, the usual outcome where the record company loses interest is a negotiated settlement of some kind. The artist is released from the contract and is paid a reduced sum of money in return for agreeing that the company no longer has to pay the advance and recording costs for the second album. The company might also be paid an “override” (i.e. a royalty of perhaps 2% or 3% on subsequent sales of that album) by the artist’s new record company. Alternately, on occasions, as part of any settlement, the artist may be given copyright in the masters for the first album.

2.4 Greatest Hits and Live Albums

Sometimes (but rarely) a greatest hits album may qualify as a product commitment album. For example, the company may agree to restrict the deal to four studio albums rather than five, on the basis that in addition to the four studio albums the company will be entitled after a given period to compile and release a greatest hits album. This would represent a victory of sorts for the artist because in reality this means that he or she only has to deliver four albums rather than five. Ordinarily, not only will the record company own all of the material but it will have unrestricted rights of exploitation. A company rarely accepts any restriction on its ability to release a greatest hits album.

Similarly (but again, rarely) a company may accept that one of the albums to be delivered will be a live album. Ordinarily, if a live album is recorded the company automatically acquires exclusive rights to it, without this counting towards the minimum product commitment, and without any obligation on the part of the company to pay any advance for it, or even to release it.

2.5 Exclusions

Recording agreements are invariably exclusive. If the artist records additional material beyond the contracted minimum product commitment, the record company will own all of the additional material. Most recording agreements contain limitations upon this exclusivity. For example, the artist may normally undertake session work (within defined limits), and may record TV and radio broadcasts, provided the TV and radio companies undertake not to exploit those recordings except by means of broadcast. Established bands may negotiate a deal which relates solely to recordings made by the band itself, leaving the individual members to pursue solo projects outside the scope of the deal. Record companies are very nervous of this arrangement. If they have to agree to important limitations of this kind, they will always insist that any solo or other work must not interfere with the band’s promotional activities. Release dates must be carefully monitored.

Record contracts do not normally extend to the artist’s separate activities as a record producer or engineer but given the increasing confusion between performance and production in some areas of contemporary music, provisions are in some cases included which limit the extent to which an artist may work as a record producer for third parties.