Is there a musician alive today who doesn’t know that owning their music ‘masters’ – the original audio recording of their song – is critically important to their earnings and career growth? Yet, most articles on this topic just stop at telling musicians what they already know.
Working with hundreds of artists has shown me that the real questions musicians have about masters tend to be along the lines, “Is it impossible for an artist to keep control of their masters in a record deal?” – “Should I still sign a record deal if it means losing control over my masters?” – “As an independent artist, how can I leverage the fact that I own my masters?”
In this article, I have addressed these and other important, real-life concerns that artists have regarding music masters.
Let’s get to it.
Quick Recap: Masters vs. Publishing Rights and Royalties
Since a master recording is the original audio recording of a song, its owner earns income, that is, royalties from all uses of the original audio, including streaming and downloads as well as new projects such as remixes.
On the other hand, the publishing rights to a song are usually owned by the individual who holds the copyrights to the underlying musical composition—the song structure (sheet music or chords) as well as lyrics. Owning publishing rights yields income from all uses of the composition, such as covers by other artists, live performances, and variants such as instrumental tracks.
The owner of music masters rights controls the use and reproduction of the original recording of a song or other musical work, earning royalties whenever the recording is used or sold. Publishing rights give control of the composition – song structure (chords) and lyrics, and royalties from its use.
Can Musicians Own their Masters in a Record Deal?
In traditional ‘royalty deals’, musicians sign over masters rights in exchange for advances and later share royalties with record labels. More modern ‘distribution deals’ and ‘licensing deals’ allow musicians to retain or regain control over masters, but offer less label-to-artist support.
In the present day music industry, deals between artists and record labels have assumed various forms. Although the specific terms and conditions vary across deals, this section offers a bird’s eye view of how rights and responsibilities are typically distributed between artists and labels in the most widely prevalent types of deals.
Royalty Deal
As outlined above, this ‘industry standard’ deal typically provides artists with a relatively large advance at the time of signing, as well as offering extended label support for music marketing and production. In exchange, the musician signs over their rights to their master recording to the label, thus losing control over and income from all subsequent re-releases, re-recordings (remixes, covers) and other variants of their musical work.
Over time, usually after the initial advance from the label is repaid, the artist earns a percentage of royalties – income from music streaming, downloads, sales of physical media (CDs, vinyl, other formats) as well as public performances such as radio and live shows.
Licensing Deal
This pro-artist variant of the royalty deal has grown more popular in recent years. A licensing deal gives the record label complete control over the masters for a limited period of time (for example, 15 years), after which the master rights revert to the artist.
On the other hand, these deals usually offer less financial incentive to artists for signing. Often, the artist may not receive comprehensive support from the label for music production or marketing, but may need to rely on their own resources.
360 Deal
Another present day trend is the 360 deal, which, as the name suggests, involves complete support from the record label in not only producing and marketing the artist’s music, but also in planning and promoting tours, events and merchandise. This deal type is favored by musicians who are looking for a steep career climb.
The flip side to the arrangement is that artists must relinquish complete control over their masters as well as much of the creative control over their artistic image, musical brand and production.
Net Profit Deal
An arrangement that is beginning to gain currency in the industry is the ‘net profit deal’. As the name suggests, the artist and the label work out a profit-sharing agreement, typically 50-50, although the terms of individual deals may veer away from complete equity.
Conversely, these arrangements generally exclude the full spectrum of label support, such as advanced recording facilities, high-budget marketing campaigns or global distribution networks. Thus, these deals are likely to benefit musicians who have the financial and professional resources to handle multiple aspects of production, promotion and distribution.
Distribution Deal
For some artists, creative control and masters rights ownership are paramount considerations. In such cases, distribution deals have evolved to cater to control-focused artists.
The musician in these deals is responsible for both production and marketing, relying on the label only for its global distribution outreach. Artists entering distribution deals must therefore be prepared for greater financial investment as well as marketing efforts to ensure the success of their music.
If you are an artist who prefers to remain at the steering wheel of their career, check out how DeNovo Agency’s expert music marketing services can help you amplify your reach to expand your audience.
The Worth of Music Masters: How Can an Artist Decide?
All too often, artists faced with important decisions such as choosing between staying independent vs. signing a record label deal allow their thinking to pivot on masters rights ownership. However, instead of focusing solely on owning their masters, musicians would be well-advised to evaluate multiple aspects to help them make a balanced decision.
Musicians evaluating the real worth of owning their masters vs. relinquishing them in a record deal must consider these crucial factors:
- initial financial outlay
- production resources
- marketing savvy
- distributional reach
- contract duration
- creative direction
- long-term returns
The section below provides a simple checklist that an artist can use to help them decide on the career path that would be best suited to their immediate priorities as well as long-term aspirations.
Checklist for signing a record label contract: Yes or No?
Read through each of the pairs of statements below. On a piece of paper, put down a ‘Yes’ or ‘No’ in response to each pair.
1. Evaluate your resources.
NO: I have the resources (time, team, talent and team, technology) to effectively market and distribute my music.
YES: I need external marketing and distribution resources to ensure that my music reaches my audience.
2. Assess your financial priorities.
NO: I can manage my professional commitments and music production and marketing goals without an immediate inflow of finance.
YES: I must obtain immediate financial support in order to meet my professional obligations, music production and marketing expenses.
3. Compare how your goals are aligned.
NO: My goal is long-term revenue, with priority given to masters rights ownership and freedom in decision-making.
YES: My goal is immediate exposure and market entry, for which I am willing to compromise on control over my masters.
4. Take stock of your professional network.
NO: I have the professional contacts and connections that can allow me to negotiate for greater control over my masters.
YES: I lack a strong professional network and will need to rely on resources provided by the record label.
5. Be clear on your creative compass.
NO: Creative control is my top priority, for which I am willing to forgo help with finance, production resources, music marketing and distribution.
YES: I am open to creative input and collaboration with the aim of enhancing the marketability of my music.
6. Estimate your comfort with a long-term commitment.
NO: I prefer short-term commitments that leave me the flexibility to reassess and change direction as my career evolves.
YES: I am comfortable making a long-term commitment that is aligned with my vision and career goals.
7. Appraise your potential opportunities.
NO: I see a record label contract as limiting my ability to explore independent projects and collaborations.
YES: I think that a record label contract will benefit me by opening doors to collaborations, tours and other opportunities.
Now that you have come to the end of the checklist, tally your yeses and nos. If you checked 4 or more ‘yes’ statements, then signing on with a record label may be a great career move for you. On the other hand, if you scored 4 or more ‘nos’, then a record label deal might not be your best option.
Gaining More Control over Your Masters: Negotiation 101 for Musicians
The first section of this article outlined the 5 major types of record label contracts prevalent in today’s music industry. Clearly, each comes with a unique blend of financial implications, production backing, promotional and distributional support as well as creative direction.
It is important to keep in mind that even within a particular category of contract, the actual terms can vary widely. By playing their cards smartly, musicians can secure more favorable terms that give them more creative autonomy and greater control over their masters, while still ensuring that the terms are attractive to the record label.
How to prepare for a record deal negotiation
A key principle of successful negotiation is to aim for a ‘win-win’ situation. Unfortunately, many artists approach record label negotiations with a ‘zero sum’ mindset—”if they win, I lose”.
In reality, a record deal that meets the expectations of both parties is likely only if the artist demonstrates clearly to record label execs that in bargaining for more favorable terms, they are paving the way for greater creative output that will benefit both label and artist in the long run.
Below is a list of practical steps that an artist can take to craft a really strong pitch during negotiations.
1. Recognize your worth
- Analyze your fanbase size and engagement on social media platforms.
- Gather streaming and download statistics from platforms like Spotify and Apple Music.
- Prepare a portfolio of past successful projects, press coverage, and any awards or recognitions.
2. Seek more control over your masters
- Propose a specific time frame after which master rights revert to you, based on industry norms.
- Prepare a plan showing how you’ll utilize the masters post-reversion for continued profitability.
- Consult with a lawyer to draft the reversion clause in clear legal terms.
3. Offer trade-offs
- Identify aspects of the deal on which you are willing to compromise, such as advance payment size.
- Research standard royalty rates and decide on a lower but acceptable rate for yourself.
- Consider offering increased promotional or touring commitments.
4. Highlight long-term potential
- Prepare a detailed career plan showcasing potential future projects and revenue streams.
- Use past successes as a basis to make projections of future profitability.
The importance of obtaining legal advice
Given the serious and long-term implications of signing a record label contract, it is highly advisable for an artist to work with an attorney experienced in music industry negotiations. Thus, preparing to negotiate with a record label should also ideally involve the following steps:
- Research and identify a music attorney with a strong track record in your genre.
- Discuss your career goals and artistic principles with the attorney. Work out how to align these with legal and practical industry constraints.
- Take the attorney’s help in crafting your negotiation pitch, particularly for elements involving financial arrangements as well as contractual commitments (such as your time, creative output and so on).
Even once an artist has ironed out terms and conditions with a record label, it is essential to ensure that they understand every clause of the contract they are about to sign. Artists should therefore ideally go over a contract thoroughly with their attorney before signing any documents.
Leveraging Masters Ownership: Tips for Indie Artists
Unlike artists signed to traditional record labels, independent artists usually retain control over their masters because they are not bound by the same contractual agreements that often require relinquishing rights temporarily or permanently.
This control represents a significant advantage for indie artists, allowing them greater flexibility and potential income from their music. However, in order to translate the additional freedom and flexibility to measurable financial and career gains, a musician must plan ahead and work smartly.
Some tips and techniques for an indie artist to maximize the advantage of owning their masters include:
Prioritize collaborations
Collaborate with fellow industry professionals, including artists, music producers, sound engineers and others to create diverse versions of your tracks, including instrumentals, a cappella, remixes and dance videos.
Make use of professional networks such as LinkedIn and SoundCloud for building collabs, as well as social platforms such as Meetup for tracking music industry events and networking opportunities.
Utilize digital tools and platforms for music marketing and distribution
Digital marketing pros such as the DeNovo Agency can help you ramp up your visibility online, as well as providing expert guidance on maximizing the impact of your music ad campaigns.
You can also explore distribution options such as ThatPitch, that can not only expand your digital music footprint, but also bring you attractive sync licensing opportunities.
Educate yourself on the business aspects of music
Invest time in learning about the industry and business side of music, including marketing strategies, music copyrights, music licensing law and other topics. Online courses such as those offered by Berklee, Coursera and Udemy are a great resource for building your knowledge.
Outsource when necessary
For tasks that require specific expertise, consider hiring freelancers or consulting with industry professionals. Explore platforms such as SoundBetter and AirGigs for finding professionals with the musical skills you require.
The Future of Master Rights Ownership
As the music industry continues to evolve, so too does the landscape of master rights ownership. One recent trend has been the rise of independent distribution channels and streaming services. Already, these changes have led to a shift in the balance of power, with artists gaining increasing autonomy over their master recordings.
Another notable development is the growing adoption of NFTs (Non-Fungible Tokens) by musicians. These digital assets offer a unique way for artists to sell exclusive rights, potentially including masters, directly to fans. This not only revolutionizes how ownership is perceived but also provides artists with a new avenue for profit and control.
These trends suggest a future where you have increased leverage as an artist, and innovative opportunities for controlling and monetizing your music. For musicians, staying informed and adaptable to these changes is key to navigating this landscape successfully.
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