Album Release Guarantees

Album Release Guarantees
by Jeffrey and Todd Brabec

One of the most important guarantees that any artist can secure is the guarantee that the record company will release the recorded album to the general public in the United States. In most cases, if a record company spends the money to record an album, it will release it, since without such a release, the project will become a total write-off.

However, it is not that uncommon for a record company to lose faith in an artist (perhaps because the finished recording does not meet the company's expectations, there are financial problems at the company, the company has been sold, or the A&R executives who were behind the act have left the company) and shelve an entire album without releasing it. The adage about "not throwing good money after bad" does come into account in such situations, as record companies do cut their losses occasionally even if it means taking a total loss on the project.

This is especially true if the record company feels that it will have to expend in promotion, advertising, marketing, and video production monies at least as much as it has spent in recording the album and in advances to the artist. After all, if the record company has paid the artist US$125,000 in advances for the album, spent US$200,000 to record the album, and is looking at future expenses of US$75,000 to US$125,000 for a video and an additional US$200,000 and above in manufacturing, promotion, trade advertising, and marketing costs, it is no wonder that certain albums are pulled from the release schedule if the faith of the company's creative, business, and financial executives is not there.

If an artist can negotiate a release guarantee, it is to his or her benefit. A sample guaranteed release clause might read:

"Record Company agrees to release each album recorded pursuant to the product commitment provisions of the recording agreement through normal retail channels in the United States within 4 months after delivery of each such album to the record company".

Since Canada is an important market closely related in geographic location and musical tastes to the United States, this territory may also be included in the release guarantee.

In addition to the United States and Canada, there are a number of other important territories for which artists try to negotiate guaranteed release schedules of their albums. For example, the United Kingdom, Australia, Germany, Japan, France, Benelux (Holland and Belgium), Italy, and the Scandinavian countries can all be important album sale territories and, depending on an artist's bargaining power and international sales base, such guarantees can be vital to an act's chances of succeeding overseas. If such non-domestic release guarantees can be secured, the release date obligation is many times within 1 to 3 months after the U.S. release date.

Now that the release guarantee concept has been discussed, the realities of the record industry must be introduced into the equation. Even though an artist has a guaranteed release clause in the recording agreement, other provisions in the agreement will almost always modify this obligation.

For example, some agreements may provide that if an album is not released within a certain period of time (e.g., 30 to 90 days after the so-called guaranteed release date), the artist can send the record company notice that the release commitment obligation has been breached. If such notice is sent, the record company usually has from 60 to 120 days to release the album. If it does, the breach will be deemed to have been cured and the artist will have received what was denied-the commercial release of the album.

If the release does not occur within the extra time period, however, the artist may have a number of different options ranging from termination of the recording agreement to being able to license the release of the album to another record company. In most cases, if the third-party licensing remedy is taken, the artist can require his or her recording company to enter into an agreement with another record company selected by the artist but usually within certain agreed-upon business and legal parameters (e.g., that the royalty will be within certain percentages guidelines, that all union fees will be paid, that audit rights are provided for, etc.). In most cases, when the artist is allowed to license a release in a territory, the monies will be paid to the artist's record company for distribution as if the album were released under the original contract.

Reprinted with permission from TAXI: The Independent A&R Vehicle connecting unsigned artists, bands and songwriters with major record labels, publishers, and film & TV music supervisors.