Most bands initially form to make music, and are not necessarily worried about making money. However, when it comes to a record contract, it is all about money; at least from the label's perspective. A record company puts a record out to make money. Creativity, uniqueness and talent development play a part, but bottom line, it is a financial relationship. Depending on the label offering the record contract, they can vary from 1-page memorandum agreements, to over 40 pages long. Needless to say, there is much to be considered and evaluated based on the goals of the band, and the label. Each band has different goals, sometimes even amongst its members. As I said above, the labels' goals are usually much easier to describe: profit. Merging these two (or more) probably conflicting sets of goals is a tricky business, and varies with each band/label relationship and contract.

I frequently get involved after a band has already negotiated the "deal points" prior to retaining my counsel. Deal points are the basics of the contract: the advance amount, number of recordings and the proposed royalty rate. However, the details are where the negotiations usually get tougher. The rule in record contracts and their negotiations is that whatever the record company might give you with one hand, it takes away with the other. Record contracts are routinely negotiated. A slight change in wording here and there can have a huge financial impact for a band, and its label.

Record deals are certainly much more complex than I can summarize in a one-size-fits-all article. However, I hope this column will give you an overview of how record contracts operate. The best advice I can offer is to have someone knowledgeable about record contracts negotiate the agreement for you, or at a minimum tell you what you should ask for and avoid.

OK, you've been handed a record contract, now what? If you are like most bands that get the opportunity of being offered a contract from a label, you immediately celebrate, thinking you've "made it". After the high spirits and hangovers subside, you review the contract to evaluate your offer and position. At this point, many musicians realize that recording contracts, and all the important points they cover, are written in legalese- a style that defies comprehension and common language. Sentences run on for several lines, with little if any punctuation. There are terms and words, which you have never encountered. Finally, the sentences constantly make reference to other provisions on other pages in the contract ("pursuant to Section 7(B) 3(c)(iv)"). Where do you begin? The first place is with someone familiar with record contracts. This is usually an entertainment attorney, though not all of the time.

One of the first places musicians compare contracts is, "Which has the bigger advance?" This analysis is not always the best to make in comparing one deal to another. What is a good advance? Again, this depends on the label and the circumstances of your signing. Generally speaking, the larger the label, the more of an advance you should expect. Additionally, the more interest in the band, the higher the bidding gets. If two or more labels are making offers, it becomes a bidding war. It is all about advantage, my friends. Is a large advance always the best? You might be surprised about how the seemingly obvious answer might not be the best choice. Remember, the more money you get as an advance, the more money you have to pay back in recoupment through your share of royalties. If you get a big advance and your album does not do well, a label may be quick to drop you and cut its losses. On the other hand, many artists who sign record contracts never reach recoupment. That means the advance may be the only money they ever get from the label. There is no right or wrong answer to the size of the advance. It depends on whether you plan to be a "one hit wonder" or are looking for consistent longevity in your recording and performing career.

In the past, record labels would sign a band, write a check to the band as an advance, and then pay additional monies to record and promote the album. Some bands abused this and went way over-budget during recording. To remedy this abuse, record companies developed the "recording fund." This is the recording budget and the artist's advance, all rolled into one. The contract provides the artist or band one lump sum to record their album, and if they stay under-budget, anything left over is their advance. If bands waste time in the studio, or spend excessively on the production, there is less money for them as their advance. This practice is an efficient and reasonable incentive for bands to be professional in the studio and during production.