There is a persistent narrative in South Africa of famous, bestselling musicians “dying as paupers”. A prime example is Mahlathini, the lead vocalist who performed with the Mahotella Queens, a 1960s mbaqanga group that attracted global recognition.
Built into this narrative is a suspicion that record labels and producers take advantage of musicians, enriching themselves at the expense of the artist.
Despite this, many musicians are eager to sign a contract with a recording label as soon as the option opens up. Most view a record deal as a sign that they have made it in the industry and believe that a contract will guarantee continuous income.
My research into contracts and patronage in the South African music industry highlights how important it is for artists to understand how the industry works – at the formal, legal level of contracts, as well as at the more hazy and unofficial level of favours and gifts.
Know your contract
Until recently, there were two main types of contracts available to artists: recording agreements and licensing agreements. The main difference between them is in the ownership of the product and in the royalty share.
With a recording deal, the music company pays for the recording-related costs and from then on owns the product. The artist receives royalties on record sales and (nowadays) on radio play. But it’s common that the artist gets only a small amount or no recording royalties because the company first deducts various production costs.
A licensing deal means that the artist produces her or his record. They then authorise the music company to manufacture and distribute it. The artist gets a larger royalty share than in the recording deal and eventually holds the ownership for their record. So, in terms of ownership and incomes, licensing deal is often a better option.
Recently music companies have increasingly moved to what are called 360 degree deals. In these contracts, the company promises to enhance all aspects of an artist’s career development. In return, the music company is entitled to a share of all the artist’s income streams. These include publishing, booking, touring and ticket incomes, TV and video appearances, merchandise sales, endorsement deals and management fees – in addition to the usual record sales.
Whatever the type of the contract, the more established and popular the artist, the better deal she or he can negotiate. That is why, when it comes to signing a contract, timing is important.
A relatively new and unknown musician doesn’t have much bargaining power in negotiating the conditions of their contract. For this reason, music industry advocate Nick Matzukis encourages emerging musicians to consider initially releasing their music on their own – or with the use of crowd-funding. The point is that they should prove their popularity before entering into negotiations with music companies.
Whether self-releasing or signing a contract, an artist is bound to fare better when armed with as much knowledge as possible about the music business and laws. This can be learnt through books, the internet or courses. And because contracts are complicated legal documents, it’s also advisable to consult an entertainment lawyer or advisor before signing one.
Be weary of favours and gifts
Beyond the complexities and pitfalls of the legalistic world of contracts, there are also some hazy practices that I call “patronage practices”. They can replace contracts or they can work alongside contracts.
Whereas contracts very specifically demarcate the shares of the diverse proceeds for each party, in a patronage relationship proceeds are negotiated through a more inexact give-and-take and they are often rewards in kind rather than money.
The record producer can, for instance, give food, accommodation or instruments, and some free records to the artist. For a famous artist, a flashy car and a fancy house can be given.
These arrangements seem casually negotiated rather than carefully calculated. And they may feel convenient for a time. They appear as flexible arrangements entered into by people who view each other as creative partners rather than legal subjects. This is both the beauty and the danger of patronage arrangements.
The danger for musicians is that they may understand the received items as gifts or compensation for their creative accomplishments. But the company usually views them differently. It considers them debts or “advances” that will be deducted from the artist’s ensuing royalties. Often the artist would not know how much or which expenses are being deducted from the royalties and this eventually leads to confusion and irritation.
When the situation turns into an open dispute, the contracts are pulled out. These tend to protect the company because companies thoroughly consider their contents in advance.
Artists should therefore do likewise and not forget that the relationship is underpinned by a legal agreement.
The advice for a musician who wants to avoid becoming another line in the narrative of famous but impoverished artists is to be very careful with the contracts they sign, to acquire as much knowledge as possible about the music business and contracts, to be very active in promoting themselves even when signed, and to be weary of patronage arrangements.