A Contract Can’t Really Be “Perpetual”-Can It?
Every music contract contains a few key provisions that can have a big impact on your career. In this series, we break down one concept at a time, in simple terms, so you can understand why it matters.
Consider any kind of music contract. The terms seem reasonable. The payment seems fair. The relationship is a good fit.
But then you see the word “perpetual.” That doesn’t really mean the contract lasts forever, does it?
Perpetual Outlasts Your Career
Some contracts in the music industry are perpetual, but most aren’t. For instance, if you have a catalog of music and you want to sell it, you can count on that transfer being perpetual/forever. But if you sign with a manager, booking agent, label, distributor, etc., the contract term isn’t going to be perpetual (if it is, then run).
But the fact that a contract term isn’t perpetual doesn’t mean there aren’t rights conveyed perpetually. Simply put, you can sign a contract with someone that only lasts a few years, but the rights you give them can outlast the contract. Those are two very different things.
That doesn't necessarily make the agreement bad. It does mean you should understand exactly what is lasting forever.
You Have To Ask the Right Questions
Asking how long the agreement lasts is important. But asking how long you will lose your rights is just as important. You can’t assume that everything reverts to you when the terms ends. It doesn’t always work that way.
For example, a recording contract may end after three years while allowing the other party to continue exploiting recordings created during those three years forever. Most artists understand that. Or a manager might sign on with you for five years, but the right to collect income from what that manager helped you build can sometimes last perpetually (although that is less the trend now than it used to be—it still happens, but it is less common).
If you don't separate the term of the agreement from the duration of the rights, it's easy to misunderstand what you're signing.
Forever Isn't Always Bad
There are situations where perpetual rights make business sense. If a record label pays to create, market, and distribute a master recording, it has a right to expect long-term rights in that recording. Likewise, if someone purchases a catalog outright, perpetual ownership is generally part of the bargain.
The issue isn't whether perpetual rights are fair. The issue is whether you understand why they're there and what you're receiving in exchange.
What Exactly Is Lasting Forever?
Don’t assume that just because the agreement ends in 3 or 4 years any impact on your rights will end, too. That is frequently not the case. Before signing any agreement, look past the term and identify whether any rights extend beyond the term, particularly if those rights are perpetual. If so, identify what that transfer applies to, and exactly what you are receiving in exchange.
The Reality
Some artists see the word "perpetual" and stop reading, thinking they have a bad contract. Others ignore it completely.
Neither approach is helpful.
The word itself isn't the problem. Misunderstanding how it applies to you is.
This Week's Takeaway
Don’t assume that any impact a contract will have on your career will end when the term expires. Look for any rights that extend beyond the term, particularly where the other side is reserving “perpetual” rights. When you see the word "perpetual,” don’t assume you have a bad deal. Just understand that what you are getting ready to do will result in a permanent loss of some kind of right. And then make sure the deal you are getting ready to make is worth giving up that right.
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Every week, Mind Your Business breaks down one music industry agreement, deal point, or artist mistake in plain English.
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