Launching Your Record Label – Your Legal Checklist

Starting a record label is a great way to promote your sound, attract like-minded artists and build an eco-system around the music you love. But, first and foremost, they are businesses. Therefore, it is important you treat your label as such from the off to avoid disputes and complications later down the line.

From a legal standpoint, there are a few things we would consider essential to any new record label and would strongly recommend are arranged before you launch. Let’s explore each of them.

Select A Suitable Legal Structure

Determining the legal structure for your record label is a foundational decision with implications for liability, taxation, and operational dynamics. However, this is something we see regularly overlooked by new labels. We often see friends club together to form record labels without a thought as to how assets and liabilities will be legally held between them or decisions made.

The most common legal structures we see new record labels take are as follows:

• Sole Trader: This is where one person carries on the business alone – you are the only individual running the label, signing agreements and receiving profits. Sole traders do not have a separate legal existence from their business and are personally responsible for the business. By running the label alone you would be personally responsible for its debts and would sign agreements in your personal capacity.
• Partnership: This is where two or more persons have come together to carry on a business in common with a view to making a profit. For example, you and your business partners or friends. No written agreement is necessary, but it is strongly advised. Business assets and debts are assumed to be jointly owned by the partners and decisions have to be made jointly. You need the agreement of all of the partners to do anything with assets owned by the partnership, even if one of the partners has since left the label and is no longer partaking. As you can imagine, this can cause serious problems in the future if the partners fall out and therefore a written agreement is strongly advised, since a written agreement can deviate from the default rules of partnerships.
• Private Limited Company: Private limited companies are considered their own legal persons, separate from the individual(s) behind them. The biggest benefit of this is that assets and liabilities are held by the company and not personal to the individual(s) behind it. Meaning the owners of the company can come and go without affecting the business. The owner’s personal assets are also not at risk should the label accrue and owe debts. However, the biggest drawback is that there are a number of administrative requirements, such as filing annual accounts, which can be an administrative burden to individuals who are new to running a business and company law.

At Briffa, we can assist with drawing up record label partnership agreements. We also have company and corporate law colleagues at other firms whom we can refer you to should you need advice on setting up a limited company.

Trade Mark Your Label’s Name and Logo

Safeguarding your label’s identity is pivotal to establishing your label’s brand identity and precluding unauthorised usage of it from the same or similar brands.

You can register your label’s brand name and logo(s) as trade marks. We recommend you prioritise registering your record label’s name before you begin trading to scope out if there are any potentially similar pre-existing mark holders out there. Be aware that pre-existing mark holders can oppose and potentially block your trade mark application. If you have already begun trading, they can bring trade mark infringement proceedings against you.

When registering a trade mark, record labels should apply across a selection of classes to cover their core music services, plus any ancillary goods or services they are likely to offer, such as branded merchandise.

It’s critical to register your marks as soon as possible, ideally before you launch. This will help you avoid investing significant costs in developing your brand identity only to find you are unable to use it as an existing similar mark holder has prior rights.

Precedent Freelancer Agreement

Record labels frequently engage freelancers such as producers, engineers, graphic designers, photographers and videographers to provide services to them. To avoid misunderstandings and disputes, you should have and use a precedent freelancer agreement with the freelancers you engage. This should set out:

• Scope of Work: Clearly define the responsibilities and tasks of the freelancer.
• Compensation: Specify payment structure, deadlines, and potential supplementary expenses.
• Intellectual Property Ownership: Transfer ownership of intellectual property rights for the produced work from the freelancer to the label. WARNING: without a written agreement confirming the transfer, intellectual property will not transfer, even if you have paid the freelancer.
• Confidentiality and Non-Disclosure: Incorporate clauses to safeguard sensitive information.
• Timelines and Deliverables: Establish deadlines for project completion and submission of deliverables.
• Termination: Outline conditions under which either party can terminate the agreement.

We can draft a precedent freelancer agreement for your label which you can repurpose with each and every freelancer you enlist.

Precedent Record Deal

A meticulously composed record deal constitutes the bedrock of your relationships with artists. This contract outlines terms governing the provision of music to your label and the corresponding compensation. Music law and rights are complex so it is critical you have this to ensure the label is entitled to what you intend it to be entitled to.

Key facets of a record deal comprise:

• Duration and Scope: Defining the agreement’s timeframe and coverage of albums or tracks. You might prefer to sign singles. Alternatively, you might sign artists on a more long-term basis, covering a number of EPs or albums.
• Rights: Precisely delineating the rights transferred to the label, encompassing distribution, promotion, and digital rights.
• Remuneration: Elaborating on the payment structure, encompassing advances (if applicable), royalties, and recoupment.
• Album/EP/Track Submission and Approval: Establishing expectations regarding music quality, submission procedures, and acceptance criteria.
• Marketing and Promotion: Describing the label’s promotional strategies and the allocation of marketing expenses.
• Master Ownership: Addressing ownership of master recordings and mechanisms for reversion of rights to the artist after a designated period (if you so wish to include such reversion rights).

We strongly advise you not to attempt to draft this yourself nor use pre-existing examples or draft agreements you have found on the internet. In our experience, these are rarely suitable to your specific needs and tend to include quirks that aren’t appropriate in your circumstances or even your jurisdiction.

Enlisting the expertise of a music lawyer to draft your precedent record deal should be your absolute priority given the precedent will form the backbone of your business. We can draft industry standard precedent record deals that align with your label’s ethos and practices. Get in touch if you would like to discuss your record label with one of our team. We offer free consultations, just email us on info@briffa.com or fill out the form below.