How does a digital music agreement or contract look?

Digital Music Distribution Agreement is a legal document, which is signed by the artist and handed over to the music distributor or aggregator, who enters into a legal binding with artists or record labels to put the final product of their music on digital platforms or other streaming websites in exchange of a flat fees or a proportion of their earnings, which is also mentioned in the contract.

A contract mandates the digital music store to pay the artist, or record labels, royalties and fees based on a sale of a particular download or out of the income engendered from streaming services for the music. Therefore, it becomes immensely important to know about such music distribution contracts to avoid frauds and at the same time get a guaranteed income for your work, so that you can stop worrying about all the other things and focus on the one thing that matters the most – producing good quality music.

Key elements covered under a basic digital music distribution agreement include – “Term” of the agreement from the execution date (including any extensions, if applicable), the “Material” to be provided, that is the songs or the album that is to be provided by the artist – each detail specifically mentioned to avoid confusion, “Method of distribution” – like streaming services or downloading rights or both, “Compensation” that indicates if the distributor is charging a cut from royalties or a fixed fee or a combination of both (important detail to note), and many more such declarations to be made by both parties need to be mentioned in the agreement.

Some other elements in the agreement that need careful deliberations include transferring of rights or ownership of the song. The artist most often gives exclusive right to the distributor to manufacture, reproduce, distribute and sell the artist’s work in a territory. On top of the ‘core’ rights, music distributors now usually demand to retain rights that may allow distributors to make a sale of songs to movies and TV shows. Distributors often request such rights to allow themselves of finding additional alternatives of earning incomes from a single source – generating extra revenue from existing albums.

When an artist decides to hand over the music he created with immense passion and hard work, he is often worried that it might be misused or modified against his/her liking. A music agreement, thereby, is created to protect the interests of both, the artist and the digital music distributor, and allows them to have a peaceful dealing and thereafter, a prolonged relationship.