BEWARE OF THE DEAL MEMO – What To Consider Before Signing With A Record Label

Ian Billen Explains The Catastrophic Blunder of Signing A Deal Memo

A deal memo is a promissory note or pre-contract that is legally binding to an artist. In this sense, the term binding means “legally obligated.” It is imperative that artists understand that a deal memo is actually a legal document, not simply a casual agreement stating that an artist will meet and talk with a record company. The deal memo states that an artist or act is required to sign a future recording contract with a particular label (the label being the record company for which the person asking you to sign the deal memo represents).

The deal memo is simply one contract stating that an act or artist will sign a more detailed contract in the future. Deal memos state that artist cannot sign or record with any other company/label without first signing with the record label in question.

Q: Who normally introduces these deal memos to artists?
A: A & R representatives and/or executives that work for a label.

With this said, let me explain:

An A & R representative works for a record company. Their job is to ultimately introduce the artist to the label in hopes of having the artist record under the label’s name (more on exactly what A & R representatives do is below). I want to make clear that not every A & R representative is necessarily a con-person nor is every A & R representative an evil or completely cunning individual. Often A & R representatives seriously believe the artist and the label in which they represent will be great for each other. There have been countless situations in which the A & R representative had an artist sign a deal memo, ultimately introducing the artist to the label in which everyone was eventually satisfied with the result. A & R executives have joined artists with labels in which millions of dollars were made on both sides. While this scenario is not always the most common, it is certainly not unheard of. However, just as there are many situations in which the artist was very satisfied with how they were treated and the financial outcome, there are also situations where artists signed deal memos in which they were then obligated or in too deep legally to sign with another organization. Many times the label at hand was not offering something they felt was financially lucrative or in their best interest. After a specific signing stage or after signing said documentation, backing out was no longer an option (because the artist was then legally obligated). At times, the A & R person can conveniently get lost in the shuffle or pushed aside after the contract between the artist and the record company is in place. In other scenarios, the A & R representative will continue the relationship with the artist or band, keeping tabs on them in the recording process while adding his or her creative input to the project on behalf of the record company. It all depends on the situation, the organization, and people involved. Keep all this in mind as you read on.

A & R representatives discover artists. That is the first part of their job. The second part of their job is to join/link the artist they’ve scouted or discovered with the record company in hopes of getting the artist signed (“signed” in the music industry means working for or being under contract of a company). A & R representatives venture out to clubs, bars, live shows, and events scouting talent (incidentally, A & R representatives also investigate and review talent online). Finally, the A & R person introduces the talent to the record company in hopes of getting the artist signed. A & R representatives may flash a deal memo on the spot or wherever they feel they can hook the act. At times, the A & R representative does not describe or refer to the document as to what it really is. Many times A & R representatives do not explain the document’s enclosed obligation. An A & R representative has been known to flash this documentation to the artist, alluding that it is merely an appointment agreement for the artist to meet and talk with a label. The legality of the document and its full obligation is elegantly passed over. A & R representatives and lower level label executives have been known to act as though this agreement is simply a meeting note in stating that the artist agrees to meet and talk with the label. Understand that documents signed at these early negotiation stage are often (however, not in every situation) much more than that.

These are three things to keep in mind when meeting with anyone from a record label and before signing a contract with a label. Sign absolutely nothing… not a single stroke of the pen until:

1. You are represented legally. Proper legal representation means hiring an entertainment lawyer/lawyers. The lawyer should definitely be a well-rounded entertainment lawyer by trade that is looking out for your best interest. Yes…entertainment lawyers are generally expensive to hire on. However, they are crucial (many decent entertainment lawyers will work on a percentage basis of the negotiated contract, requiring no fee up front).

2. Do not sign anything until you (and the rest of the group) are willing to invest serious time and effort in recording for the label. Thoroughly discuss all major aspects of the contract with fellow band mates as well as the entertainment lawyer. Make sure you feel you’re getting a fair shake and that band mates are willing to devote the required time and effort.

3. Lastly, no matter how great the recording contract seems, the artist and people close to the artist should take at least one week to consider the contract. Discuss the contract with immediate loved ones and family who will be directly affected by the decision to sign. There very well may be significant loss of quality time involved or even a necessary relocation. Your willingness to participate and understand what the contract will require of you and realizing that it could strongly affect people around you and your personal relationships is key. The most hopeful scenario is that affected family members, especially your spouse, will be supportive of this decision throughout the contract period.

– Ian Billen, Album Production Works