You want to ensure the person investing in your music is someone you trust, shares your definition of success, and is someone you genuinely want to take with you on your journey to… wherever you want to go.
By Byron Pascoe – Illustration by Don Dimanlig
Disclaimer: This article does not provide advice regarding how to find an investor for your music career!
However, reading this article may assist in structuring the relationship between you and your investor. Some musicians looking to raise money to record and promote a new EP turn to online platforms, from PledgeMusic to Kickstarter. These platforms are vehicles to obtain nancialsupportfromfans, friends, and family.
Others are lucky enough to have someone who wants to invest money in their next project. A wealthy cousin. A super fan. A wealthy cousin who is a super fan. Either way, they’re investing in you because they want you to succeed and/or because they believe investing in your music will provide them a worthwhile return on their investment.
A music agreement provides the details of the arrangement between an investor paying money and a musician receiving the funds. However, before getting into an investment agreement, ensure you want to enter into a professional relationship with the person or people who want to invest.
Similar to a musician’s relationship with her band, manager, label, and/or agent, the relationship with an investor is a marriage, of sorts. You want to ensure the person investing in your music is someone you trust, shares your definition of success, and is someone you genuinely want to take with you on your journey to… wherever you want to go.
Is the investment being made in the musician generally, or the next EP, a tour, or something else? The investment can be made broadly or for a narrow purpose. Generally, if the investment is being made in the EP, the investor is compensated specifically from the EP. If an investment is being made in the artist broadly, the compensation owed to the investor is much more far reaching.
If the investment is being made for an EP, ensure you’re on the same page with the investor regarding what will be on the EP. Does the investor want a certain song included?
The Masters and Decision-Making
If the investment is being made in an album, who owns the masters? Who makes business and creative decisions regarding the album, including all decisions regarding its exploitation? Does one person have the power and control to make all music decisions? If so, to what extent must this person consult with the other?
Roles and Responsibilities
If the investor is expecting the musician to do certain tasks with respect to the music, from arranging a team to writing and performing songs, ensure there’s clarity in the agreement about each person’s role. Who’s engaging and paying the producer, and session musicians? Who’s managing the artwork, website, pressing, distribution, and the release show?
If you expect the investor to pay for expenses directly, or through you, ensure this obligation is clear in the agreement. It may be best to set out a budget from the outset that the investor is con rming will be fully financially supported. When is the money being paid?
What costs should be included in the budget? Production costs may include producing, arranging, mixing, mastering, studio costs, and/or session musicians. Promotion and distribution expenses may include artwork, digital and physical distribution costs, publicity, radio promotion, merchandise and/or a release show. What’s missing? Paying you! Why should everyone but you get paid?
One more thing. If the investor is paying for your album budget, try to include a legal expenses for someone to draft or review the investment agreement.
Is the investor expecting you to following a timeline from creation of the work to its exploitation? If so, include a timeline of upcoming milestones in the agreement.
Paying the Investment
How are you aiming to get the investor repaid his investment? Does all or part of the money from sales go to the investor, either to get his investment returned and/ or to make a pro t? Are all forms of monetization from the music used to pay back the investor? Sales of the relevant music seems reasonable. What about your writer royalties? How often is the investor given statements and paid?
Thanking the Investor
What credit is the investor given on the album?. Ideally the investment will give you more time to focus on the music. As such, if you get an interested investor, invest in the time to ensure the partner is right, and terms of the deal are reasonable too.
This article is for general informational purposes only and is not to be construed as legal advice. Please contact a lawyer if you wish to apply these concepts to your specific circumstances.
This article is part of our July 2017 issue 15