by Ben McLane, Esq.
Video is a subject that is synonymous with the music business today. Essentially, the purpose of a video is to promote a record and to help build an image for an artist, not to make an artist money. However, videos can make money for an artist indirectly because a video can increase record sales. This article will discuss video as it pertains to unsigned and signed artists.
If an artist is unsigned, a video is probably not the best use of resources unless (1) the artist has a great song along with a great visual or story; (2) the artist can have the video broadcast to a wide audience; and, (3) the artist can afford to produce a professional video. Although an artist can get utilize a video to get bookings, interest a manager, and perhaps get a record deal, the main reason to make a video should be to promote a record. The best exposure for a video is of course MTV. However, getting on MTV is next to impossible without being on a reputable label. It is possible to get on local cable programs with a well produced video. Additionally, many syndicated video and talk shows might consider a video by an unsigned artist.
If an artist is signed to a label, a video usually will be produced to help promote the release. A video has two aspects: sales tool (i.e. MTV) and potential product (i.e., home video sales). Although a video is mostly a promotional tool, virtually all record contracts require that the artist grant video rights to the label. For contract purposes, a video is treated like a record. Therefore, the concept of recoupment comes into play. Recoupment means that the label will have the right to recoup the costs of the video, usually from all sources of income that the artist might make. As with records, the label will usually initially pay the production costs of the video. There is a strong argument that since videos serve to promote a record, not to generate sales of the actual video, only a part of the costs of the video should be recouped from the artist's royalties. Thus, most labels only require recoupment of 50% of the label's expense for production costs. That brings us to another important concept called cross-collateralization. This is when, as stated above, the label attempts to recoup its expenses from all sources (i.e., record royalties, publishing, video sales, etc.). If possible, the artist should try to limit the sources from which the label can subtract.
At first glance, it would seem that a signed artist would want to demand a guarantee of a as many videos as possible in the record contract. However, the artist must keep in mind that a label will usually spend an average of $70,000.00 on a video. Since half of these costs are recoupable from the artist's royalties, a promotional video might not always be the wisest choice. The key is to try and keep the budget low. An artist on a label will also be concerned with creative control. Yet, unless an artist is quite successful, the label generally controls the content and the concept of the video. Finally, it is not reasonable to expect to make a profit from a video. There are rare exceptions (Madonna and Michael Jackson come to mind), but again the reason for making a video is to hype a record.
In conclusion, if an artist is unsigned, in most instances a video is not the most practical way to spend money because chances are it will not be seen. If an artist is signed, although the label will probably insist on a video, the artist should strive to get the budget low so the artist will not owe back as much money to the label.Copyright 1998, Ben McLane
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