Goldman Sachs forecasts music revenue will more than double between 2019 and 2030. The growth of streaming is soaring, while physical and downloadable music sales fall. Musical artists take home only a small portion of industry profits on streaming: Only 17 percent of the money a customer spends on a streaming service goes to the artist. As a result, many musical artists are struggling financially. In one survey, only 12 percent of musicians reported that they made 80 to 100 percent of their income from music-related work.
Contracts are the key way musical artists enter business relationships. Musicians may need to sign more than a dozen contracts for management, recording, licensing, distribution, and more, and they can’t afford to sign a bad contract. Recently, recording companies have asked musicians to sign 360-degree contracts. While traditional recording contracts focused exclusively on record sales, 360-degree contracts allow companies to take a percentage of a band’s profits for all activities, including merchandise, television appearances, and ringtone sales. These contracts can benefit artists in some ways. For example, they may encourage labels to invest in an artist’s entire career instead of focusing solely on record sales. But 360-degree contracts can come with big downsides. For instance, they may leave musical artists with limited opportunities to make independent revenue.
Successful musical artists such as Kanye West are arguing for more fairness in the music industry. Musical artists must understand and negotiate fair contracts. AI-powered contract-review software can help musicians and their attorneys find key provisions in contracts and compare them to industry standards.