3 Common Record Label Contract Scenarios:

1. Perpetual Ownership: Some labels own the masters indefinitely. While the contract term might end, the label retains administration rights over the recordings.

2. Auto-Renewal: Contracts may automatically renew if both parties are satisfied. This could continue monthly, quarterly, or yearly, with a notice period for termination.

3. Masters Return: Artists may reclaim their masters at the end of the term to self-release or distribute through other channels.
   

Understanding Your Contract:

• The simplest way to determine where you stand is to read your contract. It outlines which scenario applies and provides clarity on the terms.

• Or if you are new, be sure to discuss all of these scenarios with your team and your lawyer before drafting a contract template.
  

Key Considerations:

For Artists:

• Be proactive and start the process well before the contract's end.

• Don't assume labels have reminders for contract expiration.

For Record Labels:

• Consider whether the contract should auto-renew for smoother transitions.

• Be gracious and generous in helping artists through this complicated change.
  

Addressing Common Record Label Questions:

How long does the contract go for?

• I’ve asked a few labels over the years, and a typical licensing agreement lasts, on average between 5 to 7 years. Of course, there are much shorter, and much longer contracts out there… do what’s fair for both you and the artist.

Can a contract renew itself?

• Unless specified otherwise, contracts should be assumed to end,with the responsibility on the label to remove music. Moving forward it can be a good idea to put a clause in your contracts that allow the contracts to auto-renew for 90 day if the artist hasn’t indicated that they wish to depart.

What happens to the music on streaming services?

• Artists should open an account with a digital distributor and upload their version of the release (which will temporarily show a duplicate of the release). Once there are duplicates of the release on the DSPs, it is safe for the record label to take down their version of the release without the risk of losing stream counts or playlist inclusions. 

What happens with the metadata?

• It’s nice if record labels provide artists with release metadata for a seamless transition. Metadata can include things like artwork, release dates, ISRCs, barcodes, lyrics, etc.

What happens with the extra physical inventory?

• It depends on your contract, but generally labels have the right to sell off remaining inventory while continuing to pay the artist their due-royalties on sales. There may also be a fair scenarios where the artist buys back the excess records at cost or at the label’s wholesale price.
  

Conclusion:

Navigating the end of a record label contract can be complex but manageable with clear communication and understanding of contractual obligations. Remember, it all boils down to the contract.

So, whether you're an artist or a label, ensure your agreements reflect your expectations and protect your interests.