Contract Fundamentals: Successful Negotiation

For some people, the ability to negotiate seems to come naturally. For everyone else, negotiation is a skill that can be learned and developed with practice. Music creators who are just starting down their career paths and may not yet have someone to negotiate for them (like music publishers, agents, managers, or lawyers) can effectively represent their own interests if they have an understanding of how agreements are initiated, worked out, and concluded, and how to negotiate strategically.

The Standard Phases of Negotiation

Though music creators may enter into different types of deals over the course of their careers—depending on who the other party is and why they wish to engage with the creator—the phases of how those agreements are negotiated generally remain consistent. They are as follows:

1. Introduction & Initial Offer

Usually taking place over the phone or via email, the introductory exchange between the two parties gives them an opportunity to learn about each other, understand their needs and goals, and evaluate whether they can establish a relationship of mutual trust.

Further, as part of this interaction, an offer comprising the most important points of the deal will usually be presented to the music creator. These offers commonly include proposed payments, dates and deadlines, crediting, and the rights and/or royalties the other party may (or may not) want the creator to license, assign, and/or waive.

Alternatively, in some instances, a client or licensee may ask a creator to provide a quotation for their services based on the information they’ve been given about a project.

2. Counter-Offers from Both Parties (As Warranted)

If an offer is straightforward (e.g., a simple commission contract or a standard synchronization agreement) and the music creator believes it to be fair, this phase may not be necessary. But it’s likely that there will be at least one point of an initial offer the creator wishes to negotiate. Their counter-offer may be presented immediately—even as part of the introductory phone call, if applicable—or they may take some time to go over the offer, potentially running it by an agent, manager, or lawyer, before presenting a counter-offer.

At that point, the other party may accept the creator’s counter-offer or present another counter-offer. And this will continue until one side accepts, or decides that a deal cannot be reached and abandons the negotiation.

3. Agreement on the Main Points of the Deal

To ensure that both sides are committed to the deal—and, if necessary, to allow work to proceed on the project before a full agreement is established—the key elements may be put in writing via a deal memo and/or an email. This short-form contract will also note that the parties have pledged to establish a comprehensive agreement at a later date. The music creator or their representative will then sign and return the memo to the other party, and/or reply to the email with their approval.

4. Drafting of Long-Form Agreement

When it comes time to put together the full contract, if the client, licensee, or partner entering into the agreement with the music creator is well established, they’ll usually provide the first draft. Since they’re constantly engaging with creators, they’ll have contract templates at the ready, and lawyers to customize or vet them based on the specific details of the project or partnership.

Occasionally, however, the creator may be asked to provide a draft of the long-form agreement themselves (e.g., if they’re being hired by a newly established independent production company). This can be advantageous because it allows them to set equitable and favourable terms at the outset of this part of the negotiation. Indeed, any agreement is likely to skew in favour of the party who puts it forward.

The Screen Composers Guild of Canada (SCGC) provides model production contracts and sync agreements for creators to use. And the Canadian League of Composers (CLC) provides a model commissioning contract.

5. Fine-Tuning & Execution of Final Agreement

After one party has presented an initial draft of the full contract to the other party, a back-and-forth negotiation process (similar to step 2) takes place. However, in this instance, since the most important details of the agreement have already been established, it’s the finer points that are worked out (e.g., accounting and audits; representations, indemnities, and warranties; termination; etc.).

If both sides are able to settle on all the particulars of the long-form agreement, once the necessary revisions are made to the document, it is signed and becomes legally binding. If, for some reason, however, the parties cannot agree on a final version of the contract, the deal will fall through and they’ll go their separate ways.

The Length of Negotiation

From beginning to end, the length of time it takes to negotiate an agreement can range from a few days to a few months, depending on a variety of factors including the following:

• How standard the contract is
• How many details there are to iron out
• How flexible the parties are
• How many levels of approval there are on both sides
• Whether the negotiation is time sensitive

Deal memos reached in advance of sync agreements, for example, usually need to be concluded promptly since music supervisors working for production companies are often under very tight time constraints (particularly when it comes to TV shows). For this reason, they’re usually standard and uncomplicated, making them quick to review and respond to. In fact, sometimes, if it takes more than two or three days for the owner of the musical work to get back to the supervisor about the deal, the supervisor may need to move on and find another work to synchronize.

As an example on the opposite end of the spectrum, production contracts/composer agreements commonly take three or four weeks to reach a deal memo, and ironing out a long-form agreement may stretch on for months. Because these deals concern the creation of original music, not the use of existing works, there are many important details to negotiate and formalize—including whether any portion of the rights, royalties, and/or other back-end revenue will be shared with the client. Further, since the legal language in these agreements can be complex, creators often rely on their representatives to navigate and decode it for them. And all of this takes time.

Negotiation Strategies

To ensure they arrive at a fair deal, music creators or their representatives should keep the following negotiation “best practices” and strategies in mind when sitting down at the bargaining table.

Prepare Thoroughly

Before entering into any negotiation, it’s important for music creators to do their homework in a number of areas.

By thoroughly researching the other party in advance, the music creator will gain a helpful understanding of how the client, licensee, or potential partner operates and what their expectations are likely to be.

For example, when approached by a production company about a project, the music creator should examine the company’s past creative output, whether they have a reputation for respectful collaboration or a history of conflict, and which creators they’ve hired previously. It may even be useful to speak directly to those other creators to learn of their experiences with the client. And if there are a number of parties involved in the negotiations on the client side, it’s helpful to determine the professional and personal relationships between them all (e.g., How do they know each other? How do they work together? Who are the key decision makers?).

Creators should also try to find out as much about the project they’re being offered as they can (e.g., what the overall budget is, what the music budget is, which broadcaster or platform it’s for, whether there’s a distributor attached, whether it’s a co-production, and, if so, who the other producers are, etc.). They should feel free to ask the company as many questions as they need to.

It’s likewise important for music creators to understand their own needs and wants at the outset of negotiations. To this end, there are many questions they should ask themselves:

• Are they comfortable being associated with this project and/or the party engaging them?
• Who will benefit more from this collaboration—the creator, the other party, or neither?
• Does the creator have any leverage (e.g., do they offer something unique, are they in demand, has the other party painted themselves into a corner timing-wise, etc.)?
• Is there a possibility that the collaboration may result in more work down the road?
• What do they consider to be an acceptable range for the upfront fee for this project or partnership?
• If offered a lower fee, are they excited enough about the opportunity to work on the project or with the other party to justify accepting it?
• Should they ask for additional compensation to cover certain expenses (e.g., the hiring of performers, union fees, travel and accommodation, etc.)?
• Is the timeline of the project or term of the agreement realistic and acceptable?
• Do they wish to retain full or partial ownership of the copyright in their musical work (and sound recording, if applicable)?
• If they’re willing to assign some or all of the copyright to the other party, how should this be reflected in the fee?
• What other revenue streams generated by the use of the copyright (e.g., royalties, soundtrack sales, etc.) are they willing to share with the other party, and how much of each?

When the deal pertains to a specific musical work (e.g., a sync agreement), the owner also needs to come to the negotiation ready with the information the other party will need to quickly determine whether the work can be used legally, and how the proper permissions may be secured. This includes previous licensing details (i.e., if any licences are still valid, and whether they’re exclusive or non-exclusive), a list of all the owners (i.e., all writers, publishers, and anyone else who may own a portion of the copyright), and how the royalties should be divided among them. 

Name Your Price

Where an upfront fee is part of an agreement, there are advantages and disadvantages to throwing out the first number in a negotiation. 

On one hand, if the creator’s side doesn’t know the budget the other party is working with, they run the risk of either asking for too much money and potentially removing themselves from contention, or asking for too little and selling themselves short.

On the other hand, however, going first allows the creator to frame the compensation discussion. Knowing that the other party is almost certainly going to try to negotiate a lower fee than what’s proposed, the creator can quote a figure higher than what they’re willing to accept, with the expectation that the number both sides ultimately settle on will likely be fair. In other words, it’s always a good idea to aim high so you can give yourself room to move while still staying within a range you consider fair.

Sometimes, the other party will share their music budget, or the fee they have in mind, as a way to kick off the discussion (and it’s worth asking them what that number is if they don’t—although they may not be willing to say). This will immediately reveal how valuable they believe the music is to their project. 

From there, the creator’s side can determine whether they can work within that budget. If the compensation is a little lower than what the creator is willing or able to accept, it’s best to ask if there’s any “wiggle room” and name a realistic “floor” amount. This clear and direct approach is common, and negotiators respect it. 

And even if the other party isn’t able to increase the fee, the creator may be able to suggest some changes to the terms of the agreement that will allow them to accept the lower amount. For example, they could request more resources or time to do the job, or they could ask for in-kind compensation of some kind (e.g., if a client makes videos, perhaps they’d be willing to shoot a short “making of” documentary showcasing the music creator’s skills).

Ideally, at the end of the discussion, both parties will feel satisfied with the outcome and not as though they were cheated or gave up too much. 

Read the Other Party

Though many of the best negotiators have perfected an inscrutable “poker face,” there are still potentially a number of ways to tell when the “line” at which they’ll walk away is being approached.

There may be a shift in the tone of their voice or writing, or a change in their body language that suggests frustration or impatience. Moreover, they may begin to dispense with pleasantries or attempts at humour and become more direct.

Sometimes, these are simply employed as pressure tactics, and music creators would do well to study them so they can be easily identified. Once it’s clear that these are cards being played, creators can decide whether or not to stay at the table. Often, these combative strategies can be defused when they’re named or ignored.

Usually, the other party will clearly indicate when they’ve reached their limit. They may not be able to concede on certain points, but they’ll often express hope that the creator is still open to accepting the agreement as it stands. They may also use terms like “red line,” “deal breaker,” “non-negotiable,” “final offer,” etc., and they may indicate that they’ll have to “move on” if no consensus can be reached.

While both parties should generally be able to tell whether the other is truly interested in seeing the deal through, or is adopting a non-committal “take it or leave it” approach, sometimes people are simply unreadable and unpredictable.

Know When to Walk Away

Each music creator needs to decide for themselves if and when they’ll ultimately pass on a deal, but there are a number of valid reasons why such an action may be warranted. These include the following:

• If agreeing to the terms will leave the creator feeling as though the costs greatly outweigh the benefits (e.g., the fee being offered is unacceptably low)
• If aspects of the agreement go against their expectations—and/or the industry’s expectations—of what is fair 
• If they have a sense that the other party is not negotiating in good faith or is being purposefully deceptive (e.g., details appear in the contract that differ from what was discussed)
• If they have reason to believe that, despite best intentions, the other side won’t be able to fulfill their obligations
• If the creator thinks they won’t be able to meet their own obligations for any reason (e.g., the timeline isn’t realistic)
• If anything about the agreement is unethical, legally questionable, or could threaten their good standing with their collective societies (e.g., if the other party is demanding the performing rights in a work, even though they’ve already been assigned to SOCAN)

It should be noted as well that, even if the music creator is ultimately satisfied with the fundamentals of the agreement, if the other party’s conduct leaves them feeling resentful, that may be reason enough to walk away. Bitterness is not conducive to a harmonious working relationship.

Seek Assistance if Needed

One can’t know everything—which is why music creators shouldn’t be afraid or embarrassed to enlist help with any aspect of a negotiation when it’s needed. In fact, it’s perfectly standard and strategic to do so since it will increase the likelihood of them securing the best possible deal.

When to Ask for Help

A clear indication that help is required is if the creator doesn’t understand some of the points of the agreement being discussed—or they don’t know which ones are the most important to focus on. Similarly, there may be contractual language that’s difficult or impossible for them to translate, even after conducting research. A consultation with a legal expert can provide much-needed clarification and peace of mind.

And even if the creator fully understands what the contract says and what the key aspects are, if they don’t feel comfortable negotiating for any reason (e.g., they’re new to the profession, this type of interaction causes them stress or anxiety, etc.), they should seriously consider seeking out an experienced representative to do so on their behalf.

Another circumstance that warrants seeking support is when the creator is unsure if the other party’s tactics have gone beyond “hard bargaining” and into the realm of bullying, threatening, lying, and/or manipulation. Being able to trust the client, licensee, or potential partner is absolutely vital to the success of the collaboration, and seeking an expert opinion on whether the other party is trustworthy—or whether a loss of trust can be restored—will help to protect the creator. And if they’re pressured to make an immediate decision, they should explain that the negotiation has reached the point where they’ll need to consult with an expert, and give an indication of when they’ll be able to get back to the other party.

Where to Go for Help

When it comes to negotiation, experienced and knowledgeable lawyers, agents, and managers are usually best suited to assist music creators. While agents and managers, who typically work on commission, usually only represent creators who have already achieved some professional success, lawyers can be hired at any time—provided the creator can afford them.

Legal costs can vary significantly. It’s often much more affordable to pay a set fee for a defined service than it is to have a lawyer on an open-ended retainer (creators should ask about this before enlisting a lawyer’s services). It’s advisable to test the waters with a consultation or two before deciding to become a regular client. And if this still isn’t in the budget, creators should seek out free or affordable legal counsel.

Trade associations can also lend support since they provide a multitude of professional resources as well as access to communities of music creators. As a couple of examples, La Société professionnelle des auteurs et des compositeurs du Québec (SPACQ) will review and provide feedback on contracts for free as a benefit to its members, and the SCGC offers a discussion list that invites creators to email any questions they may have to all subscribing members. There are also independent peer networks that exist to provide creators with invaluable insight (e.g., Facebook groups like “Perspective: A Forum for Film, TV, and Media Composers”, “Producers & Songwriters”, and “International Composers Network”).

It should be noted, however, that the legal landscape as it pertains to media and copyright is constantly changing, so any resources consulted must have been created within the last two or three years to be relevant and useful.