MaurosArt
I write this with a bit of levity. When it comes to running finances and contractual agreements, artists, in a general sense are lazy, or just can’t be bothered with it all. “I mean, come on, man. You’re cramping my style, dude. The monies rollin’ in and everything is running smoothly. Besides, we got this new track we’re working on, and man…, the chicks in the studio…mmmmm, smokin’ hot!” In other words, artists tend to leave the nitty-gritty of the workings to the managers, the lawyers, and the record label.
However, when the game is played in this manner, the level of oversight is out of sight! This can catapult the overall situation into a stratosphere of massive financial discrepancies and major finger-pointing. How many famous musicians have told tales of being robbed of their royalties, desperation, and finally destitute?
Given these common scenarios of the past, artists should be aware of the audit process, how it is written in terms of their contracts, and how it is executed. Thus, it is a business after all, and as I like to say, if you don’t know your rights, you don’t have any! So, let’s take a look at this compelling act called the ‘audit’ and why artists should do this exercise ‘on the regular’ when it comes to working with their record labels.
The ‘process’ of the audit is to ‘bring clarity to the artists’ as to what their total earnings and expenses are, quarterly or on an annual basis. This accounts for every penny verifying those hot royalties, advances, travel expenses, and any other payouts made are accurately accounted for, calculated, and disbursed. The ledger must make sense, and like the ol’ saying goes, the devil is in the details. No business is immune to book cooking or embezzlement, given the number of unscrupulous characters waltzing around within the music industry. Artists beware. If you are to manage your finances effectively and secure your plans for a future in the music industry, then transparency is of the utmost importance in securing it.
Through attrition, audits become an ‘old hat’ for the artist, which is a good thing. Doing regular audits will often uncover any discrepancies or minor errors in financial statements. Anything from unintentional mistakes to that unscrupulous ‘waltzing’ character, deliberately underreporting the real numbers. Detecting these kinds of discrepancies early can prevent major financial losses and with discernment, understand any nefarious intent if presented. Honing these basic skills will help ensure the artist receives all their rightful earnings without being short-changed.
An agreement is only as good as the paper it is written on, and a signed and notarized contract is good as stone when presented in a court of law. With that said, audits are a tool for ensuring that the record label is adhering to the terms of the contract, protecting the artist and the label. Compliance by the record label to the agreed-upon contract ensures that information is disseminated smoothly between parties and any third parties involved. This means that all parties involved are obligated to verify that all agreed-upon payments, marketing efforts, royalty collections, and other contractual obligations are being fulfilled and accounted for. This chain of events will help the artist understand the nature of their position in the business and also help in understanding if need be, any terms that may need to be renegotiated.
“No business is immune to book cooking or embezzlement, given the number of unscrupulous characters waltzing around within the music industry.”
You got the juice! And as an artist, your music, your brand, and your persona are your intellectual properties. They are your most valuable assets! Understanding the auditing process as an effective tool will ensure that your intellectual property rights aren’t trampled upon but respected. This also ensures that you receive the correct compensation for your intellectual property, and its use in dissemination, and marketing exploitation.
A lot of artists have trust issues. Given all the horror stories in the recording business, one can just about believe the wildest of tales. However, trust is built upon transparency, and regular audits can help build the trustworthy relationships needed between artists and their record labels. To put it plainly, dollars and cents are spelled out, exposing all matters financially. There are no mysteries or secrets to keep. So, this in turn will help strengthen the relationship and help foster an environment for a collaborative, productive partnership.
Disputes are bound to jump on the scene whenever money, fame, and fortune cloud the minds of those who are ego-driven. Sometimes these ugly disputes make their way into a courtroom. Having safeguards in place can mitigate any unseen crisis about to unfold. So, having a history of regular audits on the books provides artists with a strong legal safeguard. The documented evidence of all financial transactions and compliance with the contractual agreement is strong ammunition in case of any legal proceedings.
Taking the bull by the horns is where real power resides when the artists audit their record labels.
This will also empower the artists to make better decisions, negotiate better contract terms, and stay informed of how their career path is progressing, all the while, ensuring their long-term financial stability and success.
The overall final effect of auditing is not just to find errors or any shady activity. It’s about building trust and ensuring fairness, and transparency for the artist-record label relationship. It is up to the artist to take an active role in understanding the business side of the industry they are taking part in. Because of the nature of the business, the artist should take proactive steps in participating in regular audits to protect their interests and, surely, to protect their financial futures.
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