Beginners in the music industry have queries on how to structure a relationship between the musician and the investor. You must have a music investment agreement that provides the details between the investor paying money and you as a musician receiving the funds. So, here are the foolproof tips before getting into such music investment agreement.
1. The Investment
Some musicians raise money to record and promote their latest album to online platforms such as Kickstarter to obtain financial assistance from fans, family, and friends. Others get lucky enough to have a wealthy pal who is investing in your music. Most investments are made in the next album, and the investor is likely rewarded specifically from the music album. You just make sure that you are on the same page with the investor. The payment owed to the investor is much more far-reaching if they invest on the artist broadly.
2. The Masters and Decision-Making
The musicians preferably want to take control as much as possible while covering financial obligations to the investor. You need to check as to what extent you must consult with each other in terms of business and creative decisions regarding the music album.
3. Roles and Responsibilities
There should be clarity in the music investment agreement about each person’s role. You might be expected to do certain tasks other than doing your music, such as team arrangement or writing and performing songs. It’s advisable to ask your investor first about his expectations and have it incorporated into the agreement consistent with his wishes as long as you have already agreed with those.
You make certain that the obligation of the investor to pay for your expenses directly or through you is clearly stated in the music agreement. A budget must be set out from the outset that confirms the investor will full financial support. The cash flow, the time money is paid, production costs, and promotion and distribution expenses must also be stated. Also, the legal expenses for someone when the investor pays for your music album budget must be drafted and reviewed in the agreement.
A timeline of upcoming milestones from the creation of your music work to its exploitation should also be included in the agreement. Hopefully, those milestones will be hit once the agreement is signed. The investor must be kept updated, so you send them. Always make certain to follow any private investment rules based on your state or province you’re located.
The relationship with your investor is sort of a marriage close to a musician’s relationship with his band members, label, manager, or agent. You look out for a person whom you trust, shares the same definition of your success, and genuinely willing to take with you on your musical journey. In return, you’ll let him believe that your music will provide him a worthwhile financial return on their music investment.