Most investors are looking for both repayment and profit. As a general rule, this is done as follows: the investor receives a percentage of the funds that the artist earns less from expenses such as registration fees. This percentage or «return» varies from case to case. However, the level of investment is an important factor in calculating a fair return. It is also important for your investor to understand that an investment is not a secured credit. There is no guarantee of return of the investment or of generating a profit. Repayments can be monthly, quarterly or semi-annual. An investor usually has the right to check the artist`s books. Does the investor expect you to follow a timetable from the creation of the work to the exploitation? If this is the case, insert a timetable for the next steps in the agreement. Once the agreement is signed, and I hope you get to these steps, send updates to the investor to keep him informed. However, before entering into a musical investment agreement, make sure you have a professional relationship with the person or person who wants to invest in you. The investor`s potential overall return is generally limited in two ways.
First, the return may be limited to an amount equivalent to a multiple of the investment, usually between 100% and 250%. For example, when an investor taps $25,000, the limit can be multiplied 100% (z.B $50,000). In this model, the artist is exempt from the obligation to continue paying the investor after the investor has made 100% profit. One more thing. If the investor pays for your album budget, try to include legal fees for someone who develops or re-examines the investment agreement. A shameless catch. Some agreements provide for staggered payments instead of a pre-payment. Payment in installments gives the investor more control. This is because it can stop making payments if the artist does not respect the contract. Assuming that the contract requires the use of funds for specific purposes. If the investor only learns or assumes that the artist is spending the investor`s money for expenses that are not authorized in the agreement, he may stop paying the payments.
Below you will find a discussion on the main points of agreement in a typical artistic investment contract. At the end of this chapter there is an artist-friendly agreement and a pro-investor agreement. After reading this chapter, you will be ready to call this rich uncle and enter into a fair artist investment agreement. I wrote a book («Invest in Music – Why Artists Pay Fans Now») about what`s available on amazon (www.amazon.de/dp/B0747VSWKF). Generally speaking, if the investment in the next album is made, the investor will probably be compensated specifically by the album. If an investment in the artist is made overall, the compensation due to the investor can be much more extensive. The creation of a furniture company can also have tax advantages while demonstrating that the artist is active in a legitimate business and not in a hobby. As a result, expenses can be legally deducted as operating expenses. If the investment in an album is made, who owns the Master? Who makes business and creative decisions about the album, including all decisions about its use? Does a person have the power and control to make all musical decisions? If so, to what extent does this person have to consult the other person? Preferably for the musician, she controls as much as possible, while she has financial obligations to the investor. Just my first angel investment received (much smaller than 25k, but still a great start).
I wonder where I can deal with other investors. In this last track on MusicThinkTank, Brian Pascoe studies eight types of musical investment contracts and the impact behind them. An artist can earn income from a variety of sources, including record sales, live performance, merchandise, editorial