Musician Wonders About Royalty Split

Dear Rich: I (a young artist) have been given a production agreement from a production company. I will be their first 'artist' to develop and shop so it is all very new for us all. With regards to copyrights and grants of rights, what's 'normal' in such an agreement? They are proposing I give all copyrights of all recordings to them for a rights period of 'life of copyright.' What does this mean?! Surely we'd share copyrights and what if some of the songs were solely written (lyrics and music) by myself? Will they get the rights of that too? Like a lot of production agreements out there, they are saying a 50-50 split for net income after all costs (including recording) so based on this 50-50 split surely I get 50% of the rights? Unfortunately, the arrangement is not that unusual for the music business. Musicians commonly give up copyrights in return for a suitable payout. Our first concern is whether there's any track record for the production company. That is, is there any evidence that the producers can create successful recordings and more importantly whether they are reliable record keepers and will pay you the money you are owed? And if the recordings are unsuccessful, can you get the rights back?
By the numbers. A second concern is whether the deal makes financial sense. If the production company owns the studio, chances are good that the producers will be liberal about billing you for recording and producing costs -- expect charges of $10,000 to $20,000 for a complete album (and it could be much higher). You would have to recoup all of this income (and perhaps more) before you see a dime. If the company is shopping your recording to a label, then you will probably end up receiving even less because the production company will end up getting 12% to 20% of the net income from record sales from the label (and your 50% would come out of that). Nowadays, it's pretty tough to earn $10,000 or more on a recording. Professional musicians indicate that sales are down so dramatically, that they account for less than 6% of a musician's income. (BTW, the average professional musician in the U.S. earns about $34,000 a year before expenses.) So before you sign away rights, you may want to consider whether you can accomplish a cool recording on your own ... after all, many great recordings were made using homegrown studios.
"Yeah, yeah, but otherwise I can't make a record ..." Yes, we know that the production company is taking a risk devoting their time and energy to make a recording. So, we can understand their desire to acquire rights and make money. So if you're going ahead with the deal, we think you should look for some safeguards. Keep in mind, there are two sets of rights at work here --  song copyrights and sound recording copyrights. We can understand having to give up on sound recording copyrights but we'd like to see you retain as much of your songwriting copyright as possible. Read up on music law and copyright, or talk to an attorney, and see if you can set up a co-publishing arrangement. Can you get rights back to your songs based on time (say five years), lack of sales, or failure of the company to get a deal? Can you cap or control recording costs? Can you control any other deductions made before you get paid? We could come up with other questions but it's time for us to play some Words with Friends.
Related info: Ten Tips for Songwriters