If someone approaches your band willing to "shop" your tape, there are many questions you should ask. First, though, the term shop needs some explanation. When someone shops your tape, it means that they take a copy of it and try to get you a record deal. Basically, people who shop tapes claim to have some contacts that may be able to land you a record deal. Great you say, someone to help me get a record deal! Not so fast.

First, people don't shop tapes for free. Never pay someone to shop your tape. Shopping a tape is speculative in that it is a gamble. No one can guarantee they can get you signed. If someone wants money up front, there is probably something fishy about them. The only exception is if they ask for money to cover postage. This should be a minimal amount. Don't ever pay someone's expenses to fly to NY or LA to shop your tape. More than likely, you will subsidizing that person's trip and nothing will come of it.

A true shopping deal will pay the person out of future royalties from the deal they secure for you. If someone shops your tape and gets a record label to sign you, they will want a percentage of the income from the record deal. This is standard. What varies is the percentage. Some people are scrupulous and take only what is fair. Others over-reach and rip bands off.

What is fair compensation for someone who shops your tape? Fair compensation is 10%. It is not unfair to take 25%, but I usually tell bands anything over 10% should be viewed skeptically. It is not unheard of for people to ask for 50%. In fact, I once saw a proposed contract that offered a 60/40 split with the band getting the 40%! This is over-reaching and not standard in the industry. The other option, and one I prefer, is to offer them a point or two on the record contract. A point is a percentage point. Usually a band will get between 10-15% of the price of the album. Offer the person shopping your tape one to three points. Three points on a 15% royalty rate is 20%. (And I became a lawyer to avoid math!). The bottom line is that people who shop your tape are entitled to get a percentage, but there is a point that it becomes too much.

Another important point is to make sure the shopping deal is non-exclusive. Do not allow someone to have exclusive rights. In an exclusive arrangement, if someone from Sony Records happened to be at your show and signed you, the person shopping your tape may be entitled to his cut, even though they had no part in the deal! With non-exclusive rights, anyone can shop your tape. Why limit yourself to allowing only one person to shop your material when more people increase the likelihood of getting signed.

I also recommend putting the deal in writing. Imagine this scenario. A person agrees to shop your tape for 20% and nothing is put in writing. He calls you up and says RCA wants to sign you, but I want 50%! This is a true story. The deal fell apart and the band never signed to the major label. The moral of the story is get it in writing. It does not need to be a long formal contract. Something that says "I agree to shop your tape and if I secure you a deal, I get 10%" is sufficient. There is a lot more that should go into it, but at a minimum, get the terms in writing.

Getting someone to shop your tape can be an important step in the career of a band. However, it can also prove disastrous. Please give much thought to the idea before allowing someone to do it.