A record deal also known as a recording contract,
is a legally binding agreement between a musician/band (recording artist (s) and a record label in which both parties agree to work to together in the recording, sales and promotion of music.
The record label acts as a facilitator enabling the artist to record music, market it and distribute it.
So, is a record deal worth it?
When the artist and the record label reach an agreement that they both accept and deem as fair. A record deal is worth it.
Record deals have been given a bad name,
because most artists neglect reading and understanding record contracts.
In reality it all comes down to how good of a deal you negotiate.
A record label will put their offer on the table and it will up to the artist(s) to figure out if the deal serves them right or not.
In most cases artists will have a lawyer negotiate on their behalf to ensure that the deal is good enough.
Record deals have existed for decades, and they will be around for decades to come.
This article will walk you through the things you’ll basically need to know about recording contracts.
Let’s get into the pros and cons of having a record deal
Benefits of signing a Record deal
- Record labels usually foot all recording and production fees which is a great advantage for the artists because they don’t have to worry about raising funds independently.
- Record labels will usually give the artist an advance. An advance can help the artist get on their feet, and have enough finances to keep making music.
- Record labels can very easily promote the artists content, which usually means investing marketing dollars (for music videos and other media) to help a record get out into the world.
- Record labels have connections that can easily help the artist break into new industries like Television.
- Belonging to a Record label gives the artist free access to a community, plus the success of one artist can mean exposure and credibility for other artist. A good example of this is the American record label Top Dawg Entertainment; the success of Rapper, Kendrick Lamar shined a light on other artists under the label and his light kick started a lot of careers.
- Record label connections make promotion easy.
Cons of Signing a Record deal
- Record labels will usually a take a bigger slice of the profits than the artists music generates, which can put them at a disadvantage.
- The record label will usually own the masters of any music released under the label.
- Record labels may assume control of every song which gives the artists lesser creative control.
- Major record labels have a reputation of giving artists bad deals, which are too good to turn down but offer limited income in the long run.
TYPES OF RECORD DEALS
This type of agreement has the record label operating like a management company of the artist.
The label will advance the artist with funds to help them create and sell an album.
The record label then recoups its expenses through the sale of the album and other income that comes in line with the artist’s music.
Furthermore, the record label will usually own more than 50% of the royalties from the music and they’ll usually own the masters of the songs recorded under the label.
50 50 Deal
The 50-50 deal is quite self-explanatory.
In this case, the record label and the artist enter an agreement to share both profits and costs 50-50.
The good news is that the artists can make a lot more money with this type of deal if their music can sell extremely well.
The bad news is that; the artist won’t make much if they can’t sell well;
this is due to the fact that deductions with regards to the cost of production will be taken into account when the income of the record starts to come.
The independent label contract
Independent label deals are quite similar to the Exclusive Contract discussed in this post;
however there is a little variety when it comes to independent label contracts.
Often times the independent label contract will let the artist retain control of the rights to their music and it may only cover promotional or production expenses or any other type of arrangement.
Flexibility in the terms is what should be stressed here,
because a lot of exclusive contracts have the same terms and will usually look to own the rights to any music produced under the label.
A lawyer should always be contacted to help look through any contracts because it is very easy to miss any terms expressed in fine print,
independent label deals can be just as good and just as bad as exclusive label deals.
The 360 deal
A 360 deal is an agreement between a record label and an artist in which the record label agrees to provide financial support in more areas than just recording and production costs.
In return the artist agrees to give a percentage of the income from any revenue stream available to the artist such as online sales, song writing, features, endorsements and live show performances.
In conclusion, it is easy to see that a record deal can be very worth it if it can genuinely serve both the artist and the label.
Therefore it is very important to hire a lawyer to look through any documentation and be able to negotiate good terms on your behalf.
Record deals are given a bad name because labels in the past took advantage of artists that were too eager to get signed by giving them an advance while getting more than 85% of the royalties and record deals.
Therefore it pays to take your time to go through the terms before signing a record deal.