Recording contracts can be a tricky topic to understand. You’re definitely better off getting a lawyer if one lands on your desk. However, it is good to understand the different types of deals that are out there and how they can work for you.

Record deals can vary from deals for singles for new artists to 50/50 partnerships between labels and superstars. However, most deals that you will see these days are 360 deals. Different deals can determine different levels of involvement and commitment from a record label, as well as the royalty rate that you get paid.

getting a record deal may be the dream for many artists. However, you want to make sure that you get the best deal possible. Find out about these different kinds of deals and decide for yourself what kind of deal you’ll be prepared to sign.  

There are many different types of record deals that labels can make with artists, as well as with other labels. The types of deals that are offered are also always changing based on the direction the industry is going. This has more recently been in favour of artists, especially those that have been building up their own audience and hype.

Record deals can essentially be broken down into two categories. One where the label owns the rights to your recordings and one where the artist owns the rights. When we talk about rights, we are specifically talking about the master copyright. That is the right to reproduce and exploit the recording, which does not include the song behind it. 

It is important to consider whether the artist owns the rights to their music or not when looking at record deals. This is because it can determine the nature and relationship of the rest of the deal. It can even affect whether you get a record deal with an actual record label, for instance, Warner Music, or whether you get a label services deal with their label services department, ADA (Alternative Distribution Alliance).

The first thing to know about record contracts is that they are separate from publishing contracts. This means that they only cover the recordings you make and not the songs behind them. However, some labels that have a publishing department may ask you to sign both a recording and publishing deal.

Record contracts can vary depending on the type of deal but there are usually several commonalities. For example, these contracts are typically exclusive, so you won’t be able to sign a deal with another record company. There will also be a fixed amount of time that the contract lasts for, known as the term of the deal.

There is also the matter of where in the world the deal covers, known as the territory. This determines where in the world the record label will work for you. Many labels will ask for universal territory, meaning they cover the whole world. 

However, smaller labels that are only based in one country may only look at working in their location. For example, you may have a deal with one label to distribute your recordings in the UK and Europe, but you may have a separate label distributing your music in the USA.

The amount a record label pays an artist depends on the type of deal offered. This usually comes down to the royalty rate and advance offered to an artist. 

An advance is an upfront payment from the label to an artist. However, this isn’t free money, it’s an investment that the label expects to recoup. Therefore, you won’t see any royalties from your music until the label has made the money back from the advance it gives you. 

The royalties paid after the advance is recouped tend to be on the revenue made from the recordings. The royalty rate could also potentially increase by a fixed percentage point as the sales and streams increase, for example, +0.5% for every few hundred thousand sales/million streams.

It’s important to note that 50/50 and 360 deals may act differently to other types of deals. Whilst 50/50 deals are pretty self-explanatory, most royalty rates can range from 13% – 20% depending on how big you are as an artist. These can be even lower for single deals and can vary depending on the income stream for a 360.

A 50/50 record deal can also be viewed as a joint venture or partnership deal between an artist and a label (or between two labels). These types of deals used to be almost non-existent. However, independent artists and labels have gained a lot more power and influence without the help of labels. As a result, the only way to sign them is to offer a 50/50 deal.

50/50 deals are typically only offered to the artists and labels that are at a superstar level of fame. The number of labels bidding for the deal can also affect whether this kind of deal is offered. If every label if offering a similar deal, then it only takes one to float a 50/50 deal and get the signing.

It is far more common to see 50/50 deals with artists and independent labels. Indies may not be able to offer a big advance or any advance at all. Therefore, it makes more sense for them to offer a balanced deal to get an artist on board.

A production deal is not a record deal because it won’t involve the distribution of your recording. Instead, it is offered by a production company solely for the purpose of recording and producing your music. 

This can be a good first step before looking at a record deal, especially if you don’t have the resources or capabilities to create recordings of your songs on your own. However, there are some important points to consider before you get into a production deal.

First of all, you need to get an idea of what the production company is going to do with the music once it is complete. Do they have marketing and distribution partners that will help your music be successful? Or are they going to make you sign something that looks like a record deal and simply distribute it through an actual label, meaning you’re giving away unnecessary royalties?

Many production deals are designed with the aim of making your music that can help you get a record deal. However, be mindful of what is being offered because you might end up being tied into a long-term deal that can leave you worse off. 

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