SO YOU WANT A RECORD DEAL? HERE'S WHAT YOU NEED TO KNOW

Signing a record deal can be a very exciting or stressful time for an artist. A entertainement powerhouse, known as a record label is looking to invest in your career. We've seen artists like Kanye West, NBA Youngboy, Bobby Shmurda and more speak publicly about the dark side of their record deals. Yet and still, millions of emerging artists shared the dream of signing on the dotted line and reaching new heights in their careers. Before you lock in with a label, here's a break down the types of record deals you might see into five basic categories:

1. Traditional Record Deal

2. 360 Deal

3. Distribution Deal

4. Production Deal

5. Profit Split Deal

While there will always be outliers, these are the typical offers you will see. Of course, there is no one-size-fits-all deal for artists. Sometimes, these offers may hinder an artist or limit their creative freedom but with the right arrangement, they can also help to open up doors or grow an artist’s platform.

Traditional Record Deal Advance: Yes Label/Artist Royalty Split: 80/20 Recoupable Costs: Recording Masters Ownership: Label The classic record deal! And probably the most common among mainstream & major label artists. In this agreement, the record label will grant the artist a hefty advance for their masters’ ownership and 80% of their royalties. Most artists don't get more than 22% of their royalties, and typically it’s much lower than that. Before the artist even sees a dollar of their royalties, they must recoup both their advance and recording costs, which may not always happen.

While this may seem like a bad deal, sometimes this works out well for the artist. If they can leverage the advance & the marketing support from the label to kick start mainstream success, they have a decent chance of recouping what they owe or receiving better deal offers for their next release.

360 Deal Advance: Yes Label/Artist Royalty Split: 85/15 Recoupable Costs: All Masters Ownership: Label 360 Deals are a type of partnership between the record label & the artists - where the label operates at a loss for an extended period. There is a huge investment in the artist’s development, covering all expenses, including touring, recording, marketing & more. In return, the label gets to recoup their investment from all forms of revenue that the artist generates, including touring & merchandising. In contrast, traditional record deals recoup based on music sales.

A prominent advocate of 360 deals is Lyor Cohen, who has seen great success with 360s at Atlantic & 300 Entertainment. He strongly believes in the label investing in developing a commercially viable artist.

J. Cole is a famous artist who attributes some of his mainstream success today to the 360 deal he signed with Roc Nation back in 2009.

A lot of artists have spoken out about the negative effects of 360 deals. Depending on the needs of the artists and their team, a 360 deal may be exactly what they need to take things to the next level.

Distribution Deal Advance: Sometimes Label/Artist Royalty Split: 75/25 Recoupable Costs: Recording, Marketing Masters Ownership: Artist Distribution deals are growing in popularity these days & are typically the least predatory offering for independent artists. They also offer the least amount of resources, so it depends on what type of investment an artist believes they need to do their release justice.

Distributors focus on delivering the music to the digital service providers (DSPs) and potentially pressing physical CDs or vinyl, depending on their agreement with the artist. Distributors typically handle relationships with the representatives at the DSPs to help pitch for playlisting. Meanwhile, the marketing & promotion falls on the artist & their team to complete.

If the artist has a strong team & a hungry fan base, partnering with a distributor is an excellent way to increase leverage before seeking a traditional record deal. Some popular distributors include EMPIRE, Sony’s The Orchard (& Steak Worldwide!). Production Deal Advance: No Label/Artist Royalty Split: 50/50 Recoupable Costs: Recording Masters Ownership: Producer Production deals always fly under the radar but have the potential to be one of the most predatory deals to come across an artist’s desk. In a production deal, the artist usually signs a 50/50 deal with a single producer. The producer agrees to produce one or more of an artist’s album in entirety but retains 100% ownership of the master recordings. There are several producers in the industry that are infamous for trapping up-and-coming artists into these deals. Make sure to ask around & consult friends before arriving at any agreement with these terms. Profit Split Deal Advance: Yes Label/Artist Royalty Split: 50/50 Recoupable Costs: Recording, Marketing Masters Ownership: Label Profit split deals came back into the limelight after Russ signed a similar agreement with Columbia in 2018. In a profit split deal, the label agrees to a 50/50 royalty split with the artist and a large advance, in exchange for a recoup on all costs. So, while a traditional record deal, the label only recoups the advance & the recording costs, in a profit split deal, the label recoups advance, recording, marketing & any other expenses the artist incurs.

Profit split deals seem like the ideal offerings for both the record label (100% recoup) and the artist (50% profit split + large advance), but the answer is never that simple. It’s always important to consult an attorney & others with experience in the industry before signing any paperwork. For an excellent & more in-depth read on these deals & how record labels generate revenue, check out this article by soundcharts. They do an excellent job visualizing the deals over time & crunching the numbers.

To find out what deal may be right for you, book a consultation with Elle Jones today!