Record Deals – Decoded

Every young artist wants to sign a record deal, but do you know the details of what one actually is? Calling something a ‘Record deal’ is as vague as calling something a ‘fruit’, there are many many different shapes and sizes.

At the most basic and important level, a record deal, or recording contract, is a legally binding agreement between artist and label. Generally speaking the label pays for making, distributing and marketing the recordings and agrees to pay the artist an agreed share of money from sales of the recordings – this is what is known as the royalty rate.  Royalties are accrued through the money earned by music in any way – downloads, streams, CDs, vinyl, licenses for music in TV programmes or films, compilations, soundtracks or even MiniDisc sales should you be going back to the 1990s to release your album.

The label will usually give an advance on signing a deal which will be recouped through record sales. In many cases this advance will also cover the cost of recording the album. The advance only has to be paid back if the recordings sell enough, so if you happen to be an avant-garde genius who will not be understood ‘til after your death and you sadly only sell three albums then you can look upon your advance as free money.

Record deals really do come in all shapes and sizes. Issues covered in a recording agreement which can vary considerably include:

  • The countries and regions covered: the deal could be for a single country, a few countries, a region or continent or the whole world.
  • The length of the term: often deals are measured by the number of albums and broken into guaranteed albums and those where the label has the first option to release – eg one firm album with an option for four more should the first be the world altering smash hit it is sure to be. Or the deal could be for a specific length of time, eg five years.
  • Budgets: the amounts available to spend on producers, studios, video shoots and so on.
  • Who pays for what: deals can differ on who pays for what or what the split of expenses is – for example you may want to employ your own publicity agent or to be flown by helicopter everywhere you go. The ground rules on who pays for what when it comes to making and promoting your music will all be covered in the agreement.


The most important thing to do before signing any record deal – and we can’t stress this enough – is to have a lawyer advise you through every stage of discussing an agreement and before you sign ANYTHING AT ALL.

However excited you are to sign your name, receive money in the post and hop into a recording studio, make sure you’ve had a good chat with a lawyer so that you know exactly what you are agreeing to. Your lawyer also needs to understand what your wishes are, what’s important to you in any deal. Every record deal really is different, so you want to make sure that you end up with the one that’s going to work the best for you.

Good luck – and don’t forget about the lawyer!

Signed or unsigned you may be about to go and record. Check out these do’s and do not’s of getting in the studio.


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