The Business Side of Music: Types of Record Label Deals

When an artist signs with a record label, they're entering into a legal agreement states key factors in their business relationship which terms will establish several areas such as the duration of the agreement, who will be the owner of the records and how the artist will be compensated, among other things. However, not all record deals are the same, and there are different types of deals that an artist may encounter in their career.

Recording Contract

The traditional recording contract is the most common type of record deal. In this type of deal, the artist signs with the record label and agrees to record a certain number of albums while the record label keeps ownership of the rights in the sound recording. The label is responsible for distributing and promoting the music, and the artist typically receives an advance and royalties for their work. This agreement will govern areas such as creative control, recording budget, amount of songs that will constitute an album, royalties payable to artist.

Distribution Deal

A distribution deal is a contract between an artist and a record label that focuses solely on distribution. In this type of deal, the artist retains ownership of their music and is responsible for recording, marketing and financing the album (which could be done through an advance provided by the distributor). The record label is responsible for distributing the music to retailers and online platforms and may provide additional services depending on the artist level. The artist typically receives a percentage of the revenue generated from the commercial exploitation of their music subject to a distribution fee.

Licensing Deal

In a licensing deal, the artist retains ownership of their music but licenses the rights to the record label for a specified period. The label is responsible for distributing and promoting the music, and the artist receives a percentage of the revenue generated from the sale of their music. At the end of the licensing period, the rights to the music revert back to the artist.

Joint Venture

A joint venture deal is a partnership between an artist and a record label. In this type of deal, the artist and the label share rights ownership, the costs and profits of recording and promoting the amount of albums negotiated. The label provides resources such as marketing and distribution, while the artist retains creative control over their music. The profits from the album are split between the artist and the label.

360 Agreement

A 360 deal, also known as a multi-rights deal, is a comprehensive contract that covers all aspects of an artist's career, including music sales, touring, merchandising, and endorsements. In a 360 deal, the label provides resources for all aspects of the artist's career and takes a percentage of the profits generated from each area.

In conclusion, choosing the right type of deal between an artist and a record label is crucial for success in the music industry. Also, not all deals are appropriate for all artists. The negotiation with the label will vary among artists. Understanding the different types of deals and their respective advantages and disadvantages can help artists make informed decisions about their careers and which type of deal will best serve their interests while maintaining a business relationship with the record label. Regardless of the type of deal, it's essential for the artist to negotiate the best possible terms to ensure their rights are protected.