A record deal can change your life or lock you into a bad situation for years. The difference usually comes down to a handful of terms most artists skim past. Here's what to understand before you sign anything.
The terms that matter most
- Royalty rate. Your percentage of what the label earns from your recordings. In many traditional deals, artist royalties land somewhere around 15% to 20%.
- Term. How long the deal lasts, often measured in albums or years rather than a set end date.
- Ownership. Who owns your masters, and for how long. In most traditional deals, the label owns them.
- Recoupment. Your advance and many of the label's costs get paid back out of your royalties before you see another dollar.
- Cross-collateralization. Losses on one project get paid back from earnings on another. A hit album can end up covering an earlier flop.
- 360 rights. In a 360 deal, the label shares in more than your music: merch, touring, publishing, brand deals, even livestream income. Know exactly which streams are included.
A deal that looks good isn't always good
Even the biggest artists have had to work their way into better deals. Drake's early career ran through layered deals across Young Money, Cash Money, and Universal. Years of hits later, he negotiated directly with Universal Music Group, and his 2022 deal was reportedly worth around $400 million, according to insiders. Leverage changes everything, and most artists don't have it on their first contract. That's exactly why the first one matters.
Why you still need an entertainment attorney
Knowing what the terms mean is the start, not the finish. An entertainment attorney reads how every clause works together, spots what's missing, and finds the best way to use the deal's terms in your favor. Even if you understand the vocabulary, you need someone who can see the whole picture and negotiate it.
Before you sign
Ask for the contract in writing, take your time, and have an attorney review it. Never sign on the spot, no matter how exciting the offer is.
This post is general information, not legal advice.