Do Record Labels Ask for A Deposit? SCAM or LEGIT?

You've been approached by a record label who seems to be really interested in your music. They want to sign you and make you a star, but you're not sure if it's too good to be true. You want to know more about what happens when an artist gets signed by a label, does the label take money from them?

In this article, we'll discuss some of the things that can happen in a record deal and whether or not an artist should offer money to a record label to get signed.

The music industry is a challenging field to break into, and it can be even more difficult to get your music heard globally if you don't have a record label.

However, this is rapidly changing and there are still ways for you to get your music out there without a record label. So threat not! If the “label” showing you interest turns out to be a scam, we have PLENTY of tips for you on how to market your music as unsigned hype!

What Do Record Labels Do For Artists?

Record labels do a lot for artists, including promoting and distributing their music. But one thing that often comes up when talking about signing with a label is whether or not the label asks for money from the artist.

This question has been cropping up more and more these days; and for the unaware and desperate-to-blow musician, I am here to give you the bad news…

You might be the victim of a record label scam.

Do Record Labels Ask for A Deposit?

The answer is, generally, no. Record labels are the ones pouring money into the artist. They are doing all of this work upfront to hopefully make money off of you eventually; they’re not doing it for free.

But they do not typically ask you for any money upfront; this is likely the preposition of a scammer!

There are many different types of deals that labels offer. Some will take a certain percentage of your sales, some pay you in return for a number of albums (advance) – but in most cases, they don’t ask for money upfront.

What Are Advances?

Record labels provide advances to music producers in order to secure rights to future music production. The advances are typically recoupable against future royalties generated by the music.

Labels also invest in marketing and promotion of the music producer's work, which can help increase exposure and sales.

In exchange for these benefits, the record label usually owns exclusive rights to commercially exploit the producer's recordings for a certain period of time.

Should an Artist Offer Money to A Record Label to Get Signed?

Is it ever okay? A resounding ‘NO!'. A “label” asking you to pay a fee for an album recording and promotion is not okay and they probably do not have a great track record (if any credibility at all).

If they are asking you to pay for the studio time etc, then you are better off doing so with no middle man, as they will be doing the same thing that you could do on your own. There is no benefit to signing with them if they are making money both off of you and from you.

These are not favors, but rather things that they should be doing for you. Read up more on the different types of record deals and be sure to read up on your legal rights when it comes to deals.

I know you are hungry, but you are the artist, you are the talent, and without you, they could not make a dime. They need your talent, and you should never have to pay for that privilege!

So please, if you come across any offers from record labels asking you for money at any point in time, know it is a scam or not even worth your consideration. And make sure to let us know here at Industry Hackerz, so we can warn other musicians!

What If You Have Already Paid A Deposit To A Record Label?

You need to do your research into the company to discover if they are a genuine label or not.

If you think that it might be a scam, do your research- look on Google for reviews on the label, talk to other musicians who have dealt with them and contact past artists closely affiliated with the company.

Before alerting them to your concerns, gather all the details you can about the people you have been in contact with, if you have not met them in person. Do you have bank details? Did you pay via PayPal? This information will help you in notifying authorities if it is scam.

In most cases, you can raise a dispute, but you may need to file a fraud complaint, which you can do with your bank.

How Can You Protect Yourself From A Record Label Scam?

If you want to avoid record label scams, the best thing that you can do is: due diligence and research! Always check out a company before getting into any kind of deal with them. Look for reviews online and use caution when dealing with (any) companies that ask for a deposit.

Of course, distribution and promotion is a different topic. It is very normal to pay for distribution or promotion as this is a specific service you need at a certain time.

Likewise, in the event that you do get an offer from a genuine record label, you will still want to do your due diligence before signing any sort of contract. Because, real labels can and do scam artists, just in a different way.

There have been many horror stories of labels that own artists, their masters and anything they release but also will not promote or market them in the way that they could.

Luckily there are steps that you can follow to protect yourself as an artist:

1) Always consult with a lawyer that specializes in music industry law

2) Make sure all the details regarding your contract are outlined in writing

3) Make sure you have a lawyer look over the agreement before signing. You do not need to know one personally; thankfully, in this day and age you can pay a small fee and find one online – trust me, that is a very small price to pay and investment to make.

4) Avoid paying for services up front (unless there was a specific reason to do so).  A real record label will invest in you, not take your money and run!

5) Never agree to contracts that allow the record label to keep your music if they decide to not release it or market it.

While all the documentation may seem tedious or unnecessary, it is much better to have everything in writing no matter what you are being offered so there are no misunderstandings later.

How Do You Know If A Record Label Is Legit?

If you want to know how to tell if a record label is legit, there are a number of ways to know before getting your hopes up:

1. Reviews

When looking for a label, it's important to take the time and effort into researching what other people think. You should always start with checking out any consumer feedback that has been left on their website or social media pages.

You will want to cross-reference these reviews across different platforms, because fake views can be purchased, depending on the platform.

It cannot hurt to reach out to the artists they claim to represent or anybody you have seen making engagements with them, to check for credibility, either.

2. Social Media

Social media can tell a lot about a person or company for example: how long they have been in business, what their business model is, the way they interact with clients and other details.

3. Physical Location

A company that has its base in another country should raise an immediate red flag unless it's a music mogul or major record label!

It is also much easier for them to scam you if they are abroad because of how difficult it would be to track them down.

They should have a listing on Google Business if they are a legitimate label. Even if they are in a different city or state than you. Google'ing their physical location should present you with all the information you need.

4. Legal Registration Details

A legitimate record label will not be afraid to share their legal registration details with you. This is one of the most important things to look for when verifying a record label's authenticity.

They may have a separate business name, trading as their label but it will be somewhere in writing and on their website's privacy policy and terms and conditions.

Before signing any agreement, never forget to ask them for these specific pieces of information: business number, state or province, registration number, country of origin and corporate website.

Do Record Labels Email You?

You may be worried that you have received a fake record label email. While it is very common that a scammer will reach out to you via email or by social media – it is also common for genuine record labels to contact you by email or social media if it is the only way to reach you.

As with most things, it is safest to assume that any communication that is sent your way comes from a fake source until proven otherwise. So be aware of masked emails which appear to be from “Universal Music” or some other big company, but upon further inspection (a click on the ‘from' link) it says something like: [email protected]

The Mixdown…

No matter how you slice it, signing a record label contract can be a daunting task. But by being diligent and knowing what to look for, you can protect yourself from potential scams. Make sure to do your research on any label before signing anything and take the time to read over any contracts carefully. Remember, if something seems too good to be true- it probably is!

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