So you want to be a signed musician? You've got the talent, the ambition, and now all you need is your big break. But how can you get it? One of the most important factors in your career will involve knowing the different types of record deals so you can choose wisely! Many artists have been broken by bad deals and not having ownership over their works (but that is a conversation for another post!)
Different types of Record Deals can vary depending on many different factors including genre, budget, and location.
Recording contracts can be a confusing topic. With so many different types of deals, musicians often struggle with which type is best for them. This article will cover the most common types of deals and offer advice on how to choose the right one for your needs.
The Different Types Of Record Deals Every Artist Should Know About
Below are some of the most common record deals that every artist should know about. There will be others you may have heard of that did not make it onto the list and some that are just variations of the ones that did.
The 360 Deal
The 360 Deal is a type of deal that gives the record label a percentage of all revenue generated by an artist, not just from album sales and ticket sales.
Types of income included in this would be merchandising, endorsements, sponsorships, appearances at other artists' concerts or events (including songs written for other artists), and any other revenue-generating activity.
As the label invests heavily in an artist's future, this type of deal usually includes an advance payment. This means the label will front money to help produce and promote your music in exchange for a large percentage of all revenue you generate.
The label operates at a loss while covering all expenses such as recording, marketing and promotion.
The Pros of a 360 Deal
- The record label is more invested in the artist's success, as they are making money from all sources of income rather than just album sales.
- With multiple streams of revenue coming in, it can be less risky for the label to invest money into an artist.
- You're a big-name artist on a major label. That is a big deal. The most recognized producers, song-writers, other musicians know who you are and you have access to them. Not to mention international tours, the global fan base etc.
- The label has the best connections in the industry for marketing and events – all you have to do is focus on your art and make the music they want.
The Cons of a 360 Deal
- There is more money that can be lost if the artist's career fails.
- Labels may be less likely to sign artists who are not already established.
- The terms of the deal can be more unfavorable to the artist, as they are giving up a larger percentage of their income.
- If you already have a huge body of work when you get signed, the label benefits from that.
- You could be shelved. This mean thats the label doesn't have to put out your music, and you can't go to another record company.
- The term of a 360 Deal is typically longer than other types of deals, making it harder for the artist to renegotiate if they become more successful.
The 50/50 Deal (Profit Split Deal)
A 50/50 deal is a type of deal where the artist and the label share profits from album sales equally. With this type of deal, the artist is typically able to keep all other forms of income, such as touring and merchandising.
Typically, the artist receives a smaller up-front payment and then splits profits evenly after that. This type of deal is less common today as labels are typically less willing to take on the financial risk associated with new artists.
The Pros of a 50/50 Deal
- You maintain complete creative control over your music.
- It's less risky for the label, as they are not investing money into an artist who may or may not be successful.
- This is one of the most common types of deals, so it is easier for artists to renegotiate if they become more successful.
- You may expand your audience by marketing your music to a wider group of fans.
- You may still reach a larger audience by using the labels connections as if you had a 360 deal.
The Cons of a 50/50 Deal
- There is no guarantee that the label will market and promote your music as they would with an artist who has a 360 deal.
- You may not make as much money as you would with other types of deals.
The EP Deal
An EP record deal is an agreement between a musician and a record label in which the musician agrees to produce a set number of recordings (usually four to six) over a specific period of time. These recordings can be released as singles, EPs, or albums.
The artist is typically paid an advance against future royalties, and the recordings are made available to the public through traditional retail channels or digital downloads.
The Pros of an EP Deal
- Musicians receive an advance against royalties, which helps them finance the recording process.
- Recording and production costs are often covered by the label.
- Labels typically provide marketing and publicity support for the release of the recordings.
- Musicians retain full artistic control over their work.
The Cons of an EP Deal
- Musicians may be required to sign a non-exclusive recording agreement, which means they could release recordings with other labels.
- The term of the agreement is typically shorter than other types of deals, which can limit the musician's ability to renegotiate if their career takes off.
- Labels typically do not invest as much money in the production of EP recordings as they do with full-length albums.
- Labels typically have a lower level of commitment to marketing and promoting EPs than other types of releases, which means that it is harder for musicians to reach new audiences.
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A distribution record deal is an industry term for a distribution agreement in which a record label agrees to distribute the music of an artist in exchange for a percentage of the artist's royalties.
A distribution deal is one of the most basic and important deals that an artist can make with a record label. The artist agrees to give the record company exclusive rights to distribute the artist's recordings for a set period of time.
This means that the record company can control where and how the recordings are sold, and can also prevent the artist from signing a distribution deal with any other company for a certain period of time.
In simplest terms, it's an agreement in which the label agrees to sell the artist's music and collect royalties on its behalf. The artist then receives a percentage of those royalties, typically around 20-25%.
If the artist has built up a dedicated fan base, partnering with a distributor can give them even more leverage in their quest for success before going onto more traditional record deals
The Pros of a Distribution Deal
- Access to the record label's extensive network of radio stations, retailers, and streaming services.
- Exposure to a wider audience
- Marketing and promotional support from the record label.
- Advice and guidance from experienced music executives
- Financial support in the form of advances and royalties
The Cons of a Distribution Deal
- The label may take a large percentage of the revenue you earn from album sales, leaving you with very little profit.
- The label may not promote your album as aggressively as you would like, or may focus its marketing efforts on more commercially successful artists.
- The label may order you to make changes to your music or to your image that you are not comfortable with.
- The label may insist on controlling all aspects of your career, including which venues you play at, what songs you perfor
Artists that have a large catalog of music and are already successful with the sales numbers will most likely benefit from licensing their album. This allows artists to maintain ownership while still getting some major label perks like exposure on billboards, radio ads around release dates, etc.
Labels are typically willing to give a 360 deal, which means that they will provide marketing and promotion for your album. However, there is always the chance of them taking control away from you if they own previous albums or other works by this artist in some way- so getting licensing rights increases revenue as well.
The Pros of a Licensing Deal
- You do not have to give up any creative control over your music and retain rights to your masters.
- Labels typically invest more money into the production of licensed music than they do with recordings made through other types of deals.
- The label will market and promote the music more aggressively than if you self-released it.
- You get paid upfront.
- The label handles all of the marketing.
The Cons of a Licensing Deal
- You do not get all of the profits.
- The label takes a cut and you only make money when they sell your music.
- If it is an LP, there will be less to split between both parties since there are more costs involved in this type of deal.
- The length that these deals last can vary greatly depending on how much the label thinks the artist is worth. It can be as short as six months and last for up to five years!
The Traditional Record Deal (Standard Deal)
The Standard Record Deal (SRD) or Traditional Deal has been around for decades. It's a contract between the label and artist that sets out how an album will be created, produced, distributed etcetera – but with one major difference; this deal doesn't include marketing and distribution options as these are usually handled separately by external sources!
The traditional ‘standard' record production agreement includes all parts except those relating primarily to the promotion where producers may hire their own staff members if desired. The Standard Deal is designed to be a more complete and encompassing deal that covers all aspects of production.
In this type of record deal, the artist usually gives up some creative control in order to have the backing and resources of a major label.
This arrangement may be suitable for some known artists who already have a loyal following and do not require extensive marketing and distribution support to push them into the mainstream.
The Pros of a Traditional Record Deal
- You get more upfront money than you would with other types of deals – sometimes hundreds of thousands to millions.
- The label will take care of all the production costs, which means that there are no risk involved for you.
- SRD’s usually come with a cash advance, with the label acting as a bank lending resources to the artist.
The Cons of a Traditional Record Deal
- The artist typically doesn’t keep the masters, and these deals are not as common nowadays.
- Though it’s not necessarily a bad contract, it may not be ideal for the new artist.
Final Notes: What Is A Good Record Deal?
As mentioned before, the different types of record deals on the table these days can vary quite a bit. They can even be broken down further with the following conditions:
- Contractor for hire or one-time project
- Work for Hire
- Songwriter agreement
Just remember, not all labels are created equal. Some labels may be more interested in exploiting an artist's work than helping them build a successful career. It's important to do your research before signing any agreements and to make sure you're comfortable with the terms of the deal.
Of course, the best record deal would be one that gave you an advance, let you keep the rights to your music, paid for everything, gave you full access to their major label contacts and network and let you keep full control… but no such deal exists!