Prior to tipping my toe into the music world and running events, in my other life I come from a business background which meant dealing with some really big business contacts up to million pounds. To quote an old saying when signing any contract, “the devil is in the detail!”
I remain amazed that in “the music business” many record contracts are a terrible deal for the artists. This of course is not news, but it surprises me that in this internet age where information is more readily available and music colleges are there to educate students. There’s also often a real lack of awareness about the implications of such transactions! Many artists and super fans are unaware of the implications of signing a contract and imagine that any such signing means the artist “has made it!”
Of course this is a very naive view and all contracts should be properly scrutinised to explore just how good or bad the deal is, The “record business” is like any other business, an entity that seeks above all to make financial profit. The “product: here just happens to be music, but otherwise any contractual arrangements are like any other business transactions, except in this instance often pretty poor for the artists! Here is an overview of some of the different types of contracts.
The 360 record deals
In recent times where streaming has largely replaced traditional product income streams for artists, record companies are looking for other ways to generate income from artists. A “360” as it’s called in the industry, is an exclusive contract between a label and an artist. In a 360 deal, a recording label not only takes a share of the artist’s music sales, but crucially also percentages of revenue from other ventures. These include concerts, merchandise, television appearances, or publishing.
The challenge for many artists starting out is to find a way of funding their music creation and many such artists don’t have the business awareness to know what they could be signing and possible implications. Any record company is going to want a return on their investment in an artist, its of course ‘a business transcation” and its naive to think otherwise.
Non exclusive record deals
A non exclusive record deal can appear attractive, but of course this usually means that the record company is less invested in the artist and once again the devil is in the details. The real question is “who gives what and who gets what?” There’s minimal risk for both artist and label and often minimal reward.
Many artists and fans have the romantic idea that “being signed = musical success” BUT of course any investor will want a return on their investment and record contracts are no different to any other business contract. There’s no right or wrong with deciding how to proceed, and many artists are terrible when it comes to business awareness as well as ignoring professional advice, insisting they know best in such matters.
Distribution record deals
Distribution deals rarely have any money upfront, and the artist is typically responsible for any recording and production, but crucially the artist retains the rights to their own recordings. The artist will approach the label with a finished product and the focus is on how to take the music to a wider audience. This can be a good option for many artists, but as always read the small print.
Major record deals
With major record deals, the label pays for everything, touring, promotion, videos, music production. This is a big committment and these days many labels are nervous about taking such a financial risk in the current economic climate, and many will play it safe. Often the label is looking to see an artist’s established fanbase before even considering signing an artist. The record company of course expects a return on any financial investment and owns the artist’s master recordings even after recovering expenses. A typical deal for a new artist is 11 – 15% of music sales and any ‘advance” is a loan against future sales.
I talked to Jim Glennie from James about this whose band was signed to Universal and was quite shocked at the deal that was in place. In conversations with other established artists I was amazed at how low the advances could be for recording. The myth of “being signed” and the actual reality are poles apart. Many artists are only signed for a very short period of time. Jim confirmed that the band made money from live shows, but never from music product sales. He’s not the only artist to point this out
I’ve never made a dime from a record sale in the history of my record deal.
I’ve been very happy with my sales, and certainly my audience has been very supportive.
I make a living going out and playing shows.
Lyle Lovett
50/50 record deals
These are essentially partnerships between artists and labels and don’t usually mean a big financial advance for the artist. Its useful to remember that it any contractual arrangement, the bigger the financial investment from the company, the more the company will want a financial return from the artist. All “record deals” are trades and each artist would be best advised to consider on whether the deal in place works for them both financially and creatively
Caveat Emptor?
In the era of social media, many artist fans imagine that “being signed” is the end of an artist’s problems, but the reality is that all contracts should be looked at in detail. On one extreme a record company can offer massive financial and promotional investment, but they are goind to want some security to take such a risk. The other extreme with non exclusive agreements can sometimes mean very little actual real committment in terms of financial and time elements, so it may sound wonderful “to be signed” but in the real world of paying bills and having artistic freedom, its not really going to make any real difference to the signed party. Of course there are always exceptions, so the watchword is “caveat emptor’ in all instances!
The average UK salary in 2023 is £33,280 p.a and many artists will earn far less than that, even with regular live appearances. Many who do well are not only playing live on a regular basis but also teaching. Those who drop off the radar from live performances and/or don’t expand their audiences inevitably will find it almost impossible to maintain a living. Some rely on a dedicated small fanbase and constantly appeal for funding, but that’s not a longterm solution, especially for those with families to support. Hats off to anyone trying to earn a living from music these days.
Creativity through collaboration – enter Green Eyed Records
I set up Green Eyed Records as a different way of working, where artists retain 100% ownership of material, but work in a collaborative fashion. I talked to world renowned journalist Sylvie Simmons about this and in my view this is the best hope for retaining creative ownership and reaching a wider audience. The Music for Head and Heart/GER showcases are a great example of creativity through collaboration. It can e a big personal investment, but in my view this is the best way forward.
I’ve seen some real car crash thinking from some artists who spectacularly snatch failure from the jaws of success as they don’t see the bigger picture and are often complaining about their lot in life as an artist! Its 100% their right of course, but the most successful performers have always embraced a wider vision and sought to build connections with others.
