However, indie labels have a strong reputation for having their fingers on the pulse of upcoming music trends and for giving chances to unknown artists who eventually become international sensations.
Record labels typically set the terms and conditions of artist contracts in their favor. In the case of newly signed artists, record labels can control the type of music they record, which can include everything from the way the music sounds to the song lyrics.
They may also control album cover art. Depending on the contract structure, record labels may also have the ability to set the amount of money their artists earn. While the relationship between an artist and their record label is most often mutually beneficial, there is always the possibility of that relationship becoming contentious. The more successful artists get, the greater their ability to renegotiate contracts to include more favorable terms.
In other words, you make less from record sales, but should be benefitting from a much larger investment in recording and marketing.
I try to get as much clarity as possible on this topic, in terms of actual budget commitments from the label. This includes dollar amounts budgeted for music videos, tour support, recording, radio promotion, and more. Your label may be hesitant to commit to actual numbers until they see how the records perform, but this is where you need a good entertainment lawyer advocating on your behalf. This is the biggest thing to watch for in a modern record deal.
More and more, record labels are asking for a piece of the pie from non-record revenue streams such as touring, merchandise, and publishing. In many ways, they are a reflection of the modern realities facing record labels and artists.
But before you give away a portion of these crucial revenue streams, you need to know what the label is prepared to do to earn their piece. If they want to commission on touring, will they be providing funding for tour support?
If they want a piece of publishing, will they be providing publisher services including shopping your songs for film and television placements? These five areas are of course just the starting point.
There is much, much more to look for in a modern record deal. If you take your career seriously, you will seek the advice of an experienced, trusted entertainment lawyer who will also help negotiate the best record deal possible for you and your career. As always, email me with questions.
In short, the second label steps into the shoes of the first label. With the various kinds of deals mentioned above, a major distribution company or major label may or may not be involved in the deal. On the other hand, there are certain kinds of deals, as mentioned below, that usually only happen when there is a major label or major distributor involved. These are as follows:. The label will manufacture and distribute the records and handle the marketing and promotion activities. The term of the deal is often for an initial two or three years, with the major label having the option to continue the deal for an additional two or three years after that.
These responsibilities are divided in whatever way the two labels agree upon in their formal joint venture agreement. The major label finances the joint venture.
Then, from records sales income, the major label will reimburse itself for the expenses that it has incurred, and the net profits are then divided between the two labels, usually The deal is usually for an initial three to five years, with the major label having an option to continue the deal for a certain number of years after that. However, the major label will often have the right to terminate the deal if its losses reach a certain specified dollar amount.