3 types of music contracts you should know about

Getting signed with an established record labels doesn’t automatically equal success. When signing any music contract, you need to be read through your contract thoroughly. If you don't understand the terms of the contract, ask questions or if you can, get a lawyer to read it and explain it to you.

There have been several instances where the artist is suddenly unhappy with the deal he’s accepted and this leads to a fall out between him/her and the label. In some cases, artists are dropped because they are not successful, as the label had expected.  When signing a deal, you need to sign one that’s suitable for you.

There are three types of contracts you should know about:

Artist/Record Deal

An artist record deal is probably the first deal you’ll ever be offered as an upcoming artist. This is one of the most popular deals. In this case, the label handles everything for you – recording new material, promotion and distribution. In some situations, the label may provide accommodation, transportation and a wardrobe allowance.

Depending on what you agree on, you can have full ownership of your songs and maintain full creative control. This is something you need to be clear on with your label. You can expect a 20% revenue share from the music sales and performances. This is because you’ll be paying back the label for the expenses they’ve procured investing in you.

Distribution Deal

With distribution deals, an artist stands a bigger chance of generating more revenue. This sort of deal is usually limited to established artists and artists with the potential to generate money.

With this sort of contract, the label/distribution company makes only about 20% from music sales. Unlike the record deal the only thing the company is responsible for is distribution of the talent’s songs in stores or online and collecting the money.

Joint Venture Deal

When you hear an artist is affiliated with a record label, they are most likely in a joint venture deal. The work is split between both the label and the artist. Although the label serves as a financial investor by providing funds for studio time. Just as the work is split, so is the revenue. In most cases, it’s an equal split.

It is important you read the terms of this sort of contract and sort out who owns the masters of recordings made. Also if the label gives an advance, you need to address how much you will give back to the label when money starts coming in.