There seems to be a constant battle between music artists and record labels when it comes to contracts. Whether you're signing to a major company like Universal, or an independent label, reading is fundamental.
Record labels often sign artists to "standard contracts," commonly known as a 360 deal. These deals typically include a lot of language that the artist doesn't understand. To put it in black and white, a 360 deal is an exclusive recording contract between a label and an artist in which the label shares in the profits from music sales, touring and live performances, merchandise, endorsements, appearances, etc.
A 360 deal is a contract that essentially includes full-circle all-revenue from an entertainer. Record labels make these contracts standard as insurance to them. If an artist isn't successful, they are still able to profit off of everything that artist did make. These contracts are not good.
Imagine going to one grocery store for all of your food items. People want variety, and so do artists.
Megan Jovon Ruth (Thee Stallion) Pete, is currently suing her first record label, 1501 Certified Entertainment for refusing to allow her to release music. The Houston rapper signed with 1501 in her early 20s and since then has re-signed to ROC Nation. After requesting to renegotiate the terms of her contract, 1501 Certified Entertainment not only refused to negotiate her terms but they also refused to release her new music, expected this Friday March 6, 2020.
Long story short, a judge granted an injunction (this restrains a person from beginning or continuing an action threatening or invading the legal right of another) against 1501 Certified Entertainment, allowing Thee Stallion to release her music, Friday.
Until then, here are some helpful do's and don'ts when signing with a recording label:
1. Lawyer Up
Record labels know that you’re not going to understand the language or terms of the contract. They prey on this. Having an attorney that specializes in recording contracts, or just contracts in general, will help with a lot of confusion. Ask questions!
You can always negotiate your contract. Specifically, try to negotiate advances, publishing, recording costs and album commitment, and tour funding. If you can, negotiate the likeness license royalty rate and, lastly, a renegotiation clause. This ensures that at the end of the contract term you can renegotiate.
Record labels know artists are eager to "get signed" and lack the money needed to produce and record an album. Thus, the label will "advance" artists money for those needs. Take note of whether the advanced money will recouped (repaid) by the royalties earned from the songs of the artist under the label.
4. Recording Costs
These costs include the editing, recording, studio time, musicians and mastering of a record. So many artists do not own their masters because the record label contracted to own them. Recently, however, artists have been able to own their masters by negotiating or buying them from the label.
5. Exclusivity Clause
This will commit the artist solely to the label company for the use of image and likeness as well as recording, performing and singing for the company. This is another clause that can cause artists to miss other opportunities.
1. Don't sign a contract without thoroughly reading and understanding each and every clause included — with your attorney!
2. Don't be scared to negotiate terms of the contract that you disagree with. As the artist, you are the talent but realistically, the label holds the money and power. Do not let that discourage you. If you are being offered a deal, you are more than likely good enough to sign elsewhere.
3. Don't fall victim to record labels. Google is your best friend. Ignorance of the law is no defense.
4. Don't neglect to review the percentages of every aspect of the contract. If there is a payment or money made, ensure that you know the breakdown and ask for an example.
5. Don't be Megan Thee Stallion!
Che' Thomas, Doctor of Jurisprudence, is a class of 2018 graduate from Howard University School of Law. During her matriculation, she studied contract law, trademark law, licensing and other relevant intellectual property and entertainment law courses. Dr. Thomas's opinions do not reflect those of her alma mater, employer or any other affiliation. Connect with Che' on LinkedIn.