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5 tips every producer must know before signing a record label contract

You may have heard about artists signing contracts they regret. It's easy to feel overwhelmed when viewing a contract, especially if it's your first time. To make sure you don't sign something you'll regret, we've created a list of the 5 things you should look out for before signing your contracts. Keep in mind that this is not legal advice, just our opinion, and we recommend consulting with a music lawyer to get the best information possible.

5 tips every producer must know before signing a record label contract

Table of Contents:


1 - Royalty rate

The royalty rate is the one most artists will look out for in the first place. The royalty rate will vary, especially on smaller labels. On a smaller label, you usually have a 50/50 split after the label paid for all of their costs like a cover art design, mixing and mastering, or marketing assets. These fixed fees vary. If you feel like the label is allocating a lot for expenses like this, you may ask them to explain in more detail why the fees are so high - They may have a good reason for it.

On bigger labels, you usually get a smaller cut of the royalties. These big labels usually have more professional people for design, marketing, and playlisting. On the other hand, this is the next big step in your career. They will not just ensure a good performing song but also keep an eye on your career. So keep that in mind. You can still however negotiate with bigger labels for a higher percentage of the royalties, especially if you can explain that your name being on the track brings a higher chance of success (based on for example the performance of your previous releases).

2 - Creative control

Sometimes labels will interfere a lot in the process of the production of your music. This could get in the way of your creative vision for your music. In our opinion, you should avoid giving the label too much creative control. This is primarily for longer-term exclusive contracts with labels, not for single release contracts.

3 - Time

The time you're signing for is another important part of the contract. Sometimes you're not just signing one song to a label, but yourself as an artist for a certain period. When you're doing this, we recommend that the period is not longer than a year. If you've found your dream label, we understand that you usually want a long-term contract, but keep in mind that the label will have "full control" over you as an artist. Maybe after a couple of months you notice that the atmosphere is not that good and you will be happy that the contract ends after one year. If you're happy with the label you can extend the contract anyways!

Also, you might have tracks ready that don't fit the label you're signing with. In that case, you will want to have the freedom to sign those to other labels that are interested. So then make sure that the agreement doesn't limit you too much regarding not being able to release on other labels for a specific amount of time. Even if it's a short-term single contract - be on the look out for "options" in the contract where the label essentially has first dibs on your next tracks. Especially if it's a smaller label, you don't necessarily want to be committed to sticking with them for multiple releases.

4 - Marketing

The contract may include a part that gives the label permission to use your photos, name, biography, and other artist-related assets. But if you have a specific vision, aesthetic you like for your cover-art, etc. this might be something you want to be included in the contract, so you again have more creative control to make it happen. Also, if you want to create a music video for example and would like that budgeted in to the contract, this would be something you want added. Otherwise, the the label will usually just use their usual marketing methods like they do for their other artists.

5 - Hidden royalty deductions

Your royalty rate might seem fair to you, but be on the lookout for hidden deductions. Record labels are allowed to recoup much of the costs they make for releasing your record. This makes sense when it's about marketing, graphic design costs and such. However, sometimes labels can sneak in big deductions for the owners salary, placement on their own playlists, travel and much more. Remember that you can always ask for a detailed list of all fees associated with the contract. Of course be nice about all negotiations, but don't be afraid to ask questions. A good label should be happy to be clear and transparent with you.

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