"Recording Artist | Record Deals"
The possibility to be rich and famous is the American dream that everyone chases. Unfortunately, recording artist find that the American dream can quickly turn into a nightmare.
Recording artist deals generally grant the artist 10% to 25% of the record sales (Day, 1). Can you imagine, after spending many hours in the recording studio, photo opportunities, touring, personal appearances, and concerts you receive a bill? These charges are billed towards promotion, travel, hotel cost, bookings, clothing, studio time, distribution, housing, food, and other items to be paid from what they receive in royalties. Most recording artists have the fame, but do not understand the business side of the industry. Some would say that the artist must know what they are getting into, but it is the primary goal for the recording label to stay profitable in the end. To protect their investment, recording companies may have the artist sign over publishing, creative control, and name/likeness because all risk has been taken by the company alone. Although we think music recordings (referred to as masters) should be co-owned by recording companies and artists, we have must consider that the artist has no upfront investment. Recording companies take the hit if they are not making the record sales needed to reimburse the budget spent on their album. In the industry, artists do not receive proper royalties for their work, and deals are structured so that the label owns the masters and this can place recording artists in a no-win situation later down the line if they become a star and consistently sell records.
Many new artists signed to a recording label will have a less than 5% chance of becoming successful in the music industry, admittedly the risk can be great for the recording company (Day, 1). With this slim margin of success, the recording industry will structure a recording contract that gives them ownership of your music and masters. The recording industry has created an infrastructure that will record, distribute, market, and return a profit to the recording company. It's no wonder why they would protect their company and have the artist relinquish rights to the music they are investing in. The record companies are pretty much self-sustaining and they have an interwoven system to get new artists' music to market very quickly. Today's musician has a better situation than those back in the day because they do not need to depend on the record industry as much as they needed to for studio time and production equipment. The numbers today show "75% of music sales come from streaming, with only 10% coming from physical sales"(McDonald, 2). With independent artists having access to home studios, affordable equipment and software, they can distribute their music through platforms like Soundcloud, CD Baby, and Pandora. Recording companies are still signing artists using the "old system" based on CD sales, instead of the new download model for songs. In other words, "the artist used to get paid 8-15% of CD sales royalties", in contrast to record companies have a lower cost for distribution for uploaded digital content at this time and in this digital medium (McDonald, 2). The record companies must be willing to adjust the contracts for an artist to receive more money from music sales because these companies' budgets are far lower than the days before.
Increasingly popular deals that have become a staple for recording companies these days are the "360 deals". These are the new deals that take a piece of merchandising, personal appearances, concerts, download revenue, cd sales, publishing, and endorsements to name a few (McDonald, 2). These are deals that the recording companies put together to stay profitable to fill the gap from losing CD sales revenue. It is not uncommon for an artist to be promised certain percentages of recording sales, then years later they are advised that they do not have rights to publishing, music, music sales, or even royalties. Popular musical artists such as Kalise, had been allegedly lied to about their music royalty percentages and sales over the years. She advised she was lied to and that the album sales from the Neptunes were to be split 33/33/33 (McDonald H., 2). She was not paid at all for recording sales. Independent labels have found success by gathering a roster of good talent and then later negotiating a record deal with the major labels. This will give them more leverage in negotiation and distribution. "These labels have been responsible for such talent as Drake and Radiohead"(McDonald, 2). The new age record companies are AWAL, Soundrop, RouteNote, and several others. Stimulating the creativity of the artist and talent, they negotiate a small fee for distribution and the artist walks away with nearly 100% of the revenue. These are just a few digital platforms that store and download the music directly to the user (Medi.com, 4).
Most recording artist will forgo their legal rights, or legal counsel because they are referred to as "friends or family" during negotiations (Cochrane, 3). Recording labels have also masked more income streams in recording deals, with elusive ways to add themselves as band members, writers, plus assigning recording artists to subsidiary recording companies and talent management labels (Cochran, 3). These are the endless stories we hear over the years about artists who go broke or do not retain any rights to the very music they create. Others have said that they should know better and that attorneys should have looked over the paperwork before they signed. Contrary to what we think they should do, it is common for the artist to jump in and sign based on what promises have been made to the artist up to signing the deal. Let us not forget that these recording contracts are very confusing, have a lot of legal jargon and one word in the contract can make a big difference in interpretation to all parties. To make matters even worse than that, they trust wholeheartedly trust what the label tells them and later find that it was a false tale.
With all that said, the recording companies are still relying on the old contract structure in the new era of recording. Second, the recording artist needs to get a bigger piece of the royalty amount from what the recording companies are making, and finally, the artist is willing to sign their life away for the chance to become famous. It is such a sticky situation where the recording companies have the artist sign as much of their publishing and creativity away to the recording company, to recoup the money they place into an artist. Although that money is not guaranteed to come back, the risk is on the company and that's how they are structured to replenish the profit margin.
Day B. (2011, P. 21), In Defense of Copyright: Record Labels, Creativity, and the Future of Music. Seton Hall Journal of Sports & Entertainment Law.
McDonald H., (2020), Website, https://www.thebalancecareers.com/how-360-deals-in-the-music-industry-work-2460343
Cochrane N., (2019) Website; https://www.billboard.com/articles/columns/hip-hop/8550339/bad-record-label-deals-mase-kelis-90s
Media.com, @HipHopo Unwrapped, (2019) Website; https://medium.com/@HipHopUnrapped/why-we-need-to-leave-record-labels-behind-in-2019-bfa1db45036a
Photo Credit: Samuel Regan Asonte
