How to Read a Record Deal Before You Sign It
Every artist remembers the excitement of getting a record deal offer for the first time. But that excitement is exactly why so many artists sign contracts they don't fully understand. A record deal is a legal and financial document first, and an exciting career milestone second. Here's what to actually look at before you put your name on one.
Understand The Advance Is A Loan, Not A Gift
The advance is the money a label pays you upfront, but it's almost always recoupable, meaning it gets paid back out of your royalties before you see another dollar. Read the recoupment terms closely. Find out exactly what expenses get charged against your advance, since some deals include recording costs, video budgets, tour support, and marketing spend in that recoupable pool.
Know Your Royalty Rate And How It's Calculated
Royalty rates vary widely, and the percentage on paper means little without knowing the base it's calculated from. Ask whether royalties are based on wholesale price or retail price, and whether streaming income is treated differently than physical sales. Also check for packaging deductions and free goods clauses, which can quietly reduce what you're owed.
Check How Many Albums The Deal Actually Covers
Multi-album deals often use "options," meaning the label can choose to pick up additional albums on the same terms, while the artist is locked in regardless of how the first album performs. Look closely at how many albums you're actually committing to, and under what conditions the label can extend the deal.
Look At Ownership Of Your Masters
This is one of the most important lines in any deal. Traditional label deals typically have the label owning the master recordings, sometimes permanently. Other deal structures, like license deals or artist-friendly imprint deals, may return ownership to the artist after a set period. Know which one you're signing.
Read The Territory And Term Clauses
Check what territories the deal covers and how long the term actually lasts, including any renewal periods. A deal that looks reasonable for one album can turn into a much longer commitment once renewal options are factored in.
Look For Reversion Rights
Ask whether there's a clause that returns your rights to you if the label doesn't release your music within a set period, or if they drop you. Without this, an artist can end up shelved indefinitely with a label sitting on unreleased material.
Get A Music Industry Entertainment Lawyer, Not A General Practice Lawyer
A general lawyer can miss industry-specific red flags that an entertainment lawyer would catch immediately. This is the one expense worth paying for before any signature goes on the page.
None of this is a substitute for a proper legal review, since every contract has its own quirks, but understanding these basics means you'll know what questions to ask before you sit down with a lawyer.
Music publicist Eric Alper is a Canadian industry veteran with 25+ years shaping artist careers through storytelling, media strategy, and deep industry relationships. With over one million followers and campaigns tied to hundreds of JUNO and Grammy-nominated releases, he connects artists to audiences across radio, press, and digital platforms.
Website: www.thatericalper.com