“A breakdown of a £1 million recording contract”


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When you hear news of an artist being given a £1m recording contract by a major label it conjures up images of a big lottery type cheque perception and instant riches. But what does a £1m record contract actually mean?

Bottom line, if the record company get it wrong and it just doesn’t sell for whatever reason, they pick up the slack on it – it’s their risk.

Meanwhile, all the winners of ITV1 talent show The X Factor – from Steve Brookstein to Joe McElderry – have been awarded “£1m record deals” by Simon Cowell’s label Syco.

What they’re basically saying is we’re prepared to back you in terms of studio time, musicians, producers, arrangers etc to that kind of money.

Another misconception is that the “advance” – the money paid up front to the artist – must be paid back by singers and bands if their career fails to take off.

If the record company get it wrong and it just doesn’t sell for whatever reason, they pick up the slack on it – it’s their risk.

They don’t come knocking on the door saying, ‘give me your money back’.

A report released in March a couple years ago by international recording industry body IFPI, estimates that a typical record deal to try to break a new pop act in the UK or the US is worth about £625,000. That money invested is roughly split into a number of different areas:

Advance. “This is money to the artist in return for the rights they’re giving to the record company and which they’ll live on for the next 12 to 18 months,”

Recording. “It depends if it’s solo or a band, if they want an orchestra, a brass section, top name producers, the works. It’ll probably be at least £250,000 to record the album from a major record label but it could be anything upwards from there.”

Visuals. “People can make videos as cheap as five grand but when record labels get involved it tends to get a bit more expensive than that. It could be £50k-plus per video.”

Promotion and marketing. The cost of trying to break an album accounts for the biggest chunk of record company investment – Mark Ronson’s hit 2007 album Version cost more than £870,000 to launch.

Tour support. “In the early days the artist may make a loss on the tours so the record label will come up with some costs to fill in the shortfall,”

In some ways, we ought to feel slightly more sympathetic to the record labels, because they are taking a big risk.

Remember 2007 X Factor winner Leon Jackson was dropped by Syco Music in March 2009 despite the single When You Believe reportedly selling close to 500,000 copies and album Right Now reaching number four.

He says he was paid two advances – the first when he was signed and the second when the album was handed over.

“If you exceed that advance with your album sales, then essentially you’re making a profit on your advance.”

“I think it’s fair to say I was never going to get any real creative control with that kind of record label,” he says.

He would not discuss whether or not Syco made a profit on his advance.


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  1. Pingback: Calculating Your Record Label Advance | Amaru Don TV

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