Everybody’s ideas of what a good record deal is, is different. For some it’s a question of how much money is on offer. For others it’s how much commitment there is from the record company. Some artists are more interested in how much control they have over what sort of record they make. We call that creative control.
Lets look at ideas of a good deal from both sides, Artist and Label. There’s more than one type of record deal to chose from. The License, The development deal, the exclusive recording contract and a sub-category called a development deal, the 360 degree model and the production deal. The production deal and 360-degree model are both common propositions for artists today.
The UK record industry is operating in a fairly cautious and conservative manner. When record company executives are making up their minds about what to offer you in terms of a deal, they will look at a number of things. First, and most importantly, how much they want to sign you to the company. If they desperately want you, they’ll pay over the odds to get the deal done. If you have more than one label fighting over you, then you’ve much greater bargaining power. Your manager and lawyer can play one company off against each other and get you a better deal. But that bidding war scenario is less common in today’s climate.
I’m from a finance background so lets look at it from a numerical paradigm. If the record company is doing it scientifically, they’ll use various formulas to work out what’s a reasonable deal to offer you. They’ll look at the type of act you are, how much they think its going to cost to record the album, make videos and to promote you.
They’ll put these estimates into the model and it tells them how many records you’d have to sell before they break even. If after computing this equation they think that’s an unrealistic number for you to achieve, they may scale down the financial numbers for your offer. That’s the theory from the finance angle.
Today its common for artists to attempt to build up their buzz on the Internet through youtube and other social media outlets as a form of leverage for a potential deal.
Your manager should sit down with you and discuss what’s important to you. Are you only interested in big money advances, or would you prefer to go for a smaller advance in return for creative control or more commitment from the record company? Once your manager knows what you want, your manager can make his “pitch” to the record company along those lines.
Ideally it should be a balanced contract, where the record company can reasonably protect its investment, but also one where you get some commitment from the record company and the chance to earn a decent living from the deal.
“When you sign a deal people own you” (Below)