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Hub AI
Recording contract AI simulator
(@Recording contract_simulator)
Hub AI
Recording contract AI simulator
(@Recording contract_simulator)
Recording contract
A recording contract (commonly called a record contract or record deal) is a legal agreement between a record label and a recording act (artist or group), where the act makes an audio recording (or series of recordings) for the label to sell and promote. Artists under contract are normally only allowed to record for that label exclusively; guest appearances on other artists' records will carry a notice "By courtesy of (the name of the label)", and that label in question may receive a percentage of sales through publishing.
Labels typically own the copyright in the records their artists make, and also the master copies of those records. An exception is when a label makes a distribution deal with an artist; in this case, the artist, their manager, or another party may own the copyright (and masters), while the record is licensed exclusively to the label for a set period of time. Promotion is a key factor in the success of a record, and is largely the label's responsibility, as is proper distribution of records.
While initial recording deals usually yield a smaller percentage of royalties to the artists, subsequent (or re-negotiated) deals can result in much greater profit, or profit potential. A few acts, such as Madonna, Michael Jackson, R.E.M., U2, and Janet Jackson, among others, have signed multimillion-dollar deals. Whitney Houston signed a $100 million deal with BMG to deliver just six albums, the largest recording deal at the time. Robbie Williams signed an £80m (US$125m) contract with EMI. For many other artists, though, for the millions to become tangible, hit albums meeting or exceeding their previous sales figures must follow. Recording contracts may include opt-out clauses for the label in the event an act's popularity dips or the act releases non-hit albums under the deal. For instance, Mariah Carey was dropped by Virgin Records and her $100 million recording deal cancelled after her first album released by the label sold poorly.
Record companies put forth huge sums of money to produce, release, and promote an album. Recording time, manufacturing, packaging, photos, distribution, marketing, and music videos are just some of the areas where the label must spend money on an act it has signed. The label usually absorbs these expenses, but in some artists' contracts, some of this money may be due back to the label, unless otherwise worded. Advances (upfront money that is paid directly to a recording artist) are normally always owed back to the label. Once (and if) the advance has been paid back from record sales, the artist then begins to see royalty payments for additional sales.
Advancing an act money is a risk the label endures as it does not know how well the act's album will sell. Capitol Records suspended Linda Ronstadt's contract in the early 1970s, as Capitol had spent more money on Ronstadt then it had yielded. She continued to tour partly to pay Capitol back for her 1960s deal, and a string of hits in the mid-1970s allowed her to finally clear the debt.[citation needed]
Record companies expect to make a profit, and do not tend to concern themselves with a given performer's lack of business or financial savvy, as artists such as George Michael have discovered. "Walking out" on a deal is very difficult, as is attempting to strike a new deal without completing an old one. Donna Summer signed a new deal with Geffen Records in 1980, and released two albums on Geffen. She was then told by her previous label, Polygram Records, that she owed them another album, per her agreement. She recorded and delivered an album to Polygram that the label released, and it became a hit. Summer then went back to recording for Geffen Records for her next project. The Mamas & the Papas were forced into a reunion, years after their 1968 breakup, by the letter of their Dunhill Records contract, which required one more album to be completed – which became 1971's People Like Us.[citation needed]
Record companies will generally increase royalty rates or give artistic freedom to get acts to re-sign contracts with them once the original deal has been fulfilled. Established acts may otherwise go where they see better opportunity. During 1980, Diana Ross released her album diana, which fulfilled her contract with Motown Records. The album spawned two US top ten hits (the #1 hit "Upside Down" and the #5 "I'm Coming Out") as well as a UK top ten hit ("My Old Piano", peaking at #5), and sold 10 million copies worldwide. Ross, however, felt she was never fairly compensated by Motown for her work with The Supremes or her solo releases.
When RCA Records offered Ross $20 million to sign with them, she gave Motown the chance to match the deal, or at least offer something almost comparable. Motown, believing Ross's solo career was too up-and-down, and not seeing any reason to now compensate her for her earlier Supremes work, offered $3 million. Split with the decision to remain with the label that made her famous, or sign a deal with a company that was willing to pay her what she felt she was worth, she ultimately signed with RCA. The $20 million deal was the biggest recording contract at the time.[citation needed]
Recording contract
A recording contract (commonly called a record contract or record deal) is a legal agreement between a record label and a recording act (artist or group), where the act makes an audio recording (or series of recordings) for the label to sell and promote. Artists under contract are normally only allowed to record for that label exclusively; guest appearances on other artists' records will carry a notice "By courtesy of (the name of the label)", and that label in question may receive a percentage of sales through publishing.
Labels typically own the copyright in the records their artists make, and also the master copies of those records. An exception is when a label makes a distribution deal with an artist; in this case, the artist, their manager, or another party may own the copyright (and masters), while the record is licensed exclusively to the label for a set period of time. Promotion is a key factor in the success of a record, and is largely the label's responsibility, as is proper distribution of records.
While initial recording deals usually yield a smaller percentage of royalties to the artists, subsequent (or re-negotiated) deals can result in much greater profit, or profit potential. A few acts, such as Madonna, Michael Jackson, R.E.M., U2, and Janet Jackson, among others, have signed multimillion-dollar deals. Whitney Houston signed a $100 million deal with BMG to deliver just six albums, the largest recording deal at the time. Robbie Williams signed an £80m (US$125m) contract with EMI. For many other artists, though, for the millions to become tangible, hit albums meeting or exceeding their previous sales figures must follow. Recording contracts may include opt-out clauses for the label in the event an act's popularity dips or the act releases non-hit albums under the deal. For instance, Mariah Carey was dropped by Virgin Records and her $100 million recording deal cancelled after her first album released by the label sold poorly.
Record companies put forth huge sums of money to produce, release, and promote an album. Recording time, manufacturing, packaging, photos, distribution, marketing, and music videos are just some of the areas where the label must spend money on an act it has signed. The label usually absorbs these expenses, but in some artists' contracts, some of this money may be due back to the label, unless otherwise worded. Advances (upfront money that is paid directly to a recording artist) are normally always owed back to the label. Once (and if) the advance has been paid back from record sales, the artist then begins to see royalty payments for additional sales.
Advancing an act money is a risk the label endures as it does not know how well the act's album will sell. Capitol Records suspended Linda Ronstadt's contract in the early 1970s, as Capitol had spent more money on Ronstadt then it had yielded. She continued to tour partly to pay Capitol back for her 1960s deal, and a string of hits in the mid-1970s allowed her to finally clear the debt.[citation needed]
Record companies expect to make a profit, and do not tend to concern themselves with a given performer's lack of business or financial savvy, as artists such as George Michael have discovered. "Walking out" on a deal is very difficult, as is attempting to strike a new deal without completing an old one. Donna Summer signed a new deal with Geffen Records in 1980, and released two albums on Geffen. She was then told by her previous label, Polygram Records, that she owed them another album, per her agreement. She recorded and delivered an album to Polygram that the label released, and it became a hit. Summer then went back to recording for Geffen Records for her next project. The Mamas & the Papas were forced into a reunion, years after their 1968 breakup, by the letter of their Dunhill Records contract, which required one more album to be completed – which became 1971's People Like Us.[citation needed]
Record companies will generally increase royalty rates or give artistic freedom to get acts to re-sign contracts with them once the original deal has been fulfilled. Established acts may otherwise go where they see better opportunity. During 1980, Diana Ross released her album diana, which fulfilled her contract with Motown Records. The album spawned two US top ten hits (the #1 hit "Upside Down" and the #5 "I'm Coming Out") as well as a UK top ten hit ("My Old Piano", peaking at #5), and sold 10 million copies worldwide. Ross, however, felt she was never fairly compensated by Motown for her work with The Supremes or her solo releases.
When RCA Records offered Ross $20 million to sign with them, she gave Motown the chance to match the deal, or at least offer something almost comparable. Motown, believing Ross's solo career was too up-and-down, and not seeing any reason to now compensate her for her earlier Supremes work, offered $3 million. Split with the decision to remain with the label that made her famous, or sign a deal with a company that was willing to pay her what she felt she was worth, she ultimately signed with RCA. The $20 million deal was the biggest recording contract at the time.[citation needed]