Industry Rules: Good Deal vs. Bad Deal

Industry Rules: Good Deal vs. Bad Deal

The record deal can be a gift as well as a curse. Labels have been the gatekeepers of many artists’ careers, but music history is also littered with many casualties from exploitative and unfair deals. In recent times, certain artists have been able to build themselves and their brands without the support of traditional music-industry giants. But for aspiring artists, it’s of paramount importance to know what a deal is supposed to look like, when to sign, and with whom. 

The game has definitely changed. Artists like Chance the Rapper and the late Mac Miller became prominent examples of Hip-Hop stars navigating the music business without traditional recording contracts or major label backing.

Mac Miller was the poster boy for indie rap success for years. From age 17 on, he built his name via social media and self-promotion. He landed on indie mainstay Rostrum Records after dropping K.I.D.S. in 2010 and became an unlikely mainstream star on the strength of heavy buzz for his debut Blue Slide Park, its critically acclaimed follow-up Watching TV With the Sound Off, and hit single “The Way” with former girlfriend Ariana Grande. Then in 2014, he made the jump to industry-giant Warner Bros. Records.

“Warner is the most independent-thinking company I met with,” Miller told The Fader in 2014. “It is a partnership, and now I can focus on building my label Remember through music and let them handle everything I don’t like doing. Nothing will change in how I do things.”

In 2012 Chance the Rapper dropped his first album, 10 Day, without major label backing and it netted 400,000 downloads on music-sharing site DatPiff. The follow-up Acid Rap was an even bigger success, an uber-popular SoundCloud release that raised his profile tremendously. He garnered high-profile fans and collaborators like Childish Gambino, Vic Mensa, and Kanye West and became the first independent artist to perform on Saturday Night Live. He was in the middle of a label bidding war, which he mostly dismissed.

“People have hit us up,” he told MTV back in 2013. “There’s a lot of interest in what we have going on. I try to distance myself from it because I’m not interested in too much right now other than pushing this free album.”

A litany of bad record deals have been made throughout music history; Little Richard and TLC are just two of many examples. And Hip-Hop is no exception. N.W.A famously deteriorated due to their lopsided contracts with Ruthless Records, owned by Eazy-E and Jerry Heller. And Lil Yachty’s confusion about legal terms was apparent during an 2017 interview on the Everyday Struggle web series, when he was asked if he was locked into a 360 deal [when the record company gets a cut of an artist’s revenue stream].

After the show Lil Yachty tweeted, “Y’all gotta understand just because I didn’t know the term name ‘360 Deal’ Doesn’t Mean I Don’t Know What Kind Of Deal I Have. I Only Wasn’t Aware Of The Term ‘360 Deal’ I Own All My Publishing & Ive Recouped My Deal. For those So Pressed. Chill. I’m Good.”

Record deals can be treacherous territory when artists don’t have complete understanding of what they’re signing. Even as the game has changed in the streaming era, the same confusing legalese is used, which can leave an artist at a disadvantage.

According to music attorney Mark Quail

“The days of having to spend large amounts of money in a recording studio to produce sound recordings and having to maintain an entire shipping network to transport physical goods to thousands of retailers are over. Those were the main duties of a record company in the past, and they decided what was released to the public and what wasn’t.”

It was reported that when former Cash Money Records rapper Tyga signed his deal, his lawyer was also the label’s lawyer. He signed without considering terms, as he was so gassed to be around superstar Lil Wayne and excited that the label was releasing his single “Bedrock.” The then-18-year-old rapper was blinded by fame and a hot burgeoning career.

“I was on the road with Wayne, he’s recording Tha Carter III, so I’m just, in the sauce right now,” he said in 2017. “We did ‘Bedrock,’ and then he’s like, ‘Well, you gotta sign, this is going to be the single.’ I was like, ‘Alright cool.’ I signed. I didn’t even think about it. I didn’t think twice.”

So what makes for a good record deal nowadays? Here’s are some important considerations:

Find out where the contract is legally binding. For example, if it’s only binding in the United States, you may be able to sign other deals for content distributed elsewhere. With so much music dissemination occurring online, that’s less likely today than it was in the days of physical mediums. Get a guarantee or agreement in place for international rights, and ask what the label plans to do in terms of releasing your music in various territories. You may be able to promote and release your own music outside of the territory where your deal is binding. But make sure you understand what that means in the terms of whatever deal you sign.

Most labels traditionally want to lock you in for a long-term deal. That way whatever investment they pour into an artist for promo, tours, etc., can be recouped by sales over time if the artist is even reasonably successful. But that’s not the best thing for an artist, because you will be tied to that deal regardless of how your career progresses commercially. Go for a short-term deal, so if your career is on the upswing when your contract expires, you can renegotiate a new one with better terms. If things are on the downswing, you can cut your losses and possibly find a better agreement elsewhere. Of course, a deal can have clauses for renegotiation or an option to renew, but a shorter deal makes it more likely that optional terms can be agreed upon between artist and label as opposed to an artist being forced to abide by terms that are already determined.

Knowing your worth as an artist is key. Understand that contracts are meant to be beneficial for both parties and should not be one-sided or exploitative. Whether an act is looking to sign with a major or minor label, don’t assume that anyone has your interests at heart besides you. Make sure you know how the terms will impact you in the long view and have a representative that will negotiate in your behalf. If a label is eager to sign you, the principals involved should be able to meet your terms. Compromise is key, but don’t let anyone take advantage. As the artist, you’re the hot commodity. You can always take your talents elsewhere.


*CREDIT: Hip-Hop Producer/Executive/Label Head Andre Harrell relaxes in a nightclub VIP area by chatting with Sean "Puffy" Combs on November 12, 1994 in New York City. (Photo by Al Pereira/Getty Images/Michael Ochs Archives)

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