4 Types Of Record Label Contracts & Creating Your Own

When addressing recording contracts, it’s important to consider the diverse types of record label companies and their corresponding contractual approaches. Here we will outline the four most common types of recording contracts and provide tips for creating your own. Having a solid understanding of these contracts will help you when negotiating with artists, as well as drafting your own recording contracts. So, let’s get started!

Traditional or Standard Record Contract

The most common type of recording contract is the traditional or standard record contract. This type of contract is typically used by major record labels and includes clauses that favor the record label company. For example, a standard recording contract will have a clause that allows the label to terminate the contract if sales fall below a certain amount.

What’s Included In a Standard Record Contract?

So, what elements are included in a standard recording contract? The following are some of the most common clauses:

Artist’s name and signature
Record label’s name and signature
The term of the contract
The recording budget
The artist’s royalty rate
Ownership of the master recordings
Rights granted to the record label
Marketing and promotion obligations
Tour support
Advance amount
Option clause

As you can see, there are a lot of different elements that can be included in a standard recording contract. It’s important to understand all of these clauses before offering a contract to an artist or signing a contract with an artist.

Tips For Creating a Standard Recording Contract

If you’re a record label company owner, here are a few tips for creating a standard recording contract:

Make sure the contract is in writing and signed by both parties.
Be clear about the term of the contract and what happens at the end of the term.
Include a clause that allows you to terminate the contract if sales are below a certain amount.
Clearly state who owns the master recordings and what rights the record label has to them.
Include marketing and promotion obligations in the contract.
Describe tour support obligations in detail.
Include an advance payment amount in the contract.
Specify what happens if either party wants to terminate the contract early.

Standard Recording Contract Template

You can use this standard recording contract template to create your own contract. Simply update the information in brackets to reflect your specific situation.

This recording contract (“Contract”) is made on DATE between ARTIST NAME ( “Artist”) and RECORD LABEL NAME ( “Label”).

Recordings. Artist hereby grants Label the exclusive right to record, manufacture, copy, duplicate, release, promote, market, advertise, sell, distribute, and otherwise commercially exploit sound recordings of Artist’s performances of musical compositions (“Recordings”), in any and all media in any format now known or hereafter devised throughout the universe in perpetuity. Notwithstanding the foregoing, nothing contained in this Contract shall be deemed to restrict Artist from recording for any person, firm, or entity during the term of this Contract, so long as such recording is not released in competition with any Recordings released by Label hereunder.
Term. The initial term of this Contract shall commence on the date of this Contract and shall continue for a period of YEARS (the “Initial Term”). Upon expiration of the Initial Term, this Contract shall automatically renew for successive one (1) year periods (each a “Renewal Term”), unless either party provides written notice of its intention not to renew at least ninety (90) days prior to the expiration of the Initial Term or any Renewal Term.
Royalty Rate. As compensation for the rights granted herein, Label shall pay to Artist a royalty of PERCENT of the Retail List Price (“RLP”) received by Label for each Recording sold, net of returns. The royalty rate shall increase by PERCENT on the first day of each Renewal Term.
Ownership of Recordings. All Recordings made pursuant to this Contract shall be and remain the sole and exclusive property of Label.
Marketing and Promotion. Label shall use commercially reasonable efforts to market and promote the Recordings in accordance with industry standards.
Tour Support. Subject to availability of funds, Label shall provide Artist with TOUR SUPPORT per year for live performances in support of the Recordings.
Advances. Upon execution of this Contract, Label shall pay to Artist an advance of DOLLARS ($), which shall be recoupable from Artist’s future royalties under this Contract.
Royalties. Label shall pay Artist’s royalties quarterly within THIRTY (30) days after the close of each fiscal quarter, provided that Label may deduct from such payment any unrecouped advances and any amounts owed to third parties in connection with the exploitation of the Recordings. All payments shall be made in U.S. currency and shall be paid by check or wire transfer to an account designated in writing by the Artist.
Termination. This Contract may be terminated by either party upon written notice if: (a) the other party has breached any material term of this Contract and such breach remains uncured for a period of THIRTY (30) days after written notice thereof; or (b) the other party becomes insolvent, files a petition in bankruptcy, or commences any proceeding relating to insolvency or bankruptcy.
Signatures. This Contract shall be binding upon the parties hereto and their respective successors and assigns.

________________________ ________________________

ARTIST NAME ARTIST NAME

Signature Signature

Date Date

________________________ ________________________

RECORD LABEL NAME RECORD LABEL NAME

Signature Signature

Date Date

360 Recording Contract

A 360 recording contract is a type of record label contract where the label agrees to promote and market the artist in exchange for a portion of the artist’s income from all sources, including live performances, merchandise sales, and songwriting royalties.

Under a 360 deal, the record label typically receives between 20% and 50% of the artist’s income. The exact percentage depends on the specific terms of the contract.

360 deals are becoming increasingly common in the music industry, as record labels attempt to recoup their investments in artists. 360 deals are controversial, with some critics arguing that they take advantage of artists and stifle creativity.

What’s Included In a 360 Recording Contract?

360 recording contracts vary widely in their terms and conditions; but, there are some common elements that are typically included.

The term of the contract: This is the length of time that the label has the rights to promote and market the artist. 360 deals are typically long-term contracts, often lasting five years or more.
The percentage of income: This is the percentage of the artist’s income from all sources that the label will receive. 360 deals typically range from 20% to 50%.
The territory: This is the geographic area in which the label has the rights to promote and market the artist. 360 deals typically cover worldwide territories.
The exclusive rights: This is a clause that grants the label the exclusive rights to promote and market the artist. This means that the artist cannot sign a similar deal with another label during the term of the contract.
The non-compete clause: This is a clause that prohibits the artist from signing a recording contract with another label during the term of the contract.
The options clause: This is a clause that gives the label the option to extend the term of the contract or sign the artist to a new contract after the initial term has expired.

Tips For Creating A 360 Recording Contract

If you’re an entrepreneur considering offering 360 recording contracts, it’s important to understand all of the terms and conditions before you agree to anything. Here are some tips for creating a 360 recording contract:

Make sure you understand all of the terms and conditions. Don’t sign anything until you’re absolutely sure that you understand and agree to all of the terms.
Negotiate the percentage of income that the label will receive. If possible, try to negotiate a percentage that will repay your investment in the artist as quickly as possible. The standard percentage for 360 deals is 30% to 50%, but some artists may be willing to accept a lower percentage.
Pay close attention to the territory clause. This clause determines where your label can promote and market the artist’s music. Make sure that you’re comfortable with the territory that’s listed in the contract.
Pay close attention to the exclusive rights clause. This clause grants the label exclusive rights to promote and market the artist’s music. Make sure that you’re comfortable with the level of exclusivity that’s listed in the contract.
Pay close attention to the non-compete clause. This clause prohibits the artist from signing a recording contract with another label during the term of the contract. Make sure that you’re comfortable with the length of time and the geographic area that’s listed in the contract.
Pay close attention to the options clause. This clause gives your label the option to extend the term of the contract or sign the artist to a new contract after the initial term has expired. Make sure that you consider the options that the artist requests before you agree to anything.
Get everything in writing. Have the artist sign two original copies. You will sign both copies, as well. Each of you keeps one original copy. You will want to place your original copies of all signing contracts in a fireproof security box.
Have an attorney review the contract. If possible, have an attorney who specializes in recording contracts review the contract before you offer a contract to an artist and before you agree to or sign anything.

360 Recording Contract Template

This is a template for a 360 recording contract. This contract can be customized to fit the specific needs of the label and the artist.

Legal Label name: __________________________

Legal Artist name: _________________________

Term. This recording contract is effective as of ___________________ (the “Effective Date”) and shall continue in effect until _____________________ (the “Term”).
Description of Services. During the Term, the label shall provide the following services to the artist: _____________________.
Compensation. In consideration for the services provided by the label, the artist shall pay the label a percentage of their income from all sources, which shall not exceed ____________________ percent (___%).
Territory. The territory covered by this recording contract is ________________
______________.
Exclusive Rights. The label shall have exclusive rights to promote and market the artist during the Term in the Territory.
Non-Compete Clause. The artist agrees not to sign a recording contract with another label during the Term of this contract.
Options Clause. The label shall have the option to extend the Term of this contract or sign the artist to a new recording contract after the initial Term has expired.
Entire Agreement. This recording contract constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, proposals, negotiations, understandings and communications, whether oral or written.
Signature of Label Representative: ______________

Legal Signature of Artist: _____________

Date: ______________

Profit-Split Contract

A profit-split recording contract is a contract in which the artist and the label agree to evenly split the profits from the sale of the recording. This type of contract is less common than a traditional recording contract, but it can be beneficial for both parties if the recording is successful.

What’s Included In a Profit-Split Contract?

When creating a profit-split recording contract, there are a few key points that should be included:

The percentage of the profits that will be split between the artist and the label. This percentage should be agreed upon by both parties before signing the contract.
How the profits will be calculated. This should include a list of all of the expenses that will be deducted from the profits, as well as how royalties will be calculated.
When the artist will receive their share of the profits. This should be clearly stated in the contract so that there is no confusion about when the artist will be paid.
The outcomes if the recording is not successful. This clause should state what will happen if the recording does not generate enough revenue to cover the expenses of the label.

Tips For Creating a Profit-Split Contract

When creating a profit split recording contract, there are a few things to keep in mind:

Make sure that both parties agree on the percentage of the profits that will be split. This percentage should be fair and should reflect the amount of work that each party is putting into the recording.
Be clear about how the profits will be calculated. This will help to avoid any confusion or disagreements about how the artist will be paid.
Make sure that the artist understands when they will receive their share of the profits. This should be clearly stated in the contract so that there are no surprises.
Include a clause about what will happen if the recording is not successful. This will help to protect both parties in the event that the recording does not generate enough revenue.

Profit-Split Contract Template

This profit-split recording contract template can be used as a starting point for creating your own contract. This contract can be customized to fit the specific needs of your project.

Artist name: ______________________________

Album title: ______________________________

Term. The Term of this Agreement shall begin on the date of this Agreement and shall continue for __________________ (__) years.
Rights. The artist hereby grants the label the exclusive right to manufacture, promote, market, sell and distribute the recording in all formats in the Territory during the Term.
Profits. The artist and label agree to split the profits from the sale of the recording evenly. The percentage of the profits that will be split shall be ___________________ (__)%.
Calculation of Profits. The profits from the sale of the recording shall be calculated as follows: ____________________ (insert calculation method).
Payment to Artist. The artist shall be paid their share of the profits within __________________ (__) days of the label receiving payment from the distributor.
Failure to Generate Profits. If the recording does not generate enough revenue to cover the expenses of the label, ______________________ (insert clause about what will happen).
Signature of label: _______________________
Signature of artist: _______________________
Date: __________________

Distribution Contract

The final type of recording contract is the distribution contract. A distribution contract is a contract between the artist and a distributor, who will help to distribute the recording to different retailers. This type of contract is less common than the other types of recording contracts, but it can be used in certain situations.

What’s Included In a Distribution Contract?

When creating a distribution contract, there are a few things to keep in mind:

The terms of the contract. This is the length of time that the distributor will be distributing the recording.
The territories where the recording will be distributed. This is important to consider if the artist plans on releasing the recording in different countries.
The format of the recording. This should be specified in the contract so that there is no confusion about which format the distributor should be distributing.
The price of the recording. This should be agreed upon by both parties before signing the contract.
The artist’s royalty rate. This is the percentage of the sales that the artist will receive.
The distributor’s commission. This is the percentage of the sales that the distributor will receive.
When the artist will be paid. This should be specified in the contract so that there are no surprises.

Tips For Creating A Distribution Contract

When creating a distribution contract, there are a few things to keep in mind:

Make sure that the term of the contract is realistic. It should be long enough to give the distributor time to promote and distribute the recording, but not so long that it will be difficult to get out of the contract, if needed.
Be clear about the territories where the recording will be distributed. This will avoid any confusion or misunderstanding about where the recording can be sold.
Specify the format of the recording in the contract so there is no confusion about which format the distributor should be distributing.
Make sure to agree on a price for the recording before signing the contract. This will avoid any disagreements about payment later on.
Be clear about the artist’s royalty rate and the distributor’s commission. This will help to avoid any financial surprises down the road.
Specify when the artist will be paid in the contract. This will ensure that both parties are on the same page about when payments will be made.

Distribution Contract Template

Here is a distribution contract template that can be used:

DISTRIBUTION CONTRACT

This Distribution Contract (the “Contract”) is made and entered into as of ______________________________ (the “Effective Date”) by and between ______________________________ (the “Artist”) and ______________________________ (the “Distributor”).

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree to enter into this Contract for the distribution of the recording titled ______________________________ (the “Recording”).

Term. The term of this Contract shall begin on the Effective Date and shall continue for _____________________ (the “Term”).
Territory. The Distributor shall distribute the Recording in the following territories: _____________________.
Format. The Recording shall be distributed in the following format(s): ____________________.
Price. The price of the Recording shall be ____________________ per unit sold.
Artist’s Royalty Rate. The Artist shall receive a royalty rate of __________________ percentage of the sales price per unit sold in accordance with the terms set forth in this Contract.
Distributor’s Commission. The Distributor shall receive a commission of _______________ percentage of the sales price per unit sold in accordance with the terms set forth in this Contract.
Payment. The Artist shall be paid on a ____________________
__________ basis in accordance with the terms set forth in this Contract.
Signatures. This Contract shall become binding when both parties have signed it.

______________________________ ______________________________

Artist Date