A recording contract, also known as a recording deal or record deal, is an agreement between a record label and a recording artist. It is legally binding, just like most other contracts, and requires both parties to follow the contract or face legal repercussions and contract termination. In general, an artist’s contract typically states that he or she must only record with the label with which he or she signed, and no other labels without permission. The artist is usually entitled to a fixed payment or a percentage of the record label’s profits. Getting a record deal with a well-known music label can make or break a musician’s career, and many musicians remember their first recording contract fondly.
A recording contract differs from one record label to the next, just as the terms of a rental agreement differ from one landlord to the next. However, once the artist has signed the contract, he or she is usually given an advance, which is money that is paid in advance. This advance may be a small sum or, statistically, more money than most people make in a lifetime, depending on how popular the artist is at the time or how popular he or she appears to be likely to become. The contract may stipulate that the artist produce a certain number of albums before being released from the recording contract and having the option to renew with the same company or find a new recording contract with a better deal.
Sometimes an artist’s music isn’t as profitable as the record label had hoped. In this case, the label could take advantage of an opt-out clause in the contract, which allows them to cut their losses terminating the contract earlier than expected. Typically, the artist is paid an agreed-upon amount prior to signing the contract, and the two parties part ways. After a failed album and a record label opt-out, a budding recording artist may find it difficult to secure a new recording contract.
When a recording contract comes to an end, the artist’s current label and others may compete for the artist’s signature on a new contract. The labels may offer the artist more money up front, higher royalties, or creative control over their work. In most cases, a record label will not become desperate enough to give the artist complete creative control. This is done on occasion, especially when very well-known artists are looking to sign a new recording contract. In either case, obtaining a contract, working under one, and renewing it can be beneficial to musicians.