How To Sign A Record Label Contract As A Musician
A record contract represents the Holy Grail for many musicians.
But even if you know what you want, it doesn’t mean you know how to get it, or for that matter, sign it.
If you are presented with a record contract, best practice is to review the terms before signing, oftentimes with the help of a qualified entertainment lawyer.
In this guide, we will look at all these matters in greater detail and offer tips on getting and signing a record label contract.
We'll touch on how to get a record contract later, but first let's look at how to actually sign one.
But first, if it's your aim to do music professionally, you'll want to check out our free ebook while it's still available:
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How To Sign A Record Label Contract
The first step to signing a record contract is getting presented with one. If you follow the steps outlined above, grow a profitable music career with a large following, and have a highly marketable sound and image, you should be presented with a contract.
Signing is the easy part. Only, there are probably some things you aren’t aware of yet, including some best practices most new artists don’t even know about. So, before jumping in, you should study up and make sure you know what you’re committing to.
Here are some tips to help you navigate these waters.
Know Your Contract
Many artists assume they’re being presented with the deal of a lifetime and are quick to sign on the dotted line. After all, a record contract is what they’ve been in pursuit of for years and maybe even decades.
But this is exactly when you need to pump the breaks and review the terms. Most deals offered to new artists have some significant pros and cons – for instance, have a read through our post on 360 deals.
You may think you’re going to work your way up to a better deal later, but that’s idealistic. Many artists are let go before that ever happens and are never approached by labels again.
Please understand that negotiation is necessary, and even expected. The label probably doesn’t even expect you to sign without negotiating your terms.
So, go over everything with a qualified entertainment lawyer and understand what the contract involves, as well as what your obligations are.
Determine The Length Of The Contract
In the past, long-term contracts were somewhat desirable, because they were usually tied to development deals. These days, development deals are virtually unheard of.
Meaning – these days, if you get locked into a long-term contract, you could end up with a boss looking over your shoulder, telling you what to do and when, asking for the unreasonable, for five or even 10 years. Basically, you’ll be handing over control for an extended period.
Check to ensure that the contract is one year, which is standard for new artists these days. If it isn’t, then make sure you know what you’re getting into, and if necessary, renegotiate.
A one-year contract should be followed by a few option periods, where the label can renew your contract for longer if they like your performance.
Further, a one-year contract allows both parties to keep their options open. The label may be able to help you for a period but run out of resources to keep promoting you long-term. Or you may be presented with other desirable contracts.
Basically, you want to make sure there’s some flexibility built into the contract.
Release Commitments Are A Must
If there are no release commitments built into the contract, you may want to renegotiate.
A release commitment ensures that your album will be produced, packaged, and distributed by the label. And it’s typically a promise that the label will release at least one of your albums while you are signed to them.
This is a fail-safe for artists, because it means you can walk away if the label doesn’t live up to their end of the bargain.
You can also negotiate marketing spend, which ensures the label has some skin in the game in getting your album out there.
Confirm Royalty Rate
There’s no way to sign a record contract without signing away a good chunk of revenue. That said, you should still check to ensure your royalty rate is fair.
This can vary quite a bit from label to label and contract to contract. A good ballpark to aim for as a new artist is 5 to 10%, though up and comers can command 10 to 14%, and experienced pros can snag up to 18%.
A record label may tell you that 1 to 2% is standard. If you are presented with such an offer, I would suggest renegotiating, and barring that, walking away from the contract.
Again, the label is owed something for their work, and they will take a significant piece of the pie. But don’t get roped into a deal where you don’t get any of the royalties.
Likewise, you’ll want to keep an eye out for potential/hidden royalty deductions built into the contract. Deductions include costs related to recording, video, CD and DVD packaging, and so on. These are standard.
But you want to look out for deductions related to salaries, benefits, travel, hotel stays, car rentals, meals, entertainment, and more.
If such deductions are part of the contract, guaranteed your label is living the high life on your dime.
Build Honesty Into The Contract
So, the record contract sounds good and all, but you want accountability. After all, the label is asking for a lot. You should be able to ask for what matters to you, too, right?
Where there is no trust, resentment is sure to build, and that can sour the relationship big time. Which can cause either party to act in ways that are outside of the contract.
So, see if you can build an audit provision into the contract. This would give you the ability to hire an auditor to go through the label’s books to ensure you’re getting paid what you’re owed.
Again, this relates to royalties earned on sales and streaming, but that’s where most of the “funny business” occurs, so be sure to fight for accurate record keeping.
Other Considerations When Signing A Record Contract
The above is but a starting point. Contracts can often be long, detailed, and tedious to the point of absurdity. Plus, they can be full of legal jargon that’s hard to understand.
So, while we’ve done our best to ensure you know what to look out for and how to handle it, we’d still recommend working with an entertainment lawyer when signing a record contract.
Instead of rushing in to sign your life and money away, it’s much better to spend some money upfront to ensure you know what you’re getting into and renegotiate the terms, as necessary.
Again, experienced artists know to negotiate but many new artists don’t, and that can land them in hot water.
It would seem like everyone should be invested in a business deal, but that’s simply not the case. Sometimes labels exploit artists, sometimes they don’t have the resources to work with you but sign you anyway (something similar happened to They Might Be Giants), sometimes they let go of you for one wrong move.
It’s not necessarily fair, but it happens. So, take your time, figure out whether it’s a good deal for you, and negotiate. If things fall apart, it’s okay. If you can earn the attention of one label, surely another contract will be right around the corner.
How To Get A Record Contract
Getting an offer from a major label is rare, though not beyond the scope of possibility. Even many of the so-called independent labels are owned by major labels, which means your chances aren’t necessarily better with indie representation.
But true indie labels are on the rise, so if you have the right connections, a marketable image, and a growing fan base, you can still get the attention of talent scouts, A&R reps, or label representatives.
That said, stop listening to those who say, “make a demo and pitch it to record executives.” That’s a winning formula for apathy, disappointment, and rejection.
No, if you’re serious about getting a record contract, set aside hollow dreams of easy success and “getting discovered,” and put in some serious DIY hours into your career.
Most labels probably won’t turn your way until you’ve got some serious regional clout, and in some cases, won’t even care until you can show you’ve got strong followings in multiple markets.
You can’t “fake it until you make it,” you can’t “hack your way to success,” you can’t “optimize for the eyes of the label.” I’m sorry. If that’s why you’re here, you’re better off hanging up your guitars and drumsticks.
I’m not saying there aren’t opportunities for fame and fortune outside of representation. There absolutely are!
You can make a YouTube channel, grow a massive social media following, start a fan club or membership site, or even pursue licensing and placement opportunities. These paths, however, are going to look quite a bit different than the one you've been contemplating.
So, you’ve got to be crystal clear that a record contract is what you want. And you’ve got to work for it. Otherwise, you won’t get it.
Here are the steps you must follow to getting a record contract.
Make A Great Album
Just for now, forget the demos and singles – those are for established artists and hobbyists with time on their hands. What you want to do is make the album of a lifetime. You want to go all-out and get the best performances and production money can afford.
Recognize that this album isn’t just going out to your fans – you’re going to be sending it to radio stations, bloggers and reviewers, influencers – basically anyone who might be able to give you a leg up (build a real relationship with these people too – more on this later).
And don’t get caught up in the terminology here. In some cases, you will be sending physical copies (so you need to make some), but most of the time, you will be circulating MP3s or sharing streaming links.
Either way, you need to blow up this album. Because if it goes nowhere, you’re going to need to make another album and repeat the process and make an even better album than the first. But you might need to do this anyway, as you continue the recording, promoting, touring cycle.
With a killer album, music videos, radio airplay, and streaming data in tow, you’re ready to plan your tour through towns and cities where people are listening to you.
Yes, it’s perfectly fine to build up a local following and grow it in concentric circles before hitting the road. But many bands find this challenging because of fan fatigue and market saturation. That’s why touring is often necessary.
You want to tour through every town and city where you’ve got a following and you want to do this yearly. Cooling the markets is important, but you don’t want them to go cold. Keep them warm by showing up for them every year.
If you do this, you will demonstrate work ethic, which is a major plus in the eyes of labels.
Grow Your Fan Base
Everywhere you go, get your fans to join your email list and follow you on social media.
Do not skip over this step. Read the preceding line again. Because many artists overlook this or don’t take it seriously.
Don’t worry about sales and streaming numbers. Those will take care of themselves if you focus on growing your fan base.
You also want to build a relationship with your fans. That means showing up often.
I know, spending so much time on content, emails, and answering comments might seem like a waste of time, or at the very least, a major headache in addition to all your other duties and responsibilities.
But what label in their right mind is going to look your way if you can’t attract hundreds and thousands of fans everywhere you go? I’ll tell you what label – none of them!
Make it your top priority to get email subscribers and real followers (don’t buy followers) on social media everywhere you go.
If you’re not willing to step outside of your comfort zone to meet people, forget about your major label aspirations. I don’t want to sound mean, but I want to make sure you’re not deluding yourself and wasting years of your life on something that’s just not going to happen.
Even shy people can extend their hands, smile, and say “hi.”
I’m not sure whether you’ve had to hunt for a job before, but the most reliable way to get hired is to get a referral from someone you know. Sometimes you can get a job if you demonstrate tenacity in follow up, but this doesn’t happen as often.
So, think about it this way. If you sign a record contract, you’re basically becoming the employee of the label (company). If you want to get a job with the label, your best bet is to get a recommendation from a mutual contact.
You never know who is connected to whom, so make friends with everyone – sound engineers, venue owners, music store owners and employees, music instructors and students, bloggers, influencers, fans, and more.
How To Sign A Record Label Contract As A Musician, Final Thoughts
Seemingly great deals can sometimes turn sour.
Seemingly awful deals can sometimes lead to incredible opportunities for the artist.
Unfortunately, there’s no way to tell for sure going in. No matter how well you negotiate, you’re still at risk. It’s like any other job, except that it has much higher stakes.
So, if you’re about to sign a record contract, we want to wish you all the best.
P.S. Remember though, none of what you've learned will matter if you don't know how to get your music out there and earn from it. Want to learn how to do that? Then get our free ‘5 Steps To Profitable Youtube Music Career' ebook emailed directly to you!