4 Types of Record Deals: Explained

These days, the idea of a record deal has a lot of musicians and artists confused about what to expect in the music industry. The image would have us believe that independent artists can make use of consumer music distribution to get their music on streaming platforms and success is imminent. The reality is that very few artists see major success without the representation of a label in some aspect, even in today's music industry. The difference between the heyday of the music business and today is the many facets of marketing and content engagement that came with streaming and social media. Today, record deals still exist and there are many more versions of the record deal than ever before. Music distribution has made it easy for artists to record and produce on their own and that means labels have had to redefine the way that they do business with artists. Let's explore some of these types of deals starting with the more traditional kinds. 

Traditional Deals 

Traditional deals are the kinds of contracts that artists would sign with labels before the dawn of the internet, file sharing and streaming. In these situations, labels would take on a lot of risk with little or no guarantee for success. Labels had a lot of cash on hand back in the day and major resources for recording, production and distribution. Because of this, labels would sign artists under contracts that allowed the labels to claim complete ownership over the artists music for the duration of the agreement. Artists would usually receive a large bonus that would be weighed against future royalties. These deals proved lucrative for some, and extremely detrimental to others. If your record didn't succeed, you wouldn't see any more money after the initial injection of the bonus. 

360 Deals 

These deals are, to put it lightly, predatory. 360 deals arose from the rise of streaming when labels and artists were quickly losing money on their record sales. As a response, labels began offering all encompassing deals that give labels rights to all the money an artist might make including money from advertisements and touring. Whereas before labels retained the rights to just an artist's recorded music, they now can collect money from all facets of an artists career. While aspects like music distribution, recording and marketing are promoted by the label, it leaves little room for up and coming artists to gain much from these deals in terms of monetization. 

Distribution 

Distribution only deals exist in a much different way than they did. It used to be that labels had distribution deals with record stores and marketplaces that sold music. Today, while labels may have a preferred relationship with certain music distribution services, digital distribution has taken the middleman out of the picture allowing artists to subscribe to and submit their music to be delivered to digital stores. A distribution deal in today's music world is largely dependent on the kind of representative contract that is signed by label and artist. For physical releases, labels can come in handy as most digital distribution services don't distribute physical media like vinyl, tapes or CDs. 

Indie Deals 

The term 'indie' gets thrown around a lot in the music world these days, and it can lead to some confusion. Indie at one time meant that an artist worked entirely outside the record label sphere. It was actually quite common. Landing a deal was difficult and the traditional deals often included high risk and long term reward for labels. Today, many indie artists actually do receive representation from a label but in a smaller way. These deals usually don't include a huge sign on bonus but may provide a better split deal on royalties after the fact. The harsh reality is that to make sure your tours are successful and your music gets heard, you'll need a team of professionals helping that process occur in some way, shape or form. 

Conclusion

While record labels are not the giants they once were in the industry, they still play a valuable role in helping artists advance their careers. For artists, it's good to know what kind of deals to avoid and watch out for. 360 deals should be carefully observed before moving forward, and small artists should avoid this kind of deal at all costs. A big label might look nice at first, but the industry is much more complicated than that now. Indie deals are usually the best way to go for small to mid level artists due to the fact that music distribution occurs largely independently from labels with digital distribution services. There are many more kinds of record deals and contracts within the music industry, and it's worth researching more about them if you or your band are looking to take the next step in your careers.