Record contract: what you agree with a label and what you give up

A label wants to sign you. There is a contract with an advance that sounds good and a term you only really understand three albums in. Your signature decides who releases your recordings ten years from now.

A record contract, also called an artist agreement or recording agreement, is the agreement under which an artist assigns the rights in recordings to a record label in return for an advance and royalties. We review these contracts for artists. For labels, we draft them.

Is there a record contract on the table? Call 020 675 88 21 or send a message.

Which rights you assign to the label under a record contract

A recording carries related rights, yours as the performing artist and those of the producer of the recording. Under the Dutch Neighbouring Rights Act (Wet op de naburige rechten), the producer is whoever first makes the recording or has it made. Under a traditional record contract the label pays for the studio, so the label is the producer and the master belongs to it. On top of that, you assign your own rights as a performer.

In his case against Top Notch, Ronnie Flex tried to be recognised as the producer of his own recordings. The court rejected that, because the label had financed and organised the recordings. Our article sets out what that case means for artist agreements.

For an assignment of your rights, the Neighbouring Rights Act requires a written agreement and a deed. Only what is expressly stated in the contract, or necessarily follows from the nature of the deal, passes. If the label also wants to use your recordings for merchandise, games or AI applications, the contract has to say so in as many words. A vague reference won’t do.

Check, too, how long the assignment lasts. Many contracts assign the rights for the full term of protection, up to seventy years after first release. The collaboration itself ends after the last album the label calls for, but your recordings stay with the label.

More on the licence deal, where you keep your masters →

Advance and royalties in an artist agreement

You get the advance up front, but the label recoups it from your royalties. If the contract says so, the same goes for the recording costs, the videos and part of the marketing. Only once all of that has been earned back are royalties paid out to you. That is what recoupment means.

Whether you have to repay the advance if an album does not earn it back depends on the wording. If it says “recoupable but non-returnable”, you keep the advance even if the album flops. If that sentence is missing, have it added.

For your income, the basis matters more than the percentage. Twenty per cent of what a streaming service pays the label is not the same as twenty per cent of what the label keeps after distribution, marketing and administration. Ask which costs the label may deduct and have them listed exhaustively instead of a formula such as “all reasonable costs”.

The label must inform you at least once a year about how your recordings are exploited, what they earn and what remuneration you are owed. That obligation is in the Dutch Copyright Act and applies to performers through the Neighbouring Rights Act. Ask for it if it does not arrive.

A record contract runs in albums, not years

The term is rarely set in years. You sign for one album, with options for the label on a second, third or fourth. The label decides whether to exercise an option, not you.

As long as the contract runs, you are exclusive and cannot record for another label. Whether you may feature on another artist’s record is set out in the exclusivity clause. After the term there is sometimes a re-record restriction, a period during which you may not record the songs from your albums again. Taylor Swift showed why labels want such a clause: she re-recorded her early albums after the masters had ended up in other hands.

Endless options can be challenged. Under the Dutch Copyright Act, a clause that gives claims to future work for an unreasonably long or insufficiently defined period can be annulled. If the label may terminate the contract early, you may do so on the same terms.

Unsure about the options or the exclusivity in your contract? Call 020 675 88 21 or send a message.

360 deals: when the label also shares in live shows and merchandise

Under a 360 deal the label shares not only in the income from the recordings, but also in your live shows, merchandise, sponsorship deals and sometimes your publishing. That can be fair, for instance when the label invests in those areas itself with a booking agency or its own merchandise team. If it only takes a percentage, you are paying for nothing in return.

It gets harder when label, publisher and management belong to the same group. Your negotiator then sits on both sides.

More on the publishing deal and 360 deals →

What a label looks for when signing an artist

For a label, a record contract is an investment with an uncertain outcome, because it pays for the advance, the studio and the campaign up front.

So a label wants to know whether the artist has signed with another label or a producer before, whether there are samples that have not been cleared and whether a featured artist on the record is under contract elsewhere. Warranties in the contract put that risk on the artist. Delivery obligations set out when an album counts as delivered and who may reject it.

As a label, also allow for additional remuneration. If the agreed royalty later turns out to be out of proportion to what the recordings earn, the artist can ask the court for a top-up. If a debut becomes a hit, a rate that was reasonable at the time can therefore be reopened, even years later.

When an artist can get out of a label deal

Ending a record contract unilaterally is hard. Ronnie Flex tried to annul or rescind his contract with Top Notch, partly because he had signed without a lawyer. The Amsterdam District Court upheld the contract, because he was of age, was assisted by his later manager and could have taken legal advice.

The law does offer routes. If the label stops doing anything with your recordings, you can terminate the contract after giving it a reasonable period in writing to do so after all. The label must then return your rights. If a recording was released fifty years ago or more, that period is at least one year.

If you were bought out with a one-off payment at the time, from fifty years after release you receive an annual additional remuneration: twenty per cent of what the label earned from sales and streaming of the recording in the previous year. If you receive royalties, from that point the label may no longer withhold advances or other deductions from them. You cannot waive these rights.

Having your record contract reviewed by a lawyer

Record contracts are a fixed part of our music law practice, on both sides. For artists, we review the contract before you sign and tell you which clauses are standard and where you can negotiate. For labels, we draft artist agreements that hold up when an artist later wants to leave. If a collaboration breaks down, we look for a way out or litigate.

Would you like your record contract reviewed? Call 020 675 88 21 or send a message.