Signing to a label is a really nice achievement, but you have to be aware of some common clauses labels my ask you in their contract. You should always consult with a lawyer, but here are some things to be aware of…
4 THOUGHTS FROM ME
1. Most importantly, always feel free to ask the label for changes and clarifications. Each label has its own standard and changes in it hardly ever happen, but sometimes they do. If you don’t understand something, ask fellow producer friends or feel free to just email me, but it’s important to feel comfortable with what you’re signing.
2. Read carefully if there is any exclusivity requirement in the contract. Some labels might ask you for ‘full exclusivity’ or a ‘first-option exclusivity’, which is really common. The first is when a label only wants you to sign with them and no one else, but it’s not a common requirement. The second is when a label wants to hear your demos first, and if rejected by them, you can send it elsewhere, which happens a lot. If you receive something like this, be careful since even though you can send your tracks to labels ‘after you get rejected’, getting constant rejections from a label can suck the fun out of it and your motivation as well. Also, it can affect your collab plans if the other collab partner has a similar contract with another label.
3. Label promises can come true, but try to get them on paper as well. When a label offers you a contract and a lot of perks for the signing, make sure to get it all on paper or at least via email. Hardly ever a label will be able to promise you a ‘confirmed placing’ on a podcast, but if they say they can, it’s always better to have it on paper, so if it doesn’t happen, you can recall what is written. Remember that if it’s not written, they legally don’t have to do it and verbal promises can go down the drain.
4. Try to get the biggest percentage you can for your song. Big labels will take a big chunk of your song (70-90%) and medium/smaller labels can take a bit less, but usually between 50-70% of your song. That’s because the maximum you can take as an artist is 50% of the royalties of that track. In addition, it’s common for labels to have a $$ threshold for them to pay you, and the bigger the label, the bigger the threshold. At the same time, it’s really hard to get royalties from music since 1k plays is roughly around $3 USD on Spotify, from which at most you’ll receive 50%, so don’t stress that much about this since it’s hard to get paid even at 50% royalties.
3 ALARM BELLS TO YOU
Instead of a question, today we’ll have three things you must absolutely avoid in a label contract:
1. Label asking you for money: It’s common for labels to ask you to cover marketing costs with future royalties, but never to put your own money to cover the costs;
2. Absolute exclusivity deal: Even if you’re signing to huge labels, be careful with that. Diplo ended ‘Jack Ü’ with Skrillex because Skrillex’s contract with Atlantic was too restrictive;
3. What is being said is different from what is being written: If a label says something, but the contract says otherwise… don’t sign it until clarified. Often it could be a mistake, but it could also be intentional.