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What is a Recording Contract?

By Rhonda Rivera
Updated Feb 29, 2024
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Also known as a recording deal or record deal, a recording contract is an agreement between a record label and recording artist. Like most other contracts, it is legally binding and generally obligates both parties to follow the contract or face legal repercussions and termination of the contract. In general, a contract typically requires the artist to only record with the label he or she signed with, and no others without permission. The record label is normally required to pay the artist a flat sum or percentage of its profits. Getting a record deal with a well-known music brand is often the making of musical artist’s career, and many musicians speak fondly of their first recording contract.

The terms of a recording contract differ from record label to record label just as the terms of a rental agreement will differ from landlord to landlord. Once the artist has signed the contract, however, he or she is usually issued an advance, which is money paid up front. Depending on how popular the artist is at the time or how popular he or she seems likely to become, this advance may be a small sum or, statistically, more money than most people make in a lifetime. The contract might demand that the artist produce a certain number of albums, then he or she will be released from the recording contract, and may either renew with the same company or obtain a new recording contract with another company that is offering a better deal.

Sometimes an artist does not produce music as profitable as the record label expected. In this case, the label might utilize an opt-out clause included in the contract, which lets them cut their losses by ending the contract sooner than required. Typically, the artist is paid an amount that was agreed upon before signing the contract, and both parties go separate ways. After an unsuccessful album and record label opt-out, a budding recording artist may find getting a new recording contract difficult.

When a recording contract reaches expiration, the current record label and other labels might compete for the artist’s signature on a new contract. The labels may offer more money up front, higher royalties, or more creative control over the artist’s work. Generally, it is rare for a record label to become desperate enough to offer the artist complete creative control. This is occasionally done, however, especially with very famous artists looking to sign a new recording contract. Either way, musicians often benefit from acquiring a contract, working under one, and renewing it.

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Discussion Comments
By Lostnfound — On Nov 07, 2014

The music industry is a legal minefield anyway. Don't believe me? Look in the Nashville, Tennessee phone book for entertainment law attorneys. The listings go on for pages. And cosmetic dentists have their offices set up right next to the publishing offices and recording studios on Music Row. It's a business and the suits own it.

By Grivusangel — On Nov 06, 2014

Sometimes, a musician thinks a recording contract is an instant step to fame and fortune, but of course, that's rarely the case. Once in a while, you'll get someone who really takes off from the get-go, but many first albums are not very good.

A recording contract also pays for studio time, the producer and sound engineer's time and expertise, as well as publicity for the album.

If a label is less than upfront, the artist may actually end up in debt for making a record, because of the way the contract is written. Most music industry insiders *always* advise a young artist to have a lawyer -- preferably one versed in entertainment law and not affiliated with the label -- to peruse a contract before the artist signs it. Whatever the fee is, it will be worth it down the road.

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