You think your band has what it takes to go big. You're starting to have success at local shows. It seems as though your dreams might finally come true. You want to get signed by a major record label but have no idea what that means. You wonder "what does a recording contract look like?” 'How much will I get paid?" In this article, you'll gain a basic understanding of what's in a recording contract.
The most important thing in a recording contract are royalties. You want to get paid for your hard work and creative talent and this is how you will get paid. Royalties are a certain percentage of each album sold, generally ranging from 10-20%. Now, before you get all excited about the potential money coming in, the royalty amount can also be reduced by various charges. For example, there could be a packaging charge, deduction for freebies, album promotion, paying the manager, and many other fees. So when working on your recording contract, make sure your entertainment lawyer sits down with you and goes over each royalty deduction so you have a clear understanding of your potential payout. You cannot change the royalty rate mid-contract. If your first album is wildly successful and you wish to negotiate based on your success, you are out of luck.
Lastly is the issue of recording. Once you record a song for your record label under contract, it becomes property of the record label. The record label will own your song for a specified duration, typically 5 to 10 years. Even if your songs are recorded and never released, they will still own your songs.
A contract is no laughing matter. As defined by the American Hertiage Dictionary, a contract is 'an agreement between two or more parties, especially one that is written and enforceable by law.” Simply put, you are liable for anything and everything that goes into this contract. Normally, a recording contract will have a number of options and is good for one year allowing you to record your first album. This is your proving ground and a succesful first contract will potentiall lead to future contracts.
You may be asking yourself, 'why would anyone do a recording contract?” Think of it this way, if you hit it big, your band will make some money. It's also the best way to get exposure and air time on places like MTV. However, there are alternatives. You can keep playing at clubs, hire an entertainment lawyer to negotiate for you, go independent label, or create your own record label. Regardless of which option you chose, there are people who have paved the way and can help you with your decision.