Common Record Deal Issues for Musicians

Most people think artists get rich when their songs blow up. But the reality is: the music industry can leave artists in deep debt (while the label makes bank). As a record label owner, let me show you exactly how it works ↓ There are dozens of examples I could use. But TLC tells the story best. TLC was one of the biggest bands of the 90s. CrazySexyCool went multi-platinum. They dominated MTV. Their songs were everywhere. Then in 1995, they declared bankruptcy. $3.5 million in debt. How does a band at the peak of their fame go broke? Here's what most people don't understand about record deals: When an artist signs, they get an "advance." Sounds like free money, right? It's not. It's a loan. Every dollar goes into a bucket. Recording costs, marketing, music videos, studio time—all of it piles into that same bucket. The artist doesn't see a single royalty check until that bucket is completely full. For TLC, their label kept filling that bucket with expenses. Tours. Videos. Promotion. The costs kept stacking while royalties trickled in. Multi-platinum album. Cultural icons. Still "in debt" to their label. But that's only half of it... Because the (major) label gets paid first. Always. When a song generates revenue, the label takes their cut immediately (usually 55-60%.) That money is theirs. No waiting. The artist's smaller share? That goes toward paying off the "debt." So the label profits from day one. The artist might never see a dime. And it gets smarter. Labels know only about 5% of signed artists will produce a hit. So they use recoupment math to make winners pay for losers. Sign 20 artists. 19 flop. But that one hit? Its royalties stay locked in the bucket while the label already cashed their check. The artist funds the label's failed bets—without even knowing it. You might think this is ancient history — like the predatory nature of the 80s, 90s, 00s which Prince and Michael Jackson has been outspoken about. In 2020, rapper Kreayshawn tweeted: "Do not buy or stream my 2011 single... I'm in debt to Sony for $800k." Her song "Gucci Gucci" was a massive hit. Millions of streams. Millions of sales. The math? 2 million album sales plus 595,000 singles generated roughly $103,000 in artist royalties. But her label's advance and costs? Over $1 million. Commercial success meant nothing. Thankfully, some of the major labels eventually admitted the system's broken. In 2021, Sony made a historic announcement. They would stop applying unrecouped balances to thousands of artists signed before 2000. Artists who'd been locked out of streaming royalties for years (despite their music generating new revenue!) finally got paid. It took streaming breaking the entire financial model for majors to admit what artists knew all along. This is why I built Afterpeak differently. Artists deserve to get paid fairly and understand what they're signing. Know the bucket. Know who gets paid first. Know your deal.

These are the Traps you must avoid in Recording, Management and Publishing Deal 1. Overly Long Contract Terms: • Why it’s bad: Being locked into a contract for 5–10 years (or multiple album cycles with no clear exit) can stall your career if the label or manager loses interest. • What to do: Negotiate for shorter terms or performance-based options. 2. Unclear Royalty Splits: • Why it’s bad: Vague language about “net profits” or “deductions” can leave you with little to no money after expenses. • What to do: Ensure royalties, deductions, and percentages are clearly stated and audited regularly. 3. Complete Ownership of Masters/Publishing: • Why it’s bad: Signing away your masters and publishing rights with no reversion clause means you’ll lose control (and future income) from your own music forever. • What to do: Negotiate for either shared ownership, reversion rights after a set period, or higher advances. 4. Perpetuity” Clauses: • Why it’s bad: Any contract that says rights last “forever” or “in perpetuity” essentially means you’re signing away control of your work indefinitely. • What to do: Push for time-limited licenses or rights that revert back to you after X years. 5. One-Sided Termination Clauses: • Why it’s bad: Contracts where only the label/manager can terminate but you can’t leave are a red flag. • What to do: Ensure mutual termination rights or clear conditions to exit. ——————————————- I am Michael Orlando an Entertainment Lawyer and I protect the Interest of Artist and Investors.

A 360 deal sounds like partnership until you realize what you're signing away. Record labels pitch these deals as artist development... we'll invest in your music, your tours, your brand, and we'll support you across every revenue stream. It sounds collaborative. It sounds like someone finally believes in your full potential. But here's what the contract actually says: the label gets a percentage of everything. Not just music sales. Everything. What is a 360 deal in music? In a 360 deal, the label receives a percentage of income from record sales, touring, merchandising, endorsements, and more... providing the artist with resources while allowing the company to share in a broader range of revenue streams. That means if you book a tour, the label takes a cut. If you sell merchandise, the label takes a cut. If you land a brand partnership, the label takes a cut. They're not just your record label. They're your business partner in every stream of income you generate. Now, that's not necessarily a bad thing. I've seen some 360s that were actually a great deal for the artist. It depends on whether the label is actually providing value... funding your tour, negotiating better brand deals, handling logistics you don't have capacity for. In that scenario, a revenue share might make sense. But I've also seen some 360s where the label's "support" is minimal, and the artist is still locked into giving up 20-30% of everything they earn for years. Here's what I look at when a client brings me one of these deals: What is the label actually providing in exchange for those percentages? How long does the agreement last? Do you have a reasonable exit if they're not delivering? And critically... what happens to your touring, merchandise, and endorsement income if the relationship ends? The biggest risk with 360 deals is that often, they are structured for the label's benefit, not yours. They profit whether or not they're actively working for you. And if you're an indie artist who's already built your own audience, you might be giving away equity you've earned without them. This isn't about avoiding record deals. It's about understanding what you're agreeing to and making an informed decision. Because once that ink dries, renegotiating is nearly impossible. Read the deal. Understand the percentages. Know what you're giving up.

The truth nobody tells indie artists: catalogues aren’t just about how good the music is. They’re about how clean, structured, and monetisable the rights are. Investors don’t buy vibes, they buy cashflow and if your catalogue isn’t set up to generate income consistently, it’s not ready to work for you yet. There are five things every serious investor, publisher, or acquirer looks for: First, rights clarity. Who owns what? Is it registered with a PRO? Are the splits documented and signed? Second, metadata hygiene. Do the songs have correct ISRCs, ISWCs, and IPIs? Are they tagged, searchable, and trackable? Third, earnings history. Is the catalog generating revenue? From where? Streaming, sync, or publishing? Fourth, sync potential. Has it been licensed before? Does it have instrumental versions? Is it cleared for one-stop licensing? And fifth, deal-readiness. Are your contracts centralised and digitised? Can a buyer complete due diligence in a week instead of a month? Most artists fail at three out of five, and that is where the problem starts. Metadata, in particular, is the invisible backbone of your catalog. The Verge once called it “the biggest little problem plaguing the music industry,” estimating that billions in royalties go unclaimed every year because songs aren’t properly tagged or credited. Every ISRC, IPI, and songwriter detail is how performance rights organisations like IPRS identify and pay you. If your metadata is missing or incorrect, your song might still play everywhere, but the royalties could be going anywhere. Messy splits lead to royalty disputes. Missing metadata means lost income. No sync prep means no high-margin placements. No earnings track record means no valuation benchmark. You can’t raise capital, sell equity, or pitch your catalog if you don’t even know what you own, or worse, if you co-own something you can’t monetise. This isn’t about being perfect, it’s about being prepared. If you’re serious about turning your music into long-term value, get your house in order. Build a clean catalogue, and it becomes a business. Keep it messy, and it stays a hobby. Streams are great, but splits, syncs, and structure are what make a catalogue valuable. The next wave of music wealth isn’t going to the loudest, it’s going to the most organised. #musicbusiness #musicindustry #metadata #rights #tips #fairplay

Music lawyers, whenever you are representing record labels in transactions between them and an artist and you draft record deal contracts, be very careful with inserting clauses or agreements that makes the record label the artist’s music publisher or assigning the totality of the artist publishing rights to the label. The best you can do is to include in the record deal agreement that the record label becomes a co-publisher with which ever publishing company the artist eventually decides to sign or register with or if the artist doesn’t have a publisher representing them yet, let the record label be the publishing representative (not publishing admin or music publisher) and it should only be for the purpose of the label collecting their share of royalties from the controlled compositions. It would be very disastrous for the artist if the record label owns both his masters and his publishing interest, there’s nothing the artist can fall back to if there’s a fall out or conflict between both parties. A record label shouldn’t do the job of a music publisher.

Why Many Record Deals End Up Becoming a Problem A lot of record deals don’t start out bad. Most times, everyone is excited. The artist is happy. The label is hopeful. The team is optimistic. Then two years later, everyone is frustrated. Not because anyone planned it. But because the deal was poorly structured. Here are some things I see often: 📌 Advances with no clear repayment structure So when money doesn’t return as expected, arguments start. 📌 Very long contract terms As the artist grows, the deal stays the same. That imbalance creates tension. 📌 Weak royalty reporting If numbers are not clear, trust disappears quickly. 📌 Poor documentation around ownership Missing splits. Missing clearances. Missing paperwork. This becomes a serious problem when licensing or distributing internationally. 📌 One-sided control When one party has all the power and very little obligation, projects usually slow down. 📌 Contracts that are hard to understand If it takes three lawyers to explain a clause, something is wrong. Good contracts are not about “winning”.They are about making sure everyone can grow and still work together. When deals are properly structured, they attract, Investors, Partners. Distributors and Opportunities. And when they are not, they block growth, Simple! In this industry, legal structure is not admin. It is strategy. Would love to hear from others in the industry. What has your experience been with structuring these kinds of deals?

🎯 3 Record Label Contract Clauses That Can Impact Your Career (Underground Dance Music Edition) In my 15 years as an artist manager in electronic dance music, I’ve reviewed countless independent record label contracts. And time and again, I see the same traps that hold artists back. Here are 3 clauses every emerging DJ/producer needs to watch out for: ✅ Automatic third-party compilations ✅ First refusal/exclusivity on future tracks ✅ Hidden or un-itemised expenses These can shape your image, lock up your music, or drain your release budget before you even get started. 👉 Swipe through this PDF to see exactly what they look like and how to protect yourself. 💬 Your turn: What’s the worst clause you’ve ever seen in a music contract? Drop it in the comments ⬇️⬇️⬇️ #musicbusiness #artistmanagement #dj #producer #musiccontracts #electronicmusic

DAY 20: ESSENTIAL CLAUSES THAT SHOULD BE CONSIDERED BY ARTISTES BEFORE SIGNING MUSIC CONTRACTS 1. Term/Contract Period The "term" defines the duration of obligations between artists and labels. Clear term clauses should balance both parties' interests, avoiding unfair advantages. An "Option" term can allow for contract extension with mutual agreement. 2. Advancements/Recoupment Artists are attracted to record contracts by upfront "advances," which are prepayments of future royalties and must be repaid from sales. Understanding which expenses are recoverable is important, as large advances can result in lower royalties if sales are poor. Negotiating a smaller advance might lead to higher royalties and less pressure for immediate success. A standard recoupment clause states that no royalties will be paid until the label recoups all advances. 3. Royalties Royalties are payments to artists for using their music copyright. Record labels handle production, promotion, and exploitation of these rights. Artists typically give up their copyright in exchange for marketing and royalties. After recouping costs, royalties are split as agreed. Contracts should include an "accounting and auditing" clause for regular revenue statements and allow artists to audit the label’s finances to ensure fair payments. 4. Rights Record labels exploit artists' music copyrights through assigned rights, so it's important for artists to understand what rights they're giving up and for how long. Some contracts may grant labels indefinite ownership. Under Nigerian law, copyright doesn’t transfer automatically, so artists should negotiate for re-assignment clauses to regain rights after a certain time. Additionally, a “release commitment” clause should ensure the label releases the music within a set timeframe, allowing the artist to exit the contract or buy back the master for a fixed fee. Record labels can exploit an artist's music copyright due to the assignment of those rights. Therefore, it’s crucial for artists to understand what rights they are transferring in their contracts and for how long. Some contracts may allow labels to own copyrights indefinitely. Under Nigerian copyright law, ownership doesn’t automatically transfer, so artists should negotiate for copyright re-assignment clauses that allow rights to revert after a set period. Additionally, artists should seek a “release commitment” clause, ensuring the label must commercially release the music within a specific timeframe, or the artist can exit the contract or buy back the master for a predetermined fee. 5. Exclusivity: Exclusive clauses in record deals restrict artists from collaborating or engaging with others without the label's approval. Artists may negotiate for non-exclusive terms or the ability to work as a sideman. I hope you found this information helpful! ✨ If you have a contribution or an input to add to the aforementioned, the comment section is for you.

🎤 Wait....how can they stop me from performing my own songs? That’s the question many artists ask after signing a record deal. And unfortunately, the answer often shocks them. 🤝In most record contracts, the record label owns the master recordings, meaning the version of the song that the public knows and streams. You might have written it, sung it, even promoted it… but legally, the recording isn’t yours. So if you leave the label, you could be restricted from performing, remixing, or monetizing your old hits, unless your contract says otherwise. It’s not wickedness. It’s ownership. And in Nigerian entertainment law, ownership follows the paperwork, not the passion. Before you sign that “life-changing” deal, make sure your lawyer explains who owns: 💃The masters, 🎶The performance rights, and 🥂The publishing rights. Because talent makes the music ... but contracts decide who controls it.

I tend to focus on artist deals and contracts this week, and today, let’s talk about recording contracts, specifically this “Term and Options” clause that many artists see but don’t fully understand. If you look at the clause in the images, it starts with an initial period and then gives the company three options to extend the agreement. Because the initial period can be short, sometimes just tied to delivering a project, it is easy to assume the deal itself is short term. But that is not how it works in practice. What the clause really does is give the label the right to decide, again and again, whether the contract continues. So once you deliver your project in the initial period, the label chooses whether to move you into the next period. And they can keep doing that for as many options as the contract allows. That is how a deal that looks short at the beginning quietly becomes a multi year commitment. Now, look a bit closer at how the option is exercised in this particular clause. It says the company can exercise its option at any time before the end of the current period, or even within a few days after receiving what is called an “option warning” from the artist. It then goes further to say that the contract period will be deemed to continue until the company either exercises the option or gives notice that it will not. So even when your period has ended, you are still tied in while they decide. You cannot move on. You cannot freely take other opportunities. That is the real issue here. It is not just the number of option periods, it is the control over time. The label is not under pressure to decide early, and the structure keeps you locked in during that uncertainty. Now, people will say artist should negotiate fewer options. But in reality, most artists do not have that leverage at the point of signing. You need funding, distribution and exposure, and the label knows that. So what should you focus on instead? Understand what you are signing. How many options are there? What triggers them? Is the label required to meet any obligation before extending? What happens if they delay? Because those options are what give the label control over how long you stay in that deal. If you are about to sign, or you already have a contract you do not fully understand, it is something you should take seriously. Feel free to reach out if you want it broken down properly before you commit.