How Recording Contracts Work


So, you may have gotten this far and are now asking yourself, "Why would anyone sign a recording contract?" There are at least two good reasons for a band to sign a recording contract:

  • If you hit it big and your album goes multi-platinum, your band will make some money. You will not make a lot of money compared to the money that the label makes off a multi-platinum album, but you will make some.
  • A major record deal is probably the best way to get mass-media exposure. It is unlikely, for example, to find a band getting air time on places like MTV, VH1 and commercial radio stations unless the band has signed with a big label. If mass exposure is what you crave, then a big label is probably the way to go.

But let's say that you have read this article and you aren't liking the sound of things. What are your alternatives? You have perhaps five options:


  1. You can get out of the business.
  2. You can stay small and try to make a living off club performances and selling your own CDs at local shows.
  3. You can hire a big-name entertainment lawyer and hope that he/she can negotiate a better deal.
  4. You can go with an independent label and try to find a better deal.
  5. You can create your own record label.

The first option is obviously the easiest from a purely logistical standpoint. But, if you're like most musicians -- emotionally invested in making your music and having it heard -- this isn't an appealing option. The last option listed above is obviously the most complicated and requires a talent for business that leverages your talent for music. Despite the complexity, there are a lot of people who have formed their own labels and made money doing it. Here are two examples:

By starting your own label, you have total control, and you make a lot more money per CD you sell. The downside is that you generally do not sell as many CDs.

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