5 Types of Record Deals and Their Pros and Cons

1. The 360 Deal

Pros:

You're signed to a major label. This comes with all the bells and whistles—like world-class producers, worldwide tours, and a world of potential fans.

Having the label's connections makes your touring and marketing easier. Agents will book shows for you, set up your travel, and get you on radio shows. You just need to sit back, be you, and make good music.

Cons:

If you're a self-built artist, the label could be using you for what you've already created. If you've got a huge fanbase already, millions of YouTube plays, and have cracked radio, a label deal can't offer you much more.

You have the potential to be shelved. If the label doesn't think you've got what it takes, they have the option to do nothing for you. Not to mention, your deal prevents you from doing much without them or their approval.

2. The EP Deal

If you like it, don't like, or aren't sure, you're not married to anything with this deal.

Pros:

It's a short term deal. If you like it, don't like, or aren't sure, you're not married to anything with this deal.

You get the opportunity to market your music to a bigger fanbase. Without all of the strings of a 360 deal, you can still use the labels connections to reach a wider audience.

Cons:

If the EP doesn't sell well, it could soil your relationship with the label. They won't pour money into something that's not proven or not working--i.e. you've reached the end of your record deal road.

It's harder to negotiate a single (versus a Project Deal). Your bargaining chips are fewer.


3. The Artist Deal

They want you to succeed and will be there to guide you through pitfalls they might have made in their career.

Pros:

You have faster exposure to a larger fanbase. With these deals, you likely signed with someone in your genre. Because your music is in their wheelhouse, their fans may become your fans.

You have an experienced mentor. The artist you signed to is invested in your career and they've shown that by signing you. They want you to succeed and will be there to guide you through pitfalls they might have made in their career.

Cons:

You have to pay the artist you signed to, as well as the label they are signed to. It's like having two managers and may mean double the percentage.

There could be problems if you outgrow your signer. Sometimes your shine may be a little brighter than theirs. This can foster hard feelings and make being signed to the artist uncomfortable, awkward, and potentially unprofitable.


4. The Licensing Deal

There's potential to lose out on money...

Pros:

You get paid upfront, and maintain the rights to your masters. With this deal, you know right away what you stand to make, and you don't lose ownership of your creations.

The label will push the record for you. So you don't have to worry about coming up with a big marketing budget.

Cons:

There's potential to lose out on money, if you don't set triggers in your contract. Triggers are payments (generally in a percentage) paid after the label has recouped their costs. Without these, you could just be leaving money on the table.

If the record doesn't sell well, it could soil your relationship with the label. If you don't perform up to expectations, the label isn't likely to fund your next album. This can be a lot of pressure for new artists—or any artist for that matter.

5. The "Standard" Deal

Pros:

You keep all money outside of what's in your deal. If it's not in the contract, it's yours to keep.

You have full control of your brand. No one can force you into an image that you know is not you. You're hitting the market with your full, authentic brand.

Cons:

Less incentive for the label to help you. In these deals, the label may feel like they don't have enough skin in the game to force their hand (or wallet).

Less access to industry opportunities that the label could have facilitated. You're signed to the label, but they're not rolling out every red carpet for you. Your label has a wealth of contacts but it's up to them to share those with you.

​Editor's Note: For more information on signing the right deal for you, check out our course on Record Deals.