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How to Sign a Record Deal: A Musician's Guide

So you want to sign a record deal? We're going to assume you know the risks of labels, including that ~99% of artists signed to labels are dropped before fulfilling their contract, or how in the 21st century, labels basically act as banks...

If that is shocking to you, we encourage you to learn more about labels, before jumping into signing one, which our team can definitely help with.


If you're still reading, we're going to assume that you know the ins and outs of record deals, and now just wanting to know, how you can actually get signed to a label?


In this guide, we will walk you through the process of signing a record deal, from finding the right record label to negotiating the best possible contract, and the dark side of labels, to ensure you know what you're getting into. Let's get started!



The first step in signing a record deal is, of course, finding the right record label. We're going to make the assumption that you do not have someone representing you and walking you in the front door of a label so to speak.

Due to this, you will need to do your research on record labels. A few key things to look for include making sure the label is reputable and has a good track record of working with similar artists as yourself (and in the same genre). The last thing you want is to get stuck with a label that doesn't know how to market your type of music.

As for the actual research, dive into online forums, ask a Musician Guidance mentor, go to industry events, etc. Learn, learn, and learn. Once you've found a few (reputable) labels that you think would be a good fit for your music (and that accept "unsolicited material,)" it's time to start reaching out.


The best way to do this is usually by sending an email or physical press kit (if you're old-school) that includes your music, biographical information, photos and anything else that might be relevant.



It's important to remember that first impressions count, so make sure your materials are professional and polished.

Side note - Labels receive hundreds to thousands of demos a day, and as a result, many get sent right to the trash. The chances your demo is heard, let alone replied to with the intention of progressing is slim to none, in fact, it's practically zero.

Moreover, because you're actively seeking a label (rather than them actively pursuing you, you're giving them more leverage, to offer you a crappy contract).


Anyway, let's assume, you're extremely "lucky," and the label expresses interest in working with yourself. They will usually send what's called a "term sheet." This document outlines the basic terms of the record deal and is usually negotiated back-and-forth before both parties come to an agreement.


Before singing anything, sit down with a good music lawyer and review it. They will help you understand all the legal jargon and make sure you are getting a fair deal. After-all, you don't want to be blindsided by any hidden clauses or terms.

Once you've signed on the dotted line, it's time to start making music! The label will "help with" things like booking studios, hiring producers and engineers, and promoting your release. It's important to remember however that everything the label does for you, including surrounding you with a team of people, (is something you are directly paying for).


We will get more into this later, but these days, record deals aren't what they used to be. In the past, record labels would front all the money for recording, marketing, and touring costs, in exchange for owning your music and taking a large percentage of your royalties.


Nowadays, with technology making it possible for musicians to record and promote their music relatively cheaply on their own, most labels won't give you any money upfront. Instead, they'll give you what's called an "advance" on your royalties.


This is basically a loan that you have to pay back out of future earnings before seeing any more money from record sales. We want to re-state that. It is a loan. Remember at the beginning how we said labels are like banks now... yeah.

And just like any other loan, if you don't make your payments, they can come after you for the money, ruthless, right?


But if you do make your payments, and the record is successful, you'll eventually see a return on your investment. The key word, eventually, because the label needs to recoup everything they invested and more.


At the end of the day, you'll be lucky to walk away with more than 8% of profits. But that doesn't mean you're not making money, it just means the record label is making great money.


We're sure you can tell by now, but there is extreme risk in the majority of record deals. For example, if your deal was for $2 million, and the label only recouped 1.8 million from your music, tours, television appearances, etc (assuming it was a 360 deal), not only did you not make any money, you now owe the label money.

Given the fact you probably do not have the funds to pay the large amount, your only hope is to re-sign a new deal with them, for more money, in hopes of making a profit, putting yourself in more debt.


It's a slippery slope, that always benefits the label, not the artist. Moreover, there are a lot of different factors to consider before signing a record deal, and impossible to cover in one blog.


Our biggest suggestions, know how labels work, do as much as the "heavy lifting as possible without a label, including building your following, monetizing your fanbase, touring etc.


After all that, if you still believe a label is for you, and are approached with a contract, sit down with a reputable music lawyer to review all clauses before signing.


We hope this blog was able to shed some light on how you can sign a record deal, but also make you aware of the dark side of labels.


 

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