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Recording Contracts

When offered a recording contract with a label

On this page you will find information about:

  • When you’re offered a contract
  • Royalties
  • Advice on payment and agreements
  • Dealing with record companies
  • Production agreements

When offered a recording contract with a label:

  • Make sure you know how and when you will be paid. Ideally you will be given a cash advance in lieu of future royalties.
  • Try to secure higher royalties after reaching a certain figure, or after the first year. Aim for a payment on 100% of all sales.
  • Make sure you know what they want from you and remember they, not you, will own the recordings. You need to check whether they want you to record exclusively for them. 
  • Ask what happens if you split up. In most cases each member will remain individually signed to the label.

Advice on royalties

  • Try to secure higher royalties after reaching a certain sale figure.
  • Try to increase your rate of royalty with each new year of the contract.
  • Aim for payment on 100% of sales.
  • Get advice if a company insists on paying a half-rate royalty for ‘TV advertised’ product or compilations.
  • Try to ensure that you are entitled to receive 50% of any income paid to the record company by VPL (Video Performance Ltd).
  • Beware of ‘hidden’ deductions for packaging or new technologies.
  • Pay particular attention to the royalty rates that apply to digital download sales and streaming revenue. Ensure these do not include any reductions.


Advances are a financial sign of good faith from the record company. They should always be non-returnable (and only recoupable from any future record royalties). 

If a long-term contract is offered, the advance should be large enough to provide the members of the band with a reasonable living wage until any initial costs have been met and royalties are being received. 

When will I be paid?

Most companies will render a statement of account to their artists twice yearly, within 60 or 90 days of the end of June and December. If your royalty earnings are greater than the personal advances you have received and the recording costs you have incurred (in other words, you have ‘recouped’), then the statement should be accompanied by a payment.

What should be deducted?

The MU feels that only the cost of recording and personal advances should be offset against royalty income. You should try to get references to ‘other costs’ deleted from an agreement, or at least make them subject to joint agreement.

Try to limit the number of remixes the company can commission without your approval or it’s possible that recording costs can spiral. Also, never agree to cross-collateralisation of advances against non-royalty income, such as PPL, or income from other contracts.

How long will the agreement be for?

A typical deal with a major record company might be for one year plus four options, calling for five albums.

However, past judgements in British courts seem to have frowned upon the restrictive nature of long-term recording agreements and, especially with small labels who are unable to guarantee sufficient annual advances, you should aim for as short a deal as possible.

Tips for agreement length

  • If a guaranteed annual advance is insufficient for the members of the band to live on, then you should only commit yourself to one album.
  • There should be a time limit of one year within which this should be recorded and released, and if the period is defined by reference to the release, then ensure there is a maximum duration beyond which that period cannot extend (if there is no release).
  • Even with larger companies who can afford advances, if recordings have not been released in the major markets of the world within a certain time, you should be able to terminate the agreement.
  • Finally, it is wise to leave out extra recordings, such as ‘live’ and ‘greatest hits’, from an agreement, so you can use them as a bargaining tool later on.

Who owns the recordings?

It is important to remember that because the record company has initially commissioned and paid for the recordings, in the eyes of the law they are the owners and not you. The agreement will make this clear and assign all copyrights in the recording to them.

Related downloads

M5 Studio pre-recording agreement (PDF 37.69 bytes file opens in new window)