Record Label Basics
These three major record companies form an oligopoly in the music industry.
What are Universal Music Group, Warner Music Group, and Sony Music?
This is an upfront payment given to an artist upon signing a contract.
What is an advance?
This type of deal means the label gets a portion of income from ALL revenue streams, not just music sales.
What is a 360 deal?
These are free copies of music distributed to radio stations and music critics.
What are promo copies?
Artists can earn royalties through performances, streaming/sales, and this.
What is licensing?
This term describes a market dominated by a small number of companies, like the music industry.
What is an oligopoly?
These are payments made to the owner of copyrighted work like music or books.
What are royalties?
This clause limits how much the company has to pay for songs written or controlled by the artist.
What is a Controlled Composition clause?
This is the period from when you start recording an album through the end of touring and promotion.
What is an album cycle?
This contractual agreement gives a party the first chance to buy or sign a project before the artist can go to anyone else.
What is ROFR (Right of First Refusal)?
This division of a record label is in charge of finding new talent.
What is A&R (Artists and Repertoire)?
Artists must pay back all of these to the label before they can earn royalties.
What are recoupments?
This practice means debt carries over from single to single and album to album.
What is cross collateralization?
Producers typically earn this percentage range in royalty rates.
What is 3-4%?
Artists do NOT receive performance royalties from ASCAP/BMI/SESAC unless they did this to the song.
What is wrote/composed it?
This department is responsible for getting your records played on the radio.
What is Promotion?
This is the money held back by the label in case physical products are returned by stores.
What are reserves?
This clause states that a specific person must act as your manager, or you can terminate the deal.
What is a Key Man Clause?
This type of deal gives an artist money to record demos and may lead to a full record deal.
What is a demo deal?
Producer royalties are paid this way, meaning they get ALL money earned once recording costs are recouped.
What is retroactive to record 1?
This division computes and pays your royalties and keeps track of the company's income and expenses.
What is Finance?
Recording costs, tour support, and marketing expenses are all recoupable at this percentage rate.
What is 100%?
This clause determines how long a manager continues to get paid after the contract ends.
What is a Sunset Clause?
These refer to the amount of albums an artist is required to put out, and "aren't good for you" according to the book.
What are options?
Streams count much less toward royalties than this traditional form of music consumption.
What are album sales (or radio play)?