Wednesday, January 9, 2008

Different Types Of Record Deals

By Wendy Day from Rap Coalition (

There are a multitude of different deals out there for any recording artist. It depends solely on what you agree to contractually. There is no such thing as a standard contract-- a contract is just an agreement between two people that says who will do what by when, what happens if they do not do it, and how everyone gets paid. You don’t get what you deserve in this business, you get what you negotiate.

It is important to have an entertainment attorney finalize your deal (or negotiate it if you are not skilled in this area--I have done numerous deals and still always have a lawyer by my side in every deal) because it isn’t always what’s written in a contract that can hurt you, but often what is missing. Every contract is different because every situation is different! Recording contracts are always, always, always set up to benefit the label and not the artist, so many changes are needed. In fact, I once heard that the average contract goes back and forth in negotiation seven times.

If the label has experience with you or your attorney, they know what basics will be accepted and what will be rejected quickly, so they often start with a better contract than someone who is brand new with no experience. This is a business first and foremost, and people who are out to make money from your talent, will try to do so at a split that is as beneficial to them as possible.

I shouldn’t have to mention that a real record label or distributor is one that has been putting out music successfully for awhile, has relationships in the marketplace, and is well known. A record label is not Little Bo Bo from down the block who thinks he’s a good judge of music and linked up with the local dope boy or basketball player to start a label. It is also not a website that appeared online last week to sell your downloads and ringtones regardless of how catchy the name is. The goal is not to be signed to just ANY record label, it’s to have a successful career doing what you love to do: making music. This shit is like winning the lottery to begin with, it’s important you learn as much as you can and stack the odds in your favor as much as possible.

Here is an idea of the different types of deals out there, and these deals are attainable based on the leverage of the artist, how badly the label wants to sign the artist, who is on their team that the label sees as added value, if other labels are bidding for the artist as well, and the track record of success of the artist or producers:

Distribution Deal (sometimes called a P&D deal): This is the hardest deal to get. It can be an 80-20 split, with the label making 20% and the artist making 80%. There is rarely money advanced (in a few cases I have seen pressing costs advanced). This deal is usually reserved for the most successful artists where the label perceives minimal risk and sees value in allowing the artist to do the bulk of the marketing, promotion, radio, and video work. Cash Money has this type of deal, as did No Limit back in the mid-90s at Priority. The only thing the label is responsible for is getting the CDs into stores and collecting the money. The artist does everything else. The length of the deal usually runs 3 years and rarely, if ever, goes to an artist without the proper funding and experienced team already in place. The artist always owns the masters.

Joint Venture Deal: This is also a deal that is not easily forthcoming without a track record of success. It is usually a 50-50 split, and the term can run from 3 to 7 years. Most labels split the work with the artist but offer the sole funding for the deal. There can be an advance, which is always recoupable before the splits, and it is up to negotiation whether the label owns the masters or splits them with the artist.

Artist Deal: By far, this is the most popular and common record deal. The label does everything, except record the album (although they pay for it), and they have complete control and ownership. The term is usually for 5 to 7 years, and the average percentage for the artist is 12%. Out of that percentage the artist pays back everything the label spends that is recoupable, rarely leaving the artist any money unless the sales are exceptional (Gold or better)

All labels are not created equal. Just getting signed to a label is not enough. In fact, if you are happy solely to get a deal with a label, any label, you are doing yourself a huge disservice--you are setting yourself up to fail, unless you are just a lucky muthaphukka (in which case, play the lottery and stay out of the music business).

Some labels are great at radio, some are great at working the streets, some excel at making connections into film and TV or have great relationships with BET and M-TV, and some have great connections with the top producers and mixed tape DJs. If you make outstanding radio songs and you do a deal with a label that has a weak radio department with no budget to pursue radio play, you are screwed and your career will falter. Each label is different, and it is important to know those differences as you are building a career in the music business. Just getting a deal, is not enough to guarantee success (not that anything in this fickle business can be guaranteed, but you want as much of a fighting chance as possible). And the labels change, as the people who work for them come and go.

I have played a role in helping to build MANY millionaires in this business (Cash Money, David Banner, Twista, etc). I feel my key to success has been in studying the labels, knowing the abilities of their employees and various departments (which are constantly changing), and really seeing who is able to do what, well. Then, when I am shopping a deal, I link up the artists with the labels that make a good fit. I make sure that the artist is covered by outside consultants in the areas where the label is weak. For example, if a major label is strong at radio but weaker on the streets, I make certain it is in the artist’s contract to hire their own street promotions team along with the budget to do so.

With some labels, it is impossible to do this, so I make certain that I never do deals with those labels—they are not the successful labels anyway, so nothing is lost. Some labels are in business to make a certain percentage back above the investment they outlay to keep their investors or stock holders happy, so they are not interested in driving their artists platinum. Perhaps their business model is to spend no more than $500,000 on the creation, marketing, and promotion of any rap record, and then their goal may be to make back $750,000. It would follow that they would never spend more than half a million dollars and as soon as they achieve their sales goal, they would stop working the project and move on to another project. This is great for artists who don’t have a chance of selling a lot of CDs, but frustrates most artists who feel they can sell more than 100,000 CDs (after all, for a label to make $750,000 all they have to sell is 100,000 CDs).

Some labels spend millions of dollars to promote their artists without knowing what is effective, so their motto is spend, spend, spend. For an artist who desires fame and doesn’t care about making money, this would not necessarily be problematic. I imagine this is why we see so many broke artists on VH-1 “Behind The Scenes” specials, because they weren’t aware of ways to turn that fame into income for themselves.

Then, there are labels that change their staffing, or change their ownership or change the original teams that had made the labels successful in the past. This is why labels such as No Limit, Ruthless, Loud, Death Row, etc could be on top one day, and struggling to compete the next day. One thing is for certain in this business: success is created by hit records and hard work. There is no other route to take. It is impossible to have one without the other to succeed.

The industry is driven by radio right now. This means that the days of Master P selling millions of CDs without any radio play are over. Today, a run-away radio hit is almost a necessity to succeed. But in addition to a hot single, it is important to have a realistic budget and a well-connected team to follow up with strong radio promotion. Radio is just one piece of the pie in creating a successful project. Even though radio is key these days, it is not enough, by itself, to succeed.

Here are some of the things I look at when analyzing a major label:
• Who is running the label? Have they had success before? With what kind of artists? With what kind of music? What and when was their last hit? Do they appear to know what they are doing? Have artists left that label to blow up elsewhere? Are the current artists happy? Do they have a stockpile of artists just sitting still waiting to come out?
• Who runs the radio department? What records do they currently have at radio? Who are the priorities at radio? Which stations do they seem to have great relationships with? Which indie promoters do they hire?
• What other artists are signed to the label? What is their release schedule? Who are the priorities and will my artist be a main priority?
• Is the label good at the type of music my artist makes? Do they offer good artist development? Do they get a lot of press for their artists? Is the marketing staff strong? Does the staff have a good reputation? Does the staff turn over quickly or is it a good working environment? Does the person running the label give their staff the autonomy to do what they are hired to do?
• Is the bulk of the label’s staff an A-List staff or is it comprised of folks who are new to the business or the folks who could not get jobs anyplace else (a sign that the label is overly cheap and has no clue how to succeed)?
• Does this label share our goals and ideas of success? If I am planning to take my artist Platinum and/or do a ton of endorsement deals, we better not sign with a label that only has a history of selling 300,000 CDs on every twentieth release, while barely breaking 75,000 in sales on most releases.
• Do they sign the majority of hot acts around the country or do all of their acts seem to come out of nowhere? If they are signing the hottest acts, do they become one hit wonders or do they have legitimate careers?
• Are their deals fair or are there a lot of disgruntled artists slamming them publicly?

I am not any smarter than you. My connections are not great. I just study this industry under a microscope and place artists with the labels that appear to make sense for that type of artist. So far, it has worked! And, if I can do it, you can do it. So before you take a deal, just any deal, make sure you understand exactly what you are getting into. Do the research and make certain the company to which you are giving the next five to ten years of your life, is worthy. Most are not. The real work begins once you get a deal, so make sure you have as much stacked in your favor as you can!

Radio Spins, In Hopes Of A Record Deal

Published Wednesday, December 05, 2007 at

By, Wendy Day from Rap Coalition (

There’s a new trend with unsigned artists.

Well, it’s not really new, it’s about ten years old, but it hasn’t really worked successfully, so it seems new. It appears that some folks who have money to spend, or relationships with independent radio promoters, are trying to increase their spins at urban radio in the off-chance that a major label will sign them based on their seemingly meteoric climb on the Media Base or BDS charts. I have yet to see this tactic work successfully for an urban artist.

Over ten years ago, Universal and Atlantic set up “research departments” with the sole intention of finding what’s new and hot on the streets around the country. The labels believed in this so little, that they invested very little money in doing this. They didn’t supply key A&R folks with travel and entertainment budgets, or even corporate credit cards allowing them to travel from city to city investigating the music scene. But they did set up cubicles with phone lines and supplied hungry interns and staff with access to BDS, Media Base, and Soundscan, forcing them to call around to analyze the level of buzz for anyone hitting the radio or sales charts.

As new artists hit the charts, skilled A&R assistants call around the region to locate the artists. The goal isn’t necessarily to sign the artists, it’s just to make contact so that in the off chance that the artist breaks out, they already have a working relationship with that artist. Asylum took it a step further in 2004 and began signing some of these folks early to what I call “watch and hold deals.” They sign the artist and offer the potential to “upstream” down the road, if they begin to pop in a way that makes meaningful financial sense for WEA. Thus far, the first releases of Paul Wall and Mike Jones were successful upstreams at Atlantic and Warner Bros, respectively.

Asylum (and its Universal competitor, Fontana) is a great idea as an incubator for sub-labels or as a home for artists destined to never sell more than a few hundred thousand CDs on a limited budget. As an incubator, the sub-labels could focus on artist development and pass off the artists to the major label parent company at a point when it makes financial sense to have the power of a major label behind them (meaning the ability to sell upwards of about 350,000 CDs on a release). It gives artists the chance to recoup selling less CDs using smaller budgets. Some artists can eek out a nice career without ever seeing Gold or Platinum status.

Around the country, unsigned artists who are either too lazy to build a substantial buzz, or who lack the knowledge or proper funding to do so, turn to trying to impact radio with a hot single in hopes of attracting a major label record deal. They’re hoping that by having 200+ spins a week at numerous stations within the region that they will be able to fool the major labels into thinking that the artist is so hot that they have a break out hit. They are most often trying to manipulate the appearance of a hit record, or are deluded into believing that they have a hit record.

On the major label side, once a song hits BDS or MediaBase, the major label begins to research it. They call the radio stations, local DJs, local street teams, retail stores in that area, and their regional staff members, and they ask about the song and the artist. They hope to use their relationships to find out about the artist. They call around locally about the artist and then widen their calling range to see just how large the regional buzz expands, if at all.

This feedback either keeps the artist on their “watch list” to see if something develops naturally, or they move on to other artists in other areas. Of course the artists never know this. All they know is that Corey from Universal called or Aaron from Atlantic reached out, and they think a deal is in the near future for them. It rarely is. With the amount of hating that goes on in this industry, it is a miracle that any artist is given a rave review by local and regional people. It seems that everyone has their own artist that they are trying to push (almost always for financial gain).

The down side for an artist to attempt to get a deal with radio spins is that acceptance at radio doesn’t necessarily translate into CD sales and labels know this. Remember, labels do this for a living and have for many years. There is a very good chance that they have seen it all before since you are not the first person to ever try to get a record deal. They have a multitude of artists signed to their label that they are working at radio. They know from experience that one mediocre song, or even one very hot radio hit single, doesn’t guarantee CD sales. They have hoards of examples of this lesson: D4L’s “Laffy Taffy,” The Shop Boyz’s “Party Like A Rock Star,” DJ Webstar’s “Chicken Noodle Soup,” etc. In fact, they have no examples of this tactic actually working well.

The same can be said for MySpace page hits. There is no direct correlation between someone who is willing to visit your page for free and listen to your song for free, with someone who is willing to spend $16.99 for a full length CD or download of all of your songs for 10 bucks on their credit card. This is why more labels do not give deals to artists who are in the top of the MySpace page hits or to artists who have the most friends. A MySpace page, just like radio spins, is one small necessary piece of your marketing pie, and should be treated as such.

There is no easy way to get a deal. I wish there was; I’d own an island of my own by now if there was an easy way since I have such a successful track record of doing such good deals. There is no way to bypass hard work and a strong grind. There is no way to compensate for the lack of enough funding to build a proper buzz to prove to the major labels that the risk in signing your artist is less than if they sign another. If it was as easy as spending $50,000 at radio, don’t you think every dopeboy or real estate investor over time would have a successful career for their artist or themselves?

The goal, as I see it, is not just to get signed to a record deal. The goal is to have a successful career in the music industry as an artist who sells CDs that leads to other income producing opportunities such as TV and film appearances, endorsement deals, touring opportunities, merchandising income, publishing income, etc. So the goal is really to get signed to a successful record deal where you are a priority at that label, and at a label that has a track record of success with the type of music you make. If the goal is to just get a deal, you can sign to Lil BoBo down the block who just printed up cheap business cards at Kinko’s claiming to be a record label. If your goal is to get a good deal, where your record actually comes out and has a proper push by the record label because you will most likely sell more CDs than other artists signed to that label, well, you’re going to have to do a hell of a lot more than get a couple hundred spins at radio.

Just like a woman can’t unzip her shirt just a little bit and expect to attract a husband solely by showing cleavage (there are just too many tits out there to choose from. LOL), an artist can’t tease a label into signing them with a few good looking radio spins. It takes relationships, time in, a super strong buzz, and showing and proving that you are worthy to get to that next level.

Bear in mind that the labels are not stupid. They know a one hit wonder when they see one. If your single does take off at radio, they will be more than happy to dump money into that single and collect the ringtone and single download money. Publishing is where the money is in this business! But don’t expect it to go much further.

If you think it’s hard to get a record deal when you are unknown, just wait until you see how difficult it is after you’ve had one hit record and nothing to follow it up. “One hit wonder” is an impossible title to live down, even if you may have had other songs and the label just dropped the ball. No label on earth looks at that. There are too many other, less risky projects for them to take on that guarantee a return on investment in this industry. Be that project!!

* A huge apology to all of the radio promotion people who make a fantastic living selling the dream that an artist can get a record deal from buying spins through you guys. Not to worry, most folks won’t take heed to this advice. You’ll still be able to rock that brand new Mercedes and score that 5,000 square foot home with the heated pool!

How To Get A Decent Record Deal

By Wendy Day from Rap Coalition (

This is the question I am asked most frequently-- obviously by people who don't know me, because those who do know me ask me how they can sell more records on their own, not how can they get into a slave contract and become a sharecropper. But once again, for those who don't want to do for self, I will attempt to break it down from my vantage point.

I basically see three ways to get a deal in this industry; and let me preface this by saying that I AM talking about a rap record deal with a reputable record label that has a track record and that has experienced some success in the rap music industry through selling records. I'm NOT talking about the bogus labels that spring up daily all over the country with a business card printed last night at Kinko’s that says they are a record label.

Real legitimate record labels have a staff, they have proper financing to market and promote their releases after they record them, and they have experience and connections in the music industry with radio, retail, and promoters. The bogus labels should be avoided at all cost until they have a proven track record, as most of them can't even do as much for an artist as the artist can do for him or herself. And I'm certainly NOT talking about the labels or pseudo distributors that already exist within the industry yet can't seem to sell more than 30,000 records, even with a talented artist.

So, I see three ways to get a deal (that you'd want to have) in this industry:

1. Get put on by an established artist (but bear in mind that you may only be as successful as that artist. It's rare that someone puts you on and you blow up larger than they are). This means coming up under Busta Rhymes, Jay Z, Kanye, BG, Jeezy, T.I., 50 Cent, Nelly, Eminem, Dr Dre, etc. With any luck, the artist who puts you on is fair and doesn't do to you what was done to him when he was coming up.

2. Create a buzz. In a perfect world, you want everyone in the industry and on the streets talking about you before you get signed. Young Buck was a perfect example of an underground artist who had a very strong buzz when he was coming up. The trick is to keep it going til you get signed and then turn it up a notch so that the whole industry is buzzing about when you're going to drop (50 Cent is a great example of someone who kept up the buzz). This option usually takes many years to land a good deal.

3. Sell units. This is, of course, my favorite method because it proves to the labels you can sell, which reduces their risk and gives you negotiating leverage. Therefore, you have more control over the "fairness" of your deal, and often a choice of labels to sign with. In a perfect world, you want to be with a label that not only believes in you, but has an experienced hard-working staff in every department that can really make your project happen. Plus, a nice bidding war never hurts…

The average record deal for a new artist starts around $125,000 and 12 or 13 points (which really means 12 to 13 per cent of the retail selling price after you pay back all the expenses) for an independent label or a subsidiary label, and $300,000 and 16 points at a major label. There are far more indie labels and sub-labels than there are major labels, so it is obviously more difficult to get signed directly to a major label. The plus of being directly with a major label is that there is no middleman. Dr Dre’s label Aftermath is directly with Interscope which is a major label. Eminem’s Shady Records is signed to Aftermath which is signed to Interscope. 50 Cent is signed to Shady via Aftermath at Interscope. That’s a lot of hands for money to pass through, even figuratively.

Most money spent to sign and promote an artist is recoupable. “Recoup” means paying back most of the expenses before you receive any back end payments (points are back end payments). I can count on one hand the number of rappers I know who've ever even seen a back end payment such as a royalty check. Most rappers make money by getting advances prior to working on the next release, always in an unrecouped position of owing money to their label.

The way to increase the figures in any deal, in favor of an artist, is for the label to realize that their risk is reduced. A label takes a risk when signing any new artist (risk meaning that the label could dump hundreds of thousands, or even millions, of dollars into an artist's career and the artist might only sell 10,000 records, which means the label loses a lot of money), but anything that can reduce that risk is considered a plus, and rewarded.

This even applies to established artists. For example, when Snoop Dogg was shopping for his new deal after his deal with Priority ended, he was able to say he had Dr Dre producing for him again, he was expanding his awareness into mainstream America by appearing in a full length motion picture (in 2001), and he had an autobiography out at the time in bookstores called Tha Doggfather which got great reviews. That's the way to maximize opportunity. A more recent example would be T.I., who dropped a CD and starred in a movie that released in the same week (2006). This would backfire if the movie got bad reviews (Outkast), so it would be more of a slam dunk for an artist who had a track record of success in film already, like Mos Def, for example.

A newer artist might reduce the perceived risk for a label by having access to well known successful producers, or by bringing a hit single with a superstar producer. This affiliation is one that the label would see as reducing their risk at radio. Radio is overcrowded and expensive these days, so having a Jazze Pha, DJ Toomp, Kanye, or Cool & Dre track goes a long way for recognition with radio. Labels like this. By the way, this backfires if there are already many singles at radio by the same producer.

These are all proven ways to get the little "extras" in a record deal. Those extras could include more upfront money, more points on the back end, a better “stat rate,” less stuff to recoup, etc. Upfront money is a double edge sword because upfront money is recoupable, therefore it is just more debt. You want to get upfront money for a number of reasons:
• to invest in something yourself that will bring more money like a studio or real estate,
• to force the label to make your project a priority by being so far in debt with them that they have to work your project hard to get their money back,
• to make certain you make money from a record label that has a reputation for not paying royalties or back end money,
• etc.

If you have a deal with a reputable label that seems to believe in you and you are confident that you are a priority, you may want to reduce the front end advance in favor of a larger split on the back end. With Trick-Trick’s deal at Motown, he took less money upfront in order to get 40% to 50% on the back end. Of course Trick had a slam dunk single with Eminem called “Welcome 2 Detroit” and had already shot a tight video for it. He had a follow-up single with Jazze Pha, and starred in a movie that he knew would be in theaters in the Spring. Most joint venture deals don’t work financially in the artist’s benefit because there is often a production company in the middle collecting the money. In this case, Trick co-owned the production company, further reducing the risk for Motown to do business with him.

When I negotiate a deal, there are times where I secure money upfront for the artist that will be dumped back into the artist's project because I know the label won't. For example, in almost every deal I've ever negotiated with a major label, I've gotten between $25,000 and $75,000 for the artist to hire his own street team to work his project. Most of the radio driven majors don't understand the importance of building the artist on the streets first, so very often the artist has to do this for self. This fund is never recoupable. An artist shouldn't be taxed for an area where the label is weak, nor should the artist be taxed for something that falls under marketing of the record, like a street team. But in order to negotiate something like this, the artist must have something that the label deems worthy enough as leverage. You need some kind of leverage to get a good deal.

I guess what I'm saying is that you shouldn't take just any old record deal, you should have a deal with as many extras to guarantee your success as the label gets to guarantee your profitability to them. You are taking a risk with the label as well, but they NEVER see it like that. They always only see their risk.

Regardless of the level of your recording contract, you need to go into your deal with the attitude that the label is your partner (even if you never make a dime, because it is YOUR career). If they drop the ball, you should be able to pick up the ball and run with it. They have many artists on their label, but you only have one career. Don't let yourself become the topic of an article in a magazine about "whatever happened to..."!! Bear in mind that the REAL hard work begins after you get a deal.

You set the tone with your label. If the label has 3 artists, and 2 are lazy and never show up to stuff that they set up, but one is hardworking and arrives on time for everything, guess which artist will get the best push REGARDLESS OF THEIR LEVEL OF TALENT! Human beings work at record labels and it is human nature to work whatever causes the least resistance and least stress. If it's easier to work a T.I. record than a Twista record then that is exactly what will happen. If it's easier to work a T.I. record than a B.G. record then that is what will happen. It has nothing to do with the level of talent or the sound of the music. This is a business. That's why it's called the music BUSINESS.

Learn as much as you can before getting into the industry, ask as many questions as you can to people who are successful and legitimate, and have a really good entertainment attorney on your team. A successful team, and a little bit of luck, are the true secrets to success in this industry. And if you are an artist who has limited business sense and all you want to do is just make music, PLEASE find someone with some real business savvy to add to your team. If you don’t, you will see the ugly side of this business which is a wicked pimp and ho game. And, uh, you won’t be the pimp…