The Ultimate Guide To Record Label Contracts
Understanding Record Label Contracts
In 2025, it's entirely possible for artists to succeed independently of record labels. However, a record deal can still offer significant support and fuel an artist's development. Conversely, it could hinder growth if the label prioritizes short-term profits over the artist's long-term career.
Whether you're a bedroom producer, a buzzing rapper on TikTok, or a band selling out local shows, understanding record label contracts is essential. These contracts determine not just how you get paid, but how your music is distributed, marketed, and even how much creative control you maintain.
A record label contract is essentially a legal agreement between an artist and a label that defines how the music is recorded, owned, released, promoted, and monetized. These agreements range from basic distribution deals to all-encompassing 360 contracts, each with its own implications.
As someone navigating the music business, you’re not just signing paperwork—you’re setting the course of your career. Knowing the different types of deals can help you avoid bad record deals and choose one that aligns with your goals, whether that’s staying indie or shooting for mainstream success.
The 360 Deal
Let’s start with the infamous 360 deal. You’ve probably heard artists and execs throwing the term around like it’s a dirty word. But what is a 360 deal exactly?
In a nutshell, a 360 deal (aka 360 record deal, 360 contract, or 360 music deal) means the label gets a cut of everything you earn—not just from music sales, but from touring, merch, sponsorships, publishing, acting gigs, and more. It’s called a "360" because it covers the full circle of your career.
For labels, this setup makes sense. They’re investing a lot into developing artists, so they want a piece of all revenue streams. But for artists? It’s often seen as restrictive and overly controlling, especially if you blow up and they’re still taking a cut of every bag you secure.
Pros and Cons
Pros:
- Massive backing: labels will invest more in marketing and exposure.
- Artist development: Labels are incentivized to help you succeed in every area.
- Easier access to opportunities like brand deals, radio play, and syncs.
Cons:
- Less control: You’re essentially giving up rights across your whole career.
- Smaller profits: They take a percentage of merch, tour income, and more.
- Long-term ties: These deals are often locked in for years.
So, why is a 360 deal bad? It’s not bad by default, but it can be if you're not fully aware of what you’re giving up. The key is transparency. Make sure you know the terms inside and out, or even better, have an entertainment lawyer by your side.
Traditional Record Deal
Structure and Components
The traditional record deal is your classic artist-label contract that’s been the standard for decades. This agreement usually covers:
- The number of albums to be delivered
- Ownership rights (usually favoring the label)
- Payment of advances and royalty splits
In this setup, the record label signs you to a multi-album deal, fronts the costs of production and promotion, and takes ownership of the master recordings. You make money from royalties—a percentage of music sales, streams, and licensing after the label recoups its costs.
You might hear artists bragging they “just signed a record deal.” This is typically the deal they’re talking about.
Artist Obligations and Benefits
Here’s what you get:
- Big-budget production
- Label marketing and distribution
- Access to a professional network
But here’s what you give up:
- Ownership of your music (the label usually owns the masters)
- Creative control in many cases
- A hefty portion of your income
How do record deals work? Think of it like taking a loan. The label fronts the money but gets paid back before you see a dime. Only after they recoup their investment from sales and streams do you start making money.
Curious how many streams you need to go platinum or gold? Check out the RIAA Certification Guide here.
What is the best record deal to sign? That depends on your goals. If you want mainstream exposure and are willing to give up some control, it might be a good fit. If you value independence, look elsewhere.
Distribution Deal
What is a Distribution Deal?
Now let’s flip the script. Say you don’t want to sign your soul away, but you still need help getting your music out there. Enter: the distribution deal.
A distribution deal (aka distro deal or music distribution deal) is a contract where a distributor handles getting your music on streaming platforms, in stores, and sometimes even physical formats like vinyl or CDs. You keep full ownership of your music, while they take a small cut of the revenue. Check out our article on the top music distributors here.
Advantages for Independent Artists
Distribution deals are ideal for indie artists who want to:
- Retain control and ownership
- Release music on their own terms
- Get access to backend analytics and royalty payments
You don’t get the marketing muscle of a major label, but with the right grind, you can still build a loyal fan base and keep more of your revenue.
There’s a big demand now for distribution deals for independent artists as platforms like TuneCore, Symphonic, and DistroKid make it easy and accessible.
Comparison with Record Deals
Single Deal Recording Contract
When to Consider a Single Deal
Not ready for a multi-album commitment? A single-deal recording contract might be the way to go. These contracts enable artists to sign on for just one track, giving labels a low-risk way to test an artist’s potential and giving artists a chance to get noticed without long-term strings attached. Check out our interview with a Playlist Push artist who landed a single deal with Atlantic Records.
These deals are perfect if:
- You have one viral song
- You want to dip your toes into label life
- You’re negotiating leverage for a bigger deal
Benefits and Limitations
Pros:
- Flexibility: you're not tied down.
- Exposure: can lead to a full record deal if the single performs.
- Lower risk: less to lose if it doesn’t work out.
Cons:
- Limited support: labels won’t go all-in.
- Smaller budget: often no advance or minimal marketing.
- Short shelf life: one-and-done deals don’t build long-term careers.
Production Deal
A production deal is a contract between an artist and a producer or production company. The producer develops your sound, helps you record, and often pitches you to record labels.
What It Includes
- Exclusive recording rights
- Potential master ownership
- Revenue shares
- Artist development
Pros
- Early access to industry connections
- Creative guidance
- Better-quality productions
Cons
- Loss of creative control
- Long-term contract risks
- Potential conflict with future label deals
Licensing Deal
With a licensing agreement, you grant a record label temporary rights to your music for marketing, distribution, and monetization purposes, while retaining ownership of your master recordings.
Why Artists Like It
- You control your music
- You can re-license it later
- It’s great for sync licensing and short campaigns
This model is increasingly popular for indie artists looking for flexibility.
Sync licensing, short for synchronization licensing, is the process of licensing your music for use in visual media, such as films, TV shows, commercials, video games, and online content. Learn more about how to get sync licensing deals here.
Profit Split Deal
Instead of giving up your masters or getting a loan-style advance, a profit split deal allows the label and artist to share net profits, often 50/50.
This structure is:
- Transparent
- Flexible
- Collaborative
However, it requires trust, clear terms, and, typically, no upfront advances.
Artist Development Deal
Focuses on building your brand over time. Development deals include voice training, media coaching, and image consulting. You may not get a massive advance, but you get mentorship and structure.
Useful if you're:
- Just starting out
- Looking for long-term growth
- Building leverage before signing big
Label Services Deal
A modern approach where you keep ownership and hire a label for à-la-carte services: PR, playlist pitching, tour help, and distribution.
Think of it like being your own label but outsourcing key tasks.
Anti-360 Deal
A response to the 360 model, this deal limits the label’s cut to only the services they directly provide. Artists keep everything else—tour money, merch, sponsorships, etc.
It’s ideal for artists with existing revenue streams who just need targeted support.
720 Deal
An extreme version of the 360. The label takes percentages from EVERYTHING, often including future earnings, image rights, and even the income of your family members.
Very rare, and generally not recommended unless you’re getting a HUGE investment and have a legal team ensuring fairness.
Key Contractual Terms to Know
Advances
Money up front. You don’t start earning royalties until the label recoups that investment.
Royalties
Your share of revenue from music. The typical range in major deals is 10–20%, while indie or distribution deals offer 70–90%.
Ownership
Who owns your masters? If it’s not you, you’re licensing your art forever.
Conclusion
There’s no perfect record deal, only the one that matches your goals. Whether you’re aiming for radio hits or running an indie empire, understanding your contract is your first move toward control, growth, and long-term success.
Don’t rush to sign. Read, ask questions, know your worth.
Playlist Push offers support for indie artists and labels alike. If you want to stay independent and market your music, try our Spotify Playlist Pitching and TikTok Music Promotion services.
FAQs
1. What is a 360 deal in music, and why is it controversial? It’s a contract where the label takes a cut of all your revenue. It’s controversial because artists often give up too much without a fair return.
2. What is a distribution deal in music? It’s an agreement to distribute your music to platforms like Spotify and Apple Music, without relinquishing ownership or royalties.
3. What’s the difference between a record deal and a licensing deal? Record deals give the label ownership. Licensing allows them to use your music for a specified period, while you retain the masters.
4. Are 720 deals real? Yes, but rare. These are extremely restrictive contracts with high levels of control. Approach with caution.
5. How do you get a record deal? Build buzz and intrigue independently, online and locally. Create high-quality content, and grow your fanbase. Labels invest in traction.
Looking to Promote your own Music?
Use our Spotify Playlist Promotion or TikTok Music Promotion service.
