The craziest thing about standard royalty based record deals aside from the fact that you’re signing over ownership of your masters is that NOBODY KNOWS THAT IT MEANS TO RECOUP. Not even half the people that are signing you know. Let me break it down for you...

Let’s say a label gives you a $250k advance and the rest of your budget is $750k, so they’re $1m total invested in you. And let’s say it’s a standard 18% royalty. But for easier math purposes, let’s round up to 20% royalty...

Most people think that after their music generates the $1m their label invested, that for every dollar after that made by their music, they’re gonna make 20 cents and the label will make 80 cents. Sadly, even that fucked up scenario is mistaken.

The truth is, the royalty rate is your recoup rate. So at 20%, that means that only 20 cents from every dollar made by your music is going toward your $1m recoupment account, and the label is pocketing the 80 cents as profit. And it gets worse...

That means that you need to generate the label $5 MILLION DOLLARS before you see another dime from your music. They will have made $4m in profit on you while you only made $250k. And now you’re still only looking forward to 20 cents on the dollar. And it still gets worse...

All that sits behind exuberant hidden fees, inflated double-dipping “distribution” fees, and all sorts of bull shit expenses. Not to mention how many artists get stuck on LP1 because labels keep them in endless mixtape mode.

What to do? Educate yourself about other forms of deals. Profit splits. License deals. Joint ventures. Find something right for you. Sometimes it might make sense to do a short term royalty deal in exchange for the full support of a big machine. But never do endless option deals

You need to be able to see the end of your first deal. Your first deal is like your rookie contract. Make sure it doesn’t lock you down for too long or else how are you gonna get to better deal terms?

Not to mention the taxes and lawyer and Mgmt fees, which cut heavy into that first advance! And now we don’t have touring. So be careful! Be smart! Take your time. Do your research. Learn from those who came before you.

We can save publishing talks for another day lol