The complete guide to artists' contracts: what every artist should know before signing

Whether you're an established artist, a rising songwriter, or a TikTok sensation trying to go pro, signing a record deal often feels like the golden ticket to success. But while a contract with a label can open many doors, providing support with recording, promotion, distribution and marketing, it’s essential to fully understand what you’re agreeing to before putting pen to paper.

Music contracts come in various forms and can involve record labels, distributors, publishers, or producers. Although many of these contracts share similar terms, small differences in clauses can lead to drastically different outcomes for your career and finances. In this article, we’ll walk through the essential concepts every artist should understand before reviewing any music deal. Then, we’ll break down the main types of record deals and how they affect your income, ownership, and creative freedom.

Here's what we're going to explain:

• Key terms you need to know
• Main music income streams
• Types of record deals
• What to consider before signing a deal
• Other music industry contracts

Key terms you need to know

What’s an advance?

An advance is an upfront payment given to the artist when they sign a contract. It’s essentially a loan from the label, meant to cover the artist’s living costs or project-related expenses while they record and release new music. While it may feel like free money at first, it must be paid back through future earnings, especially royalties.

What is recoupment?

Recoupment is the process through which a label gets its money back. Any money earned from streams, sales, or other income sources is first used to pay back the advance and production costs. For example, if your label gives you a $50,000 advance and spends another $10,000 on your album’s production, your music must generate $60,000 in royalties before you begin to earn your share.

What is a royalty split?

Royalties are the artist's earnings from their music. A royalty split refers to the percentage of income that the artist and the label each take. An 80/20 split, for instance, means the label keeps 80% of the income and the artist receives 20%, after recoupment.

What does it mean to own the masters?

The “master” is the final, polished recording of a song, the version that gets distributed to platforms like Spotify or used in films and ads. Whoever owns the masters controls how and where that music is used. If the label owns the masters, they have full rights to license, sell, or monetize your music. If you own them, you hold that control.

Main music income streams

A big part of understanding any deal is knowing where your money comes from. Beyond music sales, income sources include:

• Streaming and physical album sales
• Touring and live performances
• Merchandising
• Licensing (TV, film, games)
• Sponsorships and brand deals
• Paid features and collaborations
• Appearance fees

Each deal affects which of these income streams you keep and which ones are shared with the label.

Types of record deals

1. Traditional record deal

This is the most common contract offered by record labels. In a traditional deal, the label gives the artist a substantial advance and covers the costs of production, marketing, and promotion. In return, the label owns the masters and typically takes an 80% share of royalties after recoupment.

This kind of deal can be great for new artists who need significant financial and logistical support. However, artists sacrifice long-term ownership and may receive a relatively small share of their earnings. Major labels are powerful and well-resourced, but they often offer less favorable royalty splits to new talent.

2. The 360 deal

A 360 deal is a comprehensive agreement in which the label finances and manages nearly every aspect of the artist’s career, from music production and touring to merch and branding. In exchange, the label takes a percentage of all revenue streams, not just music sales.

That includes money from appearances, endorsements, live shows, merchandise, and more. Additionally, the label owns the masters and often the artist’s image and likeness, giving them broad control over the artist’s brand.

This deal might suit artists who want full-service support, but it comes at the cost of creative freedom and long-term independence.

3. Profit split deal

In this hybrid model, the artist and label agree to a 50/50 royalty split after all costs and the advance are recouped. The label still owns the masters, but the even split of profits gives the artist more financial upside than a traditional deal.

Profit split deals are ideal for artists who already have some momentum and an audience, but need help scaling their reach. This model works well if you trust that your project will earn enough revenue to pay back costs and generate solid profit.

4. Distribution deal

A distribution deal is a lighter-touch agreement focused solely on getting your music out into the world. The distributor makes sure your tracks are on streaming platforms, digital stores, and physical formats like vinyl or CDs. Some distributors also pitch to playlists.

In many cases, the artist retains full ownership of their masters and only gives up a small percentage of sales, often around 25%. Some deals include a small advance, but many don’t.

This type of deal is perfect for independent artists who have already produced their music and just need help with exposure. Just remember: marketing and promotion are still your responsibility.

The distribution service can also be accessed through simpler means, without contracts, while allowing artists to keep increasingly higher royalty percentages. Matchfy also offers this service, always standing by the artist’s side: you have the freedom to release your music on over 150 streaming and download platforms worldwide.

We’re here to help you reach a global audience while maintaining full control over your work. Unlike other platforms, Matchfy allows you to keep 95% of the royalties generated by your music. This means that the majority of your earnings stays in your hands.

After going through this guide on the different types of contracts, the time will come to interact with a real record label. That’s why we’ve also created another guide on how to get in touch with them and sign a deal.

Learn more by reading the full article on our blog.

What to consider before signing a deal

Get a music lawyer

Hiring an entertainment lawyer can be one of the smartest moves you make. An experienced lawyer will spot problematic clauses, help negotiate better terms, and ensure the contract protects your interests. If hiring a full-time lawyer is too expensive, consider paying for a one-time consultation to review your deal.

Everything is negotiable

Many artists forget that most contract terms can be negotiated. Advances, royalty splits, ownership rights, and contract length can all be adjusted based on your leverage. Your value to a label is based on your fanbase, online presence, and momentum, so use that to your advantage.

If you have multiple offers, use them to negotiate better terms. Labels are businesses, and they’re more willing to offer favorable conditions if they know you're in demand.

Understand the contract duration

Pay close attention to the length of your contract, whether it’s measured in years or albums. A long deal can trap you in an unprofitable agreement just as your career starts to take off. Signing a one-album deal or a short-term contract gives you more flexibility and options for the future.

Other music industry contracts

Record deals are just one part of the music business. There are other contracts artists should be familiar with:

• Production agreements: Between artists and production companies
• Publishing deals: For songwriters to manage rights and royalties of compositions
• Licensing contracts: For use of music in visual media
• Producer agreements: For beat makers or music producers collaborating with artists or labels

Each type of deal serves a different purpose, and understanding which one fits your role and goals is crucial.

Conclusion

Understanding the many types of record deals is just the beginning. The next step is figuring out which path works best for you, whether that means signing with a label, going fully independent, or choosing something in between.

If you're an artist who values ownership, creative freedom, and direct control over your music, Matchfy can help you take the next step without giving up the rights to your art. Our music distribution service allows you to release your songs on over 150 streaming and download platforms worldwide. After reading this guide, you’ll be better prepared to evaluate any contract that comes your way.

Until then, Matchfy is here to support your music journey, on your terms. Ready to distribute your next release? Let’s make it happen.