Have you ever heard of someone in love with their record deal? Negative perception plagues the music industry & record labels. Ironically - they also seem like every significant artist’s metric for success. Films like Straight Outta Compton tend to paint the ‘industry’ negatively, but is that the reality of working in or around the music industry?

Short answer? Sometimes - but in reality, the overwhelming majority of people in the entertainment world are trustworthy people. Many artists have signed beneficial deals with record labels & never need to speak out. It’s only the occasional scandal or disagreement. Several months ago, Juicy J said f*** Columbia Records or the Taylor Swift vs. Scooter Braun drama - both situations that reflect poorly on the industry.

Most record deals are reasonable offers, but that doesn’t mean most artists need to sign record deals.

So, what is a record deal?

There are many types, including:

• Standard Deal

• Distribution Deal

• Production Deal

• 360 Deal

IndieHipHop.net does an excellent job of breaking those down, and I recommend checking out their article if you have any questions. 360 Deals are the ones that bring the worst press - as they allow the record label to take a percentage of all an artist’s revenue streams - hence the 360-degree moniker. Other deals usually just rely on income tied to the distribution or release of the music.

A record deal is an agreement between an Artist and a larger organization, giving artists access to resources. These resources include money, engineers, songwriting & more. The artist pays the label a hefty portion of their royalties in exchange.

So what’s the benefit of a record deal?

The onus of a deal for the artist includes an increased budget, but it is essential to understand that this money is an advance or a loan to the artist. While a ‘million dollar deal’ sounds enticing, remember that all $1 million must be repaid to the label before the artist sees a cent of the royalties from their release.

Putting together a $100,000 music video (and not even showing up) is a lot more palatable if you aren’t the one paying out of pocket. While Young Thug owes the label that $100,000 at some point, he is also generating money from merch sales, touring, licensing & more. So maybe he’s not too concerned with his repayment terms.

Also, major labels still manage the most impactful relationships with many content curators in the music industry. Being featured on Beats1 or at the top of Rap Caviar is far more likely if you’re signed to a major, but still not guaranteed.

As an artist, you will have to decide what your priorities are.

Why doesn’t an artist need a record deal in 2020?

In the online era, seeking out record deals should be a low priority for an artist who is beginning their journey. With access to tools like Distrokid or Tunecore, or small independent labels (like us!), an artist should receive all of the necessary label services at low-to-no cost.

Plus, music managers in today’s world tend to be far more hands-on. Some managers are fronting costs themselves or taking up the camera to help produce content. Relying on your local team to help carry the burden should remove some of the pressure of signing to a label.

Remember, if you read my article last week on succeeding with Social Media - the key is creating that consistent voice & then generating organic engagement. It’s the same thing here - before seeking out a record deal, make sure your art is sticking with your existing friends & family. Those networks will be where you get the best & most honest feedback.

Chance, the Rapper was able to garner a large amount of attention from being independent & Tech N9ne has made millions of dollars doing the same. Meanwhile, Kanye West, Eminem, Drake & Post Malone are some of the world’s largest artists and had to sign to major labels to achieve their goals.

Ultimately - there is no one-size-fits-all solution to succeeding in the music industry. The priority should always be focusing on creating genuine art, and the rest of the puzzle pieces will fall into place.

If you ever have any specific questions about a contract or record deal, we recommend reaching out to an entertainment attorney.