Understanding Record Deal Structures

360 deals, licensing deals, distribution deals — know the difference before you sign.

What Kind of Deal Are You Being Offered?

Not all record deals are the same, and the difference between them can be worth millions of dollars over the course of your career. Before you sign anything, you need to understand exactly what type of agreement is on the table and what you're giving up in exchange for that advance or co-sign.

The 360 Deal

A 360 deal — also called an "all-rights deal" — is the most common structure offered by major labels today. The label takes a percentage of not just your recorded music revenue, but everything: touring income, merchandise, endorsements, acting gigs, and more.

Labels love 360 deals because they reduce risk. If your album flops, they still make money from your sold-out shows. From your perspective, this means you could be paying the label 15–25% of your concert ticket revenue for the life of the contract, even after you've recouped the advance and made them profitable.

What to watch out for: Vague language like "all ancillary income streams." Always get explicit definitions of what the label can and cannot touch.

The Licensing Deal

A licensing deal is fundamentally different: you keep ownership of your master recordings and license the label the right to distribute and market them for a set period of time — usually 5–7 years per album. After that, the rights revert back to you.

This structure is increasingly popular with independent artists who have already built a fanbase. Labels like Def Jam and Atlantic have signed artists to licensing deals when the artist had enough leverage to negotiate. The tradeoff is usually a smaller advance.

The upside: After the license period, you own everything. Your back catalog. Your streaming income. Your legacy.

The Distribution Deal

A distribution deal is the most artist-friendly structure. The label or distributor simply gets your music into stores, streaming platforms, and radio — and takes a smaller cut (usually 15–30% of revenue) for doing so. They typically provide little or no marketing support, but you keep full ownership and creative control.

Companies like Empire, EMPIRE, and even services like DistroKid operate somewhere on this spectrum. This is often the best starting point for independent artists who want to maintain control.

The Production Deal

A production deal is a deal with a production company or producer that then shops you to a major label. The producer acts as an intermediary. These deals can lock you into unfavorable splits before you ever get to the label level — sometimes the producer takes 50% of your label income. Approach with caution.

Key Questions to Ask Before Signing

Before you put pen to paper on any deal, demand answers to these questions:

How long is the contract term, and how many albums does it cover?
What rights are being transferred — master ownership, publishing, or both?
What is the recoupment rate, and what expenses are recoupable?
Is there a reversion clause if the label doesn't release your project?
What creative approvals does the label have?

No label wants to lose a talented artist over negotiating tactics. If they're serious about signing you, they will work with you on reasonable requests. Always have an entertainment lawyer review any agreement before signing.

Key Takeaways

360 deals give labels a cut of ALL your income streams — not just music sales
Licensing deals let you keep master ownership after the deal period expires
Distribution deals are the most artist-friendly — small cut, full creative control
Always have an entertainment lawyer review any deal before signing
Ask about recoupment terms — many artists go years without seeing royalty checks even on successful albums

Glossary

360 Deal: A record contract where the label takes a percentage of all the artist's income streams including touring, merchandise, and endorsements, not just recorded music.
Recoupment: The process by which a label recoups (recovers) its investment — advances, recording costs, marketing spend — from the artist's royalties before the artist sees any money.
Master Recording: The original, definitive recording of a song. Whoever owns the master controls how that recording is used and licensed.
Reversion Clause: A contract provision that returns rights to the artist if the label fails to release the project within a specified time period.
Licensing Deal: An agreement where the artist retains ownership of their masters but grants the label the right to distribute and exploit them for a limited time period.