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Monday, June 13, 2011

Mega Record Deals

Mega Deals

Over the past several years there have been what is called "mega deals" in the music industry. Names like,
U2, R.E.M., Madonna, Prince, Micheal Jackson, etc. These contracts are multi-million dollar deals. So what is the actually truth behind the deals and how to obtain a contract such as this? You need to have a long run and be consistant selling millions of albums and selling out concert tours for years. Remember that record labels take options on mew artist up to eight albums. The other reality is that most new artist deals have low end royalties and advances or, at best, are in the midrange. As soon as an artist has big success, they will demand more substantial advances and royalties. If both parties agree on a contract like this the record company wants more albums. The fact is that the record labels continue to extend the deals, and artist rarely end up in a position to change labels. This is the reason why artists tend to spend their entire career at one company.

The Mega Deals Three Big Clauses

When making your own music, there are three major clauses in the mega deal.

The advances are in the multi-million dollar range. At this level, the deal becomes a big banking transaction-the record company makes its best guess as to what the artist will sell and then computes its potential profit against the risk factor.

Superstar royalties tend to be over 20%.

The amount of product in a mega deal has two big aspects:
A. There will be many more firm albums, three or four.
B. The total amount of product tends to be less. A superstar owes a lot of product to the existing label, but the deal is with a new label. The label will get fewer albums than a normal deal.

Mega deals tend to be less than reported in the press. Also, a number of the deals, involving not only a record deal but also a publishing company, film projects, and merchandising. This is my post for today.

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