The Changing Nature of Recording Contracts


The way in which recordings of music are being consumed by the public is forever changing. The journey from wax cylinders to CD’s was a prosperous one, in which money could be made from selling physical copies of recordings to the consumer. This business model warranted what we now refer to as a traditional recording contract. This involved artists granting record labels the right to manufacture and distribute their recordings. The labels would then take a percentage of net income from the sale of these physical items in shops. Upon signing with the label, the artist would usually be paid an advance against their share of future royalties which would then be used to record the album. (Hracs, 2012)

In almost all cases the record labels made the most money from these deals, but the percentages received by artists have varied throughout the timeline of the industry. Moby once noted that “if we go back fifty years a lot of musicians were getting two percent”, while in the 80’s and 90’s royalty rates became “pretty fantastic”, moving up to 20 percent. However with recent changes in how we consume music, many musicians feel the big record companies “are trying to justify their survival and keep their lights on” leaving little money behind for the artists who make the music. (Pritchard, 2014)


The most pertinent change in music consumption of late is the transition from digital downloads to streaming. An average subscription fee of ten pounds a month will now grant the consumer access to almost all of the recorded music in the marketplace. The business model has shifted from selling a recording to selling a subscription and the streaming services have replaced the shops and online marketplaces. While musicians like Thom Yorke have criticised the money artists receive from this business model, calling it “the last fart of a dying corpse”, it is important to note that the streaming services are paying out massive amounts of money to the industry. Mark Williamson, director of artist services at Spotify said that “in 2013 alone” they “paid out another 500 million dollars”. (Pritchard, 2014)

The lack of money in artist’s pockets therefore, cannot be blamed on the new marketplace. Many believe the recording contracts enforced by the major labels are where the blame is to be found. Musician Billy Bragg blames “the analogue royalty rates that the majors insist on retaining for digital plays”. It seems that the constantly changing model of music consumption requires a constantly evolving recording contract. (Pritchard, 2014)

360 Deals

Part of the reason artists are receiving miniscule money is that record labels are making far less than they were in the era of CD’s. This has forced them to look at all possible ways of monetising their artists and has birthed the 360 deal, otherwise known as a ‘Multiple Rights Agreement’.

This type of recording contract involves monetising all of the artists ancillary ventures such as publishing, touring, merchandising and even television and movie appearances. Today 360 deals are an industry standard as capitalising on these areas has proved to be far more profitable than selling records in the current climate. Edgar Bronfman, CEO of Warner Music Group said in 2008 that he required “all new acts to sign 360 deals” and at that point one third of Warner’s artists already had. Artists have always been making money from touring, merchandise and their image but the fundamental purpose of a 360 deal is to grant the labels a share of all this revenue. (Bielas, 2013)

The initial execution of a 360 deal is the same as a traditional recording contract but with the added extras of granting the labels rights to a percentage of net income from all of the aforementioned ventures. Most labels take between 10-15 percent of the net income from these sources. (Okorocha, 2011)

360 deals can be divided into two categories, passive interest and active interest. Passive interest deals allow the artists to freely contract with third parties without needing permission from the label. In active interest deals the labels have all rights to the artist as well as a split of net income. In this case the labels control schedules, salaries and contracts for publishing and merchandising. (Okorocha, 2011)

Independent and Major Labels

While the major label deals discussed rarely ever work in the favour of the artist financially, independent labels offer artists a different route. Independent labels are smaller companies who are less likely to be pressured by a board of directors to sign a specific sound or promote a certain look. This kind of label would offer each artist more face time due to a smaller roster and would also generally give the artists a bigger share of the income generated from their work. (Cool, 2015)

A massive problem with indie labels however is that many of them simply lack the funds to compete with major labels when it comes to marketing, recording, distribution or tour support. Smaller indie labels will also have less influence and reach in the industry. Filipe Cruz, CEO of ‘Enough Records’ touched on this point in an interview when he said that “traditionally independent labels have been regarded as a stepping stone to signing with a major label”. (Choi, 2009)

Although major labels have some definite advantages over their indie counterparts, they also come with their own disadvantages. The major labels have a significant artist turnover. They sign many artists at once and the majority will eventually get dropped. As well as this, the modern 360 degree recording contracts that the majors insist upon mean a smaller share of the overall net income, a forfeit of most rights and even a loss of creative control. (Cool, 2015)

One way that smaller independent labels manage to get around their lack of funds is through licensing agreements. Indie labels in different territories across the world will pay a once off licensing fee in order to act as the label for that album in that region. They then take charge of manufacturing, promotion and distribution and keep all profits made after the once off fee is paid to the artist. However, in the era of streaming and online distribution, this approach is looking more and more unnecessary as artists can get their songs heard worldwide through the internet. (McDonald, 2019)

Intellectual Property, Copyrights and Royalties

Worked into all recording contracts will be pages detailing Intellectual Property and Copyright laws as well as agreements on the percentage splits of royalties, often referred to as ‘Points’. Intellectual Property law involves the protection of people’s work and the three most common types are copyright, trademark and patents. In the music industry, the most important protection is copyright. This protects the sound and written work of the music professional for their lifetime plus 70 years. (Muhammad, 2017)

Copyright is especially important when it comes to publishing. Publishing is one of the main ways money can be made from recordings. The person or company who holds the publishing copyright to a recording decides how much money it costs to use and where that income goes. In most cases Major label recording contracts insist on the label owning the publishing. (Muhammad, 2017)

Music copyrights are divided into two categories. Musical compositions and master recordings. Royalties for the use of a musical composition are usually split evenly between the composer and the owner of publishing (the label), whereas the master recording is usually owned by the label in full. The use of the master recording can then be sold for whatever price the holder of the copyright wishes. (Foreman, 2018)

There are various different types of royalties that can be earned. Mechanical royalties are paid out when the music is consumed or purchased in mechanical format, this includes CD’s, MP3’s, toys, video games and streaming. Performance rights are royalties for the public performance of a song. This also includes the broadcasting of the song on radio and television and in pubs and clubs. These royalties are collected by Performance Rights Organisations and are split evenly between the writer of the composition and the publisher of the master recording. (Foreman, 2018)

Synchronisation fees are paid when a movie, television show or commercial wants to use an artist’s work. The company will pay a fee to license the composition and the master recording. Further royalties can then be earned from performance rights once the movie or show airs. Streaming services pay out royalties in three ways, mechanical, performance rights and the licensing of the master recording. (Foreman, 2018)

A Sample Heads of Agreement and Deal Memo

This contract between ‘Sony Music UK’ hereinafter referred to as the ‘Agreement’ Executed and effective this day, 23rd of April, 2019, by and between ‘The Riptide Movement’ (hereinafter referred to as the ‘Artist’) and Sony Music UK (hereinafter referred to as the ‘Company’).

It is Hereby Understood:

  • The Company is an organisation which specialises in the management, recording, distribution and representation of musical artists.
  • The Company is familiar with the musical abilities of the Artist and has the expertise, ability, industry contacts and resources to assist the Artist in the furtherance of his/her career.
  • The Artist performs under the name “The Riptide Movement”.
  • The Company and the Artist wish to enter into this Agreement to provide for the production and distribution of the recording.

It is Therefore Agreed as Follows:

  • TERM. The effectiveness of this agreement shall commence with its execution by all of the parties, and shall continue thereafter for a period of 2 years.
  • THE RECORDING. The recording shall be produced in the following manner:
  • PRODUCTION. The Company agrees to produce two master recordings consisting of songs written and performed by the Artist. The resulting recordings shall include not less than 40 minutes in playing duration each, and shall be of a quality which is equal to master recordings normally produced for commercial distribution.
  • CONTRIBUTION BY THE ARTIST. The Artist agrees to fully cooperate with the Company, in good faith, in the production of the recording; to contribute the music and lyrics embodied in the songs and to arrange, direct and perform the songs in such a manner as to facilitate the production of the recording.
  • COSTS. The company shall be responsible for all costs incurred in the production of the recording, including the prepayment of all travel, hotel and meal costs incurred by the Artist in attending the recording sessions. The Company may recover such expenses after the production of the master recordings or upon the advancement of the Artist’s career. The Company’s production, promotion, manufacturing and all other bonafide expenses relating to the Artist are deemed recoupable from gross income.
  • ARTISTIC CONTROL. The Company and the Artist shall be jointly responsible for all decisions regarding the artistic content of the recording.
  • COMPLETION AND RELEASE. The first recording shall be completed and prepared for release and distribution on or before the 23rd of April 2020. The Company and Artist each agree to exercise all reasonable means to achieve such completion.
  • ASSIGNMENT OF EXCLUSIVE RIGHTS BY ARTIST. Upon the timely occurrence and performance of all material events and obligations required to produce the recording, the Artist shall assign to the Company all of his/her rights, title and interest in and to the following property;
  • The songs
  • The Artist’s performance of the songs contained in the recordings
  • The title of the recordings
  • COPYRIGHT. Upon the Artist’s completion of the songs the Company will proceed to obtain and secure a copyright for each of said songs. The copyright shall be the sole property of the Company.
  • ROYALTIES. In accordance with the rights granted by the Artist to the Company, any royalties or licensing fees collected by the Company resulting from the use, exploitation or existence of the recording will be used to satisfy costs incurred and paid by the Company to create the recording. In the event that the royalties are insufficient to complete such reimbursement, the Artist shall not be liable. The remainder of such royalties, if any, shall be distributed between the Company and the Artist in the following proportion:
  • 85 percent to the Company
  • 15 percent to the Artist


The Velvet Underground


The year 1967 brings two monumental albums to mind for music lovers. The Beatle’s ‘Sergeant Pepper’s Lonely Hearts Club Band’ and the Velvet Underground and Nico’s self-titled first LP. Both albums, coming from opposite sides of the Atlantic gave genre pushing performances filled with fresh takes and ideas on old and tired concepts. They each did this however, in their own unique way. The Beatle’s 1967 endeavour redefined rock music while setting the precedent for almost all of today’s popular music and for this it gets its credit, being hailed as the “most important and influential rock and roll album ever recorded”. (Karr, 2017) But what about the Velvet Underground?

Known to the band members as the ‘Banana Album’ due to its provocative sleeve designed by Andy Warhol and remembered by musicians and music lovers alike for a sonority and mood conveyed by no album before, this album’s influence is immeasurably deep and wide.  (Vulliamy, 2017) Within what context and from what influences could such an album be birthed? Who would be involved with such a project? How did they create something so unlike anything else at that time and why is the album arguably as influential as the Beatle’s ‘Sergeant Pepper’ of the same year? That story starts around 1965.

Context and Influences

While the Beatles were at the peak of their pop careers, releasing songs like ‘Yesterday’ and ‘Ticket to Ride’, The Velvet Underground had not yet been formed. Popular music at the time featured The Beach Boys with ‘Help Me Rhonda’ and The Rolling Stones with ‘Satisfaction’. (Kot, 2015) Less well known but far more important to the creation of the Velvet Underground was La Monte Young and his Theatre of Eternal Music. John Cale who co-wrote the album was so impressed by the work of La Monte Young that he moved from London to New York to seek out the composer and join his avant-garde ensemble. (Licht, 2013) It was in 1963 that a 15 hour public performance of Erik Satie’s piano piece ‘Vexations’ was staged with John Cale performing as one of the pianists. (Sweet, 2013) Cale’s inimitable drone which shaped the texture of the Velvet Underground’s music almost certainly came from partaking in experiments with composers like La Monte Young and Terry Reilly as well as mixing his classical training with the rock music of the time. (Vulliamy, 2017)

Cale had met Lou Reed, a literature student turned songwriter in 1965. Together they wrote ‘Heroin’ and ‘Venus in Furs’, two of the songs that would later appear on the Velvet Underground album. (Fevret, 2018) Reed’s influences were as vast and mismatched as Cale’s. He was inspired musically by free jazz musicians like Cecil Taylor and Ornette Coleman but yet looked to Bob Dylan to model his singing style. In the band’s early days Reed would write protest songs in the vain of Bob Dylan, the most notable one being ‘Prominent Men’. (Fricke, 1989) Andy Warhol’s magazine ‘Aspen’ featured an essay from Reed titled ‘The View From the Bandstand’, in which he detailed some of his favourite 1950’s Doo Wop Bands such as ‘The Jesters’, ‘The Paragons’ and ‘The Elchords’. Much like Cale learnt the value of musical repetition from working with La Monte Young, Reed learnt the same lesson from listening to these bands. (Reed, L) Also, Reed’s signature aesthetic was very similar to that of the 1950’s Doo Wop scene.

Just like Cale and Reed, each musician in the Velvet Underground brought their own influences with them. Drummer Maureen Tucker would practice playing to Bo Diddley records for up to seven hours a day and was also heavily influenced by the Nigerian drummer Babatunde Olatunji and his ‘Drums of Passion’ album. (Glauner, 1998) Guitarist Sterling Morrison was a big fan of the minimalist style of Booker T and the MG’s and an instrumental called ‘Booker T’ shows up on many bootlegs of the Velvet Underground album. Cale has spoken about his admiration for the band ‘The Seeds’ and Velvet Underground’s 17 minute ‘Sister Ray’ has been compared to their 14 minute track ‘Up in Her Room’. Also the intro to ‘Here She Goes Again’ is very similar to the saxophone intro on Marvin Gaye’s ‘Hitch Hike’.

The Recording Process

Having Andy Warhol as the producer is said to be one of the biggest advantages in terms of the creation of the album. He knew little technically about music and less still about the recording processes involved in the creation of a song. This disregard for the rules and normal recording processes involved made for a sound that is still unique and ideas that are still being used today. (Mirabello, 2018) In an interview about the recording process and working with Warhol, John Cale famously said “he was there”, “he’d say a few things but they’d be effective”. (Buskin, 2013) This relaxed and almost impartial approach to producing an album gave the musicians space to experiment and try ideas which would normally be shunned.

The album was recorded in a rehearsal space in Ludlow Street on the lower east side of New York. Warhol and the band made do with the space even though it was poorly equipped in comparison to even a low budget recording studio. Only Lou Reed who was performing the lead vocals had headphones leaving the rest of the band to perform as a unit in the room. (Vulliamy, 2017)

Heroin and All Tomorrow’s Parties

Creating this album took talent, vision and a lot of luck but most importantly it took fearlessness. The song ‘Heroin’ is a perfect example of this. Writing an honest song is always a daunting challenge, but to undertake a song displaying an honest portrayal of a subject as controversial and emotional as heroin abuse is a challenge most artists would turn away from. The instrumentation starts off slow and sweet with a positive and falsely reassuring guitar part. Lou Reed’s vocals are calm and detached, delivered in a nostalgic tone. The lyrics however foreshadow the chaos and turmoil to come. Suddenly the tempo picks up as the lyrics describe the rush which makes Reed “feel like a man”. The varying tempo and wide dynamic range throughout the song work to describe audibly the feeling given by the drug better than the lyrics ever could. The kick drum seems to mimic the heartbeat of the addict as he progresses through his trip. The constant hum of a violin appears as if from nowhere putting the listener into a trance as the ebb and flow of the song continues. Then in another unexpected turn the hum of the violin turns into a screech and the guitar picks up pace past any definable rhythm. The song begins to fall apart and descend into chaos, summing up both heroin’s appeals and its pitfalls. (Wilcox, 2017)

While Heroin shows the structural genius and fearlessness of the Velvets, it is also worth looking at ‘All Tomorrows Parties’ which became a classic song for the vision and talent involved. This is Andy Warhol’s favourite song from the album because it details the people who would frequent his ‘factory’ and encapsulates the scene from which all of the surrounding art originated. This song also encompasses the fact that this album as a whole could not have been created had all of the band members not met in the circumstances in which they met, each bringing their own unique musical styles to the table.

We are introduced to Cale’s fast paced, repetitive piano roll from the start, providing melody and rhythm to structure the song around. There is no doubt that this style came from studying under La Monte Young and playing pieces like Satie’s Vexations. (Vulliamy, 2017) Moe Tucker’s unique drum pattern provides an eerie feel while Nico’s voice acts as the ice meeting the fire providing an almost lamenting tone to an otherwise warm subject matter. Reed and Morrison’s guitar parts coming in from the right side of the room feel separated from the track, almost as if they are going off on their own improvisational tangent. Interestingly the guitars are noted to have been “Chiming” like ‘The Byrds’ who were high in the charts at the time. Meaning that the Velvet’s creative process did not involve them being hermetically sealed away from mainstream music. (Wilcox, 2017) All Tomorrow’s Parties is a perfect microcosm of the album ‘the Velvet Underground and Nico’ and the scene in which it was created as it took each of the band members, their influences and their environment to create such a song.

Influence and Impact

The Velvet Underground and Nico album continues to inspire pop and rock culture today. However it did not always seem like that was going to be the case, especially upon release of the album. Initially the album sold only 30,000 copies which would seem rather unsuccessful compared to the Beatle’s ‘Sgt. Pepper’ album which shot to number one on the charts only a week after its release in 1967. But even so, key figures in the music industry like Brian Eno were still able to see the value of the Velvet Underground’s record. Eno famously said “I think everyone who bought one of those 30,000 copies started a band”, noting that even though the albums initial reach may have been low, it was nonetheless inspiring to those that it reached in a way few albums at that time were. (Fevret, 2018) There were many reasons for the unimpressive response to the album. That year saw the death of Che Guevara, an uprising in Mexico and a military coup in Greece and yet the Velvet’s remained surprisingly apolitical. Also, the mainstream culture which permeated through rock and pop music at that time had drastically changed, 1967 was the summer was the summer of peace, love and flower power which was worlds away from the velvets “dirty melange of hard drugs and decadent sex”. (Richman, 2012)

Over the following decades however, word of this debut LP would spread through word of mouth establishing it as the worst kept secret of the underground scene. 1970 saw Lou Reed leave the group, bringing an end to the band. This move was met with a general indifference from the public until two years later when everyone would be talking about the Velvet Underground. This dramatic change in recognition was for the most part brought about by David Bowie. In 1972 Bowie produced Lou Reed’s hit single ‘Take a Walk on the Wild Side’, this urged fans and new wave bands alike to turn to the Velvet’s back catalogue to hear more. Bootleg records, unpublished songs and a widespread ‘mea culpa’ by the press made the previously unheard of Velvet Underground a force to be reckoned with. (Fevret, 2018)

Today, few would deny the Velvet Underground and Nico’s right to be known as the most influential album of all time. The rock critic Lester Bangs once said “modern music starts with the Velvets”. (Richman, 2012) One major example of the albums influence is Jonathon Rickman, front man for Modern Lovers. The Velvet’s guitarist Sterling Morrison noted “if the Velvet Underground had a protégé, it would be Jonathon Rickman”. He saw the Velvets play over 80 times and slept on their manager’s couch when he first moved to New York. Even in 1967 when the album had just been released, Rickman wrote an article titled ‘New York Art and the Velvet Underground’. Modern Lover’s ‘Roadrunner’ which became a top twenty UK hit was inspired by the Velvet’s ‘Sister Ray’. Even that was topped by their next big single titled ‘Velvet Underground’ which payed homage to the band and their influence directly in the lyrics;

“The guitars got the fuzz tone on, the drummers standing upright pounding along, how on earth were they making that sound, velvet underground” (Brown, 2012)

Other examples of artists influenced by the Velvet’s first LP include Chrissie Hynde, who came to London with only three records, Raw Power by Iggy Pop and the first two Velvet albums. The Strokes 2001 release ‘Is This It’ captures a “cool detachment” and “passionate authority” very much in the vain of The Velvet’s album. In 2003 Julian Casablancas told Rolling Stone “in the beginning the Strokes definitely drew from the vibe of the Velvets”. (Strauss, 2003)

The album is also responsible for the formation of new underground scenes around the world. The British “Shoegaze” phenomenon in the early 90’s could not have existed without the Velvet Underground and their debut album.  Neil Halstead the frontman of ‘Slowdive’ who was influenced by prominent artists in the scene like Mary Chain said “the further I got into it the more I realised that not only did Mary Chain owe the Velvets a debt but so did every other alternative band I was listening to at that point”. (Fevret, 2018)


Even to this day the Velvet Underground and Nico album inspires artists from across all genres. Freddie Cowan of the Vaccines says “I remember hearing All Tomorrows Parties when I was thirteen. It was a rite of passage to discuss the importance of it”. (Hann, 2015) In this way the Velvet’s debut was able to have its posthumous revenge. The themes of painful beauty and languid ennui influenced and impacted artists and music fans for over 50 years, long after its unsuccessful release.



  • The Velvet Underground and Nico, 1967, ‘The Velvet Underground and Nico’, Produced by Andy Warhol.
  • Marvin Gaye, 1962, ‘Hitch Hike’, In: ‘That Stubborn Kinda Fellow’, Produced by William Stevenson.
  • The Seeds, 1966, ‘Up In Her Room’, In: ‘A Web of Sound’, Produced by Marcus Tybalt.
  • Babatunde Olatunji, 1959, ‘Drums of Passion’, Produced by AJ Ham.
  • The Strokes, 2001, ‘Is This It’, produced by Gordon Raphael.
  • The Stooges, 1973 ‘Raw Power’, Produced by Iggy Pop and David Bowie
  • Modern Lovers, 1976, ‘Roadrunner’, In: ‘The Modern Lovers’, produced by John Cale.
  • Jonathon Richman, 1992, ‘Velvet Underground’, In: ‘I, Jonathon’, Produced by Brennan Totten.
  • The Beatle’s, 1967, ‘Sgt. Pepper’s Lonely Hearts Club Band’, Produced by George Martin.