Record Contracts

A contract of registration (also known as a record) is a legal agreement between a label producer and an artist (or group) wherein the artist makes a record (or a series of documents) for the label to sell and promote. Artists under contract are normally exclusive to the label only, but in some cases where there is an invitation for their artist to record with another artist from a different label company, a notice of "courtesy of (name on the label)" is marked on the product and the artist’s producers are then paid with a percentage of the revenues. Label companies are usually the holders of the copyright of the recordings of their artists, and also the master copies of the same. One exception is if the artist has a recording for distribution with another artist. In this case, the artist or his manager may become the copyright holder while the artist is on the label for such period of time. The promotion is an essential factor for the success of a record, and has become a big part of the responsibility of the label company, as well as in the proper distribution of the said recording.
Although the initial release usually yields a relatively small percentage to the copyrights of artists, it also has its potential benefits or advantages. A few performers like Madonna, Michael Jackson and U2, have signed to several million dollar record contracts. Whitney Houston, for example, has the highest record in history after getting paid $100 million to record only five albums. For many other artists, the aid of press releases helps their albums exceed the previous targeted sales figures.

An artist may opt-out on the record contract if the label company’s popularity affects the release of their albums after the recording. Such was the case of Mariah Carey whose $80 million record contract with Virgin Records has been canceled from the label after her album was sold poorly by the company.

Unless otherwise stated, an artist on the label may be prepaid or paid in advance even if the recordings sell or do not. Capitol Records’ Linda Ronstadt, who performed in the early 1970s, still has a portion to collect with Capitol as discussed in 1960 even though Capitol has cost more than what she has done. (Her chain of visits in the mid-1970s has finally erased that debt). With little knowledge and the absence of a business or financial expert, don’t expect a benefit as an artist, as was the case of George Michael. "Walking out" to try a new record contract is a very difficult situation without the artist realizing it. The old records released by Donna Summer and the members of “Boston” (who called themselves "The Hunter Orion") were withdrawn from distribution after their previous label company made an appeal.
The Mamas and Papas were forced in a meeting years after its dissolution in 1968, for the writing of their contract record with Dunhill Records stipulated that their album was not yet completed (1971 “People Like Us”). Recording contracts in general, includes the increase in fees and the artistic freedom or engagement of signing new contracts with the record company of which is most usually the best direction for an artist. Sometimes, however, the artist will go where the opportunity seems better. Diana Ross for example, in 1980 with her album "Diana”, fulfilled her record contract with Motown Records. The album contained three Billboard pop hits; #1 single and two in the top twelve. Ross, however, felt that her work was never entirely done by Motown alone but with her work with The Supremes which was one of the largest in history. When RCA Records offered her a $20 million recording contract with them, Ross gave Motown a chance to match it, or at least give something optimistic.
Motown, in their conviction, maintained that Ross’ solo career was faltering at that time and sees no reason to give compensation for her work with The Supremes, although she was offered $3 million. Torn with the decision to stay loyal to the label which made her famous but has never really paid well or to sign a new recording contract with another company which gives her more value, Ross ultimately chose to go with the record company RCA.