Labels typically pay artists 10-20% of revenue from album sales and may also pay small advances that the artist must repay, ensuring that artists make only a small fraction of total profits. Advances are beneficial as they allow artists to focus on creating music.
360 and EP Deals
360 Deals entitle a label to a percentage of earnings from all of an artist’s streams, not just music sales. EP Deals involve producing an EP as a form of collaboration, which allows labels to test new artists before fully committing to them.
Advances and Investments
Labels invest heavily in new artists, which includes spending $500,000-$2 million on production, marketing, and advances, with the latter ranging from $50,000-$350,000. This substantial investment by labels gives them significant leverage in negotiations with artists.
Streaming and Income Distribution
When it comes to streaming, labels pay artists based on a percentage of profits or fixed payments, incentivizing both parties toward success. As artists gain more understanding of the financial aspects, they can negotiate fairer deals as new artists often start with around 10% from these streams. Budget indie labels pay artists based on what they can afford.