We have just been offered a deal by a label. How do I tell if it is a good deal?

We get asked this question in one form or another a lot, especially about ‘buy-in’ or ‘self-help’ type deals where you have to pay your money up front for a package of offerings. Basically, the devil is

  • Most labels are in it for the profit (unlike us). Look through and price all of the facets of the deal to see their cash value. You may get some of the elements cheaper yourself, but they know that and may not offer a part deal as that is part of their cost recovery model.
  • Are they offering it on Net or Gross - and who will be paying for the expenses? Whatever they pay out, they will look to recover and make a profit on top.
  • To minimise their risk, they will fund their expenditure from your 'buy in' or 'self help deal' fee.
  • What is the worth of the studio time they are offering? They have studios with down time (costly engineers and facilities burning the profit). They use this on speculative work at cost. The actual value is thus less and you may get second string engineers, reduced facilities, unsocial hours, limited time. Moving outside that slot may be expensive. You may be better off doing it yourself using local or reduced quality facilities creatively. On a deal like this you will not be given choice. It does not fit the business model.
  • Mixing and mastering ditto, also check you will have creative control.
  • For a label with digital distribution, the cost of adding to it is relatively low. For a band that does not have that facility, the cost is high assuming they are willing to accept you at all. There are other lower cost alternatives.
  • T-shirt and merchandising is something that is relatively low cost and easy to set-up via web site promotion etc. Look at the cost of alternative deals. Again marginal cost to the label.
  • White label CD's are of limited use and less impressive than a finished product.
  • Support gigs are easy for a label with a number of 'signed bands'.
  • What does the percentage on the sales of music equate to? It could be a lot. Also what is classed as music and for what contractual period or product? In perpetuity is a long and expensive time. Does it include copyright, intellectual rights, imaging, video etc.? The list is large and the scope could damage you.
  • Who does the promotion without which you will not shift much product at all? The cost and time involved in effective promotion can be enormous and time consuming, you won’t have the time.
  • Convert the points in the contract schedule into pound notes on a spreadsheet. Consider the future, what is the pay-back period? You can then see from the cash value if you are in business or not. You should also consider the use and cost of a solicitor and accountant.
  • Remember, these type of deals swell the number of artists on a label that could potentially lay a golden egg.

Back to FAQ’s