Deal terms artists need to know before signing

From Megan Thee Stallion’s public legal battle over her contract to Prince calling himself the label’s "slave” – bad funding deals are a tale as old as time. 

Far too often, we encounter artists and labels who have found themselves trapped in a deal with lopsided terms that they didn’t realize they were agreeing to. In 2023, rapper Dillon Cooper came to beatBread after signing a label deal earlier in his career that he called the “worst deal ever.”  

“There’s been a lot in my career—things that happen to a lot of artists—when you sign a bad deal,” he said. “Every lawyer I spoke to was like, ‘Dude, this is horrible.’ If beatBread was around in 2013, I never would’ve signed that deal.” 

To clarify: not all labels, distributors, or other music funding sources are out to mislead you – we work with many great ones. 

But when reviewing a contract, it’s best to have all the information you need to make the best decision for you and your career. That’s why we created the Deal Comparison Tool. We believe when independent artists have the ability to compare and fully understand funding offers, they can avoid unexpected traps and make better funding choices. 

Here are some more phrases and terms to look out for when signing a music funding deal. 

Royalties That Don’t Pay 

Many labels still use old-school royalty deals. In that setup, getting 20% of wholesale is actually considered a good deal. But here’s the catch: "wholesale" usually just means whatever the streaming platforms (like Spotify) pay the label. 

One million Spotify streams might earn $3,500 if you're independent. Under a label deal, your cut could be just $700. And from that $700? You could still owe for recording, production, music videos, and more. No wonder so many artists focus on the upfront advance—and never expect to see a dime in royalties.  

When Verbal Promises Mean Nothing 

Artists often sign with a label because they have a strong connection with someone on the inside, like an A&R or marketing rep who really believes in them. It feels like, “This person’s going to go to bat for me. I’ll get real support and a solid marketing push.” 

But here’s the problem: most of that support is based on a handshake, not a contract. Labels almost never put actual marketing plans or spend commitments in writing, and they rarely agree to “key person” clauses (which would tie your deal to that one person you trust). 

So, if that A&R gets laid off or moves on? You’re still under contract, but now you’ve lost your champion. And the label isn’t required to lift a finger to promote your release. You’re stuck, and there's not much you can do about it. 

Exclusivity Can Kill Momentum 

Label deals usually come with exclusivity clauses—which basically means you have to get the label’s permission to do just about anything outside the deal. Want to feature on a friend’s track who’s signed somewhere else? You’ll probably need approval. Thinking about releasing a side project or doing a one-off deal with another label? That could be blocked too. 

In short, once you’re signed, the label controls when, where, and how you can release music. It can slow you down, limit collabs, and make it way harder to move quickly when opportunities come up. 

The Truth About “50/50” Split Deals 

Even if an artist can avoid a traditional royalty structure and get a split profit deal, a 50% split profit deal is not what it seems. 

Profits are split after deducting the label’s distribution fee, and sometimes an additional administration fee is deducted off the top. When dealing with a major, the artist does not get the benefit of profits earned outside the U.S., there is usually a deemed royalty that is credited to the U.S. company for foreign sales. 

How Long Is Too Long? 

Some deals lock you in for 10, 15 years—or even forever. Major labels often push for perpetual rights, which means they own your masters for life. You can try to negotiate that down, but unless you’ve got serious leverage, you probably won’t get anything shorter than a decade. That’s a long time to be tied to a deal (especially if things aren’t going the way you hoped.) 

The Creative Purgatory Clause 

Some contracts say your music must be “commercially and technically satisfactory.” Translation: the label decides when your song is “good enough.” 

If they don’t like what you turn in, they can reject it and make you re-record it… again and again. There’s no set standard; it’s totally up to them. And until they accept it, your contract doesn’t move forward. 

In the worst cases, this can trap an artist in limbo, unable to release music anywhere else and stuck unless they buy themselves out. Sometimes labels will work with you. Sometimes they won’t. Either way, it’s a lot of power to give up. 

Artists Deserve Transparency 

Every artist deserves to understand the real cost of their funding. Unfortunately, most don’t get access to the kinds of legal, financial, or industry expertise that would help them decipher dense contracts or forecast their long-term implications. 

At beatBread, we’re changing that. The Deal Comparison Tool is designed to demystify the fine print, helping artists and indie labels break down offers across multiple dimensions—ownership, control, payment timelines, and more—so they can make confident, informed decisions.