Bad music contract red flags

This agreement shall remain in effect for an initial period of seven (7) years, with the Label holding five (5) additional one-year options, exercisable solely at the Label's discretion, for a total potential term of twelve (12) years.

Why it matters: Only the label can extend or end the deal. You can be locked in for well over a decade with no reciprocal exit.

All master recordings created during the term of this agreement, including any pre-existing recordings delivered to the Label, shall be owned in perpetuity, throughout the universe, by the Label. Artist waives all moral rights thereto.

Why it matters: You may give up masters forever — including work you made before the deal. Broad geographic and format language is common in industry forms.

Artist shall receive a royalty rate of eight percent (8%) of the suggested retail list price (SRLP), subject to a twenty-five percent (25%) packaging deduction, a fifty percent (50%) new media reduction, and a fifty percent (50%) reserve against returns, held for up to four (4) years.

Why it matters: After deductions and reserves, your effective rate can shrink sharply. Reserves can tie up money for years.

Label shall be entitled to twenty percent (20%) of Artist's gross income derived from any and all entertainment-related activities, including but not limited to: touring, merchandise, endorsements, acting, sponsorships, YouTube/streaming revenue, brand deals, appearances, and any future business ventures related to Artist's name or likeness.

Why it matters: A broad 360-style clause can give the label a cut of income unrelated to what they funded or marketed.

All recording costs, marketing expenses, video production costs, and promotional expenditures advanced by the Label shall be fully recoupable from Artist's royalties before any royalty payments are made to Artist. Such advances shall not be recoupable from Label's share of any income.

Why it matters: Costs are often recouped from your royalty share only, which can leave you in a long recoupment position even when revenue exists.

Label shall have sole and final approval over all musical compositions, album artwork, music videos, public statements, social media content, touring schedules, collaborations, and Artist's physical appearance and stage name.

Why it matters: One-sided approval can limit your art, image, and career decisions for the life of the deal.

Artist agrees to deliver a commercially satisfactory album at such times as determined by the Label. Label retains the right to reject any delivered album as commercially unsatisfactory without specifying reasons, and Artist shall re-deliver at Artist's expense.

Why it matters: Undefined “commercially satisfactory” standards can be abused to delay acceptance and restrict where else you can record.

In the event Artist fails to fulfill any obligation hereunder, Label may suspend the term of this agreement for the duration of such failure, and the term shall be extended accordingly.

Why it matters: Suspension can extend a fixed term far beyond what the years on paper suggest.

Artist grants Label the irrevocable, perpetual, worldwide right to use Artist's name, photograph, likeness, voice, and biographical information in connection with the marketing and promotion of Label's catalog, in perpetuity, even after the term of this agreement.

Why it matters: Perpetual publicity rights after the deal can outlast the relationship; scope and compensation need careful review.

Any disputes arising under this agreement shall be resolved exclusively in the courts of [Label's home state], and Artist waives the right to jury trial. Artist shall bear all legal costs regardless of outcome.

Why it matters: Forum selection, jury waiver, and one-sided fee rules can make disputes expensive to pursue.