9.1¢
Statutory Mechanical Rate (songs under 5 min)
75%
What a Controlled Compositions Clause pays you for YOUR songs
$0
Royalties you'll see before full recoupment
360°
What a 360 deal claims - everything you earn
⏱ ~2 min read · Zero fluff

The Contractual Traps

Cross-Collateralization - The Biggest Trap

This is arguably the most predatory clause in a standard label deal. Cross-collateralization allows a label to take money from one revenue source to pay off debt from another. Your touring income could be used to recoup against your recording advance. Your publishing royalties could offset losses from an album that flopped.

You could be charting, selling tickets, and generating real revenue - and still see zero royalty checks because the label is cross-collateralizing across all your revenue streams simultaneously.

The Rule: Any contract that doesn't explicitly separate recording recoupment from publishing, touring, and merchandising is a cross-collateralization trap. Get a music attorney to add explicit ring-fencing language before signing.

Recoupment - You Won't See Royalties Until This Is Zero

Labels advance money upfront against future royalties. You don't see a single cent of royalties until every dollar of the advance (and often marketing spend) has been "recouped." What most artists don't understand: the label charges full retail royalty rates against your recoupment account, but only pays you a fraction of that rate.

Example: A sale generates $1.00 in royalties. The label applies the full $1.00 against your recoupment debt. But they only pay you $0.15 of that dollar once you're recouped. The math is designed to take a long time.

Advances are (Usually) Safe: While advances are "pre-payments" of royalties, they are generally not repayable if your music fails to make money. The label simply takes the loss. But this protection disappears if you breach the contract - and label contracts have a lot of breach clauses.

6 More Sections Inside

360 deals explained, negotiation power moves (Key Man Clause, MFN), the money you're missing (SoundExchange, black box revenue), ownership vs. control, touring protections, and the technical essentials every independent artist must know.

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