What a label deal takes, in percentages

68 · 2026-10-06 · 21 min read · Español

A label deal takes everything the recording earns except a percentage, and it takes the advance back out of that percentage before you see any of it. On an exclusive royalty deal the heads of two major labels put most artists between 20 and 25 per cent of a defined base; a profit split divides what is left after costs, commonly half each; a licence or distribution deal takes 9 to 15 per cent of receipts and leaves you the copyright; a 360 clause takes a share of income the recording never earned; and a US recording contract commonly pays mechanicals on the songs you wrote at 75 per cent of the statutory rate. The percentage is the smallest fact in the contract. The base it sits on and the order the money moves in are the deal.

On an exclusive royalty deal the label owns the recording and pays you a percentage of a defined base. In 2021 testimony to a UK parliamentary inquiry, Universal Music UK’s chairman and chief executive put the majority of featured artists at 20 to 25 per cent and Warner Music UK’s described a similar range; older contracts were put at 15 to 20. No North American major publishes its rate.
An advance is recouped out of the artist’s royalty alone. In the worked example Sony Music supplied to that inquiry — a 24 per cent rate, a £300,000 advance and £250,000 of recording costs — the label breaks even at 244 million streams and the artist recoups at 458 million. The advance is recoupable and non-returnable: the label withholds royalties until it is recovered and does not pursue the balance if it never is.
A profit-share deal divides what is left after costs, commonly 50/50, and the costs come out of all income before the split. On Curve Royalty Systems’ teaching figures — £50,000 of sales, £30,000 of costs — a 50/50 profit share pays the artist £10,000, and a 50 per cent royalty deal with full recoupment leaves the artist £5,000 behind.
A licence or distribution deal leaves you the copyright and takes a share of receipts for a term: AWAL takes 15 per cent on a 30-day rolling licence, CD Baby 9 per cent of streaming and download revenue, and the Music Managers Forum and Featured Artists Coalition put label-services deals at 50 to 80 per cent of net revenue to the artist. A 360 clause takes a percentage of live, merchandise and other income on top, and no label publishes that rate.
A controlled-composition clause in a US recording contract commonly pays mechanical royalties on songs you wrote at 75 per cent of the statutory rate — 9.825 cents against 2026’s 13.1 — and caps the album at ten to twelve songs. For contracts signed since June 1995, section 115 gives the full statutory rate effect on downloads and streams whatever the contract says, so the clause now reaches physical copies only.

What does a label actually keep?

The label owns the recording and keeps everything but your royalty, which two major-label heads put at 20 to 25 per cent for most artists. That is an exclusive royalty deal, the rate is a percentage of a base the contract defines, and the base is where the money is.

No North American major publishes its royalty rate. The only place the majors have said one aloud is a British parliamentary inquiry, and the UK Intellectual Property Office’s 2021 report, Music Creators’ Earnings in the Digital Era, wrote the testimony down: Universal Music UK’s chairman and chief executive suggested the “majority” of featured artists receive “between 20% and 25%”; Warner Music UK’s said the majority of that company’s contracts offered a “similar” range; Sony’s written evidence described 25 per cent as the median; an industry accountant called 24 the going rate; 30 was reported as available to established artists; artists on older contracts put theirs at 15 to 20; and the Music Managers Forum’s deals calculator assumed 17 for a major and 20 for an independent. Those are British contracts described under oath in 2021, and they are the closest thing to a published number that exists in this business.

Twenty-five per cent of what is the question the producer-points piece answers, and the answer does not change because the person on your side of the rate is you rather than a producer: wholesale, net receipts, or an all-in rate somebody else is paid out of first. What that page does not carry is that the rate is rarely one number. Curve Royalty Systems’ own lesson on what a deal looks like gives the shape: a label “may agree a 30% royalty share for global digital revenue, but a 15% royalty rate for any physical sales in the United Kingdom, a 10% royalty rate for any physical sales outside of the United Kingdom, a 50% royalty rate for all sync revenue and a 60% royalty rate for all licensing income.” One deal, five percentages, and the one that gets said out loud is the one on streaming.

Then the base gets smaller. Curve’s lesson on royalty deals walks the three tools: a reserve, a share of physical royalties held back against returns — 20 per cent in its example, released the next period; a packaging deduction, in its example 15 per cent off the royalty on £1,000 of physical net receipts, so 25 per cent becomes £212.50 rather than £250; and a foreign-sales deduction on physical shipped abroad. Every one of those was invented for a box. A packaging deduction applied to a stream is a charge for a box that does not exist, and the deductions clause either says the word digital or it does not. The IPO report did the sum across formats for the label’s side: after artist and publishing royalties, British record companies were retaining 70 per cent of dealer-price revenue on physical, 49.6 per cent on downloads and 39 per cent on streaming. The self-release piece declined the label case by name. This is it: the rate is the number they say first because it is the number that looks like yours.

How does the advance change the percentage?

An advance is recouped from your royalty alone: at 24 per cent, recovering £1 costs the recording £4.17 and the label keeps £3.17. The percentage does not change. What changes is how long it is zero.

Sony Music supplied the inquiry with a worked deal, and the report prints it on page 220: a 24 per cent royalty, a £300,000 advance, £250,000 of recording costs, marketing at the greater of £300,000 or 30 per cent of revenue, overhead at 25 per cent, and a stream worth half a penny. It is Sony’s estimate rather than a set of accounts, and the report says so. Read across the row anyway: at 244 million streams the label has covered its costs, at 314 million it is at a 10 per cent margin, at 378 million it has made £300,000, and the artist’s balance clears at 458 million, at which point the artist has been paid exactly the £300,000 they were paid on day one. Four hundred and fifty-eight million is not a number of streams. It is a census.

What the contract does in the meantime is the part nobody reads. Curve: “The artist will not receive an additional share of the income until their advance has recouped,” and “if the contract period ends but the advance is still outstanding, the contract may state the contract period is automatically extended until the advance recoups.” What recoups is longer than the advance. In the contracts the IPO report examined, recording costs are recoupable, tour support is recoupable, video costs are usually 50 per cent recoupable, and the option to go on to the next record is “almost always at the discretion of the record company.” Every one of those is a line in a definition of recoupable costs, and every line moves the 458 million.

One thing the folk version gets wrong in the label’s favour. An advance is, in the report’s words, “recoupable but non-returnable,” and “unlike a loan from a bank to invest in a business, in the event that the project fails, the music company will not pursue or ask the creators to repay unrecouped balance.” A bank wants its money back. A label wants your share until it has it, and if the record never earns it, the label absorbs the difference and keeps the master. That is the trade, in one sentence, and it is the sentence to hold in your head when a statement arrives with a balance on it instead of a payment.

What does a profit split take?

A profit-share deal divides what is left after the label’s costs, commonly 50/50, and the costs come out of all income before the split. Not out of your share alone: out of everything, first. The same fifty pays a different amount under each shape, on identical sales.

Curve puts the two side by side on the same figures, and the comparison is the whole section. Fifty thousand pounds of sales, thirty thousand of costs. Under a 50/50 profit share the project has made £20,000 and “both parties walk away with £10,000 in profit.” Under a royalty deal with a 50 per cent rate and 100 per cent cost recoupment, “the label will report £25,000 in sales to the artist, but will recoup £30,000 in costs from the artist, resulting in a balance of −£5,000 that the label can still recoup from the artist’s future royalties.” Same record, same sales, same fifty. The word profit moved the costs from your side of the line to the middle of it, and that is the entire difference between the two contracts.

Which is why the definition of profit is the clause. In the IPO report’s reading of the contracts, a profit share’s recoupable costs “will also include the featured artist’s share of production, distribution and third-party marketing” — the label’s costs, but also a share of the costs of getting the record out — and Curve notes that an advance under a profit share is “generally fully recoupable against the artist’s share in the profit,” so the advance behaves the way it does everywhere else. Fifty per cent of profit is fifty per cent of what the definition of profit leaves. Read the definition before the number, because the number is the only part of the page that was written to be read.

What does a licence, label-services or distribution deal take?

You keep the copyright and the company takes a share of receipts for a term: AWAL 15 per cent, CD Baby 9. The Music Managers Forum and Featured Artists Coalition put label-services deals at 50 to 80 per cent of net revenue to the artist. The percentage climbs with the service, and the ownership never moves.

Curve sorts the market into five shapes — distribution, label services, full label, 360, catalogue acquisition — and the sorting rule is the useful part: “the level of ownership that an artist transfers to the label (or distributor) and the level of services that the label (or distributor) provides in return.” A distributor “will either charge a flat fee per distributed sound recording and pass on 100% of the income generated, or take a commission on the earnings.” Label services sit one rung up, less likely “to provide an advance or cover upfront recording costs,” and the copyright stays with you. AWAL’s FAQ describes the rung and the one above it in a single breath: the standard deal “is a simple digital distribution license with a 30 day rolling term,” “We take a 15% share of revenue that we collect for you,” and if funding is offered, “This usually involves a few more percentage points and a recoupable balance from the project’s earnings, but you control the budget.” That last sentence is the entire ladder. More money in, more points out, and a balance.

The percentage is not one number even inside one company. CD Baby’s pricing page, as of 2026-09-01: $9.99 a single or $14.99 an album up front, then 9 per cent of download and streaming revenue and of SoundExchange royalties, 15 per cent of what The MLC collects, 30 per cent of social-video revenue, and 40 per cent of sync. Four percentages behind one fee, sorted by how much work the company did to collect each one. A flat-fee distributor takes zero and charges the fee instead, which is a percentage of nothing until you do the arithmetic on your own release volume. And the range the artists’ own bodies gave the inquiry — 50 to 80 per cent of net revenue to the artist on distribution and label-services deals — is a range on net, which sends you straight back to the definitions.

For a term is the other half of the sentence. A licence ends; an assignment for the life of copyright does not, and Curve’s lesson says a full deal’s assignment may run “for the full life of copyright.” Under a licence the recording is still yours to refuse things with, the licensee just has the exclusive right to sell it for a while, and when the licensee stops — sells, folds, is bought — what happens to the catalogue is a question with its own page. Nine per cent of receipts for thirty days at a time and twenty-five per cent of a base for the life of the copyright are not two prices for one thing. They are two different things with a percentage in front of each.

What does a 360 deal take?

A 360 clause takes a percentage of income the recording did not earn: live, merchandise, brand partnerships, sometimes publishing. No label publishes the rate. The clause is defined by what it reaches, not by a number.

Curve’s definition is the one sentence everybody agrees on: “In addition to taking a cut of the recorded music earnings, the label will also take a cut in ancillary revenues such as live, merchandise or brand partnership earnings.” The US Copyright Office said the same thing in a footnote of its 2015 music-licensing study: “Under so-called ‘360’ record deals, artists may be required to share a portion of these additional revenues with their label.” The only published size of the thing is on the label’s side of the ledger. Warner Music Group, the one major that files public accounts, reports a line called artist services and expanded rights — its artist-services businesses and its 360 deals — and the IPO report’s compilation of those accounts puts it at 13.9 per cent of recorded-music revenue across 2018 to 2020. That is what the clause is worth to Warner. What it costs any one artist is not published anywhere, and anyone who quotes you a typical figure is quoting somebody else’s guess. So the clause has to be read as three questions rather than one number. Which streams: of the seven a career has, name the ones the clause reaches. Whether the 360 money is recoupable against the recording balance, which decides whether the T-shirt pays for the studio. And net or gross. The difference between net and gross is not drafting. On gross, the label’s share comes out of the box before the box is paid for, and there is a word for where that leaves you at your own merch table: screwed.

What does a label deal take from your publishing?

A US recording contract commonly pays mechanicals on songs you wrote at 75 per cent of the statutory rate, on physical copies, capped per album. On downloads and streams the statute overrides it. The clause is called a controlled-composition clause, and it is in a contract about the recording.

A mechanical royalty is what the song is owed for every copy of the recording, and the song is the other copyright — the one the recording contract is not about. On a copy sold in the United States the rate is set by regulation: for 2026, 37 CFR §385.11 puts it at 13.1 cents or 2.52 cents a minute, whichever is larger, and the cover-song piece has the whole rate. A label releasing your record owes that on every song, to whoever owns the song. When the songwriter is you, the contract writes down a discount. Curve’s knowledge base: a “percentage of stat or reduced rate,” typically 75 per cent, plus a “track cap” that limits the whole album’s mechanical to a fixed number of songs. Seventy-five per cent of 13.1 cents is 9.825 cents. Songtrust works the cap: ten songs at the reduced rate is the album’s ceiling, and a twelfth song does not add a cent, it divides the ceiling twelve ways. The clause applies to the songs you control and to nobody else’s. Curve’s example: fourteen tracks, eight of them yours, a cap of ten times a 12-cent rate — the six outside writers are paid 12 cents each, and “each of the [controlled] Tracks will be reported a discounted stat rate of 6c.” Write the whole album yourself and the cheapest songwriter on your own record is you.

The statute took the digital half of this away in 1995. 17 U.S.C. §115(c)(2)(A): the statutory rates “shall be given effect as to digital phonorecord deliveries in lieu of any contrary royalty rates specified in a contract pursuant to which a recording artist who is the author of a nondramatic musical work grants a license,” for any contract entered after 1995-06-22. Downloads and streams pay the full rate whatever the recording contract says; the discount survives on the vinyl and the CD. When BMG removed the clause from its US contracts in October 2020, Music Business Worldwide described it as “a 25% reduction (and sometimes more) on mechanical royalties owed to a songwriter in the US for sales of their physical records,” with a cap “typically 10–12 songs,” and quoted the National Music Publishers’ Association’s president calling the practice “poisonous.” Songtrust calls the clause “unique to the United States.” Canadian law has no equivalent to override and no statutory discount for a writer who is also the artist; what a Canadian label’s contract says about mechanicals is whatever it says. The MLC pays the streaming mechanical at the full rate to whoever registered the song; the clause never reaches that money. It reaches the money for the box, which is the money the box was always about — and no split sheet you signed with your co-writers says a word about it.

What does a label deal leave alone?

A label deal does not take the featured artist’s 45 per cent of US digital-performance royalties, the writer’s share, or rights you never signed away. Everything else is on the table, and the contract says which.

The one percentage in this business that a label deal does not set is written into federal law. 17 U.S.C. §114(g)(2)(D): of the receipts from the statutory licence for non-interactive digital transmissions, “45 percent of the receipts shall be paid, on a per sound recording basis, to the recording artist or artists featured on such sound recording.” SoundExchange pays it. The label’s half is the label’s and the rest of section 114 and Canada’s equivalent are on the page about what owning a recording gets you; what matters here is that the artist’s share does not run through the label’s statement, does not wait for recoupment, and moves only if you sign something that moves it. Read the deal for that signature.

The song is the same shape. Your PRO pays the writer’s share directly, and the publisher’s share goes wherever your publishing arrangement sends it — a publisher, an administrator, or you. A recording contract with no publishing clause takes none of it, and the controlled-composition clause above is a discount on what the label pays the song, not a transfer of the song. A 360 clause that names publishing is the exception, and it is an exception you can read.

And nothing moves without a signature. A transfer of copyright needs a signed writing, what makes that signature bind is its own page, and a grant you did sign is, in the United States, one that can be taken back thirty-five years on, by notice, whatever the contract says about forever. So the number to ask for is not the rate. It is your share of a label dollar, after recoupment, on the base the definitions section defines — and the contract answers it in this order: definitions, royalty, recoupable costs, term, and only then the percentage on the front page. Read it in that order. If you are reading it for the first time with a signature line under it, that is the hour a music lawyer is for, and what the hour buys is the same seven questions asked by somebody who has seen the answers before. Then put the agreement in the audit next to the recordings it covers, because a deal you cannot find in five years is a deal on the label’s terms twice.

FAQ

Is an advance a loan?

No; an advance is recoupable and non-returnable, which means the label withholds your royalties until the balance is recovered and, if the record never recovers it, does not pursue you for the difference. The UK Intellectual Property Office’s 2021 report draws the line against a bank loan in exactly those terms.

Do I get paid anything before the advance recoups?

From the label’s royalty, nothing; from outside the deal, whatever the statute sends past it — the featured artist’s 45 per cent of US digital performance royalties under section 114 and the writer’s share your PRO pays — unless you have signed something directing those to the label.

Is 50 per cent of net profit more than 20 per cent of receipts?

Not necessarily; on Curve’s worked figures the same 50 per cent pays £10,000 as a profit share and leaves you £5,000 behind as a royalty deal with full recoupment, and 20 per cent of a defined wholesale price can beat 50 per cent of a net figure the contract lets the label shrink. The definitions decide it, not the headline.

Do I get the master back when the deal ends?

Only if the grant was a licence for a term or the contract says so; a life-of-copyright assignment does not return by itself, and in the United States a grant you signed after 1977 can be terminated thirty-five years on, by notice, whatever the contract says.

Sources

UK Intellectual Property Office — David Hesmondhalgh, Richard Osborne, Hyojung Sun and Kenny Barr, Music Creators’ Earnings in the Digital Era (September 2021, PDF) — page 132, footnote 109: the 25 per cent median, Universal UK’s “between 20% and 25%,” Warner UK’s “similar” range, the 24 per cent going rate, 30 for established artists, 15 to 20 on older contracts, the MMF calculator’s 17 and 20; page 133: 17.5 per cent of dealer price on physical, 20 on downloads, and the record companies’ retained 70, 49.6 and 39 per cent; page 90: the MMF and FAC’s 50 to 80 per cent of net on distribution and label-services deals; page 146: recording, tour-support and video costs, options at the label’s discretion, and “recoupable but non-returnable” against a bank loan; page 219, footnote 154: what a traditional deal and a profit-share deal each recoup; page 220: Sony Music’s featured-artist deal and its table; page 221: Warner Music Group’s revenue lines, 2018–2020.
Curve Royalty Systems, Royalties 101: Recorded Music, Lesson 4: What a Record Label Deal Looks Like — the five deal types and the ownership-for-services rule; the assignment “at least for a time” or “for the full life of copyright”; the rate by sales type; the profit-share and royalty-style examples on £50,000 and £30,000; the advance recouped from future royalties, no further share until then, and the term extending until it recoups.
Curve Royalty Systems, Lesson 5: Profit Share Deals — 50/50 as the common split; costs recouped from all income rather than the artist’s share; an advance under a profit share recoupable from the artist’s share of profit.
Curve Royalty Systems, Lesson 6: Royalty Deals — the bases; reserves on physical sales with the 20 per cent example; the packaging deduction on £1,000 at 25 and 15 per cent; escalations; costs recouped from the artist’s share at an agreed percentage.
Curve Royalty Systems Knowledge Base, The Controlled Composition Clause (updated 2023-07-27) — the reduced rate, typically 75 per cent; the track cap; non-controlled writers paid in full; the fourteen-track example paying controlled tracks 6 cents.
Songtrust Help Center, What is a “Controlled Composition Clause” in a Recording Contract? — the clause applies to compositions the artist wrote; the ten-song cap divided across a longer album; “unique to the United States.” Its statutory figure is out of date and is not used here.
Music Business Worldwide, BMG eliminates ‘poisonous’ Controlled Composition clauses from its US record contracts (2020-10-08) — the 25 per cent reduction on physical sales, the ten-to-twelve-song cap, outside writers at the statutory rate, BMG’s removal from new deals and its catalogue, and the NMPA’s words.
17 U.S.C. § 115(c)(2)(A) (Cornell LII) — the statutory rate given effect for digital phonorecord deliveries in lieu of a contrary contract rate, and the 1995-06-22 grandfather.
37 CFR § 385.11 (Cornell LII) — the 2026 rate, 13.1 cents or 2.52 cents a minute, and the annual adjustment.
17 U.S.C. § 114(g)(2)(D) (Cornell LII) — 45 per cent of statutory-licence receipts to the featured artist, per sound recording.
AWAL, FAQ — the 30-day rolling distribution licence, the 15 per cent share, and funding as “a few more percentage points and a recoupable balance.”
CD Baby Help Center, How much does CD Baby cost? (updated 2026-09-01) — $9.99 and $14.99 per release; 9 per cent of download, streaming and SoundExchange revenue; 15 of MLC revenue; 30 of social video; 40 of sync.
US Copyright Office, Copyright and the Music Marketplace (February 2015, PDF) — page 70, footnote 338: 360 deals as a share of the artist’s additional revenues.

Every page cited here was read on the date at the top of this piece. The two PDFs were read through a local decoder, because this machine has none of the usual PDF tools, and every passage quoted from them was checked against a second occurrence or its own arithmetic; page numbers are the documents’ own. The royalty ranges are British contracts described to a British inquiry in 2021 and are presented as that — no North American major publishes its rate, and this page states none for them. Curve’s figures are teaching examples in pounds; Sony’s are Sony’s estimates. Nothing here is legal advice about a contract in front of you: the statutes are quoted in their own words, the companies in theirs, and a lawyer is the person who says which clause governs yours.

Keeping the register

Every question on this page is answered by a document, and the document is the thing that goes missing. CatalogTracker keeps it: the agreement uploaded against the recordings it covers, with a content hash and a warning when the splits or the parties changed after it was signed; the ℗ line on every release, which is the claim of who owns the master; the parties with their IPI and PRO beside the name; and a history of who changed what. It holds no royalty rate, no advance and no balance — nothing in it models what a deal pays, and this page does not pretend otherwise. It holds the paper the numbers are written on, which is the thing you need to find in five years. In development for iPhone.