Article: “NET PROFIT DEALS:” NOT YOUR TRADITIONAL RECORD DEAL
Articles / November 2009

Click here to download this article as a PDF file (.pdf) By Bart Day In recent years there has been a rapidly increasing use of so-called “Net Profit Deals,” as an alternative to the traditional type of record deal. This has been the particularly true with indie label record deals. The basic idea is that any net profits will be split between the artist and the record label, after ALL expenses connected with the artist’s records have been deducted by (and reimbursed to) the label from record sales income. Compare this with the traditional record deal, where the artist is paid on a royalty basis, with a typical artist royalty in the range of 12 to 15% (of the retail price) but sometimes higher (especially for more established artists). Ten years ago, out of every ten indie record deals I negotiated, only one or two were Net Profit Deals. Today it’s more like six or seven out of every ten, at least. In this article, I will first compare the basic aspects of Net Profit Deals and traditional record deals, and the advantages and disadvantages of each, both for labels and for artists. Then I will show some sample royalty calculations for both. Finally, I will provide some detail about…