Unless the artist completely relinquished the rights to the masters on a contract, a record label rarely owns 100% of the artist masters. Usually ownership is between 90/10 and 60/40 on a good deal. An artist with a 50/50 contract is practically in a partnership. The misconception about the record labels owning 100% of the masters comes from what the record labels know as recouping.

All labels have a recoup policy which allows them to recover the money they spent on the recordings before paying the artists. So if a record label spent 100k to produce a master but the artist only made 50k on sales, the artist is still in debt with the record label and once the contract is over, the record label may choose to collect up to 100% of the royalty earnings until the recoup amount is met. But if the artist meets the recoup amount then royalties will be split at the agreed amount on the contract. That split also represents the percentage of the artist’s ownership of the master.

Artists that have their own labels usually sign deals strictly for distribution. The artist’s label owns the master and pays the distributor a percentage of the royalties for the distribution. The distributor covers some of the upfront costs so they usually to negotiate a percentage. Since the distributor usually has the higher risk of losing money, the recoup policy here would apply from the distributor to the record label.

Music publishing contracts don’t usually require recoup unless the publisher is also the record label. The publisher is basically like a salesperson that wants to earn commission on an existing product (the composition) but record labels have the upfront cost of creating the product (the master recording). For that reason is easier to get higher split percentages on publishing deals vs record deals.

Many record label contracts allow artists to buy back their master recordings but the fees involved could be higher than the label’s total investment on the artist plus 200% or a percentage of the projected royalty earnings for X amount of years based on past statements.

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