Kanye West’s Record Deal Is Standard. That Doesn’t Mean the Record Industry Is Fair

Kanye West gave the world a rare glimpse into the music industry’s labyrinth of recording contracts last week when he tweeted out his own paperwork with Universal Music Group — and then lambasted those agreements as exploitative and unfair, demanding his copyrights be returned to him.

As far as the actual deal goes, Kanye’s isn’t particularly bad: Music lawyers who spoke with Rolling Stone call West’s deal standard for an artist at his level. The papers indicate that he started on a royalty deal frequently afforded to upcoming artists, which later evolved into a more artist-friendly pressing and distribution deal that gave Kanye more of the profits and bigger budgets as he became a superstar. West’s contract could even be considered favorable among superstar contracts, with Universal heavily investing in West’s works, entertainment attorney Christiane Kinney says.

“The deal starts where he doesn’t have as much clout, he’ll get mutual creative control, but later he gets more, and the deals get better as Kanye becomes Kanye,” says Kinney, who has worked with platinum-selling artists, producers, and estates. “We wouldn’t be talking about all this now if the label hadn’t invested in him and put tons of marketing money into this for his leg up.”

Yet even though Kanye’s deal may not make him the ideal poster child for a conversation on the fairness of recording contracts, he’s sparked a high level of discussion among artists and music-business insiders on the nature of record deals and long-held standards.

Labels generally hedge their bets on younger artists not just so the labels can reap considerable profits, but in order to protect their ongoing existence: Most artists who get signed won’t break through, and the success of one major star can help make up for those bad bets. But as the music industry comes out of its 20-year tailspin, with streaming fueling new growth, artists aren’t satisfied with that arrangement, and many are demanding newfound power. “Should the labels be able to make a profit off of this? Absolutely. They’re taking risks and investing in acts,” Kinney says. “Are they making too much? That’s a sort of grey area, and I think it’s an important conversation to be had.”

Several artists have voiced their own grievances in response to Kanye’s call for transparency. Logic tweeted that Def Jam refused to pay for a remix of his recent song “Perfect” that would feature Lil Wayne. Kenny Beats tweeted that “something needs to change in the structure of the music industry to protect artists and specifically Black artists.” And in a lengthy post on Instagram, Hit-Boy, who’s produced platinum songs including “Sicko Mode” and “N—-s in Paris,” said that multiple attorneys who have seen the deal he signed as a 19-year-old with Universal Music Publishing Group in the mid-2000s called it the worst publishing contract they’d ever seen.

“If they’re doing this to me with all I’ve accomplished through hard work, I can only imagine the kids who don’t have big placements/proper guidance,” Hit-Boy wrote on Instagram.

(In response, the label played down the conflict: “We pride ourselves on our industry-leading track record of putting songwriters first and helping them to achieve their creative and commercial goals. Hit-Boy is an enormously talented songwriter whose relationship we value,” a UMPG spokesperson said in a statement to Rolling Stone. “We have been engaged in an ongoing dialogue with Hit-Boy and all the concerned parties to address his concerns and will continue to do so until a reasonable solution is achieved.”)

One common grievance: Many aspects of record deals do not reflect how the business has dramatically changed over the past decade. Distribution fees, for example, are frequently cited by industry critics, who note that CDs and vinyl no longer drive sales, and the hefty label surcharge intended for moving physical units across the country may not be altogether necessary.

“There’s no more independent plants, no more putting all these CDs in a truck and shipping them from store to store across the country,” Chris Anokute, founder of entertainment company Young Forever Inc. and a former A&R executive for labels including Capitol and Island Def Jam, tells Rolling Stone. “Now, with a click of a finger, your music goes wide to 7 billion people if you want it to. Why are artists paying a 20 percent distribution fee off the top?”

“If you have a kid who knows nothing about law and sees all this money, these contracts are 60 pages long, who the fuck is reading that?” —longtime A&R exec Chris Anokute

Anokute manages several clients including Curtis Waters, who recently went viral through his TikTok hit “Stunnin’.” While Waters was courted by many major labels, at Anokute’s counsel, he signed a shorter-term 60-40 profit-split deal with BMG. “I will never work for a major record label again,” Anokute says. “When you’re awake to this, you can’t be the perpetrator anymore.”

While Anokute points the barrel primarily at the labels dishing out deals — arguing that these deals perpetuate the very inequalities for black artists that the labels have said they’re looking to change — he acknowledges that labels alone can’t take all the blame for unfriendly artist deals. Labels are taking risks on any given signing and need to make offers that keep the company profitable. Ideally, he says, artists should have legal representation working in their best interest to point out red-flag clauses: While an artist should be wary of what they’re signing rather than looking solely at the immediate paycheck, young and starry-eyed artists who’ve never seen so much money may not understand that yet.

“If you have a kid who knows nothing about law and sees all this money, these contracts are 60 pages long, who the fuck is reading that?” Anokute says. “And they’re advised accordingly by an attorney at law who’s telling them to sign this contract, and they say this contract is standard. ‘This is the same deal your favorite artist signed, this is their label.’ What do you expect a young, naive artist to do? They’ll follow their attorney’s recommendation. Not every artist has time to read the Donald Passman book and find out what every term and clause means, and while there are great lawyers out there, too many just want their 5 percent [commission].”

Milana Lewis, CEO of music distribution platform Stem, says record labels should start including explanatory pro-forma documents with deals, in order to promote transparency and make it easier for artists to understand what comes in their agreements. Many young artists don’t realize how recoupment works, in which a label fronts the money for artists’ advances and expenses like recording and marketing, to be paid back to the label through royalties later.

“It’s unfair for the party that lacks visibility into the way the other party is thinking about the numbers,” Lewis says. “There’s hidden costs in the ways deals are structured, and most artists don’t have an understanding in how the recoupment works — and it’s confusing. Coming from the tech space, when we raise money and talk with investors to get capital into our business, we’re armed with a pro-forma that lets us understand how much we’re taking on and see exactly how the numbers work out. The music industry needs more clarity when approaching artists with deals so they understand the tradeoff that they’re making.”

Amy Noonan, who records as Qveen Herby and was formerly half of 2010s pop duo Karmin, had what she describes as a lucky experience: She and her now-husband and bandmate signed a deal with Epic Records in 2011 after Karmin started going viral on YouTube, and they got out of that deal four years later. (Epic did not respond to a request for comment for this story.)

Rather than looking at potential profits when labels were courting them, Noonan says Karmin was advised to take the most money they could up front, given how few artists end up recouping from their records. “That’s not the game here,” Noonan recalls as the mindset when negotiating contracts. “’You want to get in and get as much as you can’ is what we were told. We were lucky because we were careful. We didn’t spend our advance on cars or jewelry, we bought a house. Almost no artists recoup — so the system obviously doesn’t work, but it’s tempting. We were broke college kids right after the recession. We were going to take whoever gave the most money.”

“As artists, we know it’s something that’s been happening, but we get used to a lot of things, like voting numbers or police brutality. We get used to these things and then sometimes, there’s a wakeup call” — Fantastic Negrito

When they left their deal, they chose not to try and buy back their masters, having put out only one album with Epic and feeling they still had their best musical years ahead. She says she feels they made the right decisions for their music and livelihoods, but adds that “If we’re to air out all the music contracts in the world, we’d notice the same trends as in the workplace: that black artists, artists of color, women and other artists that don’t have the same resources are getting the most unfavorable terms.”

Noonan similarly said she felt many young artists getting signed don’t know the specifics of how their contracts work. “The deal was huge, man, they give you money to live off of. A lot of people say they sign a million-dollar deal, but you don’t get a check for $1 million,” Noonan adds. “Epic spent a fortune making that Karmin album. I mean, shoot, producers can take $15,000 to $20,000 a piece on each track. We’re lucky we were told the truth in so many ways.”

Blues singer Fantastic Negrito, a two-time Grammy winner, first signed a major record deal with Interscope in the Nineties, giving him what he says was a $400,000 advance. Next came what he calls the music industry’s “biggest flop” — his only Interscope album, The X Factor. The partnership was a nightmare for both Negrito and the label, he says. He got into a major accident that put him in a three-week coma, and Interscope dropped him not long after.

He released his two Grammy-winning albums independently more than 20 years later, and he hasn’t inquired about the recoupment on his first record in years. “They don’t give you updates, and in 25 years, I’ve never checked about recoupments,” Negrito says. “Maybe it’s about time I do that.”

Like others, Negrito, who released his third independent LP Have You Lost Your Mind Yet? this summer, doesn’t point the finger at any one entity or group for the nature of these deals. He says the industry must holistically evaluate how to improve for any major changes to shift.

“Is it fair? Absolutely not. The deal’s not bad — what is that based on?” Negrito asks. “Who made this up so that record companies get 70 percent of the money? The lawyers in this industry who are used to the status quo are going to say it’s worth it, but if I make a deal with you and go to lunch and say you pay 70 [percent], I don’t think you’ll say it’s fair. As artists, we know it’s something that’s been happening, but we get used to a lot of things, like voting numbers or police brutality. We get used to these things and then sometimes, there’s a wakeup call.”

From Rolling Stone US.