Inside a Master License Agreement: What Artists Should Know Before Signing
- Liz The Music Manager
- 2 days ago
- 3 min read
I often get asked to break down real-world music contracts for independent artists, especially those navigating record deals for the first time. Here is a recent Master License Agreement between one of my artists and a major label (both redacted here for confidentiality), and I thought it would be helpful to outline its key terms and provide some insights for anyone considering a similar deal. You can download this agreement at the bottom of this article.
🔍 Summary of the Agreement
This agreement outlines the relationship between an artist and a major music company for the commercial release of a studio album. The contract governs ownership, royalties, marketing rights, delivery requirements, and more. While every contract is unique, the structure and clauses here are quite representative of standard industry deals.
📝 Key Points from the Agreement
1. Term
The term lasts 12 months following the initial commercial release of the artist's album.
2. Exclusive Recording Services
During the term, the artist must record exclusively for the label.
3. Recording Commitment
The artist must deliver one full album and additional bonus recordings.
Videos may also be required for lead singles.
4. Artistic Control
The artist controls creative choices, including song selection, producers, and studios—but the label must approve lead singles.
5. Delivery Requirements
The artist must deliver fully mixed, technically acceptable masters.
All artwork, clearances, liner notes, and licenses must be submitted in label-approved formats.
6. Ownership of Masters
The label has exclusive rights to manufacture, distribute, and exploit the masters during the “Rights Period.” Based on this agreement, the label retains these rights for 13 years.
7. Advances and Funding
The label funds recording and video production costs, recoupable from future royalties.
8. Royalties
Artist receives 75% of Net Receipts after recoupment.
Artist must pay producers, featured artists, and mixers from their share.
50% of SoundExchange-type revenue (neighboring rights) is excluded from Net Receipts; the artist receives 100% of the "performer's share" when applicable.
9. Publishing
Mechanical royalties are paid at the statutory rate with caps:
12x rate for albums
5x rate for EPs
2x rate for singles
Promotional uses (e.g., lyric videos, streaming previews) are not royalty-bearing.
10. Marketing Restrictions
The label cannot, without written artist consent:
Release albums at reduced pricing before a certain window (e.g., mid-price before 18 months).
Use tracks for sync (TV, film, ads), remix, or repackage albums.
Release greatest hits, multiple-record sets, or demos.
Use artwork for merchandise.
11. Warranties
The artist guarantees full legal rights to all content and contributions.
Re-recording restrictions apply for 3 years after the term ends.
12. Audit and Accounting
Semi-annual royalty statements are issued.
Artists have the right to audit once per year.
13. End of Rights Period
After 13 years, the label must stop manufacturing.
A 6-month sell-off period is allowed, after which unsold physical inventory is destroyed.
💡 Takeaways for Artists
Ownership = Control: This deal gives the label exclusive rights to the masters for 13 years. Understand what you're giving up—and for how long.
Recoupment Is Real: The artist doesn’t see royalties until all costs are paid back to the label.
Creative Freedom Isn’t Total: You can choose your team and sound—but lead singles and key release strategies still need label sign-off.
Marketing Restrictions Help—but Read the Fine Print: This contract includes protections that prevent over-commercialization, but those limitations expire with time.
Understand Your Royalties: "Net Receipts" language can be tricky. Make sure you're clear on what you actually receive.
Re-recording Clauses Matter: Planning to remake your old hits? You’ll have to wait three years after the contract ends.
If you're an independent artist being offered a master license agreement, always consult an experienced music attorney before signing. These deals can be beneficial—but only if you understand every clause and how it affects your long-term rights and income.
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Email: lizthemusicmanager@gmail.com
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Please note, the information provided is for educational purposes only and should not be considered legal advice. For specific legal guidance, please consult an entertainment lawyer.