Glossary
The contract language the industry relies on, in plain English. Knowing these terms is the first step to spotting where the harm hides.
- Advance
- Money a label pays an artist up front against future royalties. It is not a gift — it is recouped from the artist's royalty share before the artist sees another cent. In almost all deals it is non-returnable, meaning if the record flops the artist does not owe the cash back out of pocket.
- Recoupment
- The process by which a label recovers the advance and approved costs (recording, videos, marketing, tour support) out of the artist's royalty share before paying the artist. Crucially, it is repaid only from the artist's slice — so at a 15% royalty rate, the artist pays back the debt 15 cents on the dollar while the label keeps the rest.
- Unrecouped
- The status of an artist who has not yet earned back their advance and recoupable costs. An unrecouped artist receives no royalty checks even if the music is generating revenue. Industry estimates suggest most major-label releases never recoup.
- Cross-collateralization
- A clause that lets a label apply the unrecouped debt from one project or revenue stream against the earnings of another. It can keep an artist in perpetual debt even when individual projects succeed.
- Masters
- The original sound recordings of an artist's music. Whoever owns the masters controls licensing and reissues and collects the recording revenue. Traditional deals assign masters to the label, often in perpetuity — the root of many famous disputes.
- 360 deal
- A contract in which the label takes a percentage not just of recorded music but of additional revenue streams — touring, merchandise, endorsements, and publishing. It emerged in the 2000s as album sales fell, and is criticized for taking income from areas where the label adds little.
- Payola
- Undisclosed pay-for-play: a label secretly paying radio stations or their staff to play its records as if the airplay were organic. It is illegal in the U.S. when undisclosed; multiple majors settled state investigations into the practice in 2005–2006.
- Mechanical royalty
- A royalty paid to songwriters and publishers for each reproduction of a song (physical, download, or stream). In the U.S. the streaming mechanical rate is set through a regulatory process and has been a recurring point of industry conflict.
- Pro-rata (streaming)
- The dominant model for splitting streaming revenue: a service pools subscriber and ad money and divides it by each rightsholder's share of total streams. Critics argue it routes a casual listener's subscription toward whatever is most-streamed overall rather than what that listener actually played.
Definitions are educational summaries. For specific contracts, consult a qualified music lawyer. See our sourcing methodology for how entries on Fuck Record Labels are documented.