Record labels typically take between 70% to 85% of an artist's revenue from record sales and streaming, which might seem shocking to many aspiring musicians. I'll break down exactly how this works and what artists can expect from different types of deals.

The standard recording contract, also known as a traditional record deal, usually gives artists 10-25% of their royalties while the label keeps 75-90%. For example, if your album generates $1 million in revenue, you might only see $100,000 to $250,000 of that money.

Here's how the revenue split typically works for different types of record deals:

Traditional Record Deal: 10-25% to artist, 75-90% to label
360 Deal: 5-20% to artist, 80-95% to label (includes revenue from touring, merchandise)
Distribution Deal: 50-80% to artist, 20-50% to label
Publishing Deal: 50% to artist, 50% to label

Why do labels take such a large percentage? They justify this split by covering various upfront costs:

Recording costs
Marketing and promotion
Music video production
Tour support
Radio promotion
Distribution expenses

It's important to note that these percentages aren't set in stone. Major artists with significant leverage can negotiate better terms. For instance, Taylor Swift's deal with Republic Records reportedly gives her ownership of her masters and a much higher royalty rate than typical.

In the streaming era, the splits remain similar. When a song is streamed, the label typically keeps 70-80% of the streaming revenue after the platform takes its cut. For example, if Spotify pays $0.004 per stream, the artist might only receive $0.0008-$0.0012 per play.

Independent artists who self-release their music through distributors like DistroKid or TuneCore keep 100% of their royalties, only paying a flat annual fee. However, they miss out on the label's marketing power and industry connections.

The music industry is evolving, and more artists are choosing to stay independent or sign hybrid deals that offer better terms. Before signing any contract, I strongly recommend having an entertainment lawyer review the terms to understand exactly how much of your revenue you'll keep.

Remember, while these percentages might seem unfair, labels take on significant financial risk. They often invest hundreds of thousands or even millions of dollars in developing and promoting new artists, with no guarantee of success.

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