What is an Artist Development Deal, and Should You Sign One?

Artist Development Deal

In the “glory days” of the recording industry (i.e. after Elvis, before the Internet), there was a very common type of deal offered by record labels called the Artist Development Deal, sometimes known as a “Demo Deal”. The idea was fairly simple: if a label liked you but didn’t want to commit fully with a record deal, they’d offer you an Artist Development Deal. I like to think of them as the ‘promise ring’ of the music industry: a commitment, but not taken seriously by anyone outside of the relationship.

What is an Artist Development Deal?

In theory, the Artist Development Deal was the best of both worlds for the artist: the commitment of funds and development from the label, without signing away your soul. However, there was often more to these deals than meets the eye. The deals often gave a significant cut to the label on live and publishing revenues, often involved horrible royalty payouts, and many times included a right of first refusal clause that made the commitment as significant as a full recording deal, without all the perks. Kind of like a promise ring with the consequences of an engagement ring.

These deals still exist, but the entire artist development infrastructure has changed. Long story short: the major labels are no longer paying for artist development. But who is? For the most part, artist development has fallen on artists, and record labels only become interested when an artist has built up a major following both on and offline. But there is a whole new industry emerging in the area of artist development, led by young entrepreneurs, small businesses, and music fans, as opposed to multinational corporations. In other words, the “new” Artist Development Deals are coming from startups trying to build a legacy, rather than protect one.

What does an Artist Development Deal look like in 2017?

The new Artist Development Deals range from mutually beneficial and artist-friendly to downright exploitive. What they have in common is the investment of time and resources by the ‘developer’ in the short term, in exchange for a piece of the artist’s revenue streams in the long term.

Here’s an example: in exchange for “developing” the artist for the next 3 years, the developer will be entitled to 15% of all revenues generated during the term, and 10% of all Sunset Revenues earned over the 10 years following the term (known as the “sunset period”). Sunset Revenues are defined as gross revenues earned during the sunset period from all master recordings and compositions recorded/released during the term, as well as revenue earned from all deals negotiated during the term but received in the sunset period (including sponsorship and endorsement deals).

What are the Pros and Cons of an Artist Development Deal?

One of the advantages of signing an Artist Development Deal is obvious: the developer should open up doors that otherwise would be closed, such as providing industry contacts, booking shows, helping develop your live show, song writing, image, and brand generally.

A clear disadvantage of the Artist Development Deal is that the revenue pie gets split further, so each band member earns less. If you sign with a manager or record label or publisher, the pie gets divided further. Now, you need all of these additional parties at some point in your career, so it’s a question of ‘when’ rather than ‘if’, whereas not every artist needs the help of an artist development team.

So that is the real question you need to ask yourself: to what extent can the developer truly “develop” your career? What are they offering that you cannot already do yourself? If self-managing isn’t something at which you and your band mates excel, you will benefit more from an artist developer, and sooner rather than later.

As always, email me with questions and comments.

Artist Development Deal

18 thoughts on “What is an Artist Development Deal, and Should You Sign One?

    • Thanks Gerry. I haven’t read that book but have been meaning to. And you make a great point: so many legends could have done so much more with proper help from the outset. Thankfully, Fogerty made it through the tough times to come out on top.

      Kurt Dahl
      Entertainment Lawyer

  1. Hallo my name is Kevin I live in Belgium. I was offered an development deal and in the deal they told me I have to pay if I signe the deal. My Question is do u really have to pay for development deal ?

    • Hi Kevin,

      I’m always leery of development deals where you have to pay a sum, of any kind. They should be similar to a management deal, where they only earn if you earn, i.e. a percentage of revenue generated.

      I hope this helps.

      Kurt Dahl
      Entertainment Lawyer

      • My son’s band was recently contacted by someone in LA who is interested in managing them along with A&R. We were excited, especially when we found out he’s worked with some known bands and industry people. After asking several times, he finally told my son it would cost them $300.00 per month. That didn’t sound right to me. Thanks for your comment on this thread.

        • Hi Susan,

          I’m always suspect of monthly fee arrangements, but at least the amount in question is low. I highly recommend that something be put in writing, or if they’ve sent you a contract, that you have it reviewed. Email me at kdahl@murphyandcompany.com and we can discuss further. Happy to help, and I work with deals like this all the time!

          Kurt Dahl
          Entertainment Lawyer

  2. I am a man with very good original material. I am also an attorney, though I am clueless as to what I should do to further my music career. I want to proceed to at least a demo, but I am unable to self fund. I live near Nashville, and I play out as often as possible. I have great musicians willing to work with me based on my facebook videos. I have a showcase (covers) as well as many of my own songs. I know that music is my future. I just do not know where to begin. Any advice? My email address links to my fb profile if you care to check my material. Thanks

    • Thanks for your comment Michael. Please feel free to email me some originals to check out. Living near Nashville surely helps, as so much exciting stuff is happening there at the moment. I know some good people there, lawyers and otherwise, who might be worth connecting with. Email me for starters.

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  3. Is it common for a major label to offer a 360 deal with a big signing bonus but charge an amount for artist development that has to be paid before you sign the contract ? (Virgin records)

    • Hi Rob,

      I’m always suspect about Artist Development Deals that require a fee to be paid by the Artist. If you’re not making money, neither should they.

      Email me to chat further.

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  4. I have been looking into artist development deals and found a few in my area that I’m interested in. However, the one that I am leaning towards requires $25.00 for the initial consultation. I don’t mind paying if it is a legit company but I was curious if this was standard? The company has a good overall rating on various sites but I’m still anxious about giving them any money. Does this sound like a scam?

  5. Hi. Within the next year I was wanting to open an artist development company, but the way you have it described here makes me second guess my plans. I think maybe my vision of what I want isn’t tangible after reading this article. I am only in the beginning stages of this, but am wondering if you could answer a couple of questions, via email, in your spare time.

    • Definitely Paige! There are many successful and cutting edge artist development companies out there, many are my clients. So it’s definitely doable. Email me to chat further.

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  6. Hi guys i am professional singer/songwriter with as very good relationship with the BBC and having done all this on my own so i know where my path lies. However, after good success on the radio i have two managers, one of whom i know really well through childhood and the bother who knows a thing or two about the music industry having worked there before, they approached me and i’m in a deal paying a lump sum a month for their services to develop my career and manage however i feel after paying over a grand already that they actually aren’t doing anything i could have done myself and are just using money to set up their own business and benefit themselves as i seem to be out of pocket all the time with no resources to expand my music catalogue, photoshoots, promotional material as i have given money to them and i fear i have made a mistake because they saw success and jumped at it. i also have had no shows for nearly a year and have a big show next month which will definitely open doors but again i feeel its me who has paid for thew budgeting of the show as i have received nothing as of yet from my investment

    • Sounds like you need to have a serious conversation with these managers, and perhaps stop paying the monthly fee until they can provide certain deliverables.

      Thanks,

      Kurt Dahl
      Entertainment Lawyer

  7. I have a couple of artists who I believe have the talent to “make it”. I am willing to commit my time and money to make this happen. However, I need to make sure that I will get paid for my services.
    What type of deal should I get them to sign?

    • Hi Darrell,

      Either a management deal or an artist development deal. But the “fairness” of both really depends on what’s included in the agreements. If you’re in Canada or the US, I can help. Email me for more.

      Thanks,

      Kurt Dahl
      Entertainment Lawyer

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