Another protection that the label will require is a limitation of reissue. This prevents the artist from resuming his music after the expiry of the contract for a number of years on another label. Any restrictions you agree should apply for up to five years after the end of the contract and should only cover actual published recordings. In the United Kingdom, the mechanical royalty rate is set at 8 and a half% of the price of physical products and 8% of gross sales (excluding vat) for downloads. In the United States, however, most record companies are only willing to pay 75 percent of the fixed legal rate for mechanics. There is also a limit to the number of tracks on which American labels will actually pay mechanical royalties if the artist is also the songwriter. Normally, there are a maximum of 10 songs per album, although the artist may have composed all 14 songs on an album. In this way, it could be said that US labels control the compositions and cap the total amount they will pay to artists/writers. The most successful acts are eventually able to negotiate a 100 percent rate, but it may take several successful albums before they get there. The recording contract usually requires the artist to sign exclusively with the label. This means that they cannot register without permission for another label, nor can they leave the contract if they are dissatisfied.
However, the label remains free to sign and promote as many artists as it wishes. Record companies invest huge sums of money in the infringement of an action and say they need that level of control to improve the chances of winning or, as is more often the case, reduce their losses. From time to time, the artist receives one on the label. Mariah Carey called the termination of her long-term contract with EMI in 2002 “the right decision for me.” But it might have something to do with the $19 million that EMI had to pay him to end this relationship! To improve the profile of a publication, the artist must carry out some national and international advertising work. In case you don`t follow in Sandi Thom`s footsteps by doing your “tour” comfortably from your webcasting show, the record company will use an army of radio, press and new media distributors to talk about your record. The considerable costs that this can entail should not be recovered from artists` royalties. Finally, the record label benefits every time the record is sold, and the promotion is an appropriate overhead of their activities. And of course, with a likely merit ratio of 3 to 1 in favor of the label, they will break even faster than any artist can.
As a general rule, record companies will increase royalties or grant artistic freedoms to sign a contract with them as soon as the original contract is fulfilled. Otherwise, established actions can go where they see better chances. In 1980, Diana Ross released her album diana, which fulfills her contract with Motown Records. The album grossed three American hits (one #1 and two top 10) and sold 10 million times worldwide, but Ross never felt properly compensated by Motown for his work with The Supremes or his solo editions. When RCA Records offered him $20 million to sign with them, Ross Motown gave him the chance to get the deal, or at least offer something almost similar. Motown, who believed Ross` solo career was too high and too low and saw no reason to compensate her now for her former work as the Supremes, offered $3 million. Split with the decision to stay with the label that made her famous, or a contract with a company that was willing to pay her what she felt, she finally signed with RCA.