5 Things The Leaked Kanye West Record Contract Tell Us About How Top Deals Are Structured

5 Things The Leaked Kanye West Record Contract Tell Us About How Top Deals Are Structured

5 Things The Leaked Kanye West Record Contract Tell Us About How Top Deals Are Structured Photo: Kayne West talks on his smartphone as he arrives to attend Dries van Noten’s Fall Winter 2015 /2016 Ready to wear fashion collection as part of Paris Fashion Week in Paris, France, March 4, 2015. (AP Photo/Binta)

Kanye West loves to go on Twitter rants and one of his recent rants gave everyone an inside view into the business of making music.

West has been outspoken about his efforts to obtain his music master recordings from Universal Music Group, the parent company of his own record label, G.O.O.D. Music

He recently tweeted a video of himself peeing on his Grammy Award and he has encouraged Black artists to sign with labels owned by Black people.

Outraged at how he said artists are mistreated, West decided to post 114 pages of his record contract, which he initially signed more than a decade ago.

According to the contracts, West signed on April 13, 2005 to Roc-A-Fella Records, which was under Island Def Jam Music Group, whose parent company is Universal Music Group. Under the deal, he agreed to release six albums in addition to his first release, “The College Dropout” (2004), within a year’s time.

Black Americans Have the Highest Mortality Rates But Lowest Levels of Life Insurance
Are you prioritizing your cable entertainment bill over protecting and investing in your family?
Smart Policies are as low as $30 a month, No Medical Exam Required
Click Here to Get Smart on Protecting Your Family and Loves Ones, No Matter What Happens

Yeezy tweeted, “90 percent of the record contracts on the planet are still on a royalty A standard record deal is a trap to NEVER have you recoup, and there’s all these hidden costs like the ‘distribution fees’ many labels put in their contracts to make even more money off our work without even trying,” XXL reported.

Here are five things the leaked West record contract tells us about how top deals are structured.

Money is an illusion

Sure you hear about record companies paying out tons of money to promote artists, but as West’s contract shows, there’s a catch. 

“And, with rare exceptions, payment from a record company is a kind of loan: You must make the label that money back before they can start paying you again,” Complex reported. 

West’s contracts laid it all out. He got a $12 million pool of money to make “Yeezus” in 2013. Of that, two-thirds ($8 million) was an advance for him to keep. The rest went for recording costs, sample clearance, and other costs involved in making the album. If West went over the $4-million budget in making the album, he would have to pay back the difference. “In the recording budgets, there was almost always a clause where Kanye could keep whatever money was left over at the end of the process. But, as we’ve seen, it seems unlikely that ever happened,” Complex reported.

Going back to his second album, “Late Registration” in 2005, he got a $2.3 million advance with an additional $1.2 million as a recording budget.

Sales bonus

The artists sell, the more they are rewarded for making the recording company money. 

West received six-figure sales bonuses, including $500,000 if “Late Registration” went triple platinum within 11 months of its release (which it did) plus $750,000 if he delivered that album to the label on time. 

Read the fine print

The West contracts reveal that artists and their legal representation really have to read the fine print. There are contingencies throughout. “There are a few strange clauses buried in the 114 pages. One says that if Kanye violates ‘applicable legal standards’ in promoting his record (i.e. if he engages in payola), the label has the right to terminate his contract. There’s another in his 2005 ‘Late Registration’-era deal saying that Ye has to do ‘a reasonable number of on-line ‘chats’ on his website,” Complex reported.

Company approval is a must

Roc-A-Fella had to approve any “recording elements,” including the selection of individual producer(s), selection of compositions to be recorded, specification of accompaniment, arrangement and copying services, selection of dates of recording, and studios where recording is to take place. “‘Ye also had to seek written approval from the label at least 14 days before the first recording session,” XXL reported.

Royalties and profit share breakdown

What West earned off of record sales changed over time. Initially, he received 8 percent of all singles and long-play singles, and 14 percent of the royalty base with regard to master recordings. He also took in 14.5 percent of sales of an album in excess of 500,000 units and 15 percent of sales of an album in excess of 1 million units, XXL reported.

During his second contractual period, Roc-A-Fella gave West 18 percent of the royalty base with respect to master recordings, 18.5 percent of sales of an album in excess of 500,000 units, and 19 percent of sales of an album in excess of 2 million units. But for his third contract period, the percentages went down to 15 percent of the royalty base, 15.5 percent of sales of an album in excess of 500,000 units, and 16 percent of sales of an album in excess of 1 million units.

West also had a profit-share agreement with Island Def Jam/UMG. It included a 50-percent profit split for his sixth and seventh album, which includes distribution, marketing, recording, and any other expenses.

Listen to GHOGH with Jamarlin Martin | Episode 73: Jamarlin Martin Jamarlin makes the case for why this is a multi-factor rebellion vs. just protests about George Floyd. He discusses the Democratic Party’s sneaky relationship with the police in cities and states under Dem control, and why Joe Biden is a cop and the Steve Jobs of mass incarceration.

West can get his masters — 20 years after the initial release of the seventh album. 

Island Def Jam Music Group “agreed to give Kanye the rights, title, and interest in all of the masters for his sixth and seventh album, but only after the reversion date — the last day of the semi-annual accounting period — which is 20 years after the initial release of the seventh album,” XX reported.

However, there is a “but.”

“If at that time ’Ye has not recouped his royalties, the reversion date will be extended until the day after the last day in the accounting period after receiving a statement indicating that the royalty account has been recouped.”