A recent video of Tom Odell has reignited debate around artist royalties. In it, he explains that he only receives 25% of the money generated by his music. For many, this figure sounds shockingly low. In truth, it reflects the structure of traditional record deals that were common in the early 2010s. The real issue is not that Odell’s deal was unusual, but that it is out of step with how the business should work today.
Why 25% used to make sense
Labels take on substantial financial risk when signing new artists. They cover recording budgets, marketing, tour support, and international promotion, often investing millions before any revenue is generated. In that context, a 25% royalty was not unreasonable. In fact, it was comparatively high. Digital royalties in many major-label deals have typically sat closer to 15-20 percent, and physical royalties were often lower still once packaging deductions (a 25% royalty deduction on CDs was common) and other costs were applied.
It is also likely that Tom began on a lower rate when he first signed, with 25% reflecting a higher rate negotiated later in his career once he had proven commercial success and greater leverage. That pattern is common: artists start on modest terms and, after establishing themselves, use their success to push for improved splits.
Lower artist royalty rates made more sense in the physical era, when manufacturing, distribution, and retail costs absorbed a large share of revenue and labels carried both significant risk and overheads. But today’s digital economy is leaner, with a much lower cost to get music to market. That makes the long-term application of a sub-25% artist royalty harder to justify once a label’s active marketing stops and more passive “catalogue” income dominates.
The Problem: catalogue trapped in old splits
Once a record has recouped and entered catalogue status, ongoing investment by the label is minimal. Yet, barring modest sales-based royalty escalations, artists remain locked into the same royalty rate, sometimes for decades. This is where the system breaks down. Catalogue income flows in steadily, but the original risk that justified a low royalty rate has long since disappeared.
A proposal for fairer deals
To avoid the “Tom Odell problem,” record contracts should adapt to the lifecycle of the music:
Front-loaded risk, lower artist share: In the early stage, when the label invests heavily, a 20 to 25 percent royalty can be more easily justified.
Post-recoup switch: Once the label has recovered its initial investment and a reasonable margin, the deal should automatically shift to a distribution-style model. The artist would then receive the majority of income, with the label taking a service fee for continued administration.
Licensing, not assignment: Modern deals should grant labels a time-limited license rather than a permanent assignment of copyright. This ensures that artists regain control when the license expires, allowing them to renegotiate the terms of distribution for their catalogue.
The bigger picture
Tom Odell’s deal was typical of its time. But the industry has moved on, and so should its contracts. Early investment should be rewarded, but catalogue revenue should not be trapped in outdated splits that no longer reflect the balance of risk.
By structuring deals that evolve over time, from investment-heavy beginnings to artist-led catalogue phases, the music business can better align incentives for both labels and creators. That shift is not just fair, it is essential if we want a healthier, more sustainable music economy.
At Songpact, we believe that contracts should adapt as music does. The future is not fixed percentages forever, but flexible models that recognise how risk and reward change over time.