From 25% to Fairer Futures: Rethinking Record Deals for the Catalogue Era
- Traditional 25% artist royalties reflected label risk in the physical distribution era
- Digital streaming has dramatically reduced label costs, making old splits harder to justify
- Catalogue income continues at old royalty rates long after label investment is recouped
- Fairer deals should include automatic post-recoup shifts to distribution-style splits
- Time-limited licensing rather than permanent copyright assignment protects artist interests
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.
Lower artist royalty rates made more sense in the physical era, when manufacturing, distribution, and retail costs absorbed a large share of revenue. But today's digital economy is leaner, with a much lower cost to get music to market.
The Problem: Catalogue Trapped in Old Splits
Once a record has recouped and entered catalogue status, ongoing investment by the label is minimal. Yet artists remain locked into the same royalty rate, sometimes for decades. This is where the system breaks down.
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 20-25% royalty can be justified.
- Post-recoup switch: Once the label has recovered its investment and a reasonable margin, the deal should automatically shift to a distribution-style model.
- Licensing, not assignment: Modern deals should grant labels a time-limited license rather than permanent copyright assignment.
The Bigger Picture
Early investment should be rewarded, but catalogue revenue should not be trapped in outdated splits. By structuring deals that evolve over time, the music business can better align incentives for both labels and creators.
How Songpact helps in practice
- Collaborators agree terms together before contracts are generated
- Every clause reflects real decisions, not boilerplate defaults