A record contract is a contractual obligation that a recording label and artist, or group, enter into willingly. Oftentimes, when a recording contract is signed, that group or artist can only produce music for that company they signed with. A record label can have you under contract for as little or as long as they like, during which time you have agreed to create music for them and produce a certain number of records for that company. In some instances, the artist or group does not have to produce number one titles, but their contract will give all the terms as to the exact specifications they are agreeing to when signing on.
When you sign a record contract with a label, they have all rights to the music that you produce for them. They own the copyright, the master copy, and if the artist passes on, in some cases they will own the royalties to all music released. The only time there is an exception here is when the record label signs a distribution deal with an artist. This means that the record is licensed to the label but the copyrights belong to the artist or manager. When the recording label owns all of the artist’s copyrights, if an artist or group does a guest appearance with another artist, the label can require a percentage of the money that the song or record produces. The record label is responsible for writing out all contracts. Before you agree to sign, you should talk it over with your attorney and your manager to make sure that you are not being taken by a record label because you are new to the business. This is a problem that sometimes does happen, especially with smaller labels that are trying to become big.