Some Artists Get Screwed by Their Labels, But Kanye Isn't One of Them

Kanye West has spent about a week yelling about his record deal with Universal Music Group (UMG) on Twitter, comparing the arrangement to "modern day slavery" and promising that he "won't stop until all is fair." He posted about 10 contracts he's hashed out with the label since 2005, containing more than 100 pages of legal documents, in an apparent effort to show the world just how egregiously Universal has ripped him off. But here's the thing: If you actually read his contracts, you'll find that Kanye's deals are unbelievably generous—filled with multi-million dollar advances, extremely high royalty rates, and provisions that guarantee he'll ultimately own many of his masters. According to James Sammataro—an attorney with more than two decades of experience in entertainment law, who reviewed Kanye's contracts with VICE—"there are artists that would kill for his terms."

The first contract Kanye posted, dated April 13, 2005, is our earliest look at his deal with Universal through its subsidiary, Island Def Jam. It shows he got a $3.5 million advance on his second album, Late Registration, $2.3 million of which went straight into his bank account as soon as he signed the contract. For a relative newcomer in 2005, that was well above average, Sammataro said. The contract also sets him up to collect royalties on sales of his albums at rates ranging from 14 percent to 19 percent, which—while a tad low—were fairly typical at the time. (According to the American Society of Composers, Authors, and Publishers, in most record deals, artist royalties on album sales usually range from 10 percent to 25 percent.) 

Much has been made of this tweet referencing the contract, which claims to show that Jay Z sold Kanye's masters to Universal in exchange for control of his own:

But that's not what these two documents actually reveal. In reality, they just outline Universal's option periods, which are "completely standard," according to Sammataro. The provision states that after Kanye delivers one album, Universal has the right to extend his contract for a second; after he delivers the second, they can extend his contract for a third; and so on and so forth, until Kanye has made six albums. That might sound like a trap, used to keep Kanye stuck with the terms of this original contract over several years—but ultimately, the option periods didn't really matter. Kanye's contracts show he renegotiated his deal at least nine times, always to his advantage.

"It wasn't like he was locked in," Sammataro said. "He renegotiated after almost every album. He was able to get successive concessions each and every time."

And the concessions Kanye got were extraordinary, Sammataro said. In a 2011 contract, Kanye secured a $2.5 million advance for Watch the Throne, for which he controlled 100 percent of the mechanical rights (i.e., the rights to the underlying composition of a song—think lyrics and melody—as opposed to the rights of a specific recording.) That's a 25 percent higher rate than industry standard, Sammataro said. In a 2012 contract, Kanye received a $12 million advance for Yeezus—$8 million of which went straight into his bank account—and a $6 million advance for The Life of Pablo. On top of that, Universal bumped his royalty rate up to 22 percent. 

"These are upper-echelon, top-10 deal terms—this is superstar money," Sammataro said. "That's where the whole 'I'm treated unfairly' [thing] doesn't really resonate with me. You're getting $8 million, and if this album tanks, you have no exposure."

Kanye's record deal only got cushier from there. In a series of contracts signed in 2012, Kanye set up a profit-sharing agreement with Universal that guaranteed him 50 percent of the net profits from Yeezus and The Life of Pablo. Sammataro said that while so-called "50-50 deals" like that have become more common recently, in 2012, that kind of arrangement was virtually unheard of. In 2014, Kanye negotiated an even better "Press and Distribution" deal for Ye and Jesus Is King, securing him 100 percent of the profits from both albums—a setup he then had retroactively applied to The Life of Pablo, too. The only thing Universal collects on those three records is a distribution fee: about 21 percent on The Life of Pablo, and 17 percent on every record released after that. Both rates are more generous than the industry standard.

The real kicker here is that, for as much as Kanye has raised hell about "getting my masters for my children," he's already on track to own many of them. According to his 2012 contract, he'll control the master rights to Ye and Jesus Is King in 2026; by 2036, he'll own the masters for Yeezus and The Life of Pablo. It's true that, for now, Universal owns the masters for his first five records in perpetuity—but there's still a way for Kanye to get them back. If UMG ever puts the rights to his first five albums up for sale, Kanye—being a billionaire—could likely afford them. (The master rights to Taylor Swift's first five albums reportedly sold for $300 million; while something in that range would be a steep price for Kanye to pay, he could feasibly cover it.) 

There are other extremely artist-friendly provisions in Kanye's contracts, from a more than $3 million payout that went towards his largely forgotten 2012 movie, Cruel Summer, to seemingly random advances in the million dollar range that Kanye has apparently never had to pay back. No matter what provision of his deal you study, Samattaro said, one thing remains clear: Kanye is in a ridiculously advantageous position, and—thanks to a team of high-powered lawyers—managed to secure terms that almost any other recording artist would envy.

There's an element of truth to many of Kanye's tweets about the recording industry. Hidden fees and shoddy royalty rates can make it difficult for a musician to make a living, and some artists do get trapped in exploitative contracts. But Kanye isn't one of them. 

"If somebody wants to bemoan the evils of the recording industry, I'm not sure that Kanye is the poster child," Sammataro said. "He's speaking of things that probably can be unjust, and have been unjust. But he's doing it against the wrong players, and he's not the person to do it."

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