Both can put a release in front of a national audience. They differ on four points: ownership, term, money and control. Here is how each one usually works, in general industry practice.
In a traditional record deal, the label funds the recordings and the campaign, pays an advance, and in return owns or controls the masters for a long term, paying the artist a royalty after its costs are recouped. In a label services deal, the artist or the artist's own label keeps the masters, the term is shorter, and the artist pays for the services it uses, through fees, a revenue share or both.
The record deal moves the risk to the label. Label services keep ownership and control with the artist, and the risk comes with them.
Everything below is general industry practice from published sources. Real contracts vary, and every deal is negotiated on its own.
Record deal. The UK Competition and Markets Authority, in its Sony and AWAL findings, describes the traditional model: "the label owns the underlying copyright to the recorded music, often in perpetuity, or possesses exclusive long-term licences that could last in the region of 20 years."
Label services. The same findings say artists working with label services providers "typically independently create and retain full ownership of the copyrights." In Music Week's Deal or no deal?, Believe's Malena Wolfer called this "the obvious benefit": "the artist's ability to retain ownership of their masters and to release music on their own terms."
Ownership matters long after the campaign ends. It decides who earns from the catalog, who licenses it for film and television, and who can sell it.
Record deal. Long. Rolling Stone, reporting on why viral acts are turning down major labels, reported that even viral artists with momentum typically have to give up ownership of their music for seven years, 20 years or forever, according to multiple managers. Many record deals are also counted in albums, with the label holding options on future records.
Label services. Shorter. The CMA found these agreements "tend to be relatively short-term." Billboard's guide to picking a distributor notes that even a distribution deal may require "a period of exclusivity," so the term and the exit still need reading.
Record deal. The label pays. The CMA describes the label paying "a large capital advance to artists" and then paying "a proportion of royalties to artists, once certain costs have been recouped." The artist receives money up front and gives up a large share of future income. Rolling Stone reported that even a friendly major-label contract for a new act involves turning over "at least 50% of the streaming income they generate, usually more," once the deal's initial cost is recouped.
Label services. The artist pays, or shares. Billboard's guide puts the share for a selective distributor "typically" at 7% to 15% of master royalties, with full label services tiers asking "a much larger cut." Advances, where they exist, are smaller. MIDiA Research's Mark Mulligan summed it up on Hypebot: "smaller advances, lower royalty income, higher risk and bearing costs."
These are typical market figures from published sources, not LUSIVEX prices.
Record deal. The label funds the project, so the label usually has the final word on the big decisions: which singles, which dates, how much is spent and where. A good label listens to the artist. The contract still says who decides.
Label services. The artist and their team decide, and the services company executes. Ingrooves' Nick Roden told Music Week that label services add "expertise, skills and resources to your team" while the artist keeps "control over your masters and your campaign itself." He also noted the model "requires a more hands-on approach." Someone on the artist's side has to run the plan.
The two models are moving toward each other. In a 2023 Music Week special report on label services, The Orchard's Ian Dutt said traditional labels "who, in the past, would only offer copyright deals, now offer similar deals to services companies." Licensing deals, distribution deals with advances and joint ventures all sit between the two ends. Read every deal for what it says, not for what it is called.
A record deal can suit an artist who needs the funding and the full machine, and accepts giving up ownership for it. Label services suit an artist or label that already owns the music, has some momentum, and wants to keep control.
For international artists, the choice often comes in order. Label services build the American numbers first, and a label deal or joint venture comes later, on the strength of those numbers. Monsta X signed with Epic Records in 2019. Our page on distribution, label deals and JVs covers how we pitch for a signing when a project is ready, and our guide to breaking into the U.S. market covers the groundwork that comes first.
In general practice, a record deal means the label funds the project, pays an advance and owns or controls the masters for a long term. With label services, the artist keeps the masters, the term is shorter, and the artist pays for the services through fees or a revenue share.
Usually yes. The UK Competition and Markets Authority found that artists working with label services providers typically retain full ownership of their copyrights. Check the term, exclusivity and exit clauses in the actual contract.
Neither is better in general. A record deal moves the cost and risk to the label in exchange for ownership and control. Label services keep ownership and control with the artist, who carries more of the cost. The right one depends on what the artist owns and needs.
Artists and labels weighing the two can see how U.S. label services work with an existing team, or start on the U.S. launch page.