What is a £1m record deal?

By Liam Allen
Entertainment reporter, BBC News

image captionThe Sex Pistols famously signed a record contract outside Buckingham Palace in March 1977. Figures were rarely put on record deals in the 1970s

News of an act being given a £1m record contract by a major label conjures up images of a big cheque and instant riches. But what does a £1m record contract actually mean?

Members of the Women's Institute have become the latest unlikely act to be offered a "£1m record deal" by Universal Music Group labels, following in the footsteps of a trio of priests, a brass band and a group of Cornish fishermen.

In June, Dannii Minogue signed a £1m contract with Ministry of Sound while last year Peter Andre reportedly clinched a deal for the same amount with independent label Conehead.

Meanwhile, all the winners of ITV1 talent show The X Factor - from Steve Brookstein to Joe McElderry - have been awarded "£1m record deals" by Simon Cowell's label Syco.

"Everybody out there assumes that a £1m record deal means, basically, they sign a contract and there's a million pounds, young man or lady," says publicist Max Clifford.

"And, of course, it's not like that at all," adds the 67-year-old, who started working with The Beatles at EMI in 1962.

"What they're basically saying is we're prepared to back you in terms of studio time, musicians, producers, arrangers etc to that kind of money."

"The million has got that magic ring to it," he adds.

Music industry legal consultant Ann Harrison - who has worked with clients including St Etienne as well as Madonna, Kylie and Take That producer Stuart Price - says the phrase is shorthand for "saying it's a big deal".

"It's such a convenient number and it hasn't changed for years," she says.

"It hasn't gone up to £1.5m or £2m and it hasn't gone down to a half million - everyone always signs a £1m record deal."

Ms Harrison says another misconception is that the "advance" - the money paid up front to the artist - must be paid back by singers and bands if their career fails to take off.

"If the record company get it wrong and it just doesn't sell for whatever reason, they pick up the slack on it - it's their risk.

"They don't come knocking on the door saying, 'give me your money back'."

A report released in March by international recording industry body IFPI, estimates that a typical record deal to try to break a new pop act in the UK or the US is worth about £625,000.

Ms Harrison and the IFPI agree that money invested is roughly split into a number of different areas:

Advance. "This is money to the artist in return for the rights they're giving to the record company and which they'll live on for the next 12 to 18 months," says Ms Harrison.

Recording. "It depends if it's solo or a band, if they want an orchestra, a brass section, top name producers, the works. It'll probably be at least £250,000 to record the album from a major record label but it could be anything upwards from there."

image captionPeter Andre has signed a number of record contracts. Last year, he signed "a £1m deal"

Visuals. "People can make videos as cheap as five grand but when record labels get involved it tends to get a bit more expensive than that. It could be £50k-plus per video."

Promotion and marketing. The cost of trying to break an album accounts for the biggest chunk of record company investment - Mark Ronson's hit 2007 album Version cost more than £870,000 to launch.

Tour support. "In the early days the artist may make a loss on the tours so the record label will come up with some costs to fill in the shortfall," says Ms Harrison. "That could easily be £100,000-plus."

'Big risk'

The IFPI estimates that between one in five and one in 10 new acts are successful.

image captionJackson says he now has a "stripped back, acoustic, minimal" sound

"In some ways, we ought to feel slightly more sympathetic to the record labels," Ms Harrison adds.

"Because they are taking a big risk and it is a fickle old world out there, isn't it?"

2007 X Factor winner Leon Jackson was dropped by Syco Music in March 2009 despite winner's single When You Believe reportedly selling close to 500,000 copies and album Right Now reaching number four.

As an X Factor contestant, he says he "never really knew what to expect" from the dangled carrot of "a £1m record deal".

"I did hear through the grapevine that it was just a phrase coined, that that's what the labels described the record deal as."

He says he was paid two advances - the first when he was signed and the second when the album was handed over.

"If you exceed that advance with your album sales, then essentially you're making a profit on your advance."

He would not discuss whether or not Syco made a profit on his advance.

Jackson has been playing a series of summer gigs to showcase a new "stripped-back, acoustic, minimal production sound" and says he feels happier working "on a real grass-roots level".

"I think it's fair to say I was never going to get any real creative control with that kind of record label," he says.

Max Clifford, meanwhile, believes stories like Jackson's are typical of the modern day music business.

"What record companies are actually saying when they offer a £1m record deal is, 'we're going to pay the basic costs and, as long as you make it very quickly, then you can make a lot of money'.

"But you're going to have to make it very quickly.

"Now it seems to me that, if you don't make it in five minutes or on The X Factor, then you don't make it."

Universal and Syco declined to comment.

Leon Jackson will perform at the O2 Academy in Birmingham on Saturday 31 July.

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