Pop Stars in Search of a Better Record Deal

A new kind of contract gives artists more control—and profit
Prince works with Kobalt Label Services. Under a standard recording contract, an artist’s maximum share would be 20 percent Photograph by Pierre Hennequin/DAPR/Zuma Press

In the late 1990s, as the Backstreet Boys climbed to the top of the charts with hits such as I Want It That Way, they gained attention for more than just their music: The singers sued a former manager who they say cheated them out of millions of dollars. When it came time to release their most recent album, the band sought greater control and a bigger cut of the profits. For their eighth studio release, In a World Like This, the Backstreet Boys—now middle-aged men—abandoned the classic record company contract, turning to what the industry calls a label services company, which works almost like a consultant. Under these deals, bands call the shots on marketing and distribution, and they can receive more than triple the typical artist’s share of earnings. “With this type of situation, you’re responsible for getting the right staff and people behind it,” says Peter Katsis, the Backstreet Boys’ manager. “It falls on the artists.”

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