Net Profit Deals: Not Your Traditional Record Deal

To compute the net profits in a Net Profit Deal, the record company deducts off the top its actual outof-pocket costs for recording, manufacturing, promotion, marketing, etc. Some labels also deduct a so-called “Overhead Fee” of 10 to 15% of the gross record sales income. After the record company deducts all of these expenses and reimburses itself, the label then pays the artist whatever percentage of the profits their contract requires (usually 50%).