Here’s Everything We Learned From Kanye West’s Record Label Contracts

Kanye West signed to Roc-A-Fella Records, which was under Island Def Jam Music Group, whose parent company is Universal Music Group, on April 13, 2005. Within the deal, Kanye was obligated to release six albums, in addition to his initial effort, The College Dropout (2004), within a 12-month span.

Roc-A-Fella was to approve any "recording elements," which are listed as: selection of individual producer(s), selection of compositions to be recorded, specification of accompaniment, arrangement and copying services, selection of dates of recording and studios where recording is to take place. ’Ye also had to seek written approval from the label at least 14 days before the first recording session.

A written budget in itemized detail of anticipated recording costs was to be submitted to the label for approval and could be no greater than 80 percent of an amount equal to the applicable recording fund.

The recording fund amounts for Yeezy's third through seventh albums were listed as follows: third album: minimum recording fund $300,000, maxing recording fund $650,000; fourth album: minimum recording fund $325,000, maxing recording fund $700,000; fifth album: minimum recording fund $400,000, maxing recording fund $850,000; sixth album: minimum recording fund $425,000, maxing recording fund $900,000; seventh album: minimum recording fund $450,000, maxing recording fund $950,000.

Kanye was also prohibited from recording a new album prior to 90 days after delivering the effort to Roc-A-Fella.

The label additionally had the right to release one Greatest Hits album. At no point was Kanye allowed to object to a track being on the record if it achieved “Top 100” chart success on any national trade publication at any time prior to when the Greatest Hits album was released.

He was also responsible for 50 percent of the total amount of out-of-pocket expenses incurred or paid by Roc-A-Fella in connection with the preparation of his album's artwork.

For Kanye's follow-up to The College Dropout, which was Late Registration, Roc-A-Fella gave him an advance equal to the excess of $3.5 million over recording costs.

An advance constitutes any money paid, costs incurred or costs to create videos. However, only 50 percent of video costs can be recouped from audio-only record royalties. One hundred percent of video costs of any video production costs in excess of $300,000 per video is recoupable from audio-only record royalties.

Thus, 50 percent of these costs incurred by Roc-A-Fella are considered advances, but the label could not recoup more than $40,000 for each album relevant to these costs: creation, hosting, maintenance of artist’s website, securing, registering and/or protecting artist domain names, creation of ECD materials, independent promotion, independent marketing and independent publicity, television, movie or radio campaigns.

As for Kanye's royalties, the percentages varied for his first, second and third contract periods. For his initial contract period, Yeezy received 8 percent of all singles and long-play singles, 14 percent of the royalty base with respect to master recordings during initial contract period, 14 ½ percent of sales of an album in excess of 500,000 units and 15 percent of sales of an album in excess of 1 million units. For his second contract period, Roc-A-Fella gave ‘Ye 18 percent of the royalty base with respect to master recordings from the second contract term, 18 ½ percent of sales of an album in excess of 500,000 units and 19 percent of sales of an album in excess of 2 million units. His third contract period consisted of 15 percent of the royalty base with respect to master recordings during third contract period, 15 ½ percent of sales of an album in excess of 500,000 units and 16 percent of sales of an album in excess of 1 million units.

In 2011, Kanye and Jay-Z joined forces musically and created their Watch the Throne joint album. For that LP, there was a recording fund amounting to $2.5 million. The breakdown for this amount was: $1.5 million was to be distributed to record the album. The remaining $1 million was to be paid upon completion. After the advance was recouped, 15 percent of royalties were to be given to both artists.

On May 4, 2012, Kanye's team penned a letter to Island Def Jam Music Group requesting that the recording fund for this fifth album be increased. ’Ye asked for $12 million, and $8 million would be paid promptly after the full execution of the 2012 amendment.

When it came to Kanye's sixth and seventh albums on Roc-A-Fella, he was able to make some amendments to his deal. For the sixth album, Kanye received a $12 million advance. From that money, $4 million was allocated to recording costs. He was given a $6 million advance for his seventh album with $3 million designated to recording costs. Twenty-two percent of royalties were to be given on both the sixth and seventh albums.

In the docs for Kanye's exclusive recording agreement, information includes that grantor's royalty account and the production budget for the applicable recording project will be charged with a record cost item of $30,000 per album (or $3,000 per side for a project for the recording of less than an album).

Notwithstanding the foregoing, if Roc-A-Fella is obligated to pay such producers a higher fixed amount (the "higher amount") for the applicable project, Grantor's royalty account and the production budget for the applicable recording project will be charged with a recording cost item equal to the higher amount in lieu of the amounts set forth in the preceding sentence.

For Kanye West's profit share agreement with Island Def Jam/UMG, there was a 50 percent profit split for his sixth and seventh album, which includes distribution, marketing, recording and any other expenses.

Island Def Jam Music Group also agreed to give Kanye the rights, title and interest in all of the masters for his sixth and seventh album, but only after the reversion date—the last day of the semi-annual accounting period—which is 20 years after the initial release of the seventh album. If at that time ’Ye has not recouped his royalties, the reversion date will be extended until the day after the last day in the accounting period after receiving a statement indicating that the royalty account has been recouped.

Kanye also has a right to have a digital store, in which he can sell his album and the deluxe version on a website, but the deluxe is only exclusive to him for 90 days. After that point, UMG can distribute the albums on their own.

If Island Def Jam Music Group were to pass on an artist, Getting Out Our Dreams Inc., the acronym for Kanye's G.O.O.D. Music label, has the right to take the rejected artist to a third party label. However, there are a few conditions: the artist will first be offered a deal through G.O.O.D. Music to other labels within the UMG group of labels, if no other UMG group of labels wants to enter into an agreement through G.O.O.D. Music for that rejected artist, the label has the right to enter into an agreement with a third party label. This is subject to G.O.O.D. Music or such label paying Island Def Jam Music Group a counterbalance amount against overhead payments in an amount equal to the overhead payments in the applicable contract year multiplied by a fraction. G.O.O.D. Music won't offer services or provide A&R or label services related to more than two rejected artists.

In the event that Kanye's sixth album, Cruel Summer, exceeds 2.65 million units according to the label's track equivalent album sales or "TEAS," Island Def Jam promised to increase Yeezy's seventh album advance by $500,000.

Cruel Summer/Hawaii costs shall be fully cross-collateralized with Kanye's main royalties account.

Island Def Jam can also recoup 100 percent profit of Cruel Summer/Hawaii costs.

Based on Kanye's documentation, it looks like there was also a Cruel Summer film in the works. Based on the agreement, Universal Music Group gave Kanye a $3.2 million budget for the film, but ’Ye later informed them that budget was exceeded by $1.5 million.

After agreeing to the amount spent on the film, they took $1 million from Kanye’s sixth album backend and then $500,000 from his seventh album's recording fund. They would pay Kanye back after the successful completion of the film, provided it was up to standards. However, the film has not yet been released. It's unclear if it actually will.

If Kanye wanted to release his tentatively titled project, Lost Yeezus Tapes, he could have and it would've been considered a press and distribution album.