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, 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 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 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.