I've gone back-and-forth on what to issue as my first standard record label agreement.
First, I considered outright buying a guaranteed number of copies from an artist, covering their cost of manufacturing. This 'reverse deal' isolates the most important skill: moving units.
Then, I realized a confident (or publicly subsidized!) artist could make back their manufacturing cost on their own sales, lend the extra copies to me, and collect 50% of me selling those extras.
Both of those deals are asset-light for me: I only pay for a portion of the run in the former, and I pay nothing up-front in the latter.
Now I wonder if it's better to
- handle and pay for design and manufacturing
- give the artist, for free, x copies that I can afford to not sell
- Sell the rest, recoup, then pay 50%
For a limited edition of 262 CDs, x = 100, I recoup at some point between 80 and 100 of my sales, then I share around $600-800 to the artist after recouping (which is also my return for the label). Small absolute dollars, but I could stay in the game indefinitely. The artist would have paid zero dollars along the way.
I've never done a vinyl project of my own, but for 12'' 200 records I'd say x = 50, I recoup at 90-100 sales, then share maybe $1,000. The project doesn't clear the financial hurdle at only 100 records, not unless you sold them for over $50 each, and even then it's a stretch.