Demo Deal
Agreement where a label funds recording demos before a full record deal.
Definition
A Demo Deal is a preliminary agreement where a record label provides funding for an artist to record demonstration tracks (demos) without committing to a full recording contract. Labels use this to evaluate commercial potential before investing in a full album.
Demo deals typically include modest budgets (a few thousand dollars) and may grant the label a first-look option or right of first refusal on a full recording contract.
Why It Matters
Demo deals let artists access professional recording resources while maintaining flexibility, and allow labels to test market response without major investment. This reduces risk on both sides.
For emerging artists, a demo deal provides validation from industry professionals and resources to create radio-quality recordings that can attract interest from other labels or secure a full deal with the demo partner.
Examples in Practice
A label might offer a $5,000 demo deal to record 3 songs with a producer, with an option to convert to a full deal if the demos perform well. An artist who declines the label's subsequent offer can shop the professionally-recorded demos to other labels.
Some demo deals include provisions requiring the artist to repay recording costs if they sign with another label.