Sitting on your couch, dedicating two (or more) hours per week watching American Idol, you probably assume that the contestants are instant millionaires just for making it on the show – that all of them will sign 7 digit recording contracts, sell thousands of dollars in merchandise every month, and headline all the major tours of the year. Well, maybe some… but definitely not every contestant. In fact, even if you win American Idol, your earnings might fall well below the million dollar mark.

In an article recently published by the New York Times, entitled “‘Idol’ Winners: Not Just Fame but Big Bucks” (http://www.nytimes.com/2010/02/24/arts/television/24idol.html?hpw), the author shares what many of former idol contestants are now earning. Take Kris Allen, for example, his advance for signing a recording contract was $350,000 – well above what a new artist would receive for a similar deal, but surprisingly lower than what some new artists command with a similar fan base. Adam Lambert, the stand-out performer from last season’s show, received a $375,000 advance for a 360 deal that included him signing away his merchandising rights (for $75,000) and likely his touring revenue.

Other idols haven’t faired so well, while a few (Kelly Clarkson and Carrie Underwood) clearly reached certified superstars of the industry. But at what cost? According to the article, not only do these artists sign 360 deals in exchange for a few thousand dollars, they are locked in to management contracts for approximately 3 years with a sunshine clause on revenues that doesn’t end for another 10 years (management earns money from your earnings even after the contract is terminated). I get it. Take relative unknowns, provide them a platform to become known, and the producers, management, record label rightfully want to share in the success of those that have the skills to continue in the business. Without the show, most of these artists would still likely be unknown. The show, and then the work of management and record label executives, can legitimately take an artist to the next level; and as new and unappealing as the 360 record deal might be, some labels can deliver the resources to bolster a musicians career not only as a recording artist, but as a performing artist (touring) and as a brand (merchandise).

The final numbers, however, also have a lot to do with the artist’s attorney. If the deal on the table is “take it or leave it”, then I suppose there isn’t much that can be done, except to advise your client on the implications of signing the deal or seek out other record labels (unless each contestant signs a non-compete or something to this effect preventing them from signing with any other label for a period of time). But most deals allow for some level of negotiation. The artist should have an attorney skilled in recording contracts (and management contracts), but also an attorney that won’t just rubber stamp the deal for you – you need someone that will zealously represent your best interests.

This post does not mean to suggest that attorneys for Idol contestants have failed to fully represent their clients. The record label clearly has the leverage, so you do the best you can. But the NY Times article went on to state that Idol contestants “are likely to earn far more than they would if they were independent artists who found their own way to a recording deal.” I don’t believe this is the case all of the time, and raises the main point of this posting – would an American Idol contestant be better off passing on the first record deal to develop their career first?

I know first hand that independent artists are currently signing bigger deals with more favorable terms than some of the stats offered in the NY Times article. I also know that independent artists are signing smaller deals too. But to make it sound like Kris Allen’s deal, of $350,000, is “Big Bucks” is disingenuous. While American Idol, the record label, and the management company play a major role in developing the artist, the artist brings a lot to the table too… the institution that is American Idol does not hold a monopoly on the success of its contestants. With the right advisement and team in place, many contestants on American Idol could fare a lot better in the long term by passing on the “big bucks” in the short term. It’s a thin line to balance on, but one that must be considered if the artist will retain any leverage in his or her career.