Top of the Flops

There are no longer any sure things in pop, as EMI Records confirmed last week, when it paid Mariah Carey $28m (£20m) to terminate her contract after low sales of her first album for the label.

Don't worry about Carey. The poor performance of her CD Glitter may have cost her one of the largest ever recording deals - $90m for five albums - but she will find a new deal easily enough. Rumour has it that she has already been approached by Arista, although her representatives insist she has yet to talk to any label. It's the music business that is doing the soul-searching: about its practice of paying superstar acts enormous advances.

"Some companies may be doing it just to show they have the money," says Polydor spokesman Stuart Bell. "Someone sets a precedent and everyone else has to follow. They know they'll be front-page news and attract other stars to the label, but they're screwing themselves because they can't really afford it."

"The days of signing huge deals for eight albums are gone," agrees Gary Farrow of Sony. "For artists to warrant that kind of money, they'd have to go platinum in every territory."

Sony's own roster includes the under-performing Michael Jackson. His contractual details are confidential, but his sister Janet made headlines a decade ago when she signed to Virgin for a then-record $50m. In 1995, she negotiated a further $80m. "At the time, Richard Branson [then chairman of Virgin] said it was like buying an original Rembrandt. I don't know what he was expecting," says John McKie, ex-editor of music magazine Q. It's not that Jackson flopped; she has had numerous top 10 singles, and Virgin executives say she makes money for the company. But she hasn't had a huge hit in some time. McKie suggests she was taken on, along with the past-their-prime Rolling Stones, simply to give the company prestige.

More pertinently, it impresses shareholders, who appreciate the value of a blue-chip roster. The case of REM and their $80m golden handcuffs exemplifies the prestige signing. The Georgia band have never been enormous unit-shifters, their best ever showing being 8m copies of Automatic for the People, but their arty credentials are impeccable and their thirtysomething fans loyal. Which is why, when their WEA contract came up for renewal in 1996, the label was happy to offer a vast incentive not to go elsewhere. All fine and dandy, but for the fact that REM's subsequent sales figures have been chastening, with the last album, Reveal, selling a disappointing 3m.

In its defence, the industry points out that the huge figures quoted in the press aren't handed over to artists as a lump sum. "The majority of deals are contingent on options being picked up over a number of years, so they would only get the full amount if all options were exercised," explains John Kellett, lawyer for Travis and Paul Weller.

And no one could accuse the companies of being over-generous with wannabes. The development deals of the past, where new acts were allowed to prove themselves over two or three albums, are almost non-existent. If a band don't score a substantial hit first time out, chances are they'll be handed their P45s. Nor are acts any longer kept on for sentimental reasons, as the venerable - and currently labelless - David Bowie and Rod Stewart know.

But it's not just the labels that are unhappy with present practices. Some acts are also wangling deals that involve less money up front, but more control of how their records are marketed. George Michael has just struck an unusual agreement with Polydor that could end up the blueprint for future big-name contracts. Rather than commit to a multi- album deal, the goateed crooner will record one single, with the option for an album if he thinks Polydor has promoted the single successfully. Robbie Williams is said to be seeking a similar arrangement with his current label Chrysalis.

If such a single-by-single concept works, it could be the way forward for acts of his stature. "The City used to be impressed with dinosaur acts, but I think those sort of deals are very much on the wane," says Kellett. "The City is more streetwise now. If someone signs David Bowie, no one will go 'Wow!' till they see the numbers."