I stumbled across this via the excellent site Downhill Battle. This is what the clauses in a typical record contract actually mean, and why you can sell 250,000 records and still owe your record company money. From the original text:

What we are saying is this:

1. The majority of these clauses exist in the boilerplate language of
   the standard contracts offered to artists by each of the five major
   labels.

2. The majority of these contract clauses are considered “deal
   breakers” for all but the most powerful artists.

3. The majority of artists regularly sign contracts that seem to go
   against their best interest as a concession for gaining access to
   the means of production, distribution and promotion that is increasingly
   controlled by five labels and their parent corporations.

4. Outside of the major label music world many of these clauses are
   seen as an affront to basic logic.

• If, for example, a label is offering a specific mechanical royalty
  rate that is decreed by statute and dictated by law, why should
  they then be allowed to artificially diminish that rate contractually
  through “controlled composition clauses”?

• If easily broken acetate recordings are no longer manufactured
  or sold, why should artists be forced to sign contracts that diminish
  their royalties due to “breakage fees” which entered the
  standard contract language back when a legitimate amount of manufactured
  records were broken before they could be sold?

5. We can’t understand why, in a supposedly fair market economy
   with full competition, one of these five labels hasn’t seen the
   competitive value of removing these seemingly illogical clauses and
   offering a better deal to artists.

For the full article, visit the Future of Music Coalition Website.

This makes an excellent companion to the earlier posts with Steve Albini and Dick Dale.