This is something that was posted in a newsgroup a while back, and had a feature article written on it by Salon magazine. I had started to mention this in the Clay Aiken thread, but I think it's worthy of it's own thread. It shows exactly how obligated the finalists are to 19 Entertainment - I'm going to post the more interesting parts of the contract.
I hereby grant to Producer the unconditional right throughout the universe in perpetuity to use, simulate or portray (and to authorize others to do so) or to refrain from using, simulating or portraying, my name, likeness (whether photographic or otherwise), voice, singing voice, personality, personal identification or personal experiences, my life story, biographical data, incidents, situations and events which heretofore occurred or hereafter occur, including without limitation the right to use, or to authorize others to use any of the foregoing in or in connection with the Series
I understand that, in and in connection with the Series, I may reveal and/or relate, and other parties ... may reveal and/or relate information about me of a personal, private, intimate, surprising, defamatory, disparaging, embarrassing or unfavorable nature, that may be factual and/or fictional.
Future Agreements: Notwithstanding the other provisions of this Section C, I understand and agree that in the event I am one of the final ten (10) contestants in the Competition, I will be required to enter into the following agreements: (a) an agreement with 19 Recordings Ltd. (or an affiliated company) for my exclusive services as a recording artist; (b) an agreement with 19 Merchandising Ltd. for the use of my name, likeness biography in connection with advertising, endorsement, merchandising and sponsorship; and (c) an agreement with 19 Management Ltd. for the management of my career as an artist. I understand and agree that, unless I am the individual selected as the winner of the Competition, such agreements shall become fully effective only at the election of 19 Recordings Ltd., 19 Merchandising Ltd. and/or 19 Management Ltd.
Now those are the interesting blurbs to me - the contract is analyzed in much better detail by Salon, and rather than state my conjecture I'll provide it for reference. The article can be found here, and while it details the 2002 American Idol contract, the contract for 2003 is virtually identical:
And to the person who asked me if this is a lifetime contract - from what I can tell, yes, it is.