So many artists are signed to different labels, but they are extremely popular. How does a label work and why would an artist even want to sign to one since labels typically get a percent of money. Also, I thought independent or indie artists were not signed to a label but if you go to Spotify and look up indie music half of them are signed to a label.
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Lots of bad takes so far, based on information that has been out-of-date for years, if not decades.
A record label is a business that monetizes music. That’s it. That’s your definition.
Right now, in 2022, there are dozens of reasonable approaches to monetizing music, and there are dozens of reasons why a particular artist might want to sign with a particular label. There are also plenty of artists who see no need for a label at all.
The key question for an artist is “What can this label do for me that I can’t or won’t do for myself?” The key question for a label is “Do the skillsets of this artist fit with our approach to the business?”
If both parties answer those questions honestly, there is a decent chance of finding a good fit. If one or both parties are uneducated, dishonest, confused, or predatory, there’s a decent chance that things won’t end up going well.
None of this is any different from any other type of business, except that back in the 20th century, the power balance was tilted dramatically in favor of the labels. Clueless, desperate musicians were everywhere, and predatory labels with a stranglehold on distribution and marketing would gleefully take advantage of them, giving the industry a well-deserved bad reputation.
These days, you have to be pretty damn stupid to let a label take advantage of you, and predatory labels are fast-disappearing. If anything, it’s talentless “artists” who can bilk the labels, getting six-figure advances for a 25-second TikTok clip with nothing else to back it up.
tl;dr: Learn how to play the music game, and you’ll be fine.
Without a record label the chances of your music reaching a wide audience is significantly lower, and even if it did most people wouldn’t want to listen to stuff recorded through a 4 track.
I love at-home recordings personally, but it’s just not something the general public has been or probably will ever be interested in.
A record label sells recordings for profit, and the artists in their rosters are their contractors.
Artists are paid advances upon signing, and are paid royalties from record sales. Of course they only see the royalty money when they have recouped the amount of the advance.
How do record labels earn money? Back then they sold physical records, which had huge margins. On a physical level, the music has no intrinsic value. But the vinyl/tape/CD contains popular music so they can jack up the price from a few cents per piece of media to $15 an album. Artists get their cut from sales proceeds or net profit.
Record companies also earn money by licensing songs in movies, shows, ads, etc.
These days, they mostly earn through streaming. Because it’s weird for people to pay extra money for something they can’t touch, the market has dictated that digital music should be cheap, so artists also get much less, as most of the revenue needs to hit profit goals of the record label.
So now, why is it important for musicians?
They’re not.
Labels promoting musicians is practically using the artists as endorsers for the record label’s products, which are the recordings.
Artists who want to be signed to labels want to be signed to labels because they want the exposure. In exchange, the record company owns their recordings and recording rights, and most of the sales revenue.
If an artist was good enough musically, and are well-versed in marketing, and/or really good with fans and making friends, there is no need for a label, and they will be much more financially stable, assuming the same rate of plays and sales.
A lot of negative stuff about labels here. Sure, there are negatives, BUT…
Labels don’t just loan an artist money, they also do…EVERYTHING.
Like, say you are an artist at the beginning of your career, like, I dunno, a young Ed Sheeran or some shit. You write well. You play well. You perform well…but you don’t know anything about recording, pressing records, distribution, promo, touring etc. You have an acoustic guitar and play for tips at coffee shops.
So a label signs you based on your talent. They find a producer, book a studio, find a pressing plant, find a printing plant. Typically, it is the label’s art department that does your design, hiring artists and photographers and copy writers. Depending on who you are, they may create an image or persona for you. Then once you have a product, the label’s promo people got to work with print, radio, video and internet. The radio guys work your record at radio, getting you plays. The print guys place print media ads and maybe do posters and billboards. The video guys find you a director and allocate a budget for videos. The internet people send out press releases and get you interviews and stuff, so when your record comes out, all of a sudden there are articles about it/you all over the place.
The label also distributes your product, both physical and digital. It pops up on all of the streaming services, and the records go out to shops.
Then you need to go on tour. The label fronts money for tour support, buys you gear, and finds you touring personnel. You get a production manager…he brings in a lighting designer, and sound company (sometimes management does some of these functions).
At the end of the day, you are still just that schlub with the guitar.
Did the labels rip people off? Yeah, more or less depending on how big you were and how savvy your management…but they also took dumbfuck kids playing in bands and built lasting careers. I have a whole bunch of friends who had major record deals when they were very young, and still tour and make money because of the careers the labels built for them 30 years ago.
Can people do this themselves? Yeah, but it requires such a colossal fuckton of work that I don’t know how modern musicians ever find the time to just be musicians, which might be why we don’t have giant bands anymore. Like, all Led Zeppelin had to do was write, record and tour. A record label is you TEAM, and the big labels are STILL effective as fuck at breaking artists.
They’re like pimps.
They don’t do none of the work, but take a huge chunk from the earnings of the ones who do. But going at it independent, is hard, because the pimps, I mean, the labels have a choke hold on the market.
Radio stations will usually sign contracts with labels to have access to their catalog. Meaning you’ll never be on the radio if you don’t sign with a label.
Same goes with music TV channels.
There used the be the case that music shops would also buy from labels, and so even if you managed to make a name for yourself without TV and radio, you still wouldn’t sell albums because they wouldn’t be in stores. But that issue has vanished in a puff of smoke since people finally stopped going to shops to buy music.
I suppose the radio isn’t as important as it used to be now. But historically, that is why artists would not even consider not having a label. And if you didn’t have one, you only cared about one thing, finding one.
Record labels are the VCs of music?
All the other answers are correct, but on the last point, “indie” doesn’t really describe independent artists anymore. That used to be what it meant, but nowadays “indie” is a type of sound, usually associated with stripped down guitar rock
Essentially they are nothing more than a bank that will loan you the money to enjoy a ride on the roller coaster that is called a “music career.” Of course if you accept their loan, they will decide where and who you spend their money with which is usually their friends and business partners that give a kick back to said label. Instead of making loans, they primarily look for artists that can finance their own careers these days which is why most artists are already somewhat wealthy or have access to money before they are ever “signed.”
Recording, printing, distributing, and marketing albums is a very expensive endeavor. Far more costly than an unknown artist can likely afford.
Historically record labels would find talent, promote them, and loan them money to record, print, and market their albums. Labels would have distribution channels in place to sell records and get songs on the radio.
All of this in exchange for a significant share of the profits.
By the 00’s big record labels started going out of fashion. Labels had become predatory organizations and stories about how even big name stars like Destiny’s Child were broke because of 1-sided contracts became big news.
Contracts would be written to take a percentage of gross profits rather than net, and record labels were asking for a percentage of concert sales and merch which they had never done before. Bands would sign, get a large cash grant up front and they find themselves in debt they couldn’t pay themselves out of.
Record labels would also try to own publishing rights, meaning that artists would effectively lose control over their own work.
Bands stopped wanting to sign with big labels, and labels started signing larger numbers of bumble gum pop acts, rap stars, and boy bands that they could easily milk for money.
The record industry would blame Napster and internet piracy for an industry wide drop in sales while that was only a part of the problem. Albums had been going down in quality while consumers were turning to new media formats on the internet to get their new artists. People stopped listening to Radio, and MTV started playing nothing but reality TV.
New talented and interesting groups are being overlooked in favor of the next viral boyband or rap star.
The internet allows for small no-name acts to market themselves and sell albums on newer platforms giving them an alternative than dealing with big record labels. While streaming platforms don’t necessarily offer good rates, dealing with them gives artists far more control over their own music, merch, and tours.
Smaller Independant labels meanwhile try to attract musicians by offering more control over their work to compensate for the lack of major financial backing.
To add to the previous answers, when people refer to an “indie” label, they’re referring to a label that isn’t Capitol, EMI, Virgin (although virgin *started* as an indie label) Elektra – the big companies, in other words
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