What is the purpose of labels in the music industry and why do they hold so much power as well making more money than the artists signed?
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A label is like a bank. They provide money to record your music, and after you’re done, they want their money back. Every dollar that an artist earns through sales or streaming gets divided up, the majority going back to the label to pay off the loan (called an advance).
The label is also interested in continuing to make money even after the advance is recouped, so they market the music.
A label with dozens of artists and tons of industry connections has more promotional power than a single artist on their own, hence their power.
Source: Am in music industry.
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