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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Artists aren’t traditionally good at business. Business isn’t in any way good at art. So it goes one of two ways:
1) An artist is in such high demand that they are approached by labels begging to be associated with them. In this scenario the artist has the leverage and a greater chance to be their own CEO and dictate most of how their career play out. Since their demand is so high they don’t need the label for exposure. Often the artist will have so much leverage that they can get very favorable “terms” and retain rights to all of their publishing royalties. The label needs them as a trophy to show artists in the next scenario. (See: Nirvana, Sturgill Simpson)
2) An artist hopes that with the right amount of backing and support they can reach a greater audience and thusly create a high demand through the influence and efforts of the label. In this scenario the label has all the leverage because they have access to what the artist can’t get, fund, or manage themselves: exposure, marketing, studios, money, production, licensing, touring, merchandise, etc. (See: Kesha, Dr. Dre before Jimmy Iovine) There are also artists who don’t need anything from a label but end up signing shady contracts that leave them slaves to a corporation as if they had no leverage at all (See: Prince, The Beach Boys, Brad Paisley).
However, in modern times a third scenario has come into play wherein there is no label. Or, rather, the artist IS the label. In this scenario the artist just goes out and does everything themselves. (See Butch Walker)
If you’d like to take a lighthearted deep dive into this exact subject I’d suggest reading Butch Walker’s book titled *Drinking With Strangers*.
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