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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Labels are like banks, they basically loan money to bands. Usually the band doesn’t make a penny until the label has made their initial investment back.
Labels are the venture capitalists / angel investors of the music business. Becoming famous isn’t really about talent, it’s about investment.
The age-old saying “You have to spend money to make money” applies here, and the labels are the ones spending all the money to record, advertise, and distribute the music, so they get a larger chunk of the profits. The artists most likely don’t have enough money to get all that done themselves, so they have to make a deal with a label giving away a bunch of power over their music in order for the chance at making it big. Once they do make it big and have their own money, they are usually still bound by the legal agreements and deals they made with the label before they became famous.
It’s the same as having a product idea. Its useless if you dont own the factory or have money to develop your idea. So you need to team up with a manufacturer which has the production means and the distribution network. And since hes doing most of the work he gets more money
Same as publishers for books. They put the content in front of people. They make deals radio stations, movies, games, etc. To sell music. They also pay for production of songs, music videos, CD, etc. Sometimes they pay for touring. In exchange, artists sign (often predatory) contracts. As such, they’re always going to make more money. Modern day, most bands only really see money from touring, making cents on the dollar per song sold on something like itunes. You may remember a few years ago people tried to raise money to buy Ke$ha out of her contract. She was sexually assaulted by her record producer, but Sony wouldn’t let her out of her contract.
Tl;Dr they control the purse strings and legally bind people and bands
Labels do all the legwork to get music out to consumers:
* They scout new talent.
* They link promising musicians up with songwriters and producers.
* They provide cash advances so new artists can afford to book studio time.
* They negotiate distribution deals to get music on the radio and into (real/digital) stores.
Labels are essentially the bridge between you playing local clubs and having a cool mixtape and you becoming a nationally known artist.
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