Signing to a music label – it’s often what springs to mind when a singer, rapper or pretty much any music artist dreams of taking their voice to the worldwide stage. BUT…
Music labels have changed.
The labels of today are WORLDS away from those your fav acts were signed to 20+ years ago… despite the lack of a name change. Aside from the way they develop artists – thanks to the internet – the entire business model of a music label has been forced to changed. And take it from us – it’s NOT all for the good!
Recently, one label (naming no names) was exposed for buying fake comments, views & likes to boost the stats of its roster!! Team that with how setting up your own independent music label online is easier than ever + the recent spurt of new emerging artists, & yep – the whole subject of ‘record labels’ can get VERY confusing. Confusing to the point that casually signing the 1st deal you’re offered, is pretty much the equivalent of career suicide.
Let’s just say that the modern day record contract isn’t exactly written favour of indie artists – if it was, record labels would’ve died a death years ago. So with that in mind, are record labels just piggybacking on the hype of the past? Or is signing with a label still a valid option for artists today? Read on to find out.
After something specific about how music labels work? Or how to get you music on a label? Dive in to the menu below to get the answers you need in 1 click…
NOTE: None of the comments made throughout this article are to be interpreted as legal or financial advice. Nor are they intended to be directed towards/ designed to scar the reputation of any label, brand, business or artist, be they referred to directly or not. We’re here to inform our readers based on popular opinion & our experience – not start petty beef :)
What is a music label? How have they evolved?
Music labels are much as they sound – a company that invests in artists & uses their influence to hustle them into the mainstream spotlight. Each label has a roster of artists which are exclusively signed to them, meaning that they’re managed through, & funded by that specific label.
However, that’s a pretty old-skool definition. See, over the past 10 years, record labels have changed… quite dramatically. What with the rise of streaming & then the drama that was Covid, your typical record label contract is tighter than ever before. SO tight in fact, that you could say labels are changing… just to avoid extinction.
Something that means the average contract – most commonly a 360 deal – is now dirtier than ever!! Rammed with ‘extra’ clauses & hyper-inflated figures that mislead you as an artist to signing your life away (pardon the cliche). Sign a 360, & not only will labels be able to profit off the back of your music, but also cinch a steak of your merch, tours, brand collabs & even any businesses that you create off the back of your music!!
So really, signing the run-of-the-mill record deal today, doesn’t just mean the label assists you with music, marketing & the whole business side of things… they own you.
Some of the largest music labels…
Just like the deals, music labels aren’t what they seem.
Because while on the surface, those larger labels appear to be separate entities, the majority are actual sub-brands of the same 3 majors. Conglomerates that over the years have bought out the vast majority of medium-sized labels. See the diagram below…
So really, just like what’s happening in society, in the world of record labels, there’s an ever-growing wealth gap. With majors buying up any up & coming labels they can lay their hands on, making it ever harder for new labels to try & even make a mark.
Speaking of which, did you know that in today’s tech-savvy world it’s actually possible to start up your own record label from home??! Something that as an artist it’s good to be aware of, as when it comes to signing deals, you NEED to make sure that if you do sign, it’s with a reputable firm – not just Joe Blogs hiding in his bedroom behind a flashy website.
Reasons to avoid music labels (how they screw you)…
Okay, so what with Taylor Swift & Kanye (amongst others) kicking off about how they feel financially cheated by their record label, it’s no surprise that there’s a whole cloud of doubt surrounding what makes a good deal… & what doesn’t.
So to help you get a firm grasp of what a BAD record deal looks like & why you should perhaps tell record labels where to go, here’s 8 signs of a bad deal… (we’d almost guarantee you won’t find a deal without at least 1 of these)
1. An advance… that’s strangely large
Yep – the 1st first trick a record label has up their sleeve is their £$€.
They have a lot of it & they know that you’re desperate to get it, so if you’re a HOT act who starts a bidding war between labels, be prepared to receive some unrealistic figures. By that we mean, labels throwing silly amounts of cash at you in hope it’ll tempt you to sign with them – much like an estate agent overvaluing a house just because they want to flex it in their shop window.
See, when you really strip it back, an advance is nothing more than a fancy word for a loan (i.e. debt). Don’t forget that!! So, no matter how big the sum of money a label offers you, that’s a sum of money you need to pay back before you see so much as a penny from your music. Take an advance for $2 million, & that’s $2 million you need to generate back. If you’re not entirely sure you can generate the proposed amount or that you’d even need that much to make a good project, don’t feel bad. Walk away from the deal.
Also, bear in mind that this $2 million isn’t just automatically paid back once your music earns $2 million – oh no! That would be WAY too easy. Out of that $2 million, the label will deduct all their expenses (production, tour costs etc. that they pay for on your behalf), plus take their cut as well as pay your management, before any of that money goes towards paying down your advance.
So say you sign for $2 million, but then rack up another $1 million in expenses, you’re actually $3 million in the hole. Then say the split between you & your label is 25/75 (25% to you & 75% to them) – even if your music made the $3 million dollars back, only $750k would ‘made’ by you & go towards paying down your advance… $3 million divided by 4.
That other $2.25 million would be considered profit for the label & remaining debt that you still need to need to pay back
To see a working example, check out this video below…
2. Their cut is unrealistic
That 25/75 split referenced in the example above – the 75 is what’s known as the label’s cut.
Much as it sound, this is the amount of money they will take of profit out of what your music (& other associated income streams) earn. So as you can imagine, signing a deal that gives you a healthy cut is the main priority for an artist, however…
In reality, the example above is actually too generous. Most labels only offer 15% – 20 if you’re incredibly lucky! This means that even with a 20% cut, you’d have to make 5 times your advance + the money to cover your expenses before you so much as recoup a penny.
Yep… we’ll leave you to do the math.
PS/ Should you take the label to court & loose (which as you’ll discover later on, could be highly likely), you’d also be liable to cover these costs too!
3. They don’t ‘get’ your brand/ vision
As you can probably tell by now, record labels are primarily about one thing – the money!
Less so creativity, what with scientists concluding that chart topping songs (most of which are the product of labels) are becoming more & more similar by the day. So if you’re the artistic type & have a vivid vision for what you want to create (that isn’t a copy & paste of what’s already charting), tread VERY carefully. Because as soon as your signature goes on that dotted line, the label (not you) has creative control over the music you make.
So, unless your vision proves to be popular (& turns into the next TikTok phenomenon), there’s a good chance you’ll be forced to fit the mould of a mainstream artist just to become more profitable – i.e. abandon your dreams to become a commercial caricature.
If this is you – expect to see a lot of bills for flash cars, mansions & women sporting tight bikinis coming out of your advance.
4. Your intellectual property rights are @ risk
The intelligent thing to do with any deal that doesn’t respect your intellectual property rights is to walk away.
Pay VERY close attention here!!
Because these are your rights – those that as a creator of a piece of music you should be fully entitled to. And yet, labels will often require you to sign these over to them (via the form of exclusive rights or a lease) in order to close on a deal. Ask why, & they’ll no doubt spin you a very convincing story (that’s been practiced on every artist to walk through the door), but don’t be fooled – their primary reason for doing so is to maintain one thing – control.
Keep their hands on that & not only do you have FAR less power from a negotiation standpoint, but they can also monetise your masters for their sole benefit. In other words, every song you release serves as a nice little nest egg for their retirement pot – & no doubt funds to budget to coax more unsuspecting artists through the door.
Sign your rights over to a label for life – defined by legal buffs as ‘in perpetuity’ – & the only way for you to obtain the legal ownership of your songs would be through court. The entire reason Taylor Swift spent millions $£€ dragging her label, Big Machine Records, in-front of the magistrates.
In short – unless a label at the very least offers to lease your masters (not buy them) with the promise that ownership will be transferred back to you when your contract is over, think twice.
5. They try & persuade you to use a specific lawyer
The music business is FULL of people trying to pull the wool over your eyes… & this is concrete proof.
Learn from the mistakes of Migos & NEVER… EVER… EVER… EVER… use a lawyer that a record label provides you with. That is unless you want to be cheated out of millions of $£€ & loose any court action you take against the label, before its even begun.
Why? What? How? Just 3 words – conflict of interest.
9 times out of 10 if a label provides you with a lawyer, the ironic thing is… it’s actually their lawyer. AKA their ‘inside man’. Someone who you think is standing up for your best interests, when in actual fact they’re working against you… in the best interests of the label.
And then there’s the fact that they’ll no doubt overcharge you for the privilege… & class any legal work as an expense against your advance. Yet another way to keep you – the creative, the artist, the visionary – in debt.
So should you sign with a label, get your own lawyer & do NOT tell the label who it is. Otherwise you may find that this lawyer has suddenly gained a new client with a lot more £$€… who also works at the same label.
6. The label’s roster – it’s very ‘samey’
Artist positioning – in a world where there’s umpteen different sub-genres, & more wannabe artists than listeners can keep up with, it’s vital.
Vital to the point that when signing to a label you’d be wise to eye up their current roster. Because not only do you need to make sure the label has success in the type of music you create, but also that you actually have a place at the label. By that we mean, you’re not entering a room of artists who’re too similar.
See, there’s something record labels don’t tell you. Not everyone they approach, they (A) want to develop & (B) allow to release music. So for instance, say you’re a drill rapper who’s shooting opps & spits bars just like another drill MC they’re developing behind the scenes, if they think you have potential to be BIG (i.e. are a threat to the success of their artist) they may try sign you just so they can press the pause button.
Yep – the music industry really is that twisted.
Artists really can be bought up like a commodity, just so they can be silenced. As you’re probably beginning to realise, making it into the music industry isn’t as clear cut as it might seem.
You have been WARNED!!
7. You conny includes a death clause… (MUST READ!)
Come across one of these & well – let’s just say you’re playing with fire.
Because as sinister as it may sound, most record contracts do (& have ever since the 1900s) included a quite-on-quote ‘death clause’, to outline what happens in the event of an artist’s death. A clause that’s rumoured to be the reason behind the ‘accidental’ deaths of some of the world’s largest musical icons, including… Michael Jackson, Amy Winehouse, Avicii, Whitney Houston & even Prince!!
All of whom are said to have ‘coincidentally’ died of a drug overdose. Look at it like that, & you can see why suspicions have been raised, especially when you consider what this clause means for the record label… they cash-in BIG time!
Take the example below…
“Company shall have the right to secure insurance for 10 times the estimated value of the Artist’s earnings (from a source of revenue) for Company’s sole benefit. Company shall be allowed to employ ANY insurance carrier or combination of same to assure this benefit & need not consult or require signature compliance from the artist. Company shall keep such information confidential. Artist or Artist’s estate shall have NO right to review or claim the benefit of any such policy obtained by the Company“
In layman’s terms, what this means is that should you sign, the label could take out any insurance policy (without your permission) to cover them for the value of 10 times your earnings. In other words, if an artist is worth $100 million unfortunately dies, the record label ‘tragically’ secures a $1 billion payout + all the extra revenue they make off the back of re-releasing their greatest hits, extra radio-play & selling additional merchandise.
Team that with the fact that the record industry (especially labels) has since the 1920s, had a historic affiliation with the American Mafia (for more, see the video below) – & it’s safe to say that this type of clause does raise a few eyebrows. Reason?
With a lot of major artists, it becomes a motive. One that makes them worth more to a record label DEAD… than alive.
Want to learn more about this harrowing prospect? Jump into the video below…
8. They have serious bad marketing skillage!!
No – you read that right.
Despite being part of the music industry for well over a decade, a LOT remains to be said for the technical expertise of many record labels when it comes to digital marketing. Proof in point being the way that some labels (naming no names) have been suspected of buying followers, likes & comments just to upkeep the ‘superior’ image of the artists on their roster.
Something that you can do yourself for very little money… although we don’t advise it. As anyone in digital marketing will tell you, small numbers of real organic engagement beats hordes of fake engagement EVERY time!! So if you’re the type who doesn’t have a clue about digital marketing, don’t expect a label to magically solve all your problems – they won’t.
Ask us & your best bet would be to either hire a digital marketing agency yourself (i.e. specialists who know what they’re doing) or if you have time, study digital marketing in your spare time.
Interested to know more about the extent to which labels have been suspected of buying fake engagement online? Jump into this video below…
9. You have the business acumen to go it alone
If you’re an avid networker with a mind for business, then there may be very little value in striking a deal with a label.
See, at the end of the day, you sign with a music label because when it comes to the business side of things you’re (A) not too sure, (B) don’t have the time to learn it or (C) don’t have the capital to set up as an independent. All hurdles that if you can overcome, will not only give you more control over your affairs, but also allow you to keep a larger portion of what you make. Not to mention, the creative freedom to become the artist you want to be – opposed to just another mainstream clone.
And that’s without even touching on the tax benefits. A subject that as far as we can tell, is very rarely discussed. See, should you sign with a label, anything you spend is classed as a company expense, as ‘technically’ you’re an employee of the label. In other words, because the advance is really the label’s money, they can claim any costs you incur off their tax bill. All despite the fact you reimburse them out of your royalties/ advance.
Perhaps why most labels have an in-house accountant & encourage artists to ‘think & spend BIG’… as come the end of the tax year, doing so may actually save them money!! Whereas, by choosing to go independent via an LLC or LTD company, you hijack all these tax benefits for yourself.
* DISCLAIMER: When writing this article, we consulted with an accountant here in the UK to clarify this information. We highly suggest you do the same before making ANY concrete financial decisions.
Can you get in debt to a music label?
In fact, many maintain that it’s actually a label’s intention to keep their artists in debt, because not only does it give them a stronger hand it terms of negotiations, but it also allows the label to remain firmly in control. Or in other words, allows them to pretty much dictate how you spend your advance that you’ve been ‘given’… & (unfortunately) have to pay back.
Not bothered about living lavish & would rather save £$€ living a simple life – you’re flying private & renting a Ferrari. Drop into conversation how you’ve recently had a spurt of writers’ block – you’re paying for the country’s best songwriter. Want to trade the big-time producers for a lesser-known (but equally talented) backstreet engineer, who’ll give you a better split – good luck with that. Fancy using your advance to build your own studio space to save on studio time – in… your… dreams.
REMEMBER: If you aren’t able to invest a record advance wisely & maximise its value, then it’s not actually that generous at all. More like a hyper-inflated cost that (unfortunately) you’re liable to repay.
In other words, glamourised debt.
And while in 99% of cases, any debt you accrue will NOT have to be paid back out of pocket, the record label will be entitled to keep taking their cut out of any music you make until the debt is either written off by your royalties, or you renegotiate. Something that usually involves them giving you another advance to offset the first – meaning that in most cases, you go from being in debt… to being in even more debt.
Hardly the ‘sugarcoated’ picture of stardom that you were once promised,
In the end, the only real way out of a record contract like this is by taking the record label to court. A process that yet again, is NOT cheap, especially if you lose… as you’ll most likely be liable for any costs they incur as a result.
NOT SO FUN FACT: Most artists get a higher royalty rate when they’ve recouped their advance. So… there’s a HUGE motive for a label to keep you as an artist in debt for as long as physically possible!!
Want to know first hand about how record labels have been accused of purposefully keeping artists in debt? Jump into this video…
Is signing to a music label worth it?
While back in the day, the answer to this question may have been different, in today’s world of online production & 1 click distribution, signing to a record label makes FAR less sense than it ever has.
Yes, not all artists that sign to labels drown in debt – some do go on to recoup & then some (hands up) – but for the vast majority, this sadly isn’t the case. Consider that over 90% of recordings fail to recoup, & to sign your masters + a good chunk of your royalties over to record labels, is if anything, more a shot in the dark.
REMEMBER: The music industry today is not the same as it was 20/30 years ago. Back when Michael Jackson was releasing records in the 90s, there were FAR less artists on the scene – i.e. less competition. Team that with how CD sales have significantly bigger margins than streams + that radio/ TV were practically the definition of ‘music marketing’, & it was considerably easier for artists to turn a profit. In other words, today the business model of a conventional label, is seriously outdated.
So much so that ex-colleagues who used to work at major labels during the 80s, 90s & early 2000s have come out saying that artist development is no longer a main priority – & coincidentally, part of the reason they left. What we suspect they mean by that is, due to the pressures of social media & online streaming, to remain afloat, labels have been forced to pivot.
What was once a bespoke talent investment business, with a firm focus on creativity, is now (in effect) a glorified music marketing agency that’s all about hitting KPIs & leveraging their relationships for every last penny.
Just to be abundantly clear, we do NOT hate record labels.
Fact is, music is a business & just like in any business, you’d be a fool not to watch your back. Everywhere you go, they’ll no doubt be someone trying to sell you a dream or pull the wool over your eyes. However…
As an independent artist in the modern music scene, we do think (with the right research, business acumen & mentoring) you can develop a fanbase that’s just as strong as if you were signed to a major label. Yes, it may take you longer. And yes, you may not have the contacts right away, BUT if you make enough noise, we’re confident that the opportunities will come along.
So instead of focusing on deals, points, percentages & how to leverage connections, we want to leave you with this…
“Focus on developing yourself, your understanding of the industry & (most importantly) your music. Keep developing your vision, moving in the direction of your dreams & DON’T let anyone drown your creative spark.“
Do that & take it from us, Indie – your time will come.
Enjoy this article on whether signing to a music label in today’s world is the right move, & eager for more? Jump into our latest Latest Music Industry Advice, as well as all the knowledge we’ve accrued around Labels & Deals. Recently, we also wrote an article on Everything You Need To Know About Type Beats + another on Questions To Ask A Music Lawyer, which may also be a good read.