Updated: Mar 25
The need to find and sign with a record label is debated by many independent artists worldwide. Record labels essentially treat artists like independent contractors. In a record contract, recording artists exchange their copyrights for an advance on sales.
For example, an artist receives a $500,000 advance with a 10% royalty. The artist must pay back the $500,000 advance on their 10% of sales. If we conservatively assume the label receives a 10% royalty as well, the record label breaks even at $250,000 and begins to profit on both their 10% and the artists’ 10%. If and when the artist recoups the $500,000, the label has already profited $500,000.
In reality, most artists typically fail to recoup their advances, and many albums are shelved by the record labels for a variety of reasons. When this happens, the artist is stuck. They can’t sell their album and they can’t sell it with another label. (Tennessean, November 2020)
The conundrum: Do artists really need a record label?
Streaming is now the de facto method of consumption of music. Streaming is also the essential service for artists since many indie artists have decided to skip the music industry’s dues-paying ladder of touring, management, etc. and jumped right into establishing a fan base. (TheKnow, May 2021)
With music distributing sites like DistroSongs, do artists really need record labels anymore? Comment below.