Why Big Record Labels Are (Sorta) Useless These Days

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In case you haven’t heard, major labels exploit artists.

Furthermore, you probably know the industry started flailing around like a seal in a shark’s mouth about 20 years ago, only to see a recent resurgence due to streaming — which artists seem to detest.

The upshot: labels can be crappy. And for intrepid artists with a good business sense, a major label deal may be the last thing you want. But are record labels completely dead and totally useless?

That may depend on your situation. I know where I stand, but let’s start with the facts.

First Things First

Let’s get a few things out of the way.

First off, we’re not going to get into a lot of conjecture about what the future holds. Next, it’s important to note that label deals are incredibly complex and variable. Nothing we can say here will be a complete picture and nothing will apply to every single artist ever.

Finally, we’ll assume we’re talking about musicians who want to make money. If you’re a hobbyist who just wants to be good at it and never turn it into a business please never, ever, ever sign a record deal. You could actually end up losing a lot of money, and potentially owing people back for it.

What Record Labels (Should) Do

Record labels are often described as “glorified banks,” with label contracts working like loans with really bad terms. This is partly true, but there’s a little more to it. In theory, at least, label deals also give artists access to a team of professionals that can do things like branding, marketing, radio promotion, press pushes, website maintenance, social media management, and so on.

If you’ve been running your own music business for long, you can see how attractive that can be, even if you don’t want fame. You mean someone else will do the 50 hours per week of work I have to do that’s not even playing music? Sign me up!

In essence, a label provides a service: promotion, marketing, distribution, and production. But also, they loan you the money to pay for it. Sounds great!

Unfortunately, that’s not really how it works with the majors. Let’s start with the loan part. Label deals usually offer an advance, and it can sometimes be very, very big; like, six figures big. This isn’t a payment to you — it really is a loan, and it’s recoupable from all future revenue (in a dizzying array of ways that are as likely to end in you owing more money than you borrowed as anything).

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And guess what: it’s your responsibility to take that money and budget it for producing the record.

Usually, you’re assigned a producer, who will boss up and tell you how you’re going to get things done. They’ll get a producer fee (from your budget), pay for studio time (possibly by hiring themselves in their own studio), and figure out all the details.

You’re paying for all this (via your advance). So now you’re in a situation where you’ve got a boss who’s telling you where to be and what to do as if they were paying you. But you’re paying them. Oh, and the label has carte blanche to reject the work. This should be red flag number one.

Red flag number two: total control of your image. When you’re overwhelmed, it’s nice to fantasize about someone taking over all your promotion. But that means all of it. It means you’re locked out of your Facebook, Twitter, and Instagram and have no say about what goes on your website. Sure, you may have input if you’ve got a good deal or a cool team at the label — but legally, it’s not your deal at all now.

This can have major-league repercussions, especially if you’ve built an audience by being accessible and available via social media (which is how it’s done). Suddenly you’re unavailable and corporate; say goodbye to that loyal grassroots fanbase you’ve built!

At this point, we’ve only scratched the surface of how bad major label contracts can be. Financially, they’re disasters. From breakage clauses, to artists being shelved, to being threatened by the mob, there’s no end to the possible chicanery you can get into with a major label deal. The fact is most major label acts fail miserably.

So, while what labels should do sounds pretty awesome — invest in you and put a team to work doing the dirty work so you can be a great musician — what they actually do is often super nasty. That indeed does make labels sorta useless for most artists; even the ones they sign. In fact, the vast majority of artists are dropped before they even release a record.

+ Read more on Flypaper: “5 Ways to Reinvest Your Royalties for Growth.”

What Labels Can Do

If you’re depressed now, don’t be. It turns out it’s a great time to be an indie musician and all the mechanisms you need to live a dream unfettered by a craptastic label deal are available and learnable. But let’s play devil’s advocate for a minute. Are labels totally useless?

Charlie Puth probably doesn’t think so, although he had to fight hard to make it so. Ed Sheeran seems to be in decent shape, too. and David Bowie was legendary for getting it right financially. That’s not to say these artists haven’t been scammed, played, and worked over. And who knows whether or not they’re actually happy, but that’s besides the point.

The truth is, they’ve each succeeded wildly due to their labels. It does happen (just not often, statistically).

The point is, if extreme fame is your game, you probably need a label to help you. And let’s be honest, they are good at that. Atlantic Records took about 6 months to turn “cash me ousside girl” into Bhad Bhabie — only to have her skedaddle four years later and make $53 million on OnlyFans. Smart move! But would a troubled 14-year-old talking trash on Dr. Phil have been able to build a solid, independent business like Chance the Rapper?

Probably not, which means her success came because of help from a major label. And bear in mind, the label also made a lot of money off of her; which is ultimately all they care to do.

If fame is your game… here’s another sobering fact.

The vast majority of music heard online is released by major labels. This means that although they can be terrible and tons of big stars were totally steamrolled over, chances are all your favorite songs and music memories were brought to you by major labels. It’s hard to call that useless.

But Can a Label be Useful for You?

It should be clear by now that even if you sign a label deal, fame is statistically nearly guaranteed to be elusive and fleeting — and it may not even make you any money. Not only that, your chances of building a viable, sustainable business that lets you be a full-time musician, fully autonomous, and make lots of people happy — and to do that on your own — are better than ever.

Plus, fame is relative. Play a 2,000-seat theater chock full of your very own rabid fans and you’ll go home satisfied every single time; and you’ll leave the venue in full control of your art and money. That’s pretty dang famous to me. And all that takes is a healthy amount of hard work and personal drive.

So, do labels have any real value for artists? Maybe. Ask any industry veteran when you should consider a label deal and the answer invariably will be: “when you don’t need one.”

That’s perfect advice.

If you can build a business that has enough value that a label wants to talk, and you don’t have any real need to sign, you’re in a much better position to create a partnership that could benefit both parties. Believe it or not, there are examples of this happening, often with independent labels. Whether you get into bed with a company, though, should be a measured decision.

Can this deal make things available that you can’t accomplish yourself? Will it make your life easier or better?

This may mean creating a non-standard deal. Production and distribution (P&D) deals have been known to work, where a major label partners with a smaller company to handle the pressing and distribution of product, while the smaller company handles all the other label stuff that gets so messy in traditional label contracts. If that smaller label just happens to be you, there’s a possibility of a good partnership there. Of course, physical sales only represent about 11% of music revenue now, so this model is a little outdated.

The point is, it’s not impossible to create a strategic partnership with a bigger company. But just like any business, you’ll need to be smart, well prepared, protected (get a lawyer), and not desperate. You don’t go on Shark Tank to make a failing start up go. You go on Shark Tank when you’re already out there selling widgets and just want to grow.

Of course, most labels have trouble negotiating non-standard agreements, and that’s ok. If you can’t make the deal you want, go back to doing what’s already working. After all, you don’t need them.

+ Read more on Flypaper: “How to Think and Act Like a Successful Music Entrepreneur.”

Don’t Bother Pursuing Them

The final point is this. What’s really useless is the pursuit of a record deal. To get one nowadays, you’re going to have to do everything you would have to do to thrive as a musician without them just to get their attention. By then you don’t really need a deal because you’ve already succeeded!

So, there’s no point in running around trying to make a label listen, and there’s no point in signing any kind of old-school terrible record deal. Just learn your business as well as you’ve learned your craft and the world is your oyster.

That’s why record labels are sorta useless these days.

Don’t stop here!

Continue learning with hundreds of lessons on songwriting, mixing, recording and production, composing, beat making, and more on Soundfly, with artist-led courses by Kimbra, JlinKiefer, RJD2, and of course, Com Truise: Mid-Fi Synthwave Slow-Motion Funk

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