A Guide to Record Labels
A Guide to Record Labels
what they are, types of record deals, record labels in India and exploring labels' evolving role in the platformised music landscape
Record labels are the leading investors in music today, spending a whopping $7.1 billion dollars in A&R (Artists and Repertoire) and marketing every year.
Global superstars like The Weeknd, Justin Bieber, and Taylor Swift have inked multi-million dollar deals with major record labels. For many emerging artists, a record deal symbolises the pinnacle of success. This article aims to dive deep into the role of record labels in today’s music industry and give artists looking to get signed to a label an overview of the various types of record deals offered.
A (Very Brief) History of Record Labels and Their Role Today
A record label helps “create, distribute and market” the recordings of affiliated artists. The first ever record label was Edison Records, founded by Thomas Edison, who invented the phonograph (a machine that can record and play back sounds), in 1878. Edison records wasn’t a collection of artists; the company manufactured phonograph cylinders (hollow cylindrical objects with an audio recording engraved on the outside surface).
Image: https://www.britannica.com/technology/cylinder-recording
More record companies started entering the market (ex: Columbia, which is still around today, and RCA Victor), and as technology evolved, so did their role. Instead of solely focusing on selling machines that played records, record labels now offer a variety of services, from providing resources to create music, to the distribution of the final product.
Types of Record Label Deals
The kinds of services offered by the label depend on the deal it has with the artist. While the contracts of different artists may share similarities, they often differ in their specific terms, particularly regarding profit-sharing and the percent of copyright ownership. There are a few fundamental deal structures, however, that typically serve as the foundation for the final agreement between the two parties.
Traditional
Record label offers artist an advance in exchange for full ownership of master rights
Advances are usually given for specific projects. How it’s recouped (earned back by the label) depends on the agreement - it could be recording rights for the specific album or from the artist’s entire catalog
Cross-collateralisation - earnings of one project could be used to fund the advance of another, under-performing project
Advances are recouped through the artist’s Sound Recording royalties - earnings generated from recorded music are collected by music distributors and given to the label
Streaming royalties
Sale royalties (from the digital sale of music. ex: Itunes)
Digital performance rights (generated from playing sound recordings publicly. Ex: radio shows, music streamed in places like restaurants and bars)
Synchronisation fees (when TV shows, video games etc: need the master license to a song)
The artist gets to keep other forms of revenue, such as from touring and merchandise sales.
After advance is recouped, the label and artist split recording revenue
All the royalties mentioned above go to only the label until the advance is recouped. After that’s done, the two parties split future royalty revenue - usually 80/20 (80% to the label)
Label covers the costs of marketing, PR, and recording, and provides the artist with guidance (building a brand, song selection, long-term artist growth plan)
Typically long deals: multi-album (3-7 albums)
360
Very similar to a traditional deal, except that instead of the label taking a cut of only recording rights revenue, it takes a cut from all sources of the artist’s revenue (touring, merchandising etc:)
advances are recouped by taking from all revenue sources
Greater label involvement has benefits and disadvantages - loss of creative freedom (since label has a say in every single aspect of the artist’s career), but greater financial support and help with strategising.
Distribution
Label only handles the physical or/and digital distribution of the artist’s album
Label handles DSP and physical distributor relations (they work with their own music distributors or coordinate with third-party ones).
DSP: Digital Service Provider (includes online stores such as iTunes, and streaming services like Spotify and Apple Music)
Physical music distribution: manufacturing physical copies of music (CD’s and Vinyl, for example) and getting them to brick-and-mortar stores
Marketing and promotion are the artist’s responsibility
Artist keeps full ownership of their copyrights
Label takes a percentage cut of the revenue earned upon distribution or is paid a flat fee by the artist
Profit Split
Common agreement is a 50/50 split of the earnings from royalties
Label owns the masters
Large advance and recoup on all costs - label gets back the advance they paid as well as any other money they spent on the artist (such as on marketing)
Different from traditional deals, where the label has to cover marketing and promotion, recording, PR etc: but only recoups the advance.
Record Labels in India
Sony Music India, Warner Music India and Universal Music India
The ‘Big Three’ labels
Hard for artists to get signed with them since their focus is largely on acts that have been around for a while and have already experienced some commercial success.
Gully Gang Records
Genre: hip-hop/rap
Goal to manage and launch the careers of ‘desi hip-hop talent’
Founded by rapper DIVINE in 2019
Proves artists service to produce ‘360-degree’ content
Upload a demo - https://www.labelradar.com/labels/GullyGangRecords/portal
Consolidate Records
Based in Bangalore
Genres: Alternative, Electronic
Further reading - https://homegrown.co.in/homegrown-explore/consolidate-is-shaping-bangalores-musical-identity-every-step-of-the-way
Big Bang Music
Based in Mumbai
Describes itself as a “new age platform, dedicated to finding superstars in the indie music space”
Get featured - https://big-indie-bang.webflow.io/get-featured
Qilla Records
Record label and collective based in India
For sounds that are “gentle and fierce, euphoric and dystopian”
Demo entries - demos@qillarecords.com
Maajja
Independent record label and distribution company based out of Chennai and Toronto
Functions as a normal record label, but doesn’t keep artists’ master rights
Get in touch - https://www.maajja.com/sign-up
The Future of Record Labels
As little as 15 years ago, it was believed that getting signed to a label was the only way to be successful as an artist; artists depended on the financial resources and connections of a label as it was extremely difficult for them to promote their music, manufacture and distribute physical copies, and get radio airtime by themselves. Platformisation and the democratization of music production has drastically changed the balance of power in the music industry. Artists can handle marketing and promotion themselves using social media, and digital distributors (like DistroKid and CD Baby) make it easy and affordable to put music up on streaming platforms. Many artists can make music from the comfort of their bedroom using a DAW and basic recording equipment, reducing the need to visit (and therefore spend money on) recording studios. As the creation, distribution and promotion of a song has become less expensive, the financial backing and services of a record label aren't as important for a new artist. While major labels still dominate certain segments of the music industry, a vibrant independent scene has emerged: new artists cater to niche genres and smaller labels offer more tailored support to these artists.
India mirrors this global trend, with smaller labels and collectives (as seen earlier) focusing on nurturing independent talent and diversifying the music landscape.