Over the last twenty years, the music industry has seen many changes, and record labels are no exception. At one time, getting signed to a major label was the way to go and brought instant success to artists lucky enough to be noticed. Today is much different as there are now three major labels, many independent labels and the artists who decide to do it themselves and be their own label. As your advisor, I want to make sure that you understand the different options that are available for you.
Let’s start by weighing some pros and cons of major labels, indie labels, and being fully independent in your career. Major labels may seem glamorous and a way to get rich and years ago that was the case. It is imperative to know what is in any contract they present before signing. On many occasions, when an artist signs to a large label, they’re either signed to a developmental deal or a full-on recording contract, with 360 deals being common.
A developmental deal sounds just like it is – a deal to develop the artist, which sometimes results in a release, many times not. A standard recording contract gives the artist an advance to record and promote and then varying financial terms from there (McDonald, H. (n.d.). 360 deals want a cut of all aspects of an artist’s career, so not only music sales but performances, sometimes merchandise and distribution all take a cut of the income, so the artist is left with little. If sales are down and the album isn’t successful, the artist may be pushed aside so the label can take care of the top sellers. You the artist may receive an advance in the range of $150,000-$300,000 and these costs have to be recouped by the label before you are paid any royalties. Artists need to understand what is in the contract and what they are signing. So, careful thought needs to be taken into consideration as far as signing with a major label (see Table 1). Do you need that much of an advance, are you willing to lock yourself into a long-term contract with little control over your music and are you ready to tour extensively, assuming that you sell enough to satisfy the label? On the other side, there are many positive aspects of going with a major label as well if you really feel this is the course to take. The opportunity to make connections with producers, song writers, and tour managers will help you to take your career to the next level due to those industry connections. You may not be able to make these connections otherwise without being signed to a major label. Surrounding yourself with industry professionals will benefit you greatly in being able to grow your career. Indie labels are more flexible than the majors in terms of deals with their artists and you will keep more control over your music (see Table 2). Long term contracts are rare with indie labels so you may have a verbal contract or basic contract for one year. If an artist eventually wants a major label deal but decides to try an indie label, they can sometimes ask for a buy-out clause. A buy-out clause sets forth the rules that will apply should a bigger label want to sign the artist. Buy-out clauses can include pre-negotiated dollar figures that the major label will have to pay the indie for the indie to release that artist, or they can simply state that the indie will negotiate in good faith should a better deal for the artist come along (McDonald, (n.d.) .This way everybody wins: You, the artist can take the better deal, but the indie will have the right to make a nice exit deal for itself to compensate for all the time and money it spent working with you up until that point.Indie labels sometimes offer a profit-sharing deal, with a range of 40-75% of net profits going to the artist. The advantage of this kind of deal is that this royalty structure is more understandable. Money comes in, expenses and costs are taken out, and the profits are split between the label and the artist according to an agreed upon percentage. If you, the artist are unhappy with whatever percentage is offered to them, you could negotiate for escalations, where the royalty increases upon certain sales milestones, or for subsequent albums.The advances typically offered to artist by indies, if any, will be more in the $5,000-$125,000, depending on the size and affiliation of the indie label. Indies often will simply agree to pay a certain amount in recording costs, with no actual advance going to the artist (Musicthinktank.com, 2019). These recording costs still have to be recouped by the label before it pays the artist any royalties. The advantage of having a small advance is that the artist will have less to pay back from his or her royalties and you could be earning record royalties more quickly. The disadvantage is that since there are so many costs for the label to recoup before paying the artist their royalties, this may be the only money an artist will see for some time. The size of an advance can also depend on the artist’s leverage or bargaining power (Ostrow, (n.d.)). An artist like you who has more than one label interested in him might be able to get things such as a bigger advance, but just remember that it all has to be paid back, so think about what you are currently bringing in independently and if you would need much of an advance.While major labels can give you the benefit of becoming the biggest musician of the current times, selling millions of records, and touring through every major city in the world, you will have little control over your music, and may have to fight for attention from your label itself. At the same time, Indie labels may be too small to obtain the budget for things like world tours and music videos, may have too few connections for things like major reviews, interviews and features in the major music media outlets such as Rolling Stone, but you will still (most likely) own the rights to your music and form a meaningful relationship with your label who will fight for your success (Musicthinktank.com, 2019).An artist that remains completely independent in their career and opts to not sign to an indie or major label has the advantage of being able to release their own music on own record label, facilitate their own digital music distribution, and collect all the song royalties from the publishing (see Table 3). It is entirely possible to be successful without signing to a label. Kelly, in my opinion I would suggest that you not sign with the major label at this time. If a record label deal is that important to furthering your career, then I would suggest signing with an indie label. You have been independently successful in your career thus far and are ready for the next step in your career which includes expanding your fanbase, touring nationally instead of regionally and an indie label can do all that for you while you maintain control over your music and keep more money in your pocket. Indie labels can work with you on releasing new singles or an album if you prefer and then focus on expanding live shows to a national level. You are still collecting royalties on your song that’s being covered, so there is no need for a large advance from a major label. There will be no long- term contract to be tied into and if success comes quickly, you can negotiate a buy out clause with the indie and go with a major at that point.In conclusion, this is your career and ultimately your decision, but I would advise you to take it one step and a time, weigh the pros and cons but suggest that you consider an indie label as your next course of action.