4 Major Things to Consider Before Getting Signed to a Record Label

Most artists still have it seared in their minds that signing a record deal will make their musical career change overnight, but do you really know what a label can do for you and if it’s the best direction for your music? Signing with a label can be fantastic for some artists but disastrous for others, so let’s break down the pros and cons of signing with a record label, which types of labels you can sign with and the contracts they offer.

It’s quite clear as to why artists want to sign a major label record deal. With Universal holding the entire top 6 albums positions in Billboard 200 in October 2018, artists want that level of success and see a major label as the only way to get there. However, the independent labels have had success too. One such success being Ben Haggerty, aka Mackelmore, who decided to release his debut single ‘Thrift Shop’ completely independently. As of 2017, Haggerty was estimated a net worth of $18 million.

You can stay completely unsigned, sign to an independent label or potentially get a deal with a major label but what are the issues and benefits of each?

1. How Labels Operate in 2018

What a record label offers an artist in 2018 has had to shift hugely due to the industry’s drastic changes. Instead of promising artists the opportunity to get on TV or sell physical albums, the label must be focusing on social media presence, plugging tracks to YouTubers, brand collaborations, relationships with digital streaming platforms and general fan base growth outside of music sales. If a label isn’t offering you this, then what is the benefit?

In recent years, you may have seen major labels signing individuals who have gone ‘viral’ or blown up on social media, examples include the ‘Cash Me Outside girl’ and ‘Walmart Yodelling Kid’, both signed to Atlantic Records. This is proof alone that major labels are looking for the next viral trend to sign, so they immediately have a guaranteed income off the back of that artist.

The overall label business model has had to change with the times, meaning artists can no longer approach a label for a deal simply because they think their music is strong. A label is looking for you to be in demand, or see potential of you being in demand, whether this be through social media figures, live event turn out or even just extremely marketable music. This may differ slightly for independent labels who focus more on the artists development over time, but we’ll get into that more later.

A label isn’t going to knowingly enter into an arrangement that could potentially expose them to liability, tire out resources and destroy strong contacts, so take a step back and see what you’re offering them, before pushing them for an offering. Before even thinking about getting signed you need to polish your sound, grow your socials by creating consistent content and perfect your overall branding.

2. Indie Vs. Major Labels

In theory, anyone can state that they are a record label if they want to. Everything from a multi-million corporate machines down to a kid sat in their living room, so it’s essential you know the difference and research who is what.

A record label is defined as independent if it’s completely funded independently and is not at all connected to one of the main major labels. Unlike major international labels who have enough money to operate their own publishing, distribution and marketing, indie labels outsource everything to other companies, working alone with outside resources to help grow their artists. A major label is defined as a label that commands a high percentage of annual record sales and can publish, distribute and market all its own content. The distinction between indies and majors is fairly exaggerate in the press but the big selling point of any major record label is of course its financial clout.

Many people seem to believe that record labels have died recently, or all artists are suddenly going down the independent route. This isn’t true but where there were once six major labels in 1998, now there are just three remaining: Sony, Warner Music Group, and Universal, which became the largest international record company after merging with EMI last year. The labels haven’t disappeared or stopped producing well known artists, they’ve just had to adapt with the times, which means becoming more technologically advanced, which many artists have been able to do themselves, independently.

When you sign a major record deal, you are often signing away a large percentage of your record sales. This may seem sort of backwards but by giving away a percentage of your earnings, the record label will be spending more on your progression and musical growth. According to TheRoot, for every $1,000 in music sold, the average contracted major label recording artist makes about $23.40. Whereas Digital Music News stated that an unsigned artist makes 4x more from streaming than a major label artists, so you must take this into consideration. Although you’re giving away a larger percentage of your record sales, your supplies are close to infinite with major distribution, booking agents, high end producers and marketing agencies, proving the major labels have the budget to allow them to access top-notch professionals.

With a major label, you’ll probably have your point of contact but with the staff turnover at the majors being so high, you could wake up one morning to find the person that supported your music from the start, no longer works there and the whole label has lost interest. The indie labels however, have a more personal approach as their team is smaller. Your music succeeding will help them as much as it helps you and they quite often gain strong relationships with their roster, which means it’s a long-standing contract, unlike the majors who can drop artists extremely quick. You can try to include a ‘key man’ clause in your contract to try to avoid your point person drifting off, but often the bargaining power is against you when signing a major label deal, so scoring this is never guaranteed.

What’s clear is the main difference between indie and major labels is the money behind them. The issue with independent labels is that they can range so greatly in size, success and funds, meaning they may not actually be beneficial for you at all. You need to weigh up the pros and cons but also look into what you want to gain from being with a label. If you want to give the labels what they want, which is essentially the sound that is most ‘in’ currently, then a major label is fitting, but if you want to stick to your roots, securing a legitimate fanbase gradually, then perhaps a passionate independent label can help you.

3. What Deal to Sign

If you’re determine that signing a contract with a label is the right path for you, there are many different deals that you could be offered to sign.

Record Deal signed

– Production Deal

Rather than signing to the label directly, with a Production Deal you’re essentially signing to a specific producer who has an agreement with the label to help develop artists. This sort of deal is more of artist development, helping you to create a better product, which will in time creates a bigger fanbase. All sounds great right? The small print is that you will take a BIG % cut, as many deals see that the producer can take up to 50% of royalties, so read everything careful and weigh up whether it’s actually beneficial in the long term, to take this cut in the short term.

– Distribution Deals

This deal is pretty self-explanatory. You are expected to create, produce and have the fully formed material ready and then the label simply gets the product out there. This includes anything from albums to music videos and these will go out on the label’s own major digital channels. This sort of deal is fantastic for an artist as it puts their content out in places which was never before possible, however the label looks to take around 25% of money generated.

– Major Label Record Deal

Now we’re getting to the sort of deals that most musicians dream of and see as the typical ‘record deal’. This deal is when the label will be part of your overall development, the recording process, distribution and marketing and in most cases, the label will cover all expenses. These types of deals can be extremely complex and are different for each case but usually the artist will receive around 15% of revenue generated.

– The 360 Deal

Many believe this is the future of label deals, seen as the newest and most successful deal that artists can take. This deal involves all aspects of the artists development, management, touring and overall brand growth in exchange for a large percentage of revenues generated across all channels, not just the music sales. The benefit of this deal is the label is working 100% on your side, using all their contacts and tools to see you grow.

The 360 Deal is becoming the go to deal for record labels in 2018, offering a pseudo-manager style relationship looking after the artist’s entire career, rather than just selling the music itself. Although the artist will be getting all of the label’s support and attention, there’s some controversy around the idea of it as many see it as only really profitable for the label. Controversial or not, the 360 deal is becoming increasingly common in 2018.

4. Do I Need to Sign a Record Deal?

Major label record companies are business at the end of the day, they do everything they can do to create profit. Every bit of help you gain for a major label, whether that be investment into your music, your brand or your marketing, will be to eventually start creating a profit off the back of you. This comes with its issues as the artist will likely lose control over their rights but also their creativeness, meaning you need to be comfortable saying yes.

We strongly recommend you focus on being an independent artist before even thinking about signing any deal. Finding real success in music is a tough gig but in this digital age, there are so many tools designed to help artists record and promote their own music that signing a deal at such an early stage could be pointless or potentially damage your career. Not just that, but there’s a huge sense of creative freedom for artists who find success in music by going it alone and if you never test that, you may live to regret it.

With 55% of people listening to new music via video, 23% with paid subscriptions and 22% using free audio streaming, this allows independent artists the chance of exposure without a major label. Pitching to YouTubers, playlist curators and streaming platform editors gives all artists a chance to get in front of the right people, which was never before possible. Alongside streaming is social media growth, with close to half the world’s population on some form of social media. Social media offers independent artists the potential reach of half the world and the best part is, it’s free. You don’t need to be signed to get your music on streaming platforms, you don’t need to be signed to get your name out there on social media and you certainly don’t need to be signed to release the music you love. These labels have the contacts, which helps, but it’s still 100% achievable independently.

Social media phoneThe industry is constantly changing, with recent news in 2018 showing Spotify making major moves that are putting major labels on edge, YouTube releasing their own streaming platform and SoundCloud launching SoundCloud Premiere. Every day there is potential for independent artists to grow drastically through a new platform like Tik Tok or perhaps a major label will pay out a major streaming service, making it close to impossible for independent artists to get picked up by them. You never know what’s around the corner so it’s essential you’re following the consumer statistics, watching out for new platforms and testing every new promotional technique you can. A label will either make or break you, so predict the outcome based on the industry’s current trends, your goals and the label’s recent success stories as you could be making a decision that will change your life forever.

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