The Function of a Record Label

When starting out as an artist in the music business, many generally subscribe to a huge misconception: You write some songs, put a band together, play some gigs, create a buzz, record a demo, play some more gigs, get discovered and then get signed. Miraculously, you're being whisked away in a private jet to play Letterman, headline shows at Madison Square Garden and sell millions of records around the globe.
 
However, the music business is called such for a reason: It is a business. The mythology behind the industry is easy to understand, as all anyone ever hears about is an artist's successes.
 
Despite what you may think, as an artist, it is your number one job to avoid falling prey to this misconception and concentrate on conducting the business-side of your career appropriately.

Record Labels Explained

A record label is a brand and/or trademark associated with the marketing of music recordings and music videos. Usually, record labels:
  • conduct A and R (Artists and Repertoire)
  • coordinate the production, manufacture, distribution, promotion and enforcement of copyright protection of sound recordings and music videos
  • maintain contracts with recording artists and their managers
  • manage brands and trademarks.
The term "record label" originates from and refers to the circular label found in the center of vinyl records. These records prominently display the manufacturer's name in and among the rest of the artist info.

Artist/Label Relations

Record labels typically enter into an exclusive recording contract with an artist to market their recordings in return for royalties on the selling price of the recordings. Contracts can extend over short or long durations. Depending on the terms it sets forth, a contract may or may not be limited to one recording.

Established, successful artists usually renegotiate their contracts to get terms more favorable to them. However, recently major recording artists have found that once they have the name recognition, they financially benefit by separating from the label and going it alone.

Recording contracts typically provide for the artist to deliver completed recordings to the label or for the label to undertake the recording with the artist. For established artists, a label is fairly "hands off" during the creative process. For those with little or no recording history, however, labels are often involved in:

  • selecting additional musicians
  • selecting producers
  • selecting recording studios
  • selecting the songs to be recorded.

Additionally, record labels can act as executive producers and supervise the output of these recording sessions.

Although this may appear quite controlling from the point of view of an artist, from a business perspective, the labels are doing little more than protecting their investment by incorporating tried and true methods to ensure success.

Friction Between Artists and Labels
Tension and frustration may occur here between labels and artists when artists feel their work is being either censored or misrepresented by the label. In essence, both sides have very strong arguments, but you must look at the equation as you would any job: If your boss asks you to do something, you do it - otherwise you get fired. As a result, the job of working for a record label is no different from any other.

Types of Record Labels

Record labels come in a number of different types, including:
  • Imprint:An imprint is a label that is strictly a brand or trademark, not an actual trading company. Imprints are sometimes marketed as being a project, unit or division of a record label company, despite the lack of any legal business structure associated with the imprint.

  • Independent:Record companies and music publishers not under the control of a major label are generally considered to be independent, or indie, labels, even if they are large corporations with complex structures.

    Some prefer to use the term "indie label" to refer to only those independent labels that adhere to a random, ill-defined criteria of corporate structure and size. Others consider an indie label to be almost any label that releases non-mainstream music, regardless of corporate structure.

  • Music Group: Record labels often operate under a corporate umbrella organization called a music group. Music groups are typically owned by conglomerate holding companies that often maintain non-music divisions as well.

    Music groups control and consist of music publishing companies, record distributors, record labels and sound recording manufacturers. Record companies (manufacturers, distributors and labels) may also comprise a record group that is, in turn, controlled by a music group. Constituent companies in a music group or record group are often marketed as being divisions of the group.

  • Sub-Label: A sub-label is an imprint or subordinate company of a music group operating internationally. For example, one artist's record could be released on different sub-labels in different countries. This doesn't mean they were signed to two different labels, it just means that the music group operated two different national companies under the same international entity.

  • Vanity Label:These are labels that bear an imprint that gives the impression it is under the artist's direct ownership/control, despite operating within a standard artist/label relationship. In these arrangements, artists control nothing more than the usage of the label name. However, artists may still enjoy a greater say in the packaging of their work.

    Not all labels dedicated to particular artists are completely superficial in origin. Many artists create their own labels early in their career that are later bought out by the larger company. In this case, artists may gain greater creative freedom than if they were signed directly to the larger entity.