If you are wondering exactly what a record label could do for you and your music (and if working with a label is even worth it anymore), I’ve researched and even personally worked with labels to give you a clear picture of all of this.
A record label is a company that distributes and promotes music. Depending on the size of the label, they may also invest in the artist, get involved with the production of the music, and develop the artist over time to build their career.
At the very least, a record label can help distribute your music so that it is on all of the streaming platforms (which anyone can easily do – more on that later).
At the very most, a record label can invest in your career (with both money and resources), help your music reach new listeners with marketing and promotion, and help develop both your music and your career as an artist.
If you want to learn more about what a record label can actually do for you and if it is even worth pursuing anymore in 2022, simply keep on reading, my friend. 🙂
What Do Record Labels Do?
To understand if it is worth working with a record label, it’s important to first get a solid understanding of what they both will do for you as well as what they can potentially do for you.
Record labels distribute and promote music but can also get involved with music production, artist development, business management, funding, booking, and more.
Here are is a list of things that a record label can do for you and how likely they are to actually do them for you:
| Activity | Smaller Label | Larger Label |
|---|---|---|
| Distribution | Yes | Yes |
| Royalty Payments | Yes | Yes |
| Promotion | Possible (Not Guaranteed) | Most Likely |
| Funding | Very Unlikely | Possibly |
| Artist Development | Possible (Not Guaranteed) | Possibly |
| Booking / Tour Management | Very Unlikely | Possibly |
| Synchronization | Very Unlikely | Possibly |
| Business Management | Very Unlikely | Possibly |
Depending on the size of the record label you work with, they may simply distribute your music to streaming services or may promote your music and develop your career by putting their money and resources to work for you.
However, you should know that depending on the size of the record label and how much your project means to them, promotion can really be as little as a post or 2 on their social media profiles.
Traditionally, an artist wouldn’t be able to get very far without a record label since they were the only ones with the ability to distribute music (especially when music was only purchased physically in stores).
Major record labels in particular would also get much more involved in discovering and developing artists to build their careers.
Now, however, major record labels are only likely to work with artists that already have a proven track record to minimize their risks.
There are also many smaller record labels active today that aim to do the same thing as major labels but on a much smaller scale.
And again…
Depending on the size of the record label, this could mean anything from less to little to absolutely no promotion of your music on their part.
What Is The Main Purpose Of A Record Label?
When looking at what a record label does, it is important to remember what the main purpose of a record label ultimately is.
The main purpose of a record label is to make money by producing, distributing, and promoting music.
At the end of the day, a record label is a business and every business has the goal of making money – whether this is for never-ending capitalist greed or simply being able to keep the lights on.
Do Artists Need Record Labels? …Do You?
As you can tell from the chart above, the only guaranteed activity you have with working with a record label is that they will distribute your music streaming services and will pay out royalties to you if the music actually gets streamed.
All of the other stuff you would expect (including actual promotion of your music) is not a given and it is very likely that everything else will be your responsibility.
Considering how easy it is for anyone to release music on Spotify (and other services) all by themselves, it is pretty clear that artists do not need record labels anymore and you most likely do not either.
With a bit of knowledge and direction, it is also very possible for anyone to promote their music on Spotify and other streaming services as well now as well.
In today’s age, record labels really only have 3 potential uses for artists:
- Investment (both money and resources)
- Promotion
- Connections
Other than that, one could also argue that releasing music with a record label (no matter how small) can also be useful since it helps build credibility around your project and is like a “feather in your cap”.
Ultimately, if the record label you are looking to work with can’t help you by either investing in you, actually promoting your music, or using their connections to push your music and career you are really giving up a cut of your royalties for no reason.
Independent Artist Vs. Record Deal
If you are deciding if you should stay independent as an artist or seek out a record deal here is what you need to know:
Staying as an independent artist is for you if you’d rather keep your creative freedom and ownership over your music and schedule. If you don’t mind trading your creative freedom for the potential for more resources, attention, and credibility, then a record deal may be great for you.
If you are an independent artist you can expect:
- More creative freedom
- A higher cut of your earnings (up to 100%)
- Ownership over your music and schedule
- To spend more time learning things like marketing, promotion, management, etc.
If you sign a record deal you can expect:
- Less creative freedom
- A smaller cut of your earnings (as little as 10%)
- Loss of ownership over your music and schedule
- The potential for more resources, attention, and credibility
- The potential for not having to learn marketing, promotion, etc.
My recommendation is to stay as an independent artist since most labels won’t consider you unless you’ve already built up your career, most positives from a record deal are only “potential” positives, and it is useful for any artist to learn things like marketing and promotion.
You can always explore record deals in the future, however, you should start building your music career independently as soon as possible so that you are in the best position possible when (or if) that time comes.
Learning how things like Spotify’s algorithm playlists work can be huge for independent artists and open up a way for any artist to get massive exposure.
Focuses on releasing music and promoting it to those playlists is also how I have personally got my music on over 7 Spotify editorial playlists all by myself (and you can too).
Why Record Labels Are Bad
Record labels are bad because they tend to have lots of hidden costs, fees, and recoupments in addition to the loss of creative freedom and ownership that is associated with signing to a record label.
Signing over your music to a record label is in no way a guarantee that your music will hit the heights you want it to and there is a good chance that they will not be the “main artist” on their roster which can result in your release being an afterthought.
In addition to this, some smaller record labels are essentially just glorified DistroKid accounts that will get your music on streaming services and then take a cut of your music without adding any additional value in the form of promotion or resources.
Can Record Labels Be Good?
With that said…
Record labels can definitely be a great thing for artists. When the right deal is made with the right label, you can expect to build your career up together and have them actually be invested in your long-term success as an artist.
Although they may not be a guarantee for having your music reach even hundreds of new listeners, smaller record labels can be great for some increased exposure and the credibility that comes along with “releasing music on a label”.
When it comes to larger major record label deals, this is no longer something that should be sought after anymore as they only work with artists that have established themselves on their own, will want their loans repaid, and will only give you proper attention if you start making them money.
How Do Record Labels Work?
No matter the size of the record label, the very first thing that must happen to get the ball rolling is for the label to actually find an artist they want to work with.
Record labels can discover artists anymore from social media to word of mouth to actual demo submissions on their website.
In general, it is more common for larger record labels to “find you” through word of mouth and the buzz that you have built all on your own or with your team.
Once a connection has been made, the next step is to decide if there is music that is ready to be released.
This may involve sending demos back and forth as well as workshopping the music until both the artist and record label are happy with the music.
Once the music has been decided, there is some planning to figure out when the music will be released and how.
After all of the logistics have been worked out and agreed upon, the record label creates a contract with the artist acknowledging that they will own (or share) the rights to the music so that they can distribute and manage the music.
Once the music is released, the record label may help promote the music to reach more listeners but also may not.
From there, the relationship may or may not continue depending on how everyone feels about the performance of that first release.
Do Record Labels Control Artists?
The amount of control that an artist gives up to the record label largely depends on the size of the record label and the nature of the contract that they sign.
Today, it is more common to sign a record deal for just 1 single, album, or release as opposed to a long-term deal that involves multiple releases (which could result in more control being given up).
Regardless, you should know that record labels will usually develop contracts that are largely in their favor, although this isn’t always the case and is less common with smaller or newer record labels.
For example, the smaller labels that I have worked with straight-up let me decide the royalty split whereas the larger label was firm in taking a 50% cut.
The typical idea of an artist is losing “control” is more common with traditional major label contracts or any long-term contract.
For smaller artists or record labels and for one release deals, it is really less about “giving up control” and is more about making some compromises in the spirit of “collaboration”.
How Much Do Record Labels Pay Artists?
Record labels can pay out anywhere from 10% to 90% of a song’s sales and royalties to the artist. The exact amount is determined before the contract is signed and depends on the size of the record label.
As a standard rule of thumb, you can expect larger record labels to take larger cuts and smaller labels to take smaller cuts (or even let the artist decide the split).
In addition to this, the artist will generally have to repay any advances or any costs that the record label incurred leading up to the release of the music before they can expect to see any money paid out to them.
There are also more complex and far-reaching record deals (for example the “360 deal”) that can occur where the record label will also take a cut of any of the artists’ revenue from royalties to merchandising to touring and more.
How Do Record Labels Make Money?
Record labels make money off of the music that they release by taking a portion of the sales and royalties. Depending on the contract signed with the artist, they may also make money off of licensing.
Larger record labels may also make money by also taking a portion of the revenue from an artist’s touring, merchandise, and sponsorships – generally called “360 deals”.
Do Record Labels Take Advantage Of Artists?
Record labels will usually develop contracts that are largely in their favor, although this isn’t always the case and is less common with smaller or newer record labels.
In addition to this, record labels treat artists like independent contractors instead of salaried workers which means you do not get benefits or any real financial security.
Any time a record label gives an “advance”, these are basically just bad loans that need to be repaid meaning that you are in debt to them until the money is repaid and will be dropped if you don’t repay your loan.
With that said, most smaller record labels are chill but there are some that can do shady things like charging you for remixes of your own music, taking huge cuts of your royalties, etc.
How To Start Your Own Record Label
…so what if you want to be your own record label instead?
To start your own record label, all you need to do is find music that you want to release and sign up with a music distributor so that you can get that music up on streaming services like Spotify and Apple Music.
Although there is more to the marketing and promotion of a release, all that is truly needed to get started as a record label is music and a way to distribute that music.
When choosing the right music distributor for getting your artist’s music on Spotify and all other stores and streaming services, there are really only 2 things that really matter:
- Being able to release unlimited songs
- Not having to pay a percentage of your music’s income
Beyond being able to release as many songs as you want and not giving away any income your music makes, there are a few other things you might want to consider when making your choice:
- Distributor reputation
- Delivery speed
- The ability to set custom release dates
- Customer service
For more on this, check out my Music Distribution Buyer’s Guide, however, my recommendation would be to check out a company that I personally use called DistroKid:
You can create a record label by using DistroKid as your label’s music distribution and accounting service. DistroKid Label plans let you upload unlimited songs for 5 – 100 artists to stores, keep 100% of your earnings, and split royalty payments easily.
When submitting music with DistroKid, you can attach your record label name to your releases for no additional cost whether it is the same label name for each release or multiple different label names or imprints.
To learn more about this, check out my article on DistroKid Label Plans. 🙂
In addition to this, labels can use DistroKid Splits (formerly called Teams) to automatically split earnings as a flat fee and/or a percentage from their releases to other DistroKid users (aka the artists on your label).
To learn more about DistroKid royalty splits, check out my full article called DistroKid Teams: Royalty Splits & Invite Codes Explained.
What You Need To Start A Record Label
All you need to start a record label is music to release and a way to distribute that music to streaming services like Spotify and Apple Music. Although a record label should also market and promote the music they release, all that is truly needed is music and an account with a music distributor.
