From DRUM! Magazine’s November 2017 Issue | By Kurt Dahl
I get asked this all the time. It used to be that a record deal was the holy grail of the music industry; the brass ring that all artists worked towards. This is no longer the case. While record deals are still a vital part of the music industry, their role has completely changed, and so has the role of the labels offering them.
Record labels used to expect to have nine failures for every artist that was a financial success. In other words, 10 percent of the artists paid for the 90 percent of artists that lost money. In the glory days of record sales, there was enough revenue floating around for labels to hedge their bets and invest in artists over a period of years, with the hope that more would become financial successes.
This has all changed. Record labels can no longer invest in artist development over long periods of time, and they now invest in fewer artists. Bottom line: labels can no longer afford to lose money on 90 percent of their signings. While it took Bruce Springsteen three albums and a great deal of financing from his label to finally break through in 1975, he would not likely be afforded such investment if he came along as a new artist today.
Simply put: record labels want to sign acts that are already developed. There are exceptions, but this is the general trend in the industry, which begs the question: If a label is only interested in you once you’ve done all the heavy lifting, do you really need a record label in 2017? To answer that, let’s look at what labels can still provide you.
First and foremost is funding. Record labels have always acted as the banks of the music industry, providing funding and investing in your career in ways that you cannot. In exchange, they charge an “interest rate” like a bank, in the form of record royalties, and increasingly, a piece of other revenue streams as well.
If you happen to have financial support from someone else, be it a rich uncle or a music-loving investor, then you have less need for a record label. Many clients of mine that have achieved great financial success go on to create their own label, and reap the benefits of regaining control of their recordings.
Assuming you don’t have such financial backing, the need for a label increases. The cost of recording a professional sounding album has definitely decreased in recent years, but it can still be considerable. The same goes for music videos. But if you have friends who are producers or videographers, or can do it yourself, you can be less reliant on label funding.
The second thing labels provide is exposure. In the pre-Internet world, bands were much more dependent upon major label investment to gain exposure through old-world media outlets of print, television, and radio. This has all changed. While you still need these mediums to some degree, they are less of a barrier to entry when promoting your music. You don’t need a record label to get through the promotional bottleneck that all artists had to squeeze through previously, but will still need some funding to service your single to radio and to hire a publicist for print and TV. These services can be obtained outside of the major label system.
Distribution is the third major service provided by labels. In the pre-Internet industry, this meant physical distribution of your record to stores. This is less important in 2017, with only the biggest musical artists receiving large scale distribution to mega-chains like Wal-Mart and the like. You can release your record around the world with one click via services such as CD Baby. Of course, everyone else can do the same, meaning the real hurdle in 2017 is not distribution but exposure.
As with anything, it’s a question of degree. Major labels are a different beast than indie labels, and there are many mid-size labels in between. They all offer different services and demand different things in exchange. It really depends on where your career is and what you need to take it to the next level. The takeaway: you do not need a label to get to the next level.
As always, email me with questions along the way.
Kurt Dahl is a renowned entertainment lawyer and full-time touring musician with his band One Bad Son (www.onebadson.com). You can find legal and career advice based on his experience in the music industry over the last 15 years by visiting his website, lawyerdrummer.com.