Why major labels no longer have the allure they once experienced
For millennial musicians, “getting signed [to a major label]” was once deemed the zenith of a fledgling music career; the gateway to becoming a mainstream star. Signing to a major label meant a sizeable budget to fund your project, its marketing and distribution. Being signed to a major label was literally major. It meant glossy videos, award ceremonies, going gold or platinum and huge exposure. And with the machine of the label behind you, artists saw being signed almost as a validation of their talent.
Despite their attraction, major labels haven’t always been without reproach. On Check the Rhime, Q-Tip rapped “industry rule number four thousand and eighty/record company people are shady”. Nevertheless, the alternative to a major label was the less glamorous route of either an independent label or going it alone and self funding your project. Though a major label deal brought with it prestige that the indie route just didn’t afford. If you weren’t signed to a major label, your success was questionable just by virtue of that alone.
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“washed up rapper, you’re not respected/4 years passed and can't even sign to Koch Records”
Ironically, Fat Joe now releases his music via Empire Distribution rather than pursuing a traditional major label deal and signalling a shift in his own perception of major labels’ prestige. He isn’t the only one and from the perspective of artists, major labels have gradually been losing the sheen they once possessed within the landscape of the music industry. Many artists will now proactively eschew a major label in favour of being independent or, having experienced a major label deal, will seek to leave to go it alone.
Previously, breaking a record was done via DJs, radio and marketing; all within the gift of the label as to how aggressively they hit each aspect of the promotion. And if DJs and radio (and latterly television) didn’t like the song, there was always payola to get them to support it regardless.
With the internet, that changed. DJs were no longer the tastemakers and nor was the radio. Rather, they played what people had already decided they liked based on what they were downloading and streaming and what they were talking about on social media.
Online marketing expert Kris Trinity, CEO & Content Strategy Pro of Revolution Content Marketing, cites several precedents of artists across a range of genres who have heavily used social media to experience success without the backing of a major label. Most notably Chance the Rapper, who recently won three Grammy awards, has rejected several offers to sign to a label and opted not to sell any of his music. Instead, he makes money from touring and merchandise and uses a sweeping social media audience to serve his marketing needs and arguably above what a label could do for him. Furthermore, he retains all the creative and strategic control over his career that a label would likely stifle.
A platform like Patreon, where musicians can generate income directly from fans without signing to a label, also provides another option to a traditional career as a recording artist. Along with a comprehensive social media marketing strategy, Kris explains that from a marketing standpoint, commercial success is incredibly viable and companies like Revolution Content Marketing can increasingly effect this.
Social media has effectively usurped the expensive marketing that labels would once spend an artist’s budget on and it’s much more organic. After all, a strong social media strategy can promote a record or artist and their entire brand directly to your device in a way that street teams and traditional promotional methods can’t, and for a fraction of the cost.
In an age where physical music is being bought less, the cost of distribution has also plummeted and the finances of a major label means less than it once did. Suddenly, major labels aren’t so necessary after all and the justification of their business model, which artists are becoming increasingly aware of, isn’t either.
Broadly speaking, major labels operate like investors. They sign an act and invest in their brand and their project. They want to protect their investment so they give the act an advance to sustain themselves and a budget. That budget gets used for everything related to their project. Studio time, producers, everything. When the project is complete, they spend even more of the budget on marketing and distribution and then wait for a return on their investment.
Before the act see a penny of the profits, the label will recoup all the money they spent. That seems only fair as they did put the money up. However, once they’ve recouped, they typically take the lion’s share of profits while the artist sees a fraction. In contrast, putting out a project independently requires a lot of graft on the part of the artist and a big gamble for the artist and their backers in funding it. But if it sells well, they’ve backed a winner in receiving a significantly bigger share of the profits. They see a bigger share of the profits as the artist and their costs relating to the project are lower too. Thus profits comes quicker and their margins are bigger.
When Dizzee Rascal left XL Recordings (an independent yet established label) to go it alone and release Tongue N’ Cheek on his own Dirtee Stank label, it was his highest selling album to date. Dizzee would have been laughing all the way to the bank en route to his Miami penthouse.
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The death knell hasn’t quite sounded for major labels but they’re arguably in the twilight of their existence in their current format. Having the machine of a major label still counts for something and there are many current artists that benefit from major label backing. They still have a wealth of knowledge of the music industry and can network to push a project to places an independent situation often can’t reach. For newer and less established artists, they can help to build a fanbase that should translate into sales. And for huge stars who need any ceiling to their success removed, the majors also still have relevance.
While the majors aren’t dead, people simply aren’t buying music as they used to because they don’t need to. The internet means we can hear what we want, when we want. As a result, the profit margins of major labels are being eroded in an industry that they no longer have in a chokehold. That’s led to the 360 deal as a desperate attempt to claw back some of their once gargantuan profits.
360 deals are said to provide synergy between all of an artist’s activities with the label having complete oversight in exchange for a share of all profits. Yet it’s another reason why a major label is increasingly less attractive for many.
In the future, major labels will have in excess of several decades worth of back catalogues from which bad contracts (for the artists) will probably still allow them to profit off of masters and publishing (which artists without due diligence were happy to relinquish amidst their zeal in signing a major label deal). Rather than having a current roster of artists, I envisage this becoming their primary revenue stream as their current structure becomes redundant for new artists.
Even today, viable alternatives to the major label route mean the majors have less pull than they once did. Therefore they need to make more compromises if they still want a slice of the pie from a bankable star.
Lethal Bizzle, an artist who certainly knows how to build and promote a successful project and brand, signed a deal akin to a distribution deal for his Dench Records label via Virgin. Bizzle doesn’t need Virgin to do what he does, Virgin needs him and giving him a deal structured in this way means they get some of the cake rather than none of it. As major labels seek to extend their relevance (and postpone the inevitable), such humility will need to shown to achieve it.
Like most traditional media, major labels have had a good run of dominance that’s been scuppered by the digital age and a consequent shift of power from the label to the artist. Artists need to ask themselves what a major label can do for them that they can’t do for themselves at at a fraction of the cost and with less compromise to their artistry. Indeed, anything on that list is fast decreasing.
