Record label

In the music industry, a record label is a brand and a trademark associated with the marketing of music recordings and music videos. Most commonly, a record label is the company that manages such brands and trademarks, coordinates the production, manufacture, distribution, marketing and promotion, and enforcement of copyright protection of sound recordings and music videos; conducts talent scouting and development of new artists ("artists and repertoire" or A&R); and maintains contracts with recording artists and their managers. The term "record label" derives from the circular label in the center of a vinyl record which prominently displays the manufacturer's name, along with other information.

The music industry

Within the music industry, most recording artists have become increasingly reliant upon record labels to broaden their audience, market their albums, and be both promoted and heard on radio and television, with publicists that assist performers in positive media reports to market their merchandise, and make it available via stores and other media outlets. The Internet has increasingly been a way that some artists avoid costs and gain new audiences, as well as the use of videos in some cases, to sell their products.

Major vs. independent record labels

Record labels may be small, localized, and "independent" ("indie"), or they may be part of a large international media group, or somewhere in between. The largest 4 record labels are called major labels. A sublabel is a label that is part of a larger record company, but it trades under a different name.

Imprint

When a label is strictly a trademark or brand, not a company, then it is usually called an imprint, a term used for the same concept in the publishing industry. An imprint is sometimes marketed as being a project, unit, or division of a record label company, even though there is no legal business structure associated with the imprint.

Major labels

Major labels 1988–1998 (Big Six)

1. Warner Music Group
2. EMI
3. Sony Music (known as CBS Records until January 1991 then known as Sony Music thereafter)
4. BMG Music
5. Universal Music Group
6. Polygram

Major labels 1998–2004 (Big Five)

1. Warner Music Group
2. EMI
3. Sony Music
4. BMG Music
5. Universal Music Group (Polygram absorbed into UMG)

Major labels 2004–2008 (Big Four)

1. Warner Music Group
2. EMI
3. Sony BMG (Sony and BMG joint-venture)
4. Universal Music Group

Major labels 2008–2011 (Big Four)

1. Sony Music Entertainment
2. EMI Group
3. Warner Music Group
4. Universal Music Group

Major labels since late 2011, if approved (Big Three)

1. Sony Music Entertainment
2. Warner Music Group
3. Universal Music Group (EMI recorded music division to be absorbed into UMG, pending approval by antitrust regulators)

Record labels are often under the control of a corporate umbrella organization called a music group. A music group is typically owned by an international conglomerate holding company, which often has non-music divisions as well. A music group controls and consists of music publishing companies, record (sound recording) manufacturers, record distributors, and record labels. As of 2005, the "big four" music groups control about 70% of the world music market, and about 80% of the United States music market. Record companies (manufacturers, distributors, and labels) may also comprise a record group which is, in turn, controlled by a music group. The constituent companies in a music group or record group are sometimes marketed as being divisions of the group.

Independent

Main article: Independent record label

Record companies and music publishers that are not under the control of the big three are generally considered to be independent (indie), even if they are large corporations with complex structures. The term indie label is sometimes used to refer to only those independent labels that adhere to an independent criteria of corporate structure and size, and some consider an indie label to be almost any label that releases non-mainstream music, regardless of its corporate structure.

Sublabel

Music collectors often use the term sublabel to refer to either an imprint or a subordinate label company (such as those within a group). For example, in the 1980s and 1990s, "4th & B'way" was a trademarked brand owned by Island Records Ltd. in the UK and by a subordinate branch, Island Records, Inc., in the United States. The center label on a 4th & Broadway record marketed in the US would typically bear a 4th & B'way logo and would state in the fine print, "4th & B'way™, an Island Records, Inc. company". Collectors discussing labels as brands would say that 4th & B'way is a sublabel or imprint of just "Island" or "Island Records". Similarly, collectors who choose to treat corporations and trademarks as equivalent might say 4th & B'way is an imprint and/or sublabel of both Island Records, Ltd. and that company's sublabel, Island Records, Inc. However, such definitions are complicated by the corporate mergers that occurred in 1989 (when Island was sold to PolyGram) and 1998 (when PolyGram merged with Universal). Island remained registered as corporations in both the US and UK, but control of its brands changed hands multiple times as new companies were formed, diminishing the corporation's distinction as the "parent" of any sublabels.

Vanity labels

Main article: Vanity label

Vanity labels are labels that bear an imprint that gives the impression of an artist's ownership or control, but in fact represent a standard artist/label relationship. In such an arrangement, the artist will control nothing more than the usage of the name on the label, but may enjoy a greater say in the packaging of his or her work. An example of such a label is the Neutron label owned by ABC while at Phonogram in Great Britain. At one point artist Lizzie Tear (under contract with ABC themselves) appeared on the imprint, but it was devoted almost entirely to ABC's offerings and is still used for their re-releases (though Phonogram owns the masters of all the work issued on the label).

However, not all labels dedicated to particular artists are completely superficial in origin. Many artists, early in their careers, create their own labels which are later bought out by a bigger company. If this is the case it can sometimes give the artist greater freedom than if they were signed directly to the big label. There are many examples of this kind of label, such as Nothing Records, owned by Trent Reznor of Nine Inch Nails; and Morning Records, owned by The Cooper Temple Clause, who were releasing EPs for years before the company was bought by RCA.

Relationship with artists

A label typically enters into an exclusive recording contract with an artist to market the artist's recordings in return for royalties on the selling price of the recordings. Contracts may extend over short or long durations, and may or may not refer to specific recordings. Established, successful artists tend to be able to renegotiate their contracts to get terms more favorable to them, but Prince's much-publicized 1994–1996 feud with Warner Bros. provides a strong counterexample, as does Roger McGuinn's claim, made in July 2000 before a US Senate committee, that The Byrds never received any of the royalties they had been promised for their biggest hits, "Mr. Tambourine Man" and "Turn, Turn, Turn".

A contract either provides for the artist to deliver completed recordings to the label, or for the label to undertake the recording with the artist. For artists without a recording history, the label is often involved in selecting producers, recording studios, additional musicians, and songs to be recorded, and may supervise the output of recording sessions. For established artists, a label is usually less involved in the recording process.

The relationship between record labels and artists can be a difficult one. Many artists have had albums altered or censored in some way by the labels before they are released—songs being edited, artwork or titles being changed, etc. Record labels generally do this because they believe that the album will sell better if the changes are made. Often the record label's decisions are prudent ones from a commercial perspective, but this typically frustrates the artist who feels that their artwork is being diminished or misrepresented by such actions.

In the early days of the recording industry, record labels were absolutely necessary for the success of any artist. The first goal of any new artist or band was to get signed to a contract as soon as possible. In the 1940s, 1950s and 1960s, many artists were so desperate to sign a contract with a record company that they usually ended up signing a bad contract, typically giving away the rights to their music in the process. To this day, standard recording contracts define record labels as the rightsholders of the music that the contracts cover. Entertainment lawyers can be used by some to look over any contract before it is signed.

Through the advances of the Internet the role of labels is becoming increasingly diminished, as artists are able to freely distribute their own material through web radio, peer to peer file sharing such as BitTorrent, and other services, for little or no cost. Bigger artists such as Nine Inch Nails have announced an end to their major label contracts, citing that the uncooperative nature of the recording industry with these new trends are hurting musicians and the industry as a whole, and most of all hurting the fans. Radiohead also cited similar motives with the end of their contract with EMI when their album In Rainbows was released as a "pay what you want" sales model as an online download.

New label strategies

With an increase in file sharing and music sales plummeting in recent years, labels and organizations have had to change their strategies and the way they work with artists. New types of deals are being made with artists called "multiple rights" or "360" deals with artists. These types of pacts give labels rights and percentages to artist's touring, merchandising, and endorsements. In exchange for these rights, labels usually give higher advancement payments to artists, have more patience with artist development, and higher percentages in CD sales. These 360 style deals are most effective when the artist is established and has a loyal fan base. For that reason, labels now have to be more relaxed with the development of artists because longevity is the key to these types of pacts. Several artists such as Paramore, Maino, and even Madonna have signed such types of deals.

A look at an actual 360 deal offered by Atlantic Records to an artist shows a variation of the structure. Atlantic’s document offers a conventional cash advance to sign the artist, who would receive a royalty for sales after expenses were recouped. With the release of the artist's first album, however, the label has an option to pay an additional $200,000 in exchange for 30 percent of the net income from all touring, merchandise, endorsements and fan-club fees. Atlantic would also have the right to approve the act’s tour schedule, and the salaries of certain tour and merchandise sales employees hired by the artist. But the label also offers the artist a 30 percent cut of the label's album profits —if any—which represents an improvement from the typical industry royalty of 15 percent.

History

Industry consolidation

In the 1970s and 1980s, there was a phase of consolidation in the record industry that led to almost all major labels being owned by a very few multinational companies. CDs still flow through a handful of sources, with the majority of the sales going through the "big four" record labels.

Resurgence of independent labels

In the 1990s, as a result of the widespread use of home studios, consumer recording technology, and the Internet, independent labels began to become more commonplace. Independent labels are often artist-owned (although not always), with a stated intent often being to control the quality of the artist's output. Independent labels usually do not enjoy the resources available to the "big four" and as such will often lag behind them in market shares. Often independent artists manage a return by recording for a much smaller production cost of a typical big label release. Sometimes they are able to recoup their initial advance even with much lower sales numbers.

On occasion, established artists, once their record contract has finished, move to an independent label. This often gives the combined advantage of name recognition and more control over one's music along with a larger portion of royalty profits. Artists such as Dolly Parton, Aimee Mann, Prince, Public Enemy, BKBravo (Kua and Rafi), among others, have gone this route. Historically, companies started in this manner have been re-absorbed into the major labels (two examples are Frank Sinatra's Reprise Records, which has been owned by Warner Music for some time now, and Herb Alpert's A&M Records, now owned by Universal Music Group). Similarly, Madonna's Maverick Records (started by Madonna with her manager and another partner) was to come under control of Warner Music when Madonna divested herself of controlling shares in the company.

There are many independent labels; folk singer Ani DiFranco's Righteous Babe Records is often cited as an ideal example. The singer turned down lucrative contracts from several top-name labels in order to establish her own New York-based company. Constant touring resulted in noteworthy success for an act without significant major funding. Ani and others from the company have spoken on several occasions about their business model in hopes of encouraging others.

Some independent labels become successful enough that major record companies negotiate contracts to either distribute music for the label or in some cases, purchase the label completely.

On the punk rock scene, the DIY ethic encourages bands to self-publish and self-distribute. This approach has been around since the early 1980s, in an attempt to stay "true" to the punk ideals of doing it yourself and not "selling out" to corporate profits and control. Such labels have a reputation for being fiercely uncompromising and especially unwilling to cooperate with the big record labels at all. One of the most notable and influential labels of the Do-It-Yourself attitude was SST Records, created by the band Black Flag. No labels wanted to release their material, so they simply created their own label to release not only their own material but the material of many other influential underground bands all over the country. Ian MacKaye's Dischord is often cited as a model of success in the DIY community, having survived for over twenty years with less than twelve employees at any one time.

Internet and digital labels

Main article: Netlabel

With the Internet now being a viable source for obtaining music, netlabels have emerged. Depending on the ideals of the net label, music files from the artists may be downloaded free of charge or for a fee that is paid via Paypal or an online payment system. Some of these labels also offer hard copy CDs in addition to direct download. Most net labels acknowledge the Creative Commons licensing system thus reserving certain rights for the artist. Digital Labels are the latest version of a 'net' label. Whereas 'net' labels were started as a free site, digital labels seek to give the major record industry a real run for their money.

Open source labels

Main article: Open source record label

The new century brings the phenomenon of open-source or open-content record label. These are inspired by the free software and open source movements and the success of GNU/Linux.

Publishers as labels

In the mid-2000s, some music publishing companies began undertaking the work traditionally done by labels. The publisher Sony/ATV Music, for example, leveraged its connections within the Sony family to produce, record, distribute, and promote Elliott Yamin's debut album under a dormant Sony-owned imprint, rather than waiting for a deal with a proper label.

See also

• List of record labels
• White label