Aug. 8, 2012
-- I'm asked regularly “what are the benefits of being an independent label and what're the cons?” or ”Should an artist pursue a major deal or should they stay independent?”
Those aren’t easy questions to answer and it really comes down to dollars and cents.
First you have to understand the terminology. An independent label is nothing more than a privately owned company where as a major label is a publicly traded company. There're three major labels under the publicly traded system Sony, Universal, and Warner. Every label under them is a "daughter" label that distributes music. Now because these labels operate with the public’s money they have a legal and moral obligation to answer to the stock holders. Understand what I just wrote "a legal and moral obligation to answer to the stock holders." That means once you sign to a major label more than likely the men in the corporate suits are going to dictate how and when your music will get produced, packaged, and sold.
Operating under an independent label definitely gives you more freedom but ironically at a higher cost, meaning a much lower budget. When you sign to a major you are now on a roster of a few dozen or even a few hundred artists. You have to make the label make you a priority. But under an independent label you become the priority immediately. Remember an independent label doesn't have the roster a major does, so selling the music becomes a factor sooner rather than later.
The biggest mistake I see artists make is not understanding the business aspect of the music industry. If you are going to operate as independent label know the business in which you are involved in. It is not uncommon for major labels to partner with independent labels once the independent label shows that it is capable of selling music without nationwide exposure or distribution. Many major labels operate under a distribution/
print and press deal with the independent label. Meaning the major will not take on the full finical risk of the project but rather split the difference with the label in which they are doing business with. An example of that would be the independent label will pay for music videos and studio time, while the major comes up with a marketing budget for commercials, and payment for producers.
It becomes tricky when you reach a point of distribution deals. As an independent label you want to keep the major label at a far enough distance to where they are not in your business on a regular basis. Keep in mind that you are in corporate America at this point, and if a major label feels their marketing dollars are going to waste they will intervene. More importantly if the project is a success they will definitely try and take over the next.
All artists are trying to achieve that huge level of superstardom. And the truth is most won't make it. I tell artists all the time make music work for you and the money will come. Today you see more main stream artist going independent, but don't get fooled these artist already have a fan base who supports them. As I said earlier it comes down to dollars and cents. An independent label can succeed in the music business if it understands the music business, and a major label artist can fail because they lack the understanding of the music business.
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