THINKPIECE: To Sign With A Record Label or Not?
By: Karl Fowlkes
Tags: Record Labels, Spotify, Streaming, Music, Business

Art by Andrew Vickery

The major label has taken its fair share of scrutiny from artists and music industry veterans especially in recent years. So much so that artists have begun to champion and prioritize being independent and owning their own masters. In a traditional record deal, a record label owns an artist’s masters and takes an additional percentage of revenue outside of the traditional master recording royalty. This outside revenue could consist of the lucrative touring, brand partnerships and merchandise arenas that encompass most of an artist’s revenue. Because of the advance, marketing and recording budgets that need to be paid back, it is likely an artist will see very few royalties if any in most deals. That’s the situation of most artists signed to a label. However, this does not mean that major labels do not provide any benefits.

While distribution has certainly become accessible and easier for an unsigned artist, the root of distribution in 2019 lies in playlisting. An entry on Spotify’s Rap Caviar automatically changes an artist’s trajectory. While it is not understood completely how or when an artist’s song becomes on the radar of playlists like Rap Caviar and Most Necessary, major labels are thought to have a ton of influence on the selection process. This is unlike distribution in the past where labels were tasked with manufacturing physicals and getting them in stores such as Best Buy and Sam Goody. An artist with an entrepreneurial spirit and business mindset might find himself in a position to leverage their music in the new age distribution channels without a record label. Although distribution is certainly different today, a label can still assist in the new landscape especially if an artist is not prepared to “network”.

In addition, despite the narrative that radio is dead it still plays a major factor in blowing up records nationally. Streaming alone can make you dominant ala Russ. Streaming plus radio makes you a generational artist ala Drake. Radio is still important and once again, major labels are the driving force behind who is getting radio placement. While it is entirely possible to get local radio play without a label, it is nearly impossible to get radio play nationwide without a label.

Furthermore, let’s not forget what most know a major label can offer, the money. People love the idea of being independent but do not understand the concept of putting up your own money. For many artists, the advance can be a lifesaver for a plethora of personal and fiscal reasons at the time of entering a major label deal. In reality, the initial money (advance) is why most sign. It’s also the trap. It’s the paradox that entices a young artist to sign to a label without understanding the consequences of the deal. While an advance can be a short-term solution, it can be a part of a long-term headache.

There are 6 major factors that one should consider before signing a major label record deal.

Understanding Your Artistry

For some artists, the type of music they make will never make them a priority at most major labels. If you are an artist that will not stream well (or simply don’t care to stream well) or sell a ton of records over a long period of time, it doesn’t make sense for a label to put a ton of money or energy into you unless your impact is felt in the culture.

In this sense, an advance can cripple you in leveraging out of your deal. If a label invested a million dollars in recording, marketing, and advanced money to an artist it is unlikely that they will ever let an artist just walk free.

If you care about the art only and appeal to a niche market it is okay to understand this and go your own way. Curren$y has made a killing since leaving Cash Money Records without selling or streaming an absurd amount. Curren$y understood his artistry and chose the best route for him.

Artist Development

There was a time in music where the A&R and Label weren’t simply skimming through Soundcloud looking for streamable records to re-package and resell to the mainstream. They used to develop talent and stick with them even if an album or single flopped. The focus was on signing talent, not gimmicks or streamable acts. Don’t get me wrong some A&Rs are still great at their job and get it.

Even so only a couple labels focus on signing talent and developing them, most notably TDE and Dreamville. Understanding your skill level and buzz is key when signing because if you are not ready you will be judged mostly on your performance and not on your talent. Plenty of talented artists have been shelved because they did not meet unfair expectations and signed bad deals.

If you are going to sign with a label, sign with a team that genuinely believes in your ability and is willing to ride the trials and tribulations. Most importantly, the label must understand and share your vision for your future. Not every artist has a Drake-like trajectory, it takes time and nourishing to become a star, see SZA. Some never become stars but make a lot of money and have long careers like Curren$y. A label must share your trajectory.

An A&R at a major label recently told me this.

“Any artist I work I make sure that they meet multiple people at the label and develop a relationship with the people that will be working directly on the project. The people at the label have to thoroughly get it, if they don’t it’s probably not a good fit.”

Ownership of Music

It is typical in most deals that an artist does not own the master recording to music recorded during there time at a record label. The legendary artist, Prince, was an advocate for artist’s rights in regards to ownership of masters. He generally lacked the support he needed but his message resonates today. The concept of an artist owning their music is an empowering idea for artists to become better business minds.

When you do not own your masters, your music can be controlled in a way that effectively eliminates an artist’s creative freedom. Prince said it best in his 2004 induction speech at the Rock and Roll Hall of Fame, “When I first started out in the music industry, I was most concerned with freedom. Freedom to produce, freedom to play all the instruments on my records, freedom to say anything I wanted to.” If someone owns your art, freedom of expression is limited.

If a label is going to own your masters, you need to think long and hard about what ownership and creative freedom mean to you. 21 Savage has his answer. (See Below)

Money

Money is important but there are pros and cons to getting money up front. An advance might save you in your current financial predicament but you lose long term leverage with every dollar advanced to you because it is less likely that you ever recoup. Realistically, understand what you need money for. You need a marketing budget which could consist of billboards, online placements, and other promotion tools. You need a recording budget, but how much depends. A lot of artists record either in-house or on the road thus the costs allocated to them will only need to go toward engineering and paid features. Most features are done for return features these days so it is very likely that you will not be paying any upfront money for a feature on your song if you have developed relationships.

Take what you need and only what you need. This creates long term leverage and allows you to keep your advanced costs down so you can actually recoup on your record deal, leaving an opportunity to negotiate in the future.

Length of Deal

Signing a multiple album deal without outs in the contract is always a risky proposition. Creating flexibility in a deal is key because having the ability to renegotiate is important whether you meet expectations or not. Time is the most valuable asset we all have and in music, you never know when you are going to explode or have to go back to the drawing board. Every artist should ensure that in there deal, if certain revenue is not generated or if certain milestones are not accomplished, both parties can walk away from the deal. The era of the 5 album deal hopefully is done and artists are now protecting themselves in an effort to release music on their own schedule and retain freedom.

Limit the years and scheduled releases on your deal and create outs to make sure you can’t get shelved for years at a time. If you can’t agree to this, one should be reluctant to sign.

Leverage

Leverage is the most important factor. In business even outside of music, if one party has more leverage than the other, they are likely to get the better side of the deal. Artists need to focus on building and creating their own buzz and sources of revenue to ensure that they are coming to the table in a position to negotiate. The ideal negotiation for an artist is coming to the table not having to sign. 21 Savage, Russ, and other newer acts built their following through impeccable work ethics than decided to sign when it was truly advantageous for them. These deals look more like profit sharing situations and partnerships rather than the typical employer/employee relationship that govern most record label deals.

The key to gaining leverage is creating a lifestyle and living situation where you truly do not need an advance from a label. Where you do not need the resources that a label may have. This is entirely possible in today’s landscape where viral records and fan bases are built on social media and through other means. Where recording is as easy as creating a studio in your bedroom. Drake recorded “So Far Gone” in a hotel room. Where there are workshops and online resources for artists to gain a better understanding of the music business so they are not enticed to give in to a treacherous deal.

My answer to the major label conundrum is I would not think about signing to a major label until I hit certain thresholds for myself that included platinum singles, touring and a countable fanbase. Then and only then would it be truly advantageous for an artist to sign. There is always the exception to this rule, as TDE and Dreamville are record labels that do not make initial sales a priority and focus on artist development. H.E.R is also an example of terrific artist development and belief in an artist through good and bad times. RCA invested a ton of money and resources into development and saw the final product through. H.E.R has developed into a Grammy-nominated R&B superstar.

Regardless, only a certain type of an artist has the work ethic or patience to be an independent artist or sign an advantageous major label deal. It takes time, fronting your own money and developing relationship equity. Not every artist is built for that.

We still need and want major labels!

Conclusion

A major record label might invest all the costs below:

Advance: US$50,000–350,000

Recording: US$150,000–500,000

Video production: US$50,000–300,000

Tour Support: US$50,000–150,000

Marketing and Promotion: US$200,000–700,000

Total US: $500,000–2,000,000

This is not free money! Advances and the other investments are recoupable against future royalties from sales and streaming but are not recouped if revenues fail to reach a certain level. Another reminder to only take what you need.

A large advance might look appealing but the bigger the investment, the harder it is to recoup! If you do not recoup, it makes it easier for the major label to shelve you.

Patience. You’d rather take the Nipsey Hussle route, then settle for a quick payday. The artist who looks at themselves as only an artist and not a business is susceptible to fall into the same traps many went for in the past. It’s time to reverse course and control and own your art.

You are not simply an artist, you are a business.