Although there has been much talk in recent years of the decline of recorded music and struggling major labels, many indie labels are actually enjoying considerable success, due largely to the fact that they are more flexible and therefore better able to cope with a changing landscape. In the last few years, it is true that traditional formats of recorded music such as CDs have declined in terms of sales. However, digital music sales are increasing year-on-year and the live music sector has grown hugely in the last decade.
There are many components to a record label – so many, in fact, that it is highly unlikely you alone will be able to perform all functions. A large part of the music industry tends to be down to who you know, not what you know – therefore networking is essential in this industry.
This guide will run through what some of the main functions of a traditional record label are, as well as some key points on the emerging functions.
A key thing to remember with record labels is that every song ever recorded is subject to two forms of copyright – the copyright of the recording (e.g. the version of the song that you hear) and the publishing copyright (e.g. the lyrics and composition of the song). Recording and publishing contracts are not necessarily owned by the same people or on the same terms. Most record labels only deal with recording copyrights, although some, mostly larger record labels will also have a separate arm to deal with music publishing contracts.
A&R – or Artists and Repertoire – is arguably the most important function of a record label. Your A&R activity will decide what bands are signed to your record label and will play a large part in deciding how the finished product – their music – will sound. A&R staff oversee everything from the discovery and signing of talent to the recording and production of their music.
Another hugely important function – without it, how would anyone get to know about your bands? The marketing department will undertake functions such as maintaining websites (and this can cover everything from a band’s official website to social networking profiles, YouTube and profiles on music-based networking tools such as last.fm and songkick.com), booking magazine advertising space, managing the release schedule (e.g. deciding the dates upon which singles and albums will be released), designing flyers and posters, writing and sending mailers to mailing lists and/or fan clubs, and sending out sample and white label records to the press.
Press and promotions
Press and promotions generally fall under the bracket of marketing, although the departments perform quite different functions. This department will generally deal with press queries and arrange interviews, photoshoots and competitions, as well as tracking any press cuttings of bands signed to the label. They are also dedicated to getting a band’s music played on the radio and videos on television programmes. Staff who contact radio stations seeking airplay are known as pluggers – it’s very important for them to have excellent contacts.
The sales function of record labels is evolving as digital sales rise. Traditionally, the sales team would arrange deals with retailers and distributors, enabling CDs to be sold in shops and via websites. In more recent years, they are more likely to be occupied by getting music onto web stores such as iTunes and ensuring that an artist’s page has a good presence on such sites. Larger record labels will usually have teams dedicated to other sales areas, such as sponsorship (e.g. product placement within music videos) and synchronisation (see the next section).
When selling your records, CDs and MP3s you’ll need to ensure that you have a good multi-channel retailing strategy in place. People don’t just want to buy CDs for home use or download MP3s to their computer – mobile commerce is likely to become increasingly important in the music industry over the next few years and as such you will need to embrace it. Don’t overlook traditional sales, though – people do still buy CDs and vinyl records have seen a boost in popularity recently.
Licensing falls into the category of sales, although it is not directly involved with getting music out for sale. There are two areas here – licensing and synchronisation. Licensing usually deals with things such as compilation albums – for example, if your record label were to put together a compilation album and wanted to include songs recorded by artists who were not signed to your label, you would need to get in contact with their labels to negotiate the terms under which the music could be included on the album.
Synchronisation is fairly different as it deals with licensing music by bands signed to your record label out for use in the background of other medias, e.g. to be used on movie, television or computer game soundtracks.
While licensing may sound straightforward, it is not always the case – licensing a recording is entirely different from licensing the publishing rights. Territories are sometimes an issue, as some bands may be signed to one label in one country and another label in other countries – so you may, for example, only be able to issue a license for the recording of a song in the UK. When issuing a licence, you must always clarify exactly what, and where, is covered, and for how long.
Depending on the artist’s contract, you may also have to seek their permission before giving another party permission to use their music.
The majority of record labels will have at least one person who will deal with artwork. This can cover anything, from album covers to posters, retouching photos and anything in between. Some record labels will outsource this function – and some, although not all, bands and artists choose to create their own artwork.
Legal departments within record labels are usually known as ‘business affairs’. They will deal with any and all legal issues, from the initial signing of a contract, to any copyright claims and anything in between.
It’s very important to hire an accountant who understands how the music industry works. Recording royalties can be an extremely complex area and many labels have in the past (and will in the future) had huge legal issues with artists over who is owed what from the sales of an album. Generally, artists are given an advance while they record their first album, and the sales of that album then pay back the advance, as well as the recording and production costs, and any other costs as agreed with the artists when they sign their contract with a label. After any expenses incurred have been paid back, the artist is paid a percentage of the sales, usually somewhere between eight and 15 percent.
Traditionally, record labels did not have a great deal to do with the live side of things and did not take any money from gigs. Instead, the band’s manager, who will be independent of the record label, will liaise with an agent who will in turn arrange gigs via a promoter, or series of promoters. Increasingly, bands are signing what are known as ‘360 deals’ – deals that allow the record label to take a cut of any money the band makes, including record sales, gigs, merchandise and any other activities that generate an income.
Some things to remember
As mentioned, the way that royalties are structured is also highly complex and a good accountant who understands the music industry is also essential
- The music business’ legal structure is incredibly complex and if you are serious about trying to run a record label as a career you will need a good lawyer. Ensure that they have a thorough knowledge of the music business – there are many lawyers who practice in this industry alone
- When deciding on a business model, CDs are no longer the only source of income for a record label – in fact, when you’re starting up you can decide on virtually any model to generate your income
- Always treat your artists with respect – their music is very personal to them and they do not see it as a product
- Remember that contacts are absolutely essential in the music industry – who you know can have a huge impact on your success
- And never forget that a lot of music industry success is down to luck – you can never guarantee 100 percent whether the general public will like an artist enough to buy their music.