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March 25, 2011

Signing to a record label is likely not your best option

If you have anything to do with music, you’ve likely heard the story about the decline.  Record labels are losing money like its their job, famous studios are being sold off to be scrapped out, promoters are getting pummeled and NOBODY can sell a record to save their life. If you look at the billboard top 200, it doesn’t take much to break in.  3,000 albums on any given week could get you on the chart and 30k or more could get you in the top 10.  Nielsen seems to have a new report every 6 months about the continual decline in music sales.  Best Buy and other major big box stores have reduced their floor space allotment for the sale of compact discs and other recorded music.  Independent music stores are selling record players, novelties and other items as the margin on recorded music continues to get smaller. Even digital retailers like Amazon.com and iTunes are seeing a drop in the sales of music.

Bob lefsetz seems to think that the over saturation of touring musicians and skyrocketing ticket prices are going to drive the touring business into somewhat of a “reset” period not unlike the NFL, MLB, NHL and NBA.  There is going to be a breaking point as managers, agents, labels, promoters and the like continue on with what seems to be the last great cash grab in music.  In an industry where perception is reality, the world is perceiving the music industry to be imploding and it doesn’t seem like many people are interested in throwing out a lifeline.

So what does all of that have to do with being an independent artist?  Everything!

When I signed my first artist in 2003, we did a more traditional artist royalty type of recording agreement.  We also signed a co-publishing agreement with the label’s publishing entity.  Even then, the labels were viewed as banks and the agreements they gave bands were, at best, really bad loans.  Bands would sign away most of their rights for a recording advance, maybe some commitments to tour support and a whole lot of “potential.”  Once you sign an ERA &/OR EPA, you are largely at the mercy of the company.  Your future will rely heavily on the label’s ability to work your record and support your efforts to exploit your art.  The problem with being a smaller band signed to a deal is that you rarely, if ever, see any money from the sale of your recorded music.  These deals are structured in a way that the bulk of the financial burden is shouldered by your 10-18% of MSRP (less all applicable deductions, of course).  Selling 100k albums on your own would be a hefty pay check where as a selling 100k albums with a recording company may not even recoup your debt to the label.  The label bean counters are smart… they use P&Ls to determine exactly what they have to put into a project (your album / life / career) to get a return.  With the problem of diminishing record sales growing like an aggressive cancer, labels are, unfortunately, less apt to spend beyond the bare minimum and thus your chances for success are somewhat stunted from the word “go.”

With it getting harder and harder to sell music, many, most, maybe all record companies of any stature are offering “360″ deals.  What are these?  Well….from the label’s perspective, they are the new way of doing business and the only way to ensure a profit from new signings.  360 deals give the labels access to earnings from not only music and publishing but also touring and merchandise sales across the board.  Sure it makes sense to the labels that are hemorrhaging money! The logical thing is to pass that burden further onto the artist.  I’m not mad at the 360 deal or the people that use them.  I’m not even bummed out at the artists that sign them.  Maybe it’s the up-front money or the promise of fame?  Regardless, there is no such thing as a bad deal if both parties are consenting.  Capitalism…right?   In reality, 360 deals are nothing more than a thumb in the dam and the Dutch boy is running out of digits.

Lets do a little re-cap…..

Labels are going out of business because they can’t seem to sell enough music, apparel, licenses, etc. to push them back into profitability.  Retail stores aren’t carrying music like they used to, making it next to impossible for smaller bands to get placements at the go-to brick and mortar.  Labels are offering increasingly unfavorable deals to the musicians and songwriters.  Promoters can’t sell tickets and the general public can’t afford anything.

So what exactly is it that a record label can do for YOU these days that you can’t do on your own?  Is that “value” worth giving up most of the control over all of your work?  Is it worth giving away a portion of all of your revenue sources?  I have come to the conclusion that no, it is not worth it.

Why give over a huge portion of your income along with the control over your art for what equates to little more than a bad loan and no real promise of success?  These days you can record, mix and master a professional sounding record in your bedroom AND distribute it around the world digitally for less than a few grand.  Signing to a label is almost nothing more than the promise of multiple hands working on your product and some relationships that are spread out over an entire client roster.

While I know the graphs, the statistics and the bottom lines are all morbidly sobering.  I do believe that you can make music, sell your music, tour on your music and have a healthy and awesome career, INDEPENDENTLY.

The question is how?  I have my thoughts but I would like to hear yours.  I’ll chime in soon.

Hit the comments!

47 Comments Post a comment
  1. Sean
    Mar 25 2011

    I love this post man!

    One thing I would like to know though…what about the touring situation? I’m rather unfamiliar with how labels support bands on tour…do they or do they not help a band on the road to where it would be worth it to sign with a label simply because the touring life would be a little less stressful financially?

    Reply
    • Mar 25 2011

      I think you are referring to tour support. Most labels don’t offer it anymore unless you are generating the cash to warrant the expenditure. At the end of the day, most artists have to recoup this cost which means the tour support money is really just an advance against record royalties. Sometimes labels wont offer tour support advances off of album sales, they will offer it from the publishing side or mechanical royalties.

      As an independent musician, you can raise this money by playing regional shows, selling music and merchandise at the shows and or online. Think big picture and plan accordingly.

      Reply
      • Nick
        Mar 26 2011

        Great article! I have a question that sorta piggy-backs off of the one you already answered. Aside from simply raising funds to support a tour, how do you suggest an independent artist go about booking one? I have found booking to be incredibly difficult for my local band because few people have heard of us and venues are not willing to talk to someone they’ve never heard of unless the band is somehow “validated” by being signed to a label.

        Therefore, it seems to me that, aside from screwing you out of all that money, labels still can offer something to artists in the form of relationships with venues. Do you agree? My band is about to finish recording our debut album with Jamie King (BTBAM, For Today, etc.) and we’re exploring the best options for what to do with it after it’s been mixed and mastered.

        Reply
        • Mar 27 2011

          Labels aren’t booking agents. Labels rarely if EVER have anything to do with booking tours. You have to start local and build regionally. Check out my series on booking a tour.

          Reply
        • SIN Agency
          Mar 28 2011

          Nick,

          I work with independent bands that tour all the time and before taking them on as a client we usually require that they have booked at least one tour DIY… its hard work and lots of fore planning but it can be done and done well if you plan well ahead and work hard.

          Reply
          • Mar 28 2011

            Hey Leanne, it is great to know people like you are out there! I agree with you on some of that! Putting the time and energy in on the front end is important. If your career is important, then take the time to think it through and pour in the sweat equity. If a lazy, careless and haphazard approach is your desired approach, maybe this isn’t for you…

  2. Frank
    Mar 25 2011

    What about signing/collaborating with an independent audio & visual production company with help on tracking song and music videos? I know that bands are looking to reach out to fans, but sometimes don’t have the right resources or tools to do it on their own. Any advice?

    Reply
    • Mar 25 2011

      Regardless of being signed or not, making music, videos, etc. costs. money. Raise the money and hire the people that can do it best. Keep in mind that there is a threshold where your returns begin to diminish so don’t over spend. Do, however, rely on experts to help you make a quality product whether it’s an album or a music video.

      Reply
  3. Kirk
    Mar 25 2011

    Hey, this is a great article on the music business nowadays. I was in a band in high school and have always dreamed of either being in a great band or owning a record label of venue of some sort. I was recently talking with the guys of In The Midst of Lions, and they were informing me of this 360 deal. Yea it sounds great fot the label but its a horrble deal for the band. There are bands out there with cds all over the world becuase the label can get them out there but the band its self is barely making enough money for gas to get from one show to the other. I’ve also heard of this new thing where venues are now charging a fee for you to sell merch at a show. That’s insane. It makes me want to be out there even more helping the bands. I dont need all that money just enough to live on. There is nothing big on what I (or the label) am doing but getting the name out there. The artist is the one who should be making the money. They’re the ones doing the hard work.

    Reply
    • Mar 25 2011

      Labels and promoters have historically taken a percentage of merchandise from artists. Not really a big deal….kind of. But yeah, the 360 deal is a bummer and where is your music really going. Do people really buy plastic discs still? Sure there has been a rise in the sale of vinyl but people that want vinyl are willing to order it over the web. Consumer comfort with online shopping is a non-issue and online selling is more economical. You can get your record, vinyl, t-shirt, to anyone anywhere. Digital distribution gets your music there and merchandise sellers are open for business on every continent.

      Reply
  4. Ehren James
    Mar 25 2011

    I’m an indepedent artist and I just recently finished recording my own self-produced ‘metalcore’ EP at a friends home studio and the thing come out sounding top notch! I’m actually awaited the masters to come back in a day and the next step for me was to distribute digitally, then go after sponsors/labels. After reading this article i’m curious as to what would be the best option for bands/artists like me who only have a local following and limited resources, (but enough to keep putting out good quality music). It’s my understanding that it can be damn near impossible to create a buzz globally without the support of a label. To me, it seems that would be a labels key role, but I’m speaking from next to no experience here… What’s the best option in this case?

    Reply
    • Mar 28 2011

      Hi Ehren, some of my greatest success as a manager were with unsigned bands. I discovered Haste the Day, Still Remains, Demiricous, Gwen Stacy and Amarna Reign. I helped each band create EPs and Demos that we used to create quite a bit of buzz and ultimately it resulted in healthy offers from reputable labels (Solid State / EMI, Ferret / Warner, Roadrunner, Metalblade). Amarna Reign is the only band left unsigned and that’s by their own choice. We stared down 3 offers and turned them all down because they weren’t worth it. The band will be doing something SOON, it’s just a matter of time. I’d prefer they put the album out independently so that I could prove my point…..we’ll see.

      The point of saying all that is that you can indeed create real fans and real momentum without a label. Labels don’t put you on tour. Labels rarely mean increased probability of touring with roster-mates. Labels can’t even really guarantee retail placement of your album. There are some relationships there that can help with minor things, but I don’t believe that the trade offs are worth it.

      Reply
      • Ehren James
        Mar 30 2011

        Ah, allright then. So I guess the best next step would be to find a good manager huh! You interested? haha

        Reply
  5. Alex D-van
    Mar 27 2011

    I hate to say it, but you hit the biggest problem on the head:

    “over saturation” due to the ability to the fact that “you can record, mix and master a professional sounding record in your bedroom AND distribute it around the world digitally for less than a few grand.”

    Just a few short years ago, it was real work to be in a band. You had to have financial backing, spend time and effort creating a webpage, take the time to hone your skills, really work to book tours, and so forth.

    Back in those days, the douche with a guitar in the park was only (painfully) effecting the people within 15-20 feet. Now, that same guy thinks he’s a big star recording artist and his product is now on the market competing for the music buying public and taking attention and sales from career artists. Just multiply that by 10′s of thousands and we’re to the point where we are today. The long tail at it’s best and worst.

    Sure it’s great that anyone can put out a record for a few grand, but then again that means that ANYONE can put out a record. I hate to say it, but I think that the music artist scene will eventually be what we view artists (ie: people who paint, draw, and whatnot). It’s something that’s fun to do in high school, it’ll be a somewhat ‘joke’ major in college, some people will do it for a career in the corporate world, a few on their own, but very few will actually be huge anymore. It’ll be similar to a very select few will be absolutely huge, in the same vein as Ansel Adams & Thomas Kinkade, but it’ll eventually go back to more of a local artists. Even more-so as a hobby than a career.

    Bands putting out their own music saw a boom in the last 10 years similar to what the record labels saw through the 70′s-90′s, but the over-saturation of the market is becoming inevitable. Whenever I’m asked for advice about how to make it big in the music business with my record label experience, I recommend running fast in the other direction. But if you’re one of those people who simply cannot do anything but music, I say stay single and listen to Mark LaFay.

    Reply
    • Mar 28 2011

      hahaha. Thanks Alex!

      I agree that there is an over-saturation of musicians. EVERYWHERE. I don’t think that means that you shouldn’t pursue your dreams, I just think you need to be realistic in vision and methodical in your approach. You can still stand out, but it might take a little more than just putting your music on your myspace or facebook fan page.

      Reply
    • Jun 14 2011

      >>“over saturation” due to the ability to the fact that “you can record, mix and master a professional sounding record in your bedroom AND distribute it around the world digitally for less than a few grand.”<<

      actually it's the belief in that statement that has led to an incredible glut of really poor sounding releases over the last few years…. we have a name for them on my side of the industry: "Laptop Albums"…. fans can tell, and if you think they don't want to pay for professionally made albums…. well, many don't even want to listen to Laptop Albums.

      this glut of "albums" made in this way is one of the problems. You can buy a set of tools and a copy of Auto Repair for Dummies, but it wouldn't make you a mechanic.

      Reply
  6. Rick
    Mar 27 2011

    Agreed most labels take almost all thie then money from recordings, the the artist is expected to make money of touring and pay for it themselves. This is why most musicians are barely bothered by illegal downloading wherenas labels are.

    Reply
    • Mar 27 2011

      I think most Artists are bothered by illegal downloading. Purchasing music supports the musician regardless if they are on a label roster or independent.

      Reply
      • Sara
        Apr 1 2011

        I think that as a budding musician, giving away your music for free is one of the best things you can do! No one wants to buy music from a local band they haven’t heard of, but if you give them the music and they like it, there is a much better chance that they will come out to your shows.
        However, I am in a college town where there are loads of students willing to record bands for free to complete project requirements, so the costs for the band to give away music is extremely low.

        Reply
  7. Mar 27 2011

    In your opinion, would it ever be worth it to actually just go straight to a bank and get a loan for things a label may (or may not) typically cover (touring expenses, recording, merch, etc.)?

    Reply
    • Mar 28 2011

      I think private investment in your band is a great way to go. If you can raise the cash to record, market, release and support your album, then by all means do it. By footing the bill yourself, you obviously take the risk upon yourself but you also reap the rewards of that risk.

      Reply
  8. Mar 28 2011

    Agreed.

    Reply
  9. Steve
    Mar 28 2011

    Would you care to touch on the availability of other bands and contacts you gain from being on a label? In general, If you’re signed to a label, aren’t you more likely to then be able to tour with their artists and not have to “buy your way on” to the tour? What do you have to say regarding that?

    And also, what about the overall credibility that comes with being signed to a label? You’re generally taken much more seriously in my perception of it, as the person mentioned earlier about booking and such. When kids can look you up and see you signed, there’s a certain amount of respect that goes along with it as opposed to seeing, “unsigned” on the myspace page. What is that worth to bands nowadays?

    Thanks.

    Reply
  10. Brad
    Mar 28 2011

    As an Manager I really dig this article! It is in essence the truth about the industry and the way it is going. Artists have to be smart, distribute your music yourself, lets face it the majority of your sales are from live performances, therefore distribution to retail outlets outside of your hometown is pointless.

    The big thing I run into with independent artists is their budgeting, many artists come to me and have thousands of dollars in the bank and don’t know what to do with these funds. Waste it on things like Music Videos when they don’t have a decent sounding album or they want to tour with nothing to support. So many independent bands fail because of bad financial management, not enough research, lack of strategy or plan and no marketing efforts. For the indie bands reading this remember if you don’t know how to do something, get someone who does! You will save a lot of time and money in the long run!

    Reply
    • Mar 28 2011

      Brad!

      You hit a major point for me. What is the point of touring if you have nothing to support by touring? Put a record out and then tour on it. Local and regional stuff is great, but get some music together so kids have something to jam, share and spread around like butter on bread. Get a record out globally through digital channels and put some time in marketing it, then tour nationally.

      Reply
  11. Mike
    Mar 28 2011

    My band is just getting started. I have some friends that are in a few big bands in the scene. I think we will be going on tour the summer after next. What should I do to prepare for booking? How do I find good bands to tour with? How to I add up the total cost? I assume most bands on their first tour barely have anyone at their shows and go negative?

    Reply
    • Mar 28 2011

      Hey buddy, Read up here about touring. My thought is that you start locally, build regionally then go national and international. Trade shows, market your band and increase your value, then go on the road.

      Reply
  12. Mar 28 2011

    This is a great article, as I read through some of the comments it sparked an interest for me. I have been in a band for two and a half years and booked 9 US tours completely DIY (170+ shows). We are on a label now and it seems like they are helping us, but also we are owing more and more money everyday as we sell CD’s. This industry has become INDEPENDENT and that is the better way to go; BUT… There are always exceptions, as with our label, we are very happy to be a part of our family. I would suggest to whoever reads this that is in a band. Seek a label LAST stay indie as long as you can! In the long run you will MAKE WAY MORE MONEY!

    Reply
  13. Mar 29 2011

    Mark,
    This is a great article but I still have real trouble believing that it’s not worth it to be on a label, mainly for reasons that most of the folks commenting have already pointed out. When you’re on a label you gain contacts to booking agents, publicists, bands, etc. who can get you in front of those big crowds so you can really make some big noise on a national level and therefore be able to generate revenue. I have yet to see a band that has achieved a substantial national status, to the point where people know the band’s name and are willing to go buy their music, without the help of a label. And if the labels are screwing over bands so hard, why do bands continue to sign with them? I’d have to figure they’re offering something really enticing that’s worth signing for. The labels also get you consistent radioplay which in the eyes of fans, almost makes a band more alluring than the fact that they’re on a label. I’m not trying to dispute your point or be condescending, these are just the questions that I always raise when I hear this argument and I’d like to know if I’m way off base. Either way, great article and thanks for the info!

    Reply
    • Mar 29 2011

      Hey Jeff, I understand your apprehension with this concept and I would imagine that you aren’t alone. The norm is the norm because everyone accepts it as the norm and proceeds accordingly. Sure, 3 out of 5 kids may think that signing to a label is the right end goal but what does that have to do with whether or not you can make it on your own?

      I do believe that you can make things happen on your own SANS-record label. Hire your own support staff like managers, agents, publicists, etc. Those are all components that can help you along but don’t require you to give up control of copyrights, large percentages of your income, creative control, etc. When you start to create some buzz for your band, people will start to take note. As the buzz builds and the success follows, more and more people will take note. It’s at this point that you could start looking for a manager that shares your vision of independence. Your manager will extend your reach and help with pulling in more relationships.

      On the topic of labels, more and more labels are outsourcing their marketing efforts. Whether it be publicists, radio directors, creative, etc., it is cheaper to hire project by project than it is to have a full time employee. Hiring out also allows the company to hire different companies based on their strengths and how those can play to the benefit of the campaign. Radio, p[ublicity, creative design, video promo, even ad buying is hired out by a lot of labels. The other benefit to labels for hiring out is that in most cases they can charge back 50%-100% of the cost to the artist. In most cases, if the promo was done in-house, the cost would be absorbed by the label.

      The reality is that if you create a career without a label, labels will want to be involved because the guess work will have come out. If you decide you want to “sell-out” and do a deal, you will be in a MUCH STRONGER position when it comes time to negotiate. My suggestion is that you go it alone, and do things on your own terms.

      Reply
  14. Mar 30 2011

    Yes and SOME labels that shall remain nameless (Digital / Favored Nations) put you up on iTunes and Amazon and they’re done with you besides taking a cut. No hard copy production or anything! Thank God for social media and the free advertising it provides. Without it these days it would be even tougher.

    Reply
  15. Pro-music
    Apr 17 2011

    Any metal band interested in how to make money independently should pay attention to a band on the charts now called Five Finger Death Punch. Their independent label is teaming with EMI and are gaining quite a bit from their music and their “gimmick”. If you don’t know what their gimmick is (which is pretty brilliant) I suggest you pay attention to them and find out.

    Reply
  16. Phillip
    Apr 27 2011

    I really like your post and I am extremely glad i found it. I have an idea that i’d like your advice on. Say my band were to start out independently and got pretty well known. But as far as the reasons my band is a band it’s much more than making money and self amusement though i do love music with everything in me. It’s spreading a positive message/influence through music to kids who need it. the demand for this is rapidly growing. what if i wanted to go the next step and get label help with an already pretty respectable fanbase..wouldn’t there be room for negotiating a higher percentage for us artists? oh and just double checking label’s are pretty much used for advertisment and promotion am i right ? that’s their main purpose for the band right?

    Reply
    • May 3 2011

      Doing things on your own is great if you want to maintain control over all you do (relatively speaking of course) OR if you want to increase your bargaining power in the event you want to land on a label roster. Doing a deal with a label basically ensures that you have multiple hands touching your band. Marketing, retail, tour, etc. etc. You get more leverage through relationships, clout, etc. If you’re going to do a deal fight for a great deal, having experience under your belt will absolutely equip you for that.

      Reply
      • Phillip
        May 4 2011

        awesome thanks for the answer and your time. what are your thoughts on Victory Records?

        Reply
        • May 10 2011

          Good label, hungry owner. Lots of strengths in a lot of areas.

          Reply
  17. Songbird
    Jun 24 2011

    Hello mark, Thanks for this article mark! I’m a singer, I sing alot of different genre, I don’t have a band. I like being a solo artist. I have a question. How can an independent artist become mainstream or an internationally known artists? I always thought, even with the decline in the music industry, record companies are the only way to make internationall/mainstream success happen. For example, performing and receiving awards at the grammy’s. How does an independent artists make this happen?

    Thanks again for the article! :)

    Reply
  18. Aug 27 2011

    I realize this is an older post, but I had some thoughts and figured I’d see if I could get your thoughts on it. I’m all about being independent, and am not a fan of labels (or even banks), especially after hearing some horror stories of contracts that seem meant to take advantage of artist ignorance. But the one (and only) advantage I can think of being on a label has is exposure. Most of the indie bands I can think of started off with a label, even Radiohead, and didn’t forgo their labels until they had a large enough fan base (and obviously after their contract was up/dropped). Labels theoretically have more money for marketing than barely-above-poverty-level musicians such as myself, but with what little money we and the rest of the world have, what can an artist do to effectively promote themselves?

    Reply
  19. Guy
    Oct 28 2011

    Great article!! All musicians need to be aware of this reality. The days of selling through brick and mortar stores are over. Modern day technology has been both a blessing and a curse. It allows the independent musician to record, promote, distribute and sell his/her music. However, it’s very sad to see the record stores, moms and pops and large chain stores such as Borders, Tower and Virgin go out of business.

    Reply
  20. Justin
    Nov 8 2011

    Hey Mark, thanks for the article. Im pretty young (13) and I want to be a mainstream singer. Songbird took the words right. put of my mouth. And I think my ticket to fame is a talent agency. I know that you could easily be scammed with them and I’ve done research to tell. But if I do become famous I was thinking about doing a world tour (I know im biting off more than I can chew but thats what I REALLY want to do). Im pretty young and I want to be famous when Im in higschool. Do you think im making the right desicions?

    Reply
    • Nov 14 2011

      If you want to get into music for fame and fortune, look elsewhere. You have a better chance of fame and fortune with an education and a killer job than you do in entertainment. Have a dream but make sure your goals and motivations are pure. Thanks for reading and commenting!

      Reply
  21. K. Jordan
    Nov 14 2011

    Music industries and record labels are seeing a decline in sales because of the high standards let set in order for a band or musician to even have a chance. It’s not the hard work that kills. It’s the whoring out you have to do in order to even be a dot on the radar. If ear and minds are actually open there would be music and the would not be a decline in anything.

    Reply
  22. jacob
    Dec 6 2011

    my thoughts on this is the focus on “mainstream” music. It is in such a decline of talent! I mean there are some people that are good…Adelle,Beiber (kids got talent), justin timberlake, but most people just sing over a beat and some synth. Not to mention its auto tune. The problem with the music industry is the music industry. People will like what they tell them to like. They will like what is put on the radio…if labels need their artist to get noticed and sell something then they should do a better job of this and stop pushing all the crap on everyone. REAL MUSIC should be supported.

    Reply
  23. Nov 25 2012

    HELLO,

    ARE YOU LOOKING FOR A RECORD LABEL? THEN THIS IS YOUR CHANCE, SEND YOUR DEMO TO stormrecordlabel@musician.org IF YOU PASS THE REQUIREMENT, YOU ARE ON YOUR WAY TO FAME. ALL THE BEST.

    BEST REGARDS,
    STORM RECORD

    Reply
  24. Rehan Malik
    Sep 12 2013

    This article looks pretty good, but I have a great question: if getting signed is so bad, then how come macklemore is the only famous artist we know of that isn’t signed? I see rappers like aren’t even that mainstream like chief keef and tyga have net worths of over 1.5 million dollars on sites like celebritynetworth.com. It seems that pretty much all the known musicians making good money are signed.

    Reply

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