Should You Sign With a Music Label or Stay Independent?

The music industry offers many paths for artists seeking to share their music with the world. Signing with a record label is one path, and pursuing an independent career is another. This post explores both options, explores some pros and cons, and offers a few stories from popular musicians. If you’d like to speak with knowledgeable professionals, get in touch! We are one of the leading music recording studios in Detroit, and we’ve worked with musicians who have label contracts and those who do not. We would be happy to share what we’ve learned, mix and master your music, or book a studio session.

And before we continue - make you never, ever sign a label’s contract without having a lawyer read it and explain it to you!

What Happens When You Sign with a Record Label

Signing with a record label traditionally means entering into a partnership where the label provides resources for recording, marketing, distribution, and sometimes touring in exchange for a portion of music sales, streaming revenue, and other income. Labels can offer substantial support, including access to professional production teams, promotional efforts to reach a wider audience, and connections within the industry. For many artists, this arrangement can accelerate their career growth, providing a platform to achieve recognition and success more rapidly than they might on their own. A label may take between 50% and 90% of your earnings, but you would rather make 10% of a million bucks than 100% of $1,000.

What Are the Cons of Being Signed to a Record Label?

However, signing with a label also comes with its set of challenges. Artists often sacrifice a degree of creative control, as labels may have a say in the music's direction, image, and marketing strategy to ensure it aligns with commercial interests. Contracts can be complex, binding artists for multiple albums with terms that might not always favor them. The financial aspect is another consideration; while labels invest in the artist's development, they also recoup their expenses from the artist's earnings, which can significantly reduce the artist's take-home pay.

Also, the label often ends up owning the masters of the music recorded by the artist. This ownership means the label controls how the music is used, distributed, and monetized, and it can significantly impact the artist's income and control over their work.

Owning the masters is crucial for several reasons. First, it dictates who earns the majority of the revenue generated from music sales, streaming, licensing for film, TV, commercials, and other uses. If the label owns the masters, it typically takes a larger share of these revenues, paying the artist a royalty rate that is a fraction of the earnings. Secondly, control over the masters affects decisions about where and how the music can be used. For example, an artist might disagree with certain commercial uses of their music, but if they do not own the masters, they have limited say in these decisions.

Do You Get Money When You Sign with a Label?

The financial arrangement when signing with a label can vary widely. Some artists receive an advance, which is essentially a loan against future earnings. This advance can cover living expenses, recording costs, and other necessities as the artist works on their music. However, it's important to understand that this money is recouped by the label from the artist's royalties, meaning the artist won't see further income until the advance is paid back in full. While the advance can provide essential support early on, it's not "free money" and can lead to financial pressure if the music doesn't generate the expected revenue.

What Is the Risk of Being an Independent Musician?

Choosing the independent route comes with its own risks. Without the financial backing and resources of a label, independent artists must cover the costs of production, marketing, and distribution themselves, requiring upfront investment with no guarantee of return. The responsibility of managing every aspect of their career can be daunting, from booking shows to negotiating contracts. Additionally, without the label's promotional machinery, independent artists may find it challenging to gain visibility in a crowded market.

Despite these challenges, the digital age has empowered independent artists like never before. Platforms for music distribution, social media for marketing, and crowdfunding for financial support have leveled the playing field, allowing artists to reach global audiences and retain complete control over their music and careers.

Some Horror Stories of Musicians Signing with Labels

The music industry is rife with cautionary tales of artists who found themselves in less-than-ideal label situations. Contracts that seemed promising at the outset have sometimes left artists with little to no control over their music and financially worse off than before they signed. For instance, the band TLC declared bankruptcy in 1995 despite selling millions of albums because their contract left them with a fraction of their earnings. Prince famously changed his name to an unpronounceable symbol and wrote "slave" on his face in protest of his contract with Warner Bros., highlighting issues of artistic control and ownership. Another example is the British band The Verve, who lost 100% of the royalties from their biggest hit, "Bitter Sweet Symphony," due to a legal dispute over a sample.

So - Should You Sign With a Label?

The decision to sign with a label or remain independent is deeply personal and varies depending on an artist's goals, values, and circumstances. Signing with a label can offer valuable resources and support for those willing to navigate the trade-offs, including potential sacrifices in creative control and financial independence. On the other hand, the independent route offers complete artistic freedom and the potential to retain a larger share of earnings, albeit with the responsibility of self-management and the challenge of building a career without the backing of a label's resources.

If you would like to work with us on mixing and mastering, gain the ear our our sound engineers in Detroit, or need a venue to host your next show, please get in touch. We would love to work with you.