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October 2017
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Record Labels Are Overrated

Artifact film poster

Artifact film poster

In 2012, a rock band called Thirty Seconds To Mars released the documentary ‘’Artifact’’ about their struggle with their record label EMI, which I only saw recently. It opened my eyes to the contemporary music industry business model and how artists are often being taken advantage of by their record label: some artists never receive any money for their albums. The music world is not at all what I thought it was and after seeing Artifact and researching the journey of independent artists, I came to the conclusion that with the current business model, it is better for an artist not to sign the oh-so-desired record deal.




The two types of record deals I will criticize are the Equity Model and Standard Distribution. With today’s technology, record labels soon realized that just getting a share from the income generated from album sales was not going to cut it anymore. Therefore, record labels started offering ‘’360 deals’’ (equity model) that allow the label to be involved with every segment of an artist’s career, such as touring, merchandise and creative control.

The Standard Distribution-model allows the record label to manufacture, distribute, promote and press a record. Therefore, the artist will be in (great) debt to the record company. This means the artist does not get to see any money until the debt is paid back. This seems fair, but the costs included in the debt do not make sense whatsoever. Firstly, the label takes its cut, mostly around 85% of the income from the total sales. Then it deducts the initial loan for the making of the album, recording costs, half the promotion costs, video costs and the expenses for tour support. This often results into debt that is carried on to the next album, which then goes through the same process, resulting into even more debt etc. Besides these rip-off charges, there is also ‘’hidden costs’’ in the small print, such as breakage costs and packaging costs, even when this is not applicable to downloadable copies of the album, and this can be up to 25% of the artist’s cut.

Chart that showcases the business model

It may be clear that these kinds of deals are not desirable to sign as an artist. So what should you do? One thing you could do is crowdfunding. Projects on websites as Indiegogo and Kickstarter have resulted into albums, DVDs and even tours being financed by the artist’s/band’s fans: Swedish band Pagan’s Mind funded their live DVD through Indiegogo, while American Youtube personality Alex Goot financed his album and international tour through Kickstarter.


Anywhere From Here cover art

According to Bram de Wijs, drummer of Only Seven Left, you should only seek help when you simply cannot help yourself. Only Seven Left released their first album Wake Up Call without a label or manager. The band financed the album themselves and promoted themselves through social media. They only signed a publishing deal with Pennies From Heaven and a distribution deal with Rough Trade, so that they do not have to take care of that. So how did this turn out? The album debuted at number 1 in the Alternative Charts and at number 35 in the Album Top 100 in the Netherlands. Overall, Only Seven Left’s debut was a dream come true: ‘’We got 70% of the selling price per album, resulting in a breakeven within just seven days. Our six-date tour sold out, which made a 22-date tour possible the next year. We became 3FM’s Serious Talent and as a bonus, we caught the attention of sponsors, who gave us free stuff to promote their brand.’’ Ironically, the band ended up signing with EMI, but on their own terms. Just like before, they financed and created their second album themselves and remained main owner of their work. EMI only helped them with radio promotion and distribution. Eventually this led to the album debuting at number 20 in the Album Top 100 and headline tours in the Netherlands, Germany and Indonesia. Bram: ‘’It’s hard work, lots of investing and lots of trying things out, but it most definitely yielded something.’’

Youtube famous Alex Day

Then there are people who are even more successful without any help, like Alex Day. As a Youtube personality, Alex had already gained a huge following before releasing his music. When he finally did, without management, label or radio support, his single Forever Yours peaked at number 2 in the UK Indie Charts, setting the world record for highest-charting single by an unsigned artist. ‘’The major UK labels couldn’t offer me anything I couldn’t do myself. In theory, signing a deal could get me airplay, music awards, and a shiny metal disc hanging on the wall. But none of those things will actually happen.’’ He has never been on tour, but he is able to make a living from his music and Youtube videos. ‘’Physically I sold 791 CDs through the whole year for a total of $10,852. If you include other merch (posters, t-shirts etc.) the number increases to 6,210 items sold and a total income of $96,707. Digitally, I sold 293,760 digital downloads of songs on iTunes, making me $246,340.95. My songs were streamed 632,318 times, making me $2,782.11, but that figure doesn’t include YouTube music video views which would bring the total play count to over ten million and the earnings substantially higher.’’

It may be clear that money is not and should not be a valid reason to sign a contract, no matter how desperate you are to get your music out. (Social) media can do all your marketing and promotion for you, no label necessary; let alone its suffocating business models. My advice to all aspiring professional musicians would be: Never underestimate the power of social-, and streaming media. It is initially free for everybody, uploading the content as well as consuming the content, but it can still make you sufficient money. Use today’s technology to your advantage, as the record labels still have difficulties adapting to their ever-changing music industry.







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