Record Label
A company that finances, produces, markets, and distributes sound recordings on behalf of artists.
What it means
A record label is a company that signs recording artists, finances the creation of sound recordings, and handles the marketing, promotion, and distribution of those recordings. Labels range from major multinational corporations (Universal Music Group, Sony Music Entertainment, Warner Music Group) to small independent labels run by a single person. The traditional label model involves the label providing an advance to the artist, paying for recording costs, manufacturing and distributing the physical or digital product, and marketing the release. In exchange, the label owns the master recordings and pays the artist a royalty on sales and streams — typically 15-25% of net revenue in a traditional deal. The rise of digital distribution and social media has disrupted the traditional label model significantly. Many artists now self-release their music through digital aggregators, build audiences through social media and playlist placements, and retain full ownership of their masters. In response, labels have developed new deal structures including profit-sharing deals, licensing deals (where the artist retains ownership but licenses masters to the label for a set term), and services deals (where the label provides specific services like marketing for a fee). For ambient and meditation music creators, the traditional major label model is rarely the best fit. Independent labels and collectives that specialize in ambient, electronic, or wellness music (or self-releasing) tend to offer better terms and more creative control.
Technical details
Record label deal structures include: traditional deals (label owns masters, 15-25% artist royalty), profit-sharing deals (50/50 or similar split of net profits after costs), licensing deals (artist owns masters, licenses to label for a term with a higher royalty rate of 25-50%), distribution deals (label handles distribution for a fee of 15-30%), and 360 deals (label participates in multiple revenue streams including touring, merchandise, and endorsements). Label accounting involves complex royalty calculations with provisions for reserves against returns, packaging deductions (historical holdover from physical era), cross-collateralization between projects, and controlled composition clauses (which reduce mechanical royalties paid to artist-songwriters). The label's role in master rights ownership is the most significant contractual issue — owning your masters gives you control over licensing, catalog sales, and long-term revenue.
Frequently asked questions
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