Posted by codypendant on 8/20/2007

Giving the state of the music business-major labels firing 25% and upwards of their staff, extreme declines in CD sales, internet downloads are down 15%, major record chain stores folding, ringtones bringing in more revenue then actual album sales, the ridiculous popularity of American Idol and gathering locusts, is it suicide to sign with a major label, if an artist actually a) wants to make some money and b) have a career that’ll span more than 3 years after signing?

thnx, Cody Pendant


Dave’s Answer:

Cody,

Well, like any other business decision, inking a deal with a major label is based on what they are offering. If the terms are favorable, it’s a good idea, and if they aren’t …

This is probably the most pivotal time in the history of the music industry. Yes, CD revenues are down, but any time new technology’s come into play, there are bound to be growing pains as the industry adjusts to the new model. This is a complicated question, so I will try to cover all the major aspects as briefly as I can.

Labels have had their luster gradually stripped away over the last few decades. It used to be so expensive (even as recent as the ‘90s) to go into a quality studio—few independent artists or bands could afford it. But as digital recording evolved, the cost went down.
Replicating CDs was also more expensive than most independent bands could afford—same thing for distribution, marketing, etc.

But then came along this whole World Wide Web thing. Most artists fail to realize the “working” internet has only been around for 12 years. Before that it was primarily only used by MIT grad students and “computer geeks”. Remember dial-up?

Essentially the Internet, in the case of major record labels, has grown to become a dragon killer. All the things that used to be too expensive for anyone but a record label to do are now affordable/ accessible which makes the decision to sign with a major label more interesting. Here are the general payout numbers—most major label artists receive between 12 and 24 percent of the revenue from CD sales. Digital sales are usually in the 8—22 percent range.

So, if you can record, replicate, market and distribute your CD yourself, you’re going to make a much higher percentage than if you sign with a major label as you would get all 100%. So it all comes down to where you are and how much time and effort you can put into pushing your CD. Labels have years of experience and the clout to make it easier for you, but you get paid less.

So: A) Yes, you can potentially make more money releasing your CD yourself, but you can get a much stronger push by the label than you can afford IF they put their weight behind your release. That’s a big “if” though. Most artists are unaware that many labels sign a number of artists, test how well radio program directors respond to CDs sent out to selected “key” markets, then only really push those artists that “tested well.” If you get signed and the radio PDs
like your record, you’re in for a fun ride. If they don’t, you may very well find yourself stuck in limbo. You’re signed to a label that isn’t pushing your record and in all likelihood they will drop you from the label 6-24 months down the road. If this happens, your band
will have a stigma attached in the industry as “damaged goods” and other labels will probably shy away from you.

Something else that has changed in the last ten years is major labels no longer develop artists like they used to. Some of the biggest acts like R.E.M. and U2′s first few records sold miserably, yet the label stuck with them, groomed them and were patient. The
results speak for themselves. But today, major labels have backed off of development. That has shifted artist development to smaller indie labels like my friends at Saddle Creek (Bright eyes, The Faint).

Here are a few interesting numbers for you:

Average number of CDs sold by major label artists when you add up ALL their artists (from superstars like Beyonce to newly signed artists that haven’t “popped” yet) is less than 2,000 CDs sold a year.

Most major label artists are together for an average of six years before they get signed to their contract.

Weigh all your options, pros and cons and think with your head—not your heart.

Best of luck,

Dave

Posted by Broadjam on Aug 27, 2007 in Broadjam Blog