What is Record Label? Deals, Examples, and More

As the music industry becomes faster moving, this department is being taken out of many labels. In the late 1910s, the original patents on audio recording technologies expired and entered the public domain. The access to these innovations led to the emergence of independent labels throughout the twenties. Simultaneously, the invention of radio was becoming popular and taking consumers away from the recorded music industry.

Public relations, for instance, is often outsourced by independent labels. Labels such as RCA Records (Sony), Capitol Music Group (UMG), and Atlantic Records (WMG) are all major labels. The labels directly under their leadership, still within their parent label’s jurisdiction, are the major label subsidiaries that are in the middle ground between major and independent labels.

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It typically includes rights for merchandising, sponsorships, media appearances, product endorsements, live performances, and touring. It’s a little more conclusive, though, since it covers more than just the aspects that cater to music creation and distribution. For one, the structure of a typical Indie label makes it more on the ground level.

Record companies (manufacturers, distributors, and labels) may also constitute a “record group” which is, in turn, controlled by a music group. The constituent companies in a music group or record group are sometimes marketed as being “divisions” of the group. Gore oversees WMG’s Rhino catalog division, which its parent company no longer breaks out on Luminate’s Connect Music measurement platform, making it virtually impossible to determine the legacy and reissue imprint’s market share and total revenue.

The 1940s saw a large number of new independent record labels established. There also began a trend of film studios extending their operations to include a audio divisions. Paramount Pictures and Warner Bros. followed next by creating ABC Records and Warner Records.

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The internet has freed artists from dependence on record labels, and many artists market and distribute their music independently through social media and streaming platforms at a much lower cost. To stay in business, given the reality of the digital age, record labels now offer so-called 360 deals to artists that give them a cut of all the artist’s work, including album sales, media appearances, and product endorsements. Independent labels usually do not enjoy the resources available to the “big three” and as such will often lag behind them in market shares. However, frequently independent artists manage a return by recording for a much smaller production cost of a typical big label release.

The important thing to understand is that labels sign artists in order to promote them so that they will make money, which will go back to the record label. Despite the complexity, record labels play a vital role in launching artists. They handle everything from production to marketing, in exchange for ownership of recordings and a share of profits. In the era of intensely repressive white minority rule, Vally became the first South African of colour to establish his own independent record label.

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The top three largest record labels in the U.S. are known as the Big Three. After the Big Three, there are several other record labels with medium and small market sizes. They are responsible for finding talent, although sometimes the talent finds them.