The circular paper stuck to the center of a vinyl record was once the only way a listener knew who made the music. This small label, often red or blue, carried the name of the manufacturer and the song's title, serving as the first point of contact between the artist and the consumer. Before the digital age, this physical object was the entire universe of a song, containing the legal rights, the artist's name, and the company that funded the recording. The term record label derives directly from this physical artifact, which was the primary identifier for the brand associated with music recordings and music videos. In the early days of the recording industry, the label was not just a logo but a guarantee of quality and distribution. Without the backing of a company that could manufacture millions of copies and ship them to stores, a song remained unheard. The label was the gatekeeper, the financier, and the distributor all rolled into one small circle of paper. This physical connection defined the relationship between the creator and the audience for decades, establishing a system where the label held all the power and the artist held the talent. The history of the music industry is written in the evolution of these labels, from the small independent presses to the massive multinational corporations that dominate the global market today.
The Giants of Sound
In 2014, three massive corporations controlled between 65 and 70 percent of the world market for the sale of records and music videos. These entities, known as the Big Four, include Sony Music Entertainment, Universal Music Group, Walt Disney Records, and Warner Music Group. Sony Music Entertainment, headquartered in New York City, holds a 31.9 percent global market share, while Universal Music Group, with corporate operations in Hilversum, Netherlands, and operational headquarters in Santa Monica, California, commands 22.1 percent. Walt Disney Records, based in Burbank, California, accounts for 16 percent, and Warner Music Group, also in New York City, holds 7 percent. These companies are not just record labels but complex music groups that own publishing companies, manufacturers, and distributors. They are often subsidiaries of international conglomerates, such as Sony Group Corporation, which owns Sony Entertainment. The history of these giants is a story of constant merger and acquisition. From 1929 to 1998, the industry was dominated by the Big Seven, which included EMI, BMG, and PolyGram. PolyGram was merged into Universal Music Group in 1999, reducing the number of majors to six. In 2004, Sony and BMG formed a joint venture, creating Sony BMG, which was later renamed Sony Music Entertainment after a 2008 merger. The dissolution of EMI in 2012 and 2013 saw its recorded music division absorbed into UMG and its Parlophone and Virgin Classics labels absorbed into Warner Music Group. By 2020 and 2021, Sony Music remained the only wholly owned subsidiary of an international conglomerate, while the others went public through initial public offerings. These companies control the flow of music to the world, deciding which artists get promoted and which songs reach the airwaves.
Independent labels, often called indie labels, operate outside the control of the big four, offering a different path for artists who seek more creative control. These labels may be small and localized or large corporations with complex structures, but they are defined by their independence from the major music groups. The Association of Independent Music defines a major label as a multinational company with more than 5 percent of the world market, leaving indie labels to compete with less sales power but often with more artist-friendly terms. Indie labels typically offer larger artist royalties, sometimes through a 50 percent profit-share agreement known as a 50-50 deal. This structure allows artists to retain more of their earnings, even if the label has fewer resources to promote their work. Many indie labels are artist-owned, with the stated intent of controlling the quality of the artist's output. While they may lag behind the big three in market share, independent artists often manage to recoup their initial advance with much lower sales numbers due to smaller production costs. Artists such as Dolly Parton, Aimee Mann, Prince, and Public Enemy have moved to independent labels after their major contracts ended, gaining name recognition and control over their music. Historically, companies started in this manner have been re-absorbed into the major labels, such as Frank Sinatra's Reprise Records, which has been owned by Warner Music Group since 1963, and Herb Alpert's A&M Records, now owned by Universal Music Group. Madonna's Maverick Records, started by Madonna with her manager and another partner, also came under control of Warner Music when Madonna divested herself of controlling shares. Some independent labels become successful enough that major record companies negotiate contracts to distribute music for the label or purchase the label completely, functioning as an imprint or sublabel.
The Contractual Struggle
The relationship between a record label and an artist is often a difficult one, marked by conflicts over the type of sound or songs they want to make. A label typically enters into an exclusive recording contract with an artist to market the artist's recordings in return for royalties on the selling price of the recordings. These contracts may extend over short or long durations and may or may not refer to specific recordings. For artists without a recording history, the label is often involved in selecting producers, recording studios, additional musicians, and songs to be recorded, and may supervise the output of recording sessions. Established artists tend to be able to renegotiate their contracts to get terms more favorable to them, but the history of the industry is filled with counterexamples. Prince's much-publicized 1994 to 1996 feud with Warner Bros. Records provides a strong counterexample, as does Roger McGuinn's claim, made in July 2000 before a US Senate committee, that the Byrds never received any of the royalties they had been promised for their biggest hits, Mr. Tambourine Man and Turn! Turn!, Turn!. Record labels generally do this because they believe that the album will sell better if the artist complies with the label's desired requests or changes. At times, the record label's decisions are prudent ones from a commercial perspective, but these decisions may frustrate artists who feel that their art is being diminished or misrepresented by such actions. In other instances, record labels have shelved artists' albums with no intention of any promotion for the artist in question. Reasons for shelving can include the label deciding to focus its resources on other artists on its roster, or the label undergoing a restructure where the person that signed the artist and supports the artist's vision is no longer present to advocate for the artist. In extreme cases, record labels can prevent the release of an artist's music for years, while also declining to release the artist from their contract, leaving the artist in a state of limbo. Artists who have had disputes with their labels over ownership and control of their music have included Taylor Swift, Tinashe, Jon Bellion, Megan Thee Stallion, Kelly Clarkson, Thirty Seconds to Mars, Clipse, Ciara, JoJo, Michelle Branch, Kesha, Kanye West, Lupe Fiasco, Paul McCartney, and Johnny Cash.
The Digital Disruption
The role of labels is rapidly changing due to advancing technology such as the Internet, which allows artists to freely distribute their own material through online radio, peer-to-peer file sharing such as BitTorrent, and other services, at little to no cost, but with correspondingly low financial returns. In the early days of the recording industry, recording labels were absolutely necessary for the success of any artist, and the first goal of any new artist or band was to get signed to a contract as soon as possible. In the 1940s, 1950s, and 1960s, many artists were so desperate to sign a contract with a record company that they sometimes ended up signing agreements in which they sold the rights to their recordings to the record label forever. Entertainment lawyers are usually employed by artists to discuss contract terms. However, the rise of the Internet has forced labels to adapt. Established artists, such as Nine Inch Nails, whose career was developed with major label backing, announced an end to their major label contracts, citing that the uncooperative nature of the recording industry with these new trends is hurting musicians, fans and the industry as a whole. Nine Inch Nails later returned to working with a major label, admitting that they needed the international marketing and promotional reach that a major label can provide. Radiohead also cited similar motives with the end of their contract with EMI when their album In Rainbows was released as a pay what you want sales model as an online download, but they also returned to a label for a conventional release. Research shows that record labels still control most access to distribution, but the power dynamic has shifted. Netlabels have emerged, where music files from the artists may be downloaded free of charge or for a fee that is paid via PayPal or other online payment system. Some of these labels also offer hard copy CDs in addition to direct download. Digital Labels are the latest version of a net label, representing more competition for the major record labels. The new century brought the phenomenon of open-source or open-content record labels, inspired by the free software and open source movements and the success of Linux. In 2002, ArtistShare was founded as the Internet's first record label where the releases were directly funded by the artist's fans.
The 360 Deal
Labels and organizations have had to change their strategies and the way they work with artists in response to the decline in music sales caused by file sharing and direct-to-fan digital distribution. New types of deals called multiple rights or 360 deals are being made with artists, where labels are given rights and percentages to artist's touring, merchandising, and endorsements. In exchange for these rights, labels usually give higher advance payments to artists, have more patience with artist development, and pay higher percentages of CD sales. These 360 deals are most effective when the artist is established and has a loyal fan base. For that reason, labels now have to be more relaxed with the development of artists because longevity is the key to these types of pact. Several artists such as Paramore, Maino, and even Madonna have signed such types of deals. A look at an actual 360 deal offered by Atlantic Records to an artist shows a variation of the structure. Atlantic's document offers a conventional cash advance to sign the artist, who would receive a royalty for sales after expenses were recouped. With the release of the artist's first album, however, the label has an option to pay an additional 200,000 dollars in exchange for 30 percent of the net income from all touring, merchandise, endorsements, and fan-club fees. Atlantic would also have the right to approve the act's tour schedule, and the salaries of certain tour and merchandise sales employees hired by the artist. In addition, the label also offers the artist a 30 percent cut of the label's album profits, if any, which represents an improvement from the typical industry royalty of 15 percent. This shift in strategy reflects the changing landscape of the music industry, where labels must find new ways to generate revenue beyond just the sale of recordings. The 360 deal allows labels to invest more in artist development and to share in the broader success of the artist, but it also gives labels more control over the artist's career and income streams.
The Imprint and the Sublabel
A label used as a trademark or brand and not a company is called an imprint, a term used for a similar concept in publishing. An imprint is often marketed as a unit or division of the parent label, though in most cases, they operate as pseudonym for it and do not exist as a distinct business operation or separate business structure, although trademarks are sometimes registered. A record label may give a musical act an imprint as part of their branding, while other imprints serve to house other activities, such as side ventures of that label. Music collectors often use the term sublabel to refer to either an imprint or a subordinate label company, such as those within a group. For example, in the 1980s and 1990s, 4th & B'way Records, pronounced as Broadway, was a trademarked brand owned by Island Records Ltd. in the UK and by a subordinate branch, Island Records, Inc., in the United States. The center label on a 4th & Broadway record marketed in the United States would typically bear a 4th & B'way logo and would state in the fine print, 4th & B'way, an Island Records, Inc. company. Collectors discussing labels as brands would say that 4th & B'way is a sublabel or imprint of just Island or Island Records. Similarly, collectors who choose to treat corporations and trademarks as equivalent might say 4th & B'way is an imprint and/or sublabel of both Island Records, Ltd. and that company's sublabel, Island Records, Inc. However, such definitions are complicated by the corporate mergers that occurred in 1989, when Island was sold to PolyGram, and 1998, when PolyGram merged with Universal. PolyGram held sublabels including Mercury, Island and Motown. Island remained registered as corporations in both the United States and UK, but control of its brands changed hands multiple times as new companies were formed, diminishing the corporation's distinction as the parent of any sublabels. Vanity labels are labels that bear an imprint that gives the impression of an artist's ownership or control, but in fact represent a standard artist/label relationship. In such an arrangement, the artist will control nothing more than the usage of the name on the label, but may enjoy a greater say in the packaging of their work. An example of such a label is the Neutron label owned by ABC while at Phonogram Inc. in the UK. At one point artist Lizzie Tear, under contract with ABC themselves, appeared on the imprint, but it was devoted almost entirely to ABC's offerings and is still used for their re-releases, though Phonogram owns the masters of all the work issued on the label. However, not all labels dedicated to particular artists are completely superficial in origin. Many artists, early in their careers, create their own labels which are later bought out by a bigger company. If this is the case it can sometimes give the artist greater freedom than if they were signed directly to the big label. There are many examples of this kind of label, such as Nothing Records, owned by Trent Reznor of Nine Inch Nails, and Morning Records, owned by the Cooper Temple Clause, who were releasing EPs for years before the company was bought by RCA.