Record label facts for kids

A record label is a company that helps musicians create, produce, and sell their music. Think of it like a special brand for music recordings and music videos. These companies find new artists, help them record songs, make copies of the music (like CDs or digital files), and then promote and distribute it to fans. They also make sure the artists' music is protected by copyright laws. The name "record label" comes from the round sticker in the middle of old vinyl records, which showed the company's name.

In the music world, artists often work with record labels to reach more people. Labels help market albums and promote songs on streaming services, radio, and TV. They also provide people who help artists get good news coverage and make sure their merchandise (like T-shirts) is available in stores.

Big Music Companies vs. Independent Labels

Record labels can be small and local, called "independent" or "indie" labels. Or, they can be huge companies that are part of a larger international group. The Association of Independent Music (AIM) says a "major" label is a big company that sells more than 5% of all music records or videos worldwide.

As of 2012, there were only three "major" record labels: Universal Music Group, Sony Music, and Warner Music Group. Together, these three companies control about 65–70% of the global music market.

Sho-money records

The Main Major Labels Today

Here are the biggest record labels in the world:

How Major Labels Changed Over Time

Record labels are often part of a bigger "music group." This group might also be connected to an even larger company that does other things besides music. A music group usually includes companies that publish music, make recordings, distribute them, and manage the record labels.

From 1929 to 1998, there were six major record labels, known as the "Big Six":

• Warner Music Group
• EMI
• Sony Music (called CBS Records until 1991)
• BMG (started in 1985)
• Universal Music Group (called MCA Music until 1996)
• PolyGram

In 1999, PolyGram joined Universal Music Group. This left five major labels, known as the "Big Five."

Then, in 2004, Sony and BMG combined their music recording parts to create Sony BMG. This reduced the number of major labels to four, known as the "Big Four." By 2007, these four labels controlled about 70% of the world's music market.

In 2012, the major parts of EMI were sold off. Most of EMI's recorded music went to Universal Music Group. Other parts, like Parlophone and Virgin Classics, went to Warner Music Group. This left only three major labels, which are now called the "Big Three."

In 2020 and 2021, Warner Music Group and Universal Music Group started selling shares of their companies to the public. Sony Music is still fully owned by its parent company, Sony Group Corporation.

Independent Labels

Independent labels are those not controlled by the "Big Three." Even if they are large companies, they are still called "independent" or "indie." Sometimes, "indie label" refers to labels that release music that isn't mainstream, no matter their size.

Independent labels are often seen as more friendly to artists. While they might not sell as much music as major labels, indie labels often give artists a larger share of the profits, sometimes even 50%. Also, independent labels are sometimes owned by the artists themselves. This allows artists to have more control over their music.

Indie labels usually don't have as many resources as the "Big Three." So, they often have a smaller share of the music market. However, independent artists can sometimes make a profit even with lower sales. This is because their production costs are much lower than a typical big label release.

Sometimes, famous artists, after their contracts with major labels end, move to an independent label. This gives them the advantage of being well-known while having more control over their music and earning more money. Artists like Dolly Parton, Aimee Mann, and Prince have done this.

Some independent labels become so successful that major record companies either agree to distribute their music or even buy the label completely. When this happens, the independent label might become an "imprint" or "sublabel" of the major company.

Imprints and Sublabels

An imprint is like a brand name or trademark used by a record label, but it's not a separate company itself. It's often marketed as a "unit" or "division" of the main label. For example, a record label might create an imprint for a specific type of music or for a particular artist's releases.

The term sublabel is often used by music collectors to mean either an imprint or a smaller label company that is part of a larger group. For instance, in the 1980s, 4th & B'way Records was a brand owned by Island Records. Collectors might say 4th & B'way was a sublabel or imprint of Island Records.

Vanity Labels

Vanity labels are labels that look like they are owned or controlled by an artist, but they are actually just a regular artist-label agreement. The artist might only control the name of the label and have more say in how their music packaging looks. An example is the Neutron label, which was used mostly for the band ABC's music.

However, not all labels started by artists are just for show. Many artists create their own labels early in their careers. These labels might later be bought by a bigger company. This can sometimes give the artist more freedom than if they had signed directly with the big label. For example, Nothing Records was owned by Trent Reznor of Nine Inch Nails.

How Labels Work with Artists

When an artist and a label want to work together, they usually sign a contract. This can happen if an artist sends their music to a label, or if the label's "Artists & Repertoire" (A&R) team finds and contacts the artist.

A label typically signs an exclusive contract with an artist to sell their music. In return, the artist gets paid "royalties," which are a percentage of the money earned from sales. These contracts can be short or long. Famous artists can often negotiate better deals for themselves.

For new artists, the label might help choose producers, recording studios, other musicians, and even songs to record. For established artists, the label is usually less involved in the recording process.

The relationship between record labels and artists can sometimes be tricky. Many artists have disagreed with their labels about the kind of music or songs they want to make. This can lead to changes in the artist's album artwork or titles before release. Sometimes, labels even prevent an artist's music from being released, or "shelve" it. Labels usually do this because they believe the album will sell better if the artist agrees to their changes. While these decisions can sometimes be good for sales, they can frustrate artists who feel their art is being changed too much.

In other cases, labels might shelve an artist's album with no plans to promote it. This can happen if the label decides to focus on other artists or if the person who signed the artist leaves the company. In extreme situations, labels can stop an artist's music from being released for years, while also refusing to let the artist out of their contract. This leaves the artist stuck. Artists like Taylor Swift, Kelly Clarkson, and Kanye West have had disputes with their labels over ownership and control of their music.

In the past, record labels were almost always necessary for an artist to succeed. New artists often tried to get signed as quickly as possible. In the 1940s, 50s, and 60s, many artists were so eager to sign that they sometimes gave away the rights to their recordings forever. Today, artists often hire lawyers to help them understand contract terms.

Thanks to new technology like the Internet, the role of labels is changing fast. Artists can now share their music directly with fans through online radio, file sharing, and other services, often for free or very low cost. However, this also means they might earn less money. Some established artists, like Nine Inch Nails, have ended their contracts with major labels because they felt the industry wasn't adapting to new trends. However, Nine Inch Nails later returned to a major label, realizing they needed the label's help for international marketing and promotion.

New Ways Labels Work

With computers and the internet, sharing music files and selling directly to fans became easier. This caused music sales to drop. So, labels had to change their strategies. New types of deals, called "multiple rights" or "360 deals," are now common. In these deals, labels get a percentage of an artist's touring, merchandise sales, and endorsements. In return, labels often give artists more money upfront and are more patient with helping artists grow their careers. These 360 deals work best when an artist is already well-known and has a loyal fan base. Artists like Paramore and Madonna have signed these types of deals.

For example, one 360 deal offered by Atlantic Records gave an artist money upfront and royalties from sales. But once the first album was released, the label could pay an extra $200,000 to get 30% of the money from all touring, merchandise, and fan club fees. The label would also have a say in the artist's tour schedule and the salaries of some tour staff. In return, the artist would get 30% of the label's album profits, which is more than the usual 15% royalty.

Online and Digital Labels

Since the Internet is now the main way people get music, "netlabels" have appeared. These labels let artists' music files be downloaded for free or for a fee using online payment systems. Some of these labels also sell physical CDs. Digital labels are a newer version of netlabels and compete more directly with major record labels.

Open-Source Labels

The new century also brought "open-source" record labels. These labels are inspired by the idea of free software and allow music to be shared and used more freely.

Publishers as Labels

In the mid-2000s, some music publishing companies started doing work that labels traditionally did. For example, the publisher Sony/ATV Music used its connections to help produce, record, distribute, and promote Elliott Yamin's first album. They did this through an old Sony-owned label instead of waiting for a deal with a regular record label.

Crowdfunded Labels

In 2002, ArtistShare was created. It was the first record label on the Internet where fans directly funded the artists' music releases.

See also

• List of record labels
• Streaming media