How Do Indie Record Labels Make Money
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How do small local indie labels make any money?
I was just on my Facebook and noted that a few new local bands recently have been "signing deals" with local "labels" for distribution etc.
My question is this - no one is buying albums, so what is the point of these deals?
How on earth is a label supposed to make any money from sales when there are no more sales?
My question is form the label standpoint, not the artists - how are they making money?
Assuming they are not providing any advances/support money/merch money but providing distribution (probably just acting as a middleman to another middleman like distrokid) in exchange for say 50%.
While I agree that 50% of nothing is still nothing, I would assume that cumulatively or if you simply got lucky and found a breaking through artist, eventually those fractions of fractions of streaming pennies add up.
The new thing is are 360 deals where the label gets a percentage of concert revenue, merchandise sales, endorsement deals, and ringtones. Typically the percentages on streaming and download sales is higher too.
They are still making their nut, but the artist is being squeezed more.
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Originally Posted by Reverb ➡️
I was just on my Facebook and noted that a few new local bands recently have been "signing deals" with local "labels" for distribution etc.
My question is this - no one is buying albums, so what is the point of these deals?
How on earth is a label supposed to make any money from sales when there are no more sales?
My question is form the label standpoint, not the artists - how are they making money?
The short answer is 99.999999999999999% make nothing. Not the label or the Artist. The long answer is strictly my opinion as it has effected me personally. I am going to start with mixing and mastering. 10 years ago, you had to contact a studio, go in, sit down and get to work. Fast forward 10 years and now you simple upload your files to get the job done.
The big difference here is that there are many qualified people who are working out of their homes, that have the tools as well as the knowledge, to compete with the big boys. They have no overhead, no staff to pay, no insurance etc.
Now, lets move on to the labels using this same setup. A few people get together, create a great looking website and start a massive spam attach on anyone who has a band or sings. They tell them how they can give them exposure and promise them the moon. They offer a contract that states they will only receive a very small percentage, for promoting them.
All these so called labels are doing, is just what everyone else is doing. They will post your song on FB, Twitter, etc, every 20 secs, with the hopes that a major label will see the amount of tweets they have. That's what they do. They follow all the major labels on all their social media, hoping that one of their internees will click their link, listen to the people they are promoting and contact them with a deal of a lifetime.
I know this as they also target anyone in the music industry with spam, looking for and asking you, to give their information, to the people you have as clients. I filter out about 50 a week. The only drawback is when these artist sign with these POS's, they may very well be signing their rights away.
I have followed bands on YT that have over 1,000,000 subscribers to their channel. They did it their own way. Playing local, getting dedicated people to plaster their name and music over their own social media to spread the word. It is a business and it needs to be treated like a business. When you can get that type of dedication, paying $0.99 for a song, adds up very quickly. IMHO, these labels are nothing but one of the newest scams, to hit the www. There are exceptions to every rule, READ THE CONTRACT!
Gear Guru
Quote:
Originally Posted by Reverb ➡️
I was just on my Facebook and noted that a few new local bands recently have been "signing deals" with local "labels" for distribution etc.
My question is this - no one is buying albums, so what is the point of these deals?
How on earth is a label supposed to make any money from sales when there are no more sales?
My question is form the label standpoint, not the artists - how are they making money?
Printing press in the basement.
Selling drugs.
Charging bands for distribution and not paying for production.
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In my experience of knowing the people behind roughly 20 such labels going back to the early 80s, and being one of those people, everybody loses money.
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Originally Posted by teleharmonium ➡️
everybody loses money.
Yes, it's usually not the case that a small local label has the power to rip off the local artist and make any real money, though they may legally sideline them from better things depending on the contract. Some bands signing with a local are looking for someone to do the heavy marketing lifting needed to get the band local recognition. They know they need success locally and then regionally before they can even think of going national. In other cases, it becomes an easy way to get a record or album produced as a first big step forward. In other words, you learn to walk using a local label to assist you, and then when you are ready to run, you hook up with a national label, or so the dream sometimes goes.
Here's an honest question: has anyone here ever actually worked for a record label?
I have - major as well as indie, and also had my own micro-label/imprint. I wouldn't mind sharing info, but wondering how 'serious' the conversation here is.
Short answers:
- actually, bands that are actively gigging do sell product as merch at shows, and that is rewarding for artists as well as labels
- it is an imprimatur of approval, if the label is recognized in some way
- promotion is NOT 'nothing,' and having any assistance in promoting one's music should always be appreciated
- it can be helpful for those who want physical product or a certain amount of web presence to have that done by someone else, rather than spend their own time on it
And last but certainly not least: community is ALWAYS important. Working with others, officially or otherwise, yields benefits.
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Originally Posted by danhedonia ➡️
Here's an honest question: has anyone here ever actually worked for a record label?
Personally, I have not. But I have sent talent to them and they were signed.
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I have - major as well as indie, and also had my own micro-label/imprint. I wouldn't mind sharing info, but wondering how 'serious' the conversation here is.
This is a forum talking about music. One size does not fit all. Meaning, some are are different levels then others.
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Short answers:
- actually, bands that are actively gigging do sell product as merch at shows, and that is rewarding for artists as well as labels
This can be said of any band that has no label at all. The only difference is they receive 100% of the profits.
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- it is an imprimatur of approval, if the label is recognized in some way
- promotion is NOT 'nothing,' and having any assistance in promoting one's music should always be appreciated
If you have a bad label backing you, then you are moving backwards. I had to look up the word "imprimatur". This is the results.
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an official license by the Roman Catholic Church to print an ecclesiastical or religious book. a person's acceptance or guarantee that something is of a good standard. the original LP enjoyed the imprimatur of the composer
Can you clarify?
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- it can be helpful for those who want physical product or a certain amount of web presence to have that done by someone else, rather than spend their own time on it
WordPress owns over 33% of the www. In other words, every 3rd website you click on, is done using WordPress. It is a free CMS platform and is used by millions. Anyone can update their site as simple as posting on FB.
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And last but certainly not least: community is ALWAYS important. Working with others, officially or otherwise, yields benefits.
100% agreed! 
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I think that none of the parties involved has fully accepted that the current business model does not work for musicians which are not major acts. Until this is not accepted by everyone and an effort is put in pressing streaming services for these to start paying for music (and stop stealing music as they do now) the situation will worsen. Streaming services are making more damage to music than illegal download did.
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Originally Posted by Frank_Case ➡️
Yes, it's usually not the case that a small local label has the power to rip off the local artist and make any real money, though they may legally sideline them from better things depending on the contract. Some bands signing with a local are looking for someone to do the heavy marketing lifting needed to get the band local recognition. They know they need success locally and then regionally before they can even think of going national. In other cases, it becomes an easy way to get a record or album produced as a first big step forward. In other words, you learn to walk using a local label to assist you, and then when you are ready to run, you hook up with a national label, or so the dream sometimes goes.
Small local labels typically do not have contracts of any kind.
Losing money on a band is the opposite of ripping them off. I'm pretty tired of record labels always being the rhetorical bogey man when there are a lot of great ones, and consumers and streaming companies rip off musicians on a much larger scale.
Talking about "the dream" is an attractive but misleading narrative. The vast majority of musical artists never achieve any kind of success. If we're talking about music as a whole and not just professionals, we should use clear language to acknowledge that truth.
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Originally Posted by teleharmonium ➡️
Small local labels typically do not have contracts of any kind.
A record label or record company is a brand or trademark associated with the marketing of music recordings and music videos. Sometimes, a record label is also a publishing company that manages such brands and trademarks, coordinates the production, manufacture, distribution, marketing, promotion, and enforcement of copyright for sound recordings and music videos.
Also conducting talent scouting and development of new artists ("artists and repertoire" or "A&R"); and maintains contracts with recording artists and their managers. The term "record label" derives from the circular label in the center of a vinyl record which prominently displays the manufacturer's name, along with other information.
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Losing money on a band is the opposite of ripping them off. I'm pretty tired of record labels always being the rhetorical bogey man when there are a lot of great ones, and consumers and streaming companies rip off musicians on a much larger scale.
It is sad that they are starting to get the same reputation as the dreaded "Used Car Salesman".
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Talking about "the dream" is an attractive but misleading narrative. The vast majority of musical artists never achieve any kind of success.
Success come in many different levels. Some become the "Hometown Heroes", some "Love the Lifestyle" and some are completely content if they never leave their home state.
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If we're talking about music as a whole and not just professionals, we should use clear language to acknowledge that truth.
One mans truth is another mans exception. That can be said in all walks of life. I call them opinions.
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They make money because they don't pay their artists.
I run one of those little labels. Omniphonic Records UK – Omniphonic Records UK
It hardly ever makes me money but I do it because it advertises my work, and my studio.
The thing I have found running a small studio is that most of my clients can't afford enough time to make a decent sounding record, I get enquiries like "It's only six songs so will we need a whole day?" when I think a full blown rock band needs a day per song for tracking and another for mixing. So a ten track album could take twenty days to complete.
So I run the label to choose bands I like and give them as much time as they need to make it good, I then hope to make at least some money back to cover the studio time. But mostly what I get is a good showreel, albums made the way I want them rather than what the band could afford. And then my prospective paying customers listen to those when they judge my work and decide whether to book me.
Without my label, my showreel would all be cover bands or quick cheap recordings. It's been twenty years since I engineered anything that made the charts (my fault for leaving London) so I can't keep touting those old 90's house records now, That would look too "has been".
There is also a small chance that one of my bands might go on to big things after I give them a start, If that happens then I own their first album and their new bigger label makes them successful - should be a long term win for me then.
I do a straight 50/50 deal with the band and the recording cost is included in my 50% (so no recoup or debts for the band). I've yet to make back the full cost of anyone's record but SkyBurnsRed are about a third of the way there - their album Machines took around thirty days to complete.
I suppose I see this as not so much part of the music industry, but a different way of paying for the recording for the band, and for me a showreel I'm proud of.
Gear Guru
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Originally Posted by Dana_T. ➡️
This can be said of any band that has no label at all. The only difference is they receive 100% of the profits.
NO. The other difference is that they have to pay 100% of the expenses -UP FRONT.
And that any label worth its salt is going to have established channels of promotion that an in die musician is not likely to have. Often an indie musician attempting to self-promote is regarded by people in the business as a "fish" or, at best, as an amateur.
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f you have a bad label backing you, then you are moving backwards.
If you have a bad label, you're a fool who doesn't do your homework. Only an idiot signs the first paper that's waved in front of them.
Gear Guru
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Originally Posted by teleharmonium ➡️
Small local labels typically do not have contracts of any kind.
Only a fool would work with a "label" without a contract. And any label who would work with an artist without signing contracts is run by either a fool or a crook.
Contracts specify responsibilities and conditions for both sides. Without a contract a label is exposing themselves to gratuitous lawsuits and an act is setting themselves up to be ripped off.
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Originally Posted by John Eppstein ➡️
NO. The other difference is that they have to pay 100% of the expenses -UP FRONT.
In 2018, many Artist/Bands are designing their own website as well as social media accounts. They are providing 30 sec samples that can be purchased/downloaded in many different formats, without the need of any other source. They record, mix and master their own audio, burn their own CDs using laser printers built in to the CD roms and design their own cover art. They are using online companies to print their logos, bcs, hats, tee shirts, key chains, coffee mugs, beer steins etc. They receive 100% of their profits after a very little investment!
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And that any label worth its salt is going to have established channels of promotion that an in die musician is not likely to have. Often an indie musician attempting to self-promote is regarded by people in the business as a "fish" or, at best, as an amateur.
Funny, that's what the pros said when these kids started cutting their own music in their parents basements not to long ago. They screwed the pooch on that one. Here's a great article concerning Pearl Jam and how they broke all the rules the big name labels had, and wound up in the "Rock and Roll Hall of Fame".
As far as iTunes go,
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Retail sales were up 17 percent, to $4 billion, and wholesale shipments were up 14.6 percent, to $2.7 billion. Meanwhile, iTunes-style digital download sales continue to fall. They're down 24 percent. Because why buy songs for a dollar when you can legally stream (almost) anything you want for a price that ...
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If you have a bad label, you're a fool who doesn't do your homework.
I agree there is a lot that needs to be learned very quickly. It is hard to fault someone when they simply do not know what questions need to be asked. It amazes me how some people seem to forget the knowledge they had, when they first started.
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Only an idiot signs the first paper that's waved in front of them.
Well, here is 40 idiots that turned down that first paper concerning 40 roles, that they have regretted for the rest of their lives. Live and learn.
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Originally Posted by Dug Wolfsohn ➡️
I run one of those little labels. Omniphonic Records UK – Omniphonic Records UK
It hardly ever makes me money but I do it because it advertises my work, and my studio.
The thing I have found running a small studio is that most of my clients can't afford enough time to make a decent sounding record, I get enquiries like "It's only six songs so will we need a whole day?" when I think a full blown rock band needs a day per song for tracking and another for mixing. So a ten track album could take twenty days to complete.
So I run the label to choose bands I like and give them as much time as they need to make it good, I then hope to make at least some money back to cover the studio time. But mostly what I get is a good showreel, albums made the way I want them rather than what the band could afford. And then my prospective paying customers listen to those when they judge my work and decide whether to book me.
Without my label, my showreel would all be cover bands or quick cheap recordings. It's been twenty years since I engineered anything that made the charts (my fault for leaving London) so I can't keep touting those old 90's house records now, That would look too "has been".
There is also a small chance that one of my bands might go on to big things after I give them a start, If that happens then I own their first album and their new bigger label makes them successful - should be a long term win for me then.
I do a straight 50/50 deal with the band and the recording cost is included in my 50% (so no recoup or debts for the band). I've yet to make back the full cost of anyone's record but SkyBurnsRed are about a third of the way there - their album Machines took around thirty days to complete.
I suppose I see this as not so much part of the music industry, but a different way of paying for the recording for the band, and for me a showreel I'm proud of.
I am glad you shared your story. You have given me pause to reconsider small labels. I have BMed your site so I can get more details. Nice digs by the way. I will be sending you an email sometime this week.
With apologies, this just seems fraught with defensiveness and personal experiences substituting for general truths. The quote about 'imprimatur' came off very poorly; if you do not know a word, no reason to get snippy about it.
It's always helpful to have the help of people who know what they're doing. Most bands have very little experience with getting a release organized, manufactured, and promoted. It can be nice to have people to help do those things.
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Originally Posted by Reverb ➡️
I was just on my Facebook and noted that a few new local bands recently have been "signing deals" with local "labels" for distribution etc.
My question is this - no one is buying albums, so what is the point of these deals?
How on earth is a label supposed to make any money from sales when there are no more sales?
My question is form the label standpoint, not the artists - how are they making money?
I underlined the error.
There's still 5 billion/yr being made off recorded music (and growing, the shrink stopped happening a few years ago), with indie labels commanding over 1/3 of it.
While its true most do not make money, there's still sh*itloads of money being made off records. Because most don't make money, "the whole thing is dead" is a nice belief for the ego, but the truth is there are plenty of folks cleaning up in the record biz right now, with indie being as powerful as its ever been.
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Originally Posted by Dana_T. ➡️
One mans truth is another mans exception. That can be said in all walks of life. I call them opinions.
There is a difference between a fact that you do not like and an opinion.
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Originally Posted by teleharmonium ➡️
There is a difference between a fact that you do not like and an opinion.
I agree 100% with your statement. It is only when someone tries to convince you that their opinion is indeed a fact, without offering any proof to the contrary, and they require you to adopt their line of thinking, without any further explanation backed by other sources. I have a friend that swears he can fly UN-aided by any mechanical means. The only problem is that he can not do this if anyone is watching. In his mind, this is a fact. In my mind, I do not allow him to be around my weapons. In reality, he is a very nice guy and fun to be around.
Gear Guru
Beyond the massively successful acts that everyone knows, music business is a labor of love. There's no money in it, unless you are scamming wanna-be bands out of their spare pennies. People do that, and it's shameful. Those who get into it because they love music are not making significant money, or even enough to float expenses. Everyone is gambling their time and money, hoping to be the next break out. Vast majority end up with nothing but memories and debt.
It wasn't all that different when the record biz was at its peak. This is the stead-state of trying to become a star, be it film industry, music biz, famous evangelist minister, big time politician, reality TV celeb, you name it. 99.9% of the people who try end up going home and getting a day job. But that fact stops almost nobody from trying.
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Originally Posted by kennybro ➡️
Beyond the massively successful acts that everyone knows, music business is a labor of love. There's no money in it, unless you are scamming wanna-be bands out of their spare pennies. People do that, and it's shameful. Those who get into it because they love music are not making significant money, or even enough to float expenses. Everyone is gambling their time and money, hoping to be the next break out. Vast majority end up with nothing but memories and debt.
It wasn't all that different when the record biz was at its peak. This is the stead-state of trying to become a star, be it film industry, music biz, famous evangelist minister, big time politician, reality TV celeb, you name it. 99.9% of the people who try end up going home and getting a day job. But that fact stops almost nobody from trying.
And your reply gets the "BEST ANSWER OF THE POST AWARD"! Very well said!
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Originally Posted by ProgFree ➡️
I think that none of the parties involved has fully accepted that the current business model does not work for musicians which are not major acts. Until this is not accepted by everyone and an effort is put in pressing streaming services for these to start paying for music (and stop stealing music as they do now) the situation will worsen. Streaming services are making more damage to music than illegal download did.
Agreed but illegal downloading was the start of the downward spiral one can argue.
How Do Indie Record Labels Make Money
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