How Do You Attract Music Labels?

With the advent of streaming services and new ways to monetize music, the industry has changed significantly – not only for listeners, but also for musicians. Streaming generates a solid income for rights holders, but access to the main network media platforms, with rare exceptions, is limited.

An independent musician cannot, without intermediaries, upload their album to Apple Music or Spotify. In the role of necessary assistants in this matter are labels and distributors. For a novice artist, the difference between them is often not obvious.

As the Internet developed, a variety of indie labels appeared – no-labels (Internet labels). They distribute music on the Internet without producing content on physical media. However, this line is now blurred.

Within net-labels, there is a useless variety of them – labels that upload material to digital platforms without further promotion. Often these labels exist simply because the creators like to own them. These labels have neither the expertise nor the finances to promote the artist.

In recent years, streaming has become the main way to listen to music. Streaming services are also digital storefronts: selections, curated playlists, and homepage promotion are essential to music marketing. So, according to Spotify statistics, a third of all listening on the service comes from custom playlists and another third from playlists generated by Spotify itself.

Streaming royalties are paid based on the amount of revenue generated by advertising and sales of paid subscriptions over a certain period. The final profit, minus a percentage for the company itself, is divided between labels and distributors, depending on the number of track plays. Music is distributed by record labels and distributors. Both those and others work only with a phonogram. They are not interested in concerts or an artist’s career. Booking agencies, music managers and other agents of the music business deal with these issues.

The main difference between labels and distributors is the range of services offered to musicians. The labels take care of the distribution through all of the above channels, while the distributors only deal with digital.

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The label builds a brand, an image in the minds of listeners, does all the activities that lead to this: maintaining groups on social networks, promoting tracks and videos, concerts and similar things.

The terms of cooperation between artists and labels can be very diverse. In the simplest version: the label and the artist agree on the distribution of profits from all sources. The ratio depends on the current status of the artist and the capabilities of the label. 50% to 50% is usually a great option, but rarely happens. More often the label gets a larger percentage: 70% to 30%, or 90% to 10% (for young artists).

The contract can be formed more flexibly: for example, the ratio of profits can be changed as the artist returns the money invested in it. For example, they start with 90% to 10% in favor of the label, with a set amount of initial investment. As soon as the profit covers the invested funds, the 70% by 30% stage begins. After reaching the next financial indicator (or a certain period) – the percentage changes again.

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