What is a Record Company?

The definition of a record company is as follows: A company in the business of making and selling musical recordings.

That clear things up? We thought not. The words “record company” and “record label” are often used interchangeably. In actuality, a record company might be made up of several record labels (often genre-specific) while a record label is a single entity.

Before the internet, music downloads, and streaming music there were just a few record companies, each with a handful of record labels under their dominion. Like an octopus with tentacles controlling virtually every aspect of the music industry, record companies called nearly all the shots. They had a stranglehold on discovering new artists, recording, publishing, distributing, marketing, and promoting them and their music through their deep ties to the radio, print & television industries, concert promoters, and the retail music business.

Not anymore. The internet, along with advances in digital audio technology, have made it possible for the artist to do all of these tasks themselves. Among many, there’s a common belief that cutting out the middle man (the record company) is now the way to go, and that record companies are no longer relevant. While it is true that artists are no longer dependent on being “discovered” by the right A&R and locked into record deals, there’s one notable side effect to consider. The brave new world we’re in now has many thousands of independent artists, many with their own labels, who are out there competing for listenership more than ever before.

As a result of this, today’s record companies have changed to adapt to the times. Instead of the record companies insisting on total control over all the processes involved in music, they’re now much more amenable to working with artists on certain things while leaving them open to pursue their own interests on other aspects.

There are still a number of things that a record company can probably do better than the individual artist. Whether it makes sense to go this route depends on the trade outs. There’s an old saying, “100% of nothing is nothing” which applies here. Involving a record company means the artist will have to give up a percentage of their possible revenue. However, if the record company can greatly increase the revenues for a song, the artist can benefit by giving up this segment of their repertoire to realize the additional income and invest it back into their career.

Record companies still have their ears on the pulse of what is trending in the music scene. Some artists can be a bit isolated and may not be as attuned to the marketplace as a record company. Advice from established music industry veterans can be profitable. Additionally, record companies are willing to front the money required to hire a big recording studio. This might not matter to the one-man band EDM artist, but to a rock ‘n roll band, it might make all the difference in the world.

Record companies can also mobilize a lot of publicity. While some musical artists have immense and loyal social media audiences, the majority of them do not. The record companies have massive social media presence. When working with them, the odds of getting mainstream exposure (and results) by having their clout and platforms behind you can increase your reach exponentially.

Record companies may have come to the digital distribution process late in the game but once they grasped the obvious, they became a powerful force in digital music distribution. They not only know which platforms are working the best at any given moment, they’re experienced at monitoring and collecting royalties on everything they distribute.

It’s estimated by IFPI that the average cost of breaking a new artist into a mainstream artist is over $1 million. Chances are, you don’t have that kind of cash. The record labels do. Whether it’s the cost of recording an album, going on-tour, or promoting your music, money always makes things easier and, often times, faster.

As mentioned earlier, there are thousands upon thousands of independent musical artists releasing their songs every day and they’re fighting to get their music heard and into the hungry ears of their future fans. Being signed by a record company is one way to break through the noise.

Before the internet, musical artists needed record companies to have any chance at success. Today, it’s definitely possible to become a successful artist without ever dealing with a record company. It’s also true that a music company can bring powerful resources to support a musical artist and speed up their career path immensely. Like everything else in life, it’s a matter of weighing the pros and cons, so consider carefully and go get ’em!


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