5 Reasons You Should Never Sign A Major Label Record Deal
June 9th, 2017 by Circa
Chance The Rapper…
The list of highly successful career musicians choosing to sidestep a record deal and stay independent is growing. And, it’s getting more powerful. These and many more success stories illustrate the fast-spreading knowledge that signing a major label record deal is not the fantastic thrill ride of success and admiration that it is reported to be.
How do I know?
Well, currently, 4 of my close friends are being courted by major labels. I have spoken with two of the artists at the top of this article personally on several occasions. And, turning down many a record deal on behalf of artists that I work with, I have seen all manner of horrific contract paper be thrown around.
So, I’ve seen some pretty morally reprehensible professional behavior.
Have I cataloged the details of every record deal and major label career in the past 70 years? No, absolutely not. I’m sure there are exceptions. But, I’ve seen enough. More than enough.
The major label industry is dirty. The mechanisms of this record industry are exploitative and detrimental to creative people. Whatever ounce of passion and stardust pushes professionals into this career quickly vanishes, only to be replaced by distant cynicism. The major record labels are systemically out-of-touch.
The who, why, and what of that story is far longer than this article. Today, we’re just going to outline the top 5 reasons why you should put signing with a major label out of your mind for the next two decades.
1. A Record Deal Can Make COST A Fortune
When you sign a major label record deal, you are often signing away the possibility of making any money off of record sales. Seems kind of backwards, right?
According to TheRoot, for every $1000 in music sold, the average contracted recording artist makes about $23.40. For those of you keeping score, that’s 2.34% of gross. That sucks.
Is this because music is difficult to profit off of?
Is it the format? No.
Is it the waning support of music listeners everywhere?
The average full-length record deal is literally a mile-long minefield of hidden costs, bullshit fees, and recoup clauses from the 50s that were left in to screw you over. Don’t believe me?
This article from TechDirt touches on a clause that is common among modern record deal contracts: Breakage. In the days of vinyl, shipping music across the country could easily result in a few broken records. So, record labels charged artists a 20% “breakage” fee. That means that the record industry was claiming that 1 in every 5 vinyl records created would break in transit! I call bullshit, but it gets a lot worse…
Obviously, vinyl is far more delicate than a cassette tape or a CD in a big plastic case. Even still, record labels continued to charge a 20% breakage fee when the industry largely shifted over to tapes and CDs. Luckily, streaming and digital downloads represent a majority of revenue now. So, the day’s of bending artists over barrels for a 20% breakage fee are over…
Oh wait, they’re not! Record labels still charge 20% fees for breakage and what they are now calling “digital breakage”.
Why? Because “fuck you“, that’s why.
Breakage, container charges, free goods, and “reserves”, are all recuperative clauses that get buried in long form record deal contracts. These clauses are engineered to perform one orchestrated task: confuse and exploit artists for almost 75% of their royalty rate. Notice I said “royalty rate” and not “revenue”. That’s because record deal contracts often allot only 10% of profit (if you’re lucky) as a royalty to the recording artist.
As if that wasn’t bad enough, this royalty rate is negatively impacted by the clauses we just went over. But it gets worse…
Your royalty is calculated out of profit – that is, any expense your record label deems necessary in the process of creating your album can be written off against your revenue. So, while you may only need your band mates and a good sounding room to record an album, your label will be saddling you up with songwriters, expensive studios, top producers, session musicians, and more just to make sure you’re making something that THEY deem to be marketable.
You don’t actually have much say in this process. You can’t just tell them you don’t need a songwriter so that you can keep more money. If your A&R says you need a songwriter, you’re getting a songwriter.
Now, pile all of those costs on top of your entirely recoupable album advance, tour support, and independent radio promotion (see: institutionalized bribery) and the chances that you will ever make any money off of your recorded music drop to a definitive 0%. In fact, you may end up OWING the record label money, even if you sell millions of albums.
But surely it’s worth it right? Because you couldn’t possibly market yourself online and make money all by yourself. A label is going to give you access to massive exposure and marketing strategies that can help you blow up worldwide…
2. Getting Offered A Record Deal Is A “Catch 22”
Unless you are able to build a sizable following all by yourself, a major record label probably won’t be interested in signing you. If they do, your contract will be awful. Like, not-even-worth-a-meeting awful. Like, emailed-to-you-blank-without-a-conversation awful.
But, let’s say you do build that massive following (50-100k) and record labels come sniffing for your secret sauce. They’re going to buy you weed, take you to the Spotify offices, and tell you you’re the coolest fuckin’ guy/gal in the whole world. They’re going to make you feel like your time has arrived; all you’ve got to do is take it to the next level…
Can they help you take it to the next level? Yeah, totally. Unless, of course, you don’t think the best place for your music is down the throat of every man, woman, and child in America. That is, if your A&R likes your music enough to release it as is (spoiler alert: they won’t)…
Major record labels won’t help you market. Take it from this girl, who got big on YouTube, signed to a label, and then found herself telling her own label manager how YouTube works. Major record labels SUCK at marketing. They suck, suck, suck at it. Some managers are really good at it, but make no mistake: they are few and far between.
I know a lot of amazing marketers. I have had the privilege to speak directly to people who have helped companies generate billions of dollars in revenue. Their success rate when working directly with companies to improve their growth approaches 100%. Great marketing isn’t about hitting the lottery with a product, great marketing is all about creating relationships with messaging.
A lot of people confuse marketing with the broader subject of “communications”, but marketing is communication with a goal: to develop a deeper relationship with your prospective customer. So, what kind of relationships are major record labels developing?
Wham, bam, thank you Baja Men.
For the past three decades, almost 10% of all songs on the Billboard Top 100 were by one-hit wonders.
What does it say when a company can ship millions of units for its first product but can’t get anyone to buy the follow-up? Often times, in the music industry, that gets blamed on the inventor – the artist – NOT the company promoting the product – the major label. That is, when second albums flop, the labels assume that the artist just couldn’t produce another hit, they don’t think of the fact that they lost 1,000,000 customers.
3. The Record Industry Encourages Genericized Sounds
Anyone who is making money in marketing will tell you that the first thing you need to do is select a single, target market. Whether you have a product yet or not, your chances of marketing success fall dramatically when you try to market your product to an entire age group or gender.
This is a big reason why 99% of those signed to a major label deal are shelved. It’s also why most of the financial wins in the music industry are represented by some of the most forgettable music in the history of artistic endeavor. A product that “isn’t for everybody” is a marketers dream…
…and a major record labels worst nightmare.
Major labels aren’t looking to develop a business around a profitable product. That’s not specific enough. They are looking for blinding, obscene, almost nauseating levels of fame and success. So, they are willing to churn and burn 99 creative souls in order to find 1 artist they can test against hundreds of others. They don’t care to help you grow a profitable business with your 10-100k fans.
So what are they hoping to find?
Well, you need to be good looking, that’s for sure. America’s musical stars are, by and large, fairly gorgeous people. There aren’t a lot of ugly ducklings in the Billboard Top 100.
Then, provided you are bright and shiny enough, a huge section of the population needs to be able to relate to you and your sound. This means that your sound cannot be wildly different from anything that is on the Top 100 right now. As explained in this article, the Billboard Top 100 gets more and more generic every single cycle. And it makes sense: when you don’t have a target market, a generic product will sell best.
So, if you have anything fringe about you, your label handlers will be quick to smooth out your rough edges. That means changing your wardrobe, your hairstyle, and even your subject matter.
As we’ve already discussed, labels don’t know how to market very well. So, they will usually grasp desperately at whatever success got you into their board room in the first place. Did you blow up on YouTube with a party song? Great. Say hello to your party album. Every song you do from this point on will be about beer pong, drunk girls, and skipping class. You hit a vein with the partying college kids and now they’re going to milk it for all it’s worth! Go ahead, try to make a song about something else. Your A&R will tell you it’s “not really what we’re looking for”.
Then, they’ll tack on a songwriter to your bill to help you figure out how many times you guys can actually fit the word “party” into a song.
Labels spend so much money employing this mass marketing method that they are butt-clenchingly terrified of trying anything new. If you get to major label contract level, chances are they are going to double down on whatever got you there (while simultaneously fucking it up).
Just ask Kid Ink or Chamillionaire.
4. The Record Deal Has A Devastating Failure Rate
30-year music business veteran and formally noted expert on the subject, Moses Avalon, wrote this amazing article breaking down the numbers behind the major label business model.
It should come as no surprise to you that getting signed to a major record label is like winning the lottery – in the sense that most people don’t win it and those who do usually end up right back where they came from.
I don’t mean to make this whole thing all “doom and gloom”, so let’s just look at the numbers:
According to Avalon, 1 in 42 acts submitting to record labels do get signed. This number is a liberal estimate, as not all the acts signed in a given year actually submitted demos, some are scouted. But, pending that you actually are one of the lucky acts that do get signed, you still face a treacherous road of disappointment, failure, and abject consequences.
Avalon goes on to explain that, these days, 99% of those actually signed to major labels each year never get to release their first album. In fact, only 0.2% of acts signed to a major label manage to avoid getting dropped from that label in the process of fulfilling their contract.
This can be for many reasons. As explained in this BuzzFeed article, sometimes labels are acquired, merged with other labels, or unceremoniously shut down. All the artists in development at that time are usually caught in the shuffle. Sometimes, A&Rs get fired and their signees go on the back burner. Sometimes, labels are only signing you to make sure you never release your music…
5. Artists Do Get Intentionally Shelved
You won’t find a whole lot about this on the Internet. You’ll hear mentions of it in interviews with label veterans; you may read about it in books involving the music industry. But, almost every other shitty thing that record labels do has been covered extensively in some article or another.
So, it’s time that this information be made as public as possible.
Out of the 99.8% of artists signed to a record label and dropped before fulfilling their contract, a certain percentage are intentional failures.
That is, major record labels will intentionally hold up an artist’s release and prevent them from ever seeing the light of day. The crime is almost unforgivable – but, the logic is pretty simple:
Let’s say, for example, it’s the year 2008, and you’re a teen pop singer. You’re white but vaguely urban, bright, shiny, ready for the big time…
Posting cover videos on YouTube, you start racking up millions of views and getting a loyal following. All of a sudden, label execs are starting to call your Mom asking about you.
Next thing you know, you’re flying all expenses paid to LA for a week of meetings with major record labels.
You and your family are excited for the bright future that is unfolding before you…
You meet with RCA and they seem excited about your future, too. They offer you a 5-album deal with a huge advance.
The next day, Atlantic offers you even more!
Then comes Island Records…
Island offers you more money than your family has made in the past 5 years, they promise you the whole world. They walk you through their massive plan, step-by-step, to turn you into the biggest pop star since Michael Jackson…
They have a 10-year plan that puts you in the drivers seat of the most successful music career of the 21st century…
And you and your family sign on the dotted line.
What you didn’t know, was that for over six months, Island/Def Jam has been developing Justin Bieber: a young, white but vaguely urban, bright, shiny pop singer. You aren’t the biggest artist of the 21st century, he is. You’re just a threat.
Island could have ignored you, yes. They could have left you and your family alone. But, with you making waves on YouTube, one of their two competitors would definitely have signed you. Then, you would be in direct competition with their shiny new pop star. To Island/Def Jam, Bieber represents untold billions in revenue. So, they are more than willing to outbid their competitors to get you into a gigantic record deal.
We’re talking dictionary sized, player.
Island throws enough paper at you to keep you from recording, releasing, or even publicly performing a single song for the next half decade. Plenty of time for Justin to get a stranglehold on the marketplace.
Does this happen?
Yeah. It definitely happens.
Maybe, for some of them, the label had every intention of giving them a fair shot. Unfortunately, as many have scientifically documented, the Top 100 sound becomes more homogenized every year. So, if you’re getting signed to a major label, you probably sound like someone they care a lot more about than you.
Am I saying that all 3 major record labels are shady?
Am I saying that every contract they write is a scam perpetrated on creative people?
Yes, yeah. Definitely. That is absolutely what I am saying.
And I’m not alone…
If you are fetishizing being signed to one of these gaping supermassive black holes, please stop immediately.