Signing To a Major Label Ain’t What It’s Cracked Up To Be

For many years now, the deepest desire of many bands and artists has been to find themselves signing a contract with, say, Warner Music or one of the other “big five” record labels in the US, and walking home with a pocket full of dough and a bright future ahead.

Label of an Emerson Record from 1919. This 10-...
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On every music site on the web, independent bands and artists are asked if they want to be signed to a label and you can bet your bippy that most of them click off the “yes” box.  Signing a major label contract is the holy grail of many an artists’ life.  And most of them have no idea what it means.

I speak, of course, from the outside because I have never signed a contract myself.  However, I personally know people who have, and from the artists’ perspective, I can tell you that it ain’t always a sweet deal.

It is a well-known fact now that record labels made a whole lotta cash from old blues artists and their music years ago, hardly sharing a penny with those who actually wrote the songs or performed on the recordings. A lot of these blues men ended up poor and on the streets because they were only given a very small lump sum to sign away the rights to their music.  Many of them couldn’t even read or write, let alone understand that they were being taken advantage of.  In the meantime, these record labels made millions from them.  And as labels themselves over the years have swallowed up smaller labels and have turned into big, belching conglomerates making millions and millions from their artists and bands year after year, it appears that they’ve gotten greedier.

First, let me explain to a degree how an artist or band contract works.  This would not necessarily apply to older contracts with well-established artists, as contracts get re-negotiated over time.  But for newer bands and artists, it works something like this:  you sign over the rights or part of the rights to your songs and they give you a few million dollars.  Sounds good, eh?

Actually, they don’t give you a few million dollars in the end, because every time you record or do a tour or need promotion, etc., they take that out of your few million.  And then they expect you to pay it all back.  So you really don’t have much control over the money they “give” you, and in fact, it’s more like a loan.  In the end, what they are really doing is putting some money towards your career and then expect you to pay it all off.  In the meantime, you have to live off that money.  If there are, for instance, five of you in the band, that’s five people who need food, clothes, a place to live, and every other ordinary expense you can imagine, all coming out of that one lump sum of money.  That’s besides the cost of recording, touring, promotion, etc.  That few million runs down pretty quickly.  And you OWE it back to them.

So not such a hot deal, eh?

But wait a minute.  You’re making money off the tour and the record sales, right?  But the label decides how much of it goes towards your “loan” and how much they stuff their coffers with.  And now, as it turns out, there are even cases where if you make money from downloads, they take almost all of it.  An example is in a story on Wired Magazine‘s website where Tim Quirk, who knew a little bit more about digital music services than the average joe, found out that his band’s label, Warner Music, was doing just that.  While he figured out that his band made some $12,000 from albums distributed digitally, Warner Music only paid them $62.47.  That’s right, sixty-two dollars and forty-seven cents.

It’s no wonder that record labels have built themselves such a crappy reputation with the general public.  They are seen as bloated and greedy.  And they are.  Unfortunately, the bands and artists signed to them are stuck with a contract and a big loan to pay off.  So if you are not signed to a big label, count yourself as lucky.

Just my humble opinion, of course 🙂


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  1. Hi IJ!

    That is very interesting!
    I just the other day researched how to form a record label of your own and after reading this there is no way I would accept an offer from a well known label!

    Do you have any advice or knowlege about starting a record label of your own?


  2. Sarah, I’m sorry I didn’t respond to your comment before now as I was out of town. However, starting a label can be as simple as creating a company as a Sole Proprietorship (check out for a definition of what that is) and going from there. That is what I did for all of my releases. If you wanted to sign other artists or bands, then here’s a relatively decent article about starting a record label for that purpose:


  3. oh mah gosh, thanks SO MUCH for this. i knew that they don’t really leave the artists with a lot of money, but i had no idea they left them virtually BROKE!!!!!!!!

    and here i was, thinking i’d like to get signed to Cherrytree.

    do you have any suggestions for record labels that would be good to sign to, if any? thanks!

  4. Hi mrsjenna 🙂

    These days the industry is changing so fast because of the internet, iTunes and file sharing, etc., and record labels were terribly slow in embracing the new age of music. So a lot of them have downsized or gone under completely because their traditional way of doing business doesn’t work anymore. I think, and this is just my personal opinion, that you are far better off signing with smaller, newer and lesser known labels. They might not have the big bucks, but they don’t have the liabilities (ie – huge promotion and production costs), and they are likely more aware of better ways to promote their artists.

    Also, don’t be afraid to venture out on your own…there are so many ways to promote yourself and a lot of bands and artists have even given up the idea of getting signed in favour of learning how to promote themselves. It takes longer, you don’t have the same contacts, etc., but everything you make, you keep.

    Thanks for your post 🙂

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