SoundPress.net Feature Article: Indie Labels vs. Major Labels

Indie Labels v. Major Labels
A SoundPress.net Feature Article by Joy R. Butler, Esq

The Majors

There are currently five major music groups: BMG, EMI, Sony Music, Universal Music and Warner Music. Each of these music groups has a number of labels under which records are released. They are the major labels. Collectively, they control 75-85% of commercially released recordings.

What Makes A Label A Major
Access to distribution is a primary characteristic that separates major labels from indie labels. As you can imagine, getting an artist's music into every record store in the country requires a large distribution network. Distribution for the major labels is handled by major distributors which are wholesalers that take the records produced by the record labels and coordinate their placement into consumer retail stores. Each of the current major distributors is owned by one of the major music groups or its affiliate.

Advantages and Disadvantages to Major Labels
Major labels have more resources so they are able to spend more on the production and marketing of their artists' recordings. Unfortunately, this doesn't necessarily mean that each artist signed to a major label will have equal access to those resources. Artists at major labels can sometimes become "lost in the shuffle". However, when a major label does put its full resources into an artist's career, the result is much more national (and international) exposure than an indie label can offer.

Major labels are interested in producing recordings that will sell millions of copies. That sometimes results in a major focusing on the projects of one or a few artists who the major believes capable of producing a gold or platinum album. Its desire to sell millions of records may also make the major unwilling to produce a second album for an artists whose previous album yielded disappointing or only moderate sales.

The Indies

There are many types of independent (or indie) labels, but you can think of them as falling into two broad categories: (i) indie labels which are associated with major labels, and (ii) indie labels which are truly independent and have no association with a major label.

Indie Labels Associated With Major Labels
There's a wide variety of deals that indie labels enter into with major labels. For example, the indie may be the production house of a well-known producer or artist. In that case, the indie may sign artists and produce the record. The major does everything else from manufacturing and distributing the record to handling all marketing, promotion, sales and other administrative functions. The major may collect the revenue from sales of the record produced by the indie and then pay the indie a percentage royalty on the record sales. In these cases, the contract between the major and the indie is very similar to the typical contract between a label and an individual artist.

At the other side of the spectrum of indie-major associations are those indies that are fully-staffed record companies but lack access to a national distribution network. These indies use the major labels for distribution of their records. The indie may pay the major a distribution fee for its assistance, or the major may take partial ownership of the indie. The major might also fund some or all of the indie's operating costs.

Indie Labels Not Associated with Major Labels
There are indie labels which have no association with a major label or major distributor. These indies distribute their records through independent distributors. Independent distributors typically serve only a few states, so the indie label must use several of them in order to get its records into stores across the country.

Advantages and Disadvantages to Indie Labels
It's often easier to get signed to an indie label. Since indie labels don't need to sell millions of copies in order to make a profit, an indie may be preferable for music targeted to a smaller niche such as children's music, jazz and folk and an indie may be more tolerant with artists who are still developing a following of fans who want to purchase their recordings. Since indies tend to be smaller companies than majors, the indie can often give more personal attention to each of its signed artist.

On the minus side, indies typically have fewer financial resources so royalties, advances and recording budgets are lower than what a major label would offer. If the indie relies heavily on the services of a major, the artist will be one step further away from the decision-makers who have an impact on his career.

© Copyright 2002 Joy R. Butler. All Rights Reserved.
No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written permission of the author. (DISCLAIMER: This article is offered as an educational and informational tool only, and should not be relied on as legal advice. Applicability of the legal principles discussed may differ substantially in individual situations. If you have a specific legal problem or concern, you should consult an attorney.

REVIEWS -- "A great reference tool for up and coming musicians, songwriters and composers" (Mark Northam, Film Music Magazine.) "This is one of the best references I've seen on this very confusing topic in YEARS" (Jodi Krangle, The Muse's News)

Joy R. Butler is an entertainment attorney (http://www.joybutler.com) and the author of The Musician's Guide Through the Legal Jungle (TM), a 3-hour audiobook presentation on the music industry. Visit http://www.GuideThroughTheLegalJungle.com for audio clips and an outline of the audiobook.

Related Links: Joy R. Butler is an entertainment attorney (http://www.joybutler.com) and the author of The Musician's Guide Through the Legal Jungle (TM), a 3-hour audiobook presentation on the music industry. Visit http://www.GuideThroughTheLegalJungle.com for audio clips and an outline of the audiobook.

(Originally Published on November 27, 2002)

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