Indie Labels vs Major Labels: Which Record Label Contract is Right for You

Securing a record deal is a major goal for many aspiring musicians, with most imagining themselves signing with one the of 3 major labels: Sony, Universal and Warner Records. However, these major labels actually represent only a tiny percentage of the global musician population.

Independent record labels are amongst the top record labels in the world and offer different benefits to a major. There are advantages and disadvantages of signing to an indie so we’ll cover the pros and cons and you can work out what contract is best for you.

In recent years, many artists have shifted their aspirations towards signing with indie labels. It’s a more realistic goal, but they also recognise the advantages of signing with a smaller, independent label over the mega-corporations.

Pros and cons of independent record labels

Securing a record deal

Pros:

  • Deals that are more artist-friendly
  • More creative freedom and development for the artists
  • A closer team that can give you more attention

Cons:

  • Smaller budgets compared to majors
  • Less influence and connections with the music industry
  • Won’t be capable of promoting as much as a major

Benefits of signing with a record label

“What we wanted was some control over our [master recordings] and how it was used in the future by them. That seemed reasonable to us, and we cared about it a great deal.” Radiohead XL Recordings

— Thom Yorke

Whichever style of label you choose, first you’ll need to undertake a good deal of self-promotion in order to develop a fanbase; no record company will consider investing in an artist until they can prove their work is capable of drawing interest, and, therefore, profit.

If an artist is ready, signing to a label can be very beneficial for everyone involved. You will be able to focus more on your music and performance ability because you will have a team behind you taking care of the marketing side of things.

You will also have some financial backing behind you and be able to work with a budget set by the label. They will likely have someone managing this and be booking studios and shoots on your behalf.

Different labels are able to offer different services but you need to know about the distinct difference between majors and indies.

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Major record labels

Major record labels

“There are three main major labels in the world now. A major is basically just defined as those labels part of corporate groups, conglomerates, they have global reach, large staff teams… as an individual working from your home studio or bedroom, you’re not necessarily going to be able to reach markets in Japan as easily as a label that has offices based over there, or European continental markets and the States as well.”

Leon Hayes, Universal Music A&R

Universal, Sony and Warner are the three major labels operating today. They are huge organisations that operate across the whole entertainment industry. They are exceptionally well connected across the music industry because they dominate the mainstream and international market.

Signing to these labels can be seen as a huge accomplishment but you need to be completely ready as an artist. This is because the competition is so fierce and it is a results-based business. When you first sign you might feel like a small fish in a massive ocean so confidence, self-belief and a strong core fan base are essential to have any chance of successfully getting a deal.

Indie record labels

indie record labels

“With independent labels, they are defined as such as they are independently funded. They can range from small teams of staff from about 1 or 2 people in a back room to maybe 20 or 30 people in a small office up and down the country. You’ve got small medium and large independents as well.”

Leon Hayes, Universal Music A&R

The term ‘indie’ (independent) is applied to any music label that operates outside the sphere of the major corporations.

Indie labels differ dramatically in size and capacity: from professional teams working in slick premises, to self-trained individuals using their home computer to run the business.

While major labels operate on an international scale, with their own distribution and publishing departments, indie labels normally enlist third-party companies to provide their distribution and publishing services.

Top Record Labels

Here is a list of 25 significant indie record labels:

Top Dawg Entertainment

XL Recordings – See the below video for what it takes to get signed to XL Recordings:

Young Turks

Domino

Boy Better Know

True Panther

Dirty Hit

Warp

Ninja Tune – Behind the scenes at Ninja Tune’s London HQ:

Glassnote

Jagjaguwar

Matador

Bella Union

4AD

Lex

Tru Thoughts

Carpark

Rough Trade – Part 1 of a documentary about the important & influential label:

37 Adventures

Stones Throw

Brainfeeder

Daptone

Loma Vista

Mute

Sub Pop

Do artists still need record labels?

There are a growing number of artists that are finding success without a record label, such as Jorja Smith and Stormzy. However, this doesn’t mean that they don’t have a team behind them that fulfils the functions of a record label.

record label quote Labels are there for a reason, they’ve always been here and they always will be, I just don’t know what it’s like to be with a major label. I just like what I’m doing at the moment, it’s going well, I don’t need to add anybody to my team. I don’t think I need to go to a label at the moment.”

— Jorja Smith

Record labels employ members of staff across all of these departments:

  • Artist & Repertoire
  • Sales
  • Marketing
  • Promotion
  • Product Management
  • New Media
  • Production
  • Finance
  • Business Affairs / Legal
  • International
  • Sync

Some artists may feel that they don’t need a record label, having a team covering all of these areas can make a massive difference in global success. Overall, although we live in a time where record labels may not be as essential, they still provide talented teams and vital services to help artists achieve massive success.

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Advantages and disadvantages of independent record labels

indie vs major record label

Who keeps the rights to the music?

One major benefit to working with an indie label is that artists often get to keep the rights to their songs, which is especially significant given the increasing potential to monetise music by ‘syncing’ it in other forms of media.

But, you must own the full rights to a song to be able to claim the profits from any licencing fees.

The big-business approach of major record labels means that they usually claim the rights to the music of their artists and will collect the profits from any licencing fees, so the musician receives just a fraction of the profits.

The artist’s influence over their work

Because indies are smaller corporations run by fewer individuals, unlike major record companies, they are not beholden to the agenda of a large board of directors, motivated simply to churn out music that will perform well in the charts, and rake-in large profits.

If you’re offered a contract with an indie label, it’s probably because they believe in your unique brand, not because they want to funnel and mould your image to fit the mainstream market

Artists working with large-scale corporations often have less creative control over their music and image, which can be a major issue for those who prioritise their credibility as a musician over financial success.

“There’s the famous thing that the A&R man from the record company is supposed to do: He’s supposed to come into the studio and listen to the songs you’ve been recording and then say, ‘Guys, I don’t hear any singles.’ And then everybody falls into a terrible depression because you have to write one.” Jarvis Cocker Quote

— Jarvis Cocker

Relationships within the team

Indie labels have far fewer musicians on their books than major record companies, so they can usually afford to assign each of their artists a dedicated representative, who will work closely with them for as long as they’re signed with the company.

However, the downside of working with a smaller team is that you’ll have less expertise at your disposal, and smaller labels will have less commercial influence in the industry.

Artist-friendly contracts

Indie labels have a better reputation for offering pro-artist contracts, often with larger royalty percentages for the musician, and generally giving artists better value for their work.

On the other hand, major record companies are far more business-orientated and will push to squeeze the most money out of their artists by offering musicians a smaller portion of any royalties they generate.

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The scale of production

The biggest companies in the industry have established powerful connections and influence during their decades of leading the industry. Smaller labels, however, might find it more difficult to get the attention of media publications, who are capable of granting artists much sought-after exposure.

Major labels with massive rosters of artists operate on such a large scale that it can be difficult for individual acts to get the attention from the label that they need to succeed, especially if their music isn’t immediately drawing a significant profit.

The size of the budget

The major drawback of using an independent label is that it is more likely they will have a much smaller budget for recording, production, distribution and marketing. This means that artists often have to invest more time and energy into self-promotion if they want to get adequate exposure.

On the other hand, major labels have the potential for far more funding at their disposal, which can be used to fund top-quality recording facilities, global promotion and distribution, as well as music-video shoots and world tours – major expenses that indie labels often can’t fund.

The size of advances

Advances are effectively loans: the artist receives a sum of money from the record company at the beginning of their contract, but this sum is recouped by the label from the royalties earned by the artist before any royalties are passed on the musician.

Major record labels are naturally going to offer bigger advances than smaller indie operations, but the size of advance will differ dramatically depending on the size and affiliation of the particular label.

Rather than offering an advance, indies often agree to cover a portion of the recording costs but this production loan is still recouped by the label before the artist receives any royalty income.

The advantage of having a small, or no advance, is that artists can start profiting from royalties more quickly. However, since there are so many costs for the label to recoup before an artist sees any profit, sometimes an advance is often the only financial reward the artist will receive for a long time.

Free goods deals

The term ‘free goods’ refers to the records that labels have to give away to retailers as part of promoting the album before the release. It’s important to consider the impact of free-goods arrangements because artists do not receive any royalties from records given away for free.

Major labels wield enough influence to limit the number of free-goods they’re expected to provide, but smaller record companies will need to give away more records to promote their artists – reducing the potential profit a musician can earn in royalties.

Indies sometimes want to include their artist’s individual songs on compilation CDs to create a showcase of their musician’s work. These compilation CDs are also given away as promos for free, so artists can’t expect to receive any financial compensation for their work to be used in this way.

Publishing

Publishing means claiming, and profiting from, the license to the song itself (the lyrics and composition), rather than just a particular recording.

Most contracts offered by major record labels do not include publishing since major labels normally have affiliated publishing companies for their artists to work with.

On the other hand, indie contracts normally do demand that the label gets publishing rights to their artist’s music. Normally, the artist is offered fifty per cent of whatever income the publisher receives from licensing fees, in return for the label owning the publishing licence.

Co-publishing deals are common amongst indie labels; this is where the artist and the publisher co-own the copyrights, and the artist receives an agreed percentage of the income generated from their song.

Merchandise

Indies are also more likely to request the merchandising rights because it’s more of a priority for smaller productions to start making money back from their artists as quickly as possible.

Because a major label has bigger budgets, you could end up with a more comprehensive line of merchandise and some major artists have even gone on to start their own fashion lines after signing with a major label.

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Why the rise of Indie labels?

The traditional structure of major record labels has caused them to struggle against the rise of social media, as well as digital music retail, and the subsequent decline in the popularity of radio and physical album sales.

Therefore, the companies that once monopolised the industry are currently in a state of flux, as they transition towards the more modern methods pioneered by indie labels.

The rise of online digital distribution has also helped new indie labels gain prominence. Previously, the only way you could get your music in stores, physical and digital, was through large distributors or major labels.

There are now plenty of digital aggregators, such as Distrokid and Tunecore, that anyone can sign up for and will put your music on platforms like Spotify and Apple Music in exchange for royalties or a subscription fee.

How to decide?

Many artists on major labels actually start their careers on indie labels so don’t feel rushed into going for majors. These artists have been able to develop and grow their fanbase at their own pace in less pressurised environments and have then made the jump to majors when they are ready.

Some indie labels will even release music for their successful artists in partnership with major labels. This is because some independent artists become so successful on a small label that both parties sign an agreement with a major to expand the team and maximise success.

There are some fundamental differences in the way indie labels are run compared to major corporations. It’s worth educating yourself on these differences before committing yourself to either model so decide on your priorities as an artist and what sort of signing will best help you to accomplish your career goals.

Would you prefer to be signed by a large major record label or a smaller indie label and why? We would love to hear about your views in the comments below.

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