Record labels have long been a central part of the music industry, playing a crucial role in discovering, promoting, and distributing music. In the electronic music scene, labels hold particular significance as they often act as curators of a specific sound or genre, playing a vital role in launching and supporting artists’ careers.
However, the role of record labels has significantly evolved over the years, especially with the digitisation of music. In this blog post, I will delve into the origins of labels, explore their development over the decades, and analyse their tasks in today’s music landscape.
How record labels work: The business model of record companies
A record label is primarily a business that produces, markets, and distributes music. Labels act as intermediaries between artists and the market by managing the master rights to the artists’ recordings. Master rights involve the copyright of the original recording of a music piece, specifically the version intended for sale or streaming. Note: This is different from the copyright of the lyrics and composition which are managed by PROs and publishers. For more details on this, feel free to check out my previous blog posts. This stems from the way music was traditionally created, where a composer would typically write the composition and lyrics, and a separate performer, such as an orchestra, would bring the composition to life. In contrast, in today’s electronic music scene, the roles of artist and composer are often merged into one. The person who creates the music is usually also the one who produces and performs it, unless they work with a ghost producer…
When an artist signs a contract with a label, they usually transfer the master rights to the label. In return, the label takes on the responsibility of reproducing, distributing, and marketing the music. This includes the physical sale of media such as CDs and vinyl, as well as digital distribution through streaming platforms and downloads. In exchange, the artist receives a proportional share of sales.
In addition to managing music rights, a label handles marketing, promotion, and the strategic placement of the music. They ensure that the music gets featured in playlists, covered by media outlets, and reaches the largest possible audience through various channels. Good labels, therefore, act as essential partners for artists, helping them maximise the potential of their music and fostering a successful career. If you want to know what to look out for before signing tracks with labels, you can check out this blog post here.
Origins of record labels
The origins of record labels trace back to the late 19th century when the first phonograph records emerged. At that time, labels were primarily responsible for producing and distributing physical recordings. The earliest labels were established to press artists’ music onto records and distribute them through retailers. Back then, records were the only means of accessing music, and record companies played a crucial role as they were the sole entities capable of reproducing and disseminating music.
With the advent of radio and later audio media such as cassettes and CDs, people gained new ways to consume music, leading to the first major crisis for labels. They expanded their roles, evolving from mere producers of recordings to key players in music marketing. Recognizing the influence and power of radio, they began to produce and promote music specifically for radio play. This shift allowed them to play a pivotal role in the dissemination of new music styles and artists.
Impact of digitalisation on labels
The ongoing digital revolution and the rise of the internet have profoundly altered the business model of record labels. Before the digital age, physical sales and radio airplay were the primary sources of revenue for labels. However, the advent of streaming services and digital downloads has dramatically shifted this focus.
The introduction of platforms like Napster, iTunes, and later Spotify led to a significant decline in physical music sales, forcing labels to adapt their business models. Today, labels generate the majority of their revenue through streaming and digital distribution channels. This shift has not only transformed the distribution of music but also the way labels market their artists.
Where labels once focused primarily on music production and distribution, their focus has now shifted towards digital marketing, data analysis, and artist development. Labels must now develop digital strategies to succeed in a global and increasingly saturated market.
The modern role of labels in electronic music
In the electronic music scene, labels still hold a vital role, particularly in discovering and promoting emerging talent. They’ve evolved from being primarily music production and distribution companies to acting more like marketing firms that also serve as gatekeepers. A strong label typically has a wide-reaching audience and a dedicated fan base that’s engaged with their music. For artists, this is much more attractive than simply having their tracks available online, as nowadays anyone can release music independently without the need for a label thanks to modern technological advancements.
Therefore, a significant aspect of electronic labels is the community and network they bring. Many successful labels in the scene function not only as outlets but also as collectives that host events, foster collaborations, and provide a platform for emerging artists. These labels are often closely associated with specific music styles or subcultures, contributing to the identity and growth of the respective artist.
Why labels are still Important
Even though the landscape has shifted and artists today have the ability to produce and distribute music independently, labels can still be highly beneficial for artistic development. Not only in the context of vinyl releases but also due to the aforementioned gatekeeping role, it can be very desirable for an artist to release on the right labels to reach a larger audience.
Additionally, good labels often have a clear image and represent a specific sound. By releasing on labels that endorse a certain style, artists can further develop their artistic vision and strategically position themselves in a particular direction. This alignment with a label’s brand can enhance an artist’s credibility and exposure within a specific scene or genre.
