Music opinion: Record labels - The birth of a career and the death of autonomy
In 1993, O(+>, more famously known as Prince, appeared in public after having changed his stage name to an unpronounceable code and with the word ‘SLAVE’ drawn on his cheek.
This was not one of the pop star’s many artistic statements. Rather, it was a calculated effort to draw attention to the predatory relationship between him and his record label, Warner Bros.
The contractual dispute concerned Warner Bros.’ full ownership of his masters and, as Prince would’ve proclaimed, the ownership of Prince himself and his brand by extension.
More than three decades later, this dismal tale has unfortunately not stayed an anomaly.
It has become emblematic of the music industry at large and how record labels continue to create ‘slaves’ out of musicians.
Artists continue to sign their rights away, one exploitative contract at a time, writes Music News Blitz’s Arwen Lehmann.
The royalty deal
Up-and-coming artists are noticed by prestigious record labels (think RCA, Atlantic or Sony) that use their influential name to trap young musicians inside predatory contracts.
Traditionally, labels use the ‘royalty deal’ to enact their plan.
This entails the label giving the artist a hefty advance so that they can be financially self-sufficient and cover the costs of producing their music.
All the label asks for in return is the masters, the ownership of and rights to the musician’s catalogue.
Except, it's not all that the label asks for. The advance, which is so graciously gifted to the artists at the start of the contract, is in fact a loan.
A loan that has to be repaid through singles, EPs and albums’ royalties.
What are royalties?
Royalties, in the music industry, are the profit made from an artist’s music. This is accumulated through streams, downloads, broadcasts, performances or sales.
The royalty revenue is then split between the label and the musician. Labels tend to allocate the majority of the revenue to themselves.
This can translate to anywhere between 60% and 90%. Artists, on the other hand, are given, on average, between 10% and 20% of the revenue.
But even with such a small cut, the artists can’t pocket the money yet. Instead, the money made from their music is what is used to recoup the advance to the label.
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The catch
After the recoupment, musicians will run at a loss, meaning they are indebted to their record label.
Usually, the label would have made their talent sign a multi-album deal, so artists can then recoup their advance to the label with their following albums.
However, more albums mean more costs, which means more money owed to the label.
The musician is then bound to a contract which can only liberate them once all their debt is forgiven; a task which for many big artists is impossible.
The 360 deal
Since the mid-2000s, the music industry has used a different model to allure young talent. They make a deal that, on face value, seems a lot fairer and more favourable for the artist.
The 360 deal is a contract wherein labels take a cut from any revenue generated from any entertainment-related endeavour a musician undertakes.
This contract is thus not exclusively a musical one, but instead includes the earnings the artist makes from anything related to entertainment.
This includes marketing, TV and film appearances, merchandise, touring and commercials.
Each avenue, besides a musical contract, financially favours the artist. They also get an advance, which is significantly higher than what a royalty deal would give them.
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The catch (again)
This contract presents itself as giving independence to the musician but, in actuality, is a royalty deal with even more strings attached.
The artist is given an advance for every entertainment-related avenue they pursue, meaning that there are several loans to be paid back.
And these loans can be repaid cross-collaterally.
This means that if an artist generates a lot of money from one creative avenue but hasn’t paid off their loan from another, the profit will then be used to cover that outstanding loan amount.
Creative captivity: an oxymoron
Not only does the money loaned to artists come with strings attached, but it also comes with terms and conditions.
An artist might think that more money and investment mean more creative independence and agency, but they end up becoming slaves to the creative industry rather than masters of it.
These contracts, and their authors, maintain tight control of an artist’s outputs and dictate which creative endeavours they can pursue.
If an endeavour goes against the brand of the celebrity which the label aims to design, then their authority overrides any decision an artist wishes to make.
These kinds of contracts have, over time, become an industry standard. Record labels don’t only exist to build careers, but to own them.
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