The Record Deal:
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Signed, Sealed, Delivered?
THERE is a split in the music industry that is causing a lot…
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of confusion. We are in a very digital and technological age so I wonder whether artists are looking for a record deal: if they are, is it practical and profitable? The majority of my reviews and interviews are with unsigned acts. A lot of artists have P.R. companies behind them – promoting their stuff and getting them interviews/reviews – but what about that record deal? Is it something musicians lust after?!
BACKGROUND: PHYSICAL MUSIC VS. DIGITAL DOWNLOADS
We have all heard the statistics about vinyl. Looking at an article by Noisey - they provided the figures:
“In the past ten years, the sale of vinyl has increased to a staggering degree—a roughly 900 percent increase in LP sales between 2004 and now, with 9.2 million vinyl albums sold in 2014. While over the same decade, overall music sales across all formats have decreased annually, dropping from 667 million total albums sold in 2004 to 257 million in 2014. Clearly, vinyl is thriving in spite of the free streaming digital age…But the law of supply and demand is not necessarily applicable in this case, as within the same time frame, the number of facilities producing vinyl has remained static, at roughly 20 active pressing plants nationwide. These facilities can in no way meet the current demand for vinyl”.
If C.D.s are levelling or in decline: it seems there is a need for vinyl and the sheer beauty that provides. Maybe it is a retrospective thing: harking back to a better time; getting vinyl for its artistic values. Perhaps people want to connect with the simplicity of the ‘vinyl age’. Whatever the reason for this; it means there is a definite desire for vinyl. I know a lot of new artists who can print their music to vinyl but, for the most part, it seems reserved for mainstream acts. With the sales of vinyl heating up – and being profitable for the bigger acts – it means other physical forms, like C.D.s are less popular. I hear few people who buys C.D.s – these are formats new musicians release to so one has to wonder how profitable that endeavour is? It seems music hardware is becoming less common and not generating money for new artists. If you are a big act, and can get those vinyl sales in, then it might be okay. Those who rely on the economic and affordable C.D. distribution method – are they accruing the money and profit to make a go of things?! I would argue, unless punters at a gig snap up a C.D., that line of things is quite challenging.
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Digital income is the only viable option for many new artists. Looking at another article - I got an idea of what kind of money is generated from digital downloads:
“The UK average monthly income is £1,517. How many downloads would a band need to sell in order to reach this figure? Assuming, once again, that there are four (4) band members, they would need to make a total of £6,068 per month to match the UK average income amount.
If selling exclusively on iTunes (which pays roughly 60p per single download), a band would need to achieve 10,113 downloads each month. This would equate to 2528 per week.
I am guessing the ‘average’ amount that an unsigned band makes from downloads is £10/month (per band member). If we add £120 from downloads to the £2,340 from gigs, we can guess that the average band member makes £2,460/year”.
That equates to about £120 per year (per band member) every year. There is a great debate rumbling in the media as to whether Spotify is creating fictitious artists in order to avoid paying them. It sounds like an odd thing but there might be some truth in it. It seems Spotify is magnificent for consumers but not too great for artists who want to be compensated fairly. I have written a piece on Spotify – so shall not go into too much depth – but, for new artists, the figures are quite shocking. They do not have the big teams that can get those streaming figures into the six/seven-digit ranks. They rely on meagre downloads/streams and, in real terms, that is a paucity. Even those massive artists who might get millions of streams each song – does that mean they will get a huge cash-load of from that achievement?! It seems not which, in some cases, is a relief. You wouldn’t want all the money going to the same artists time and time again. I am not sure if there is a way to fairly compensate and remunerate on Spotify. If you paid each artist about 10 pence per stream without any taxation – that would be quite generous and fruitful. Those figures seem low but, in reality, are unrealistic. A lot of people are choosing to use Spotify for free and those who subscribe might not be willing to pay extra at all. Going back to that Spotify and, looking at the contents, there is something troubling emerging.
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Taking a scan of the article - and it lays out the facts quite clearly:
“The allegations came to light thanks to a piece that recently ran over at Vulture, outlining various outside-the-box ways people try to profit off of the massively popular streamer. (Tactics include filling channels with hundreds of individualized versions of “Happy Birthday,” for instance, or posting song covers under slight misspellings of the actual artists’ names.) Nestled among these tricks by users, though, was a suggestion that Spotify itself was equally prone to screwing with the system, hiring producers to release songs by fake artists to bulk up its popular playlists.
The original allegations stem from this article from music blog Music Business Worldwide, which quotes anonymous but “cast-iron” sources claiming that the streaming company hires producers to create songs to fill out popular playlists like “Chill” and “Deep Focus.” (Vulturecites a few different bands that it says seem to exist only in the form of two or three playlisted songs on the service.) The article claims the original productions aren’t just about avoiding playlist royalties, though, but also about providing quality control, ensuring listeners get the company’s precise definition of what “Chill” actually is.
Spotify flatly denies the idea it’s producing its own music, though, refuting the MBW article at every point. “We pay royalties—sound and publishing—for all tracks on Spotify, and for everything we playlist,” the company’s statement continues. “We do not own rights, we’re not a label, all our music is licensed from rightsholders and we pay them—we don’t pay ourselves.”
There is controversy and pitfalls of a career on Spotify so, is this method of income viable and sustainable? If C.D. sales are declining – and vinyl is profitable for the big artists – are digital avenues profitable and beneficial for new artists? It is a great way to get your music out to people, and link with other acts, but, in real-world terms, it is not going to make you big bucks.
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GIGS AND PROFIT:
Going back to the first article and it got me thinking about whether it is gigs the natural way for bands/acts to thrive and succeed? Maybe the profit is not immense but is gig income the most reliable way to ensure a sense of safety and gravity? Let us look at the piece:
“Since we are describing ‘Success’ as achieving a gross annual income of £18,200/year (per band member), live gigs must surely play a key role in this. We will not include covers bands, wedding or corporate events bands. For the purpose of this research paper we will use the term ‘band/musician’ for those who want recognition for their own original music.
The average capacity for a venue that houses mainly unsigned bands is 250 in the UK.* The majority of venues will increase ticket sales by hosting 3-6 bands (on average). Assuming that a venue is 80% full and has 4 bands performing, each band would therefore have bought 50 people.
After speaking with approximately 30 diverse bands from London, I have estimated that the average band brings in much less than 50 paying fans on average. I will be setting the average paying fan count (per gig) to just 15.
Bare in mind that this would be the average number of paying fans that turn up to every gig, whether in the bands local town or 500 miles away. Many bands will bring 40 fans to local gigs but find fan counts drop dramatically the further afield they play.
There are several ways that bands can be paid by venue promoters. The average payment however seems to work out at about £6 per fan.
There is no data on the average band size, but I am setting a generic band size of 4 people so that we can work the statistics.
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With these assumptions we can see that the average band will be paid £90 per gig (£22.50 for each band member). Based on two (2) gigs per week, the gross yearly income for each member would be £2,340, far lower than the UK average wage. This also pays no mention of travel costs or gear hire etc.
Gigs generally provide more income for signed bands than the sale of records. In fact, the number of people going to gigs has increased over the last 10 years, whilst record sales have decreased. Ticket sales can generate huge incomes for large music acts.
Let’s look at a Robbie Williams gig in August 2003. He performed at Knebworth with 3 other acts and 125,000 tickets were sold. I am not sure on the ticket price but I will set the average tickets sale price at £45. That means on one night they generated a colossal £5,625,000. This doesn’t even factor in the sale of programs, merchandise, food etc”
This piece, written in 2011, from Music Think Tank, might seem a bit outdated now but gives a good example of the profits, costs and revenue associated with gigs. Again, their quick answer – usually for the larger bands – equates to £2,340 per year (per band member). Taking a read further down the article and, when thinking about how much unsigned bands make a year – I got a bit of a reality check:
“We have made a guess that (20) unsigned bands managed to reach the UK top 40 in the last (5) years. Let’s assume that just (5) of those bands earned £18,200/year (per band member) in the year that they charted.
Let’s also assume that ten (10) more bands in the UK have generated £18,200/year (per band member), this would give us a total of just (15) unsigned bands that earned £18,200/year (per band member).
Sounds dismally low right? I’ll admit that there is precious little data to go on, but do you know any bands making this kind of money who are unsigned? Remember, an original four piece band would therefore need to generate £72,800 per year to qualify, I am guessing that is extremely rare.
With the information outlined above we can begin to answer the question, “What are the odds of succeeding without a record deal?”
The chances of an unsigned band earning £18,200/year (per band member) without a record deal is 0.00025%. (Assuming there are 600,000 unsigned bands in the UK and only fifteen (15) earn £18,200 per year (per band member)”
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THE CHARTS AND THE REALITIES FOR UNSIGNED BANDS:
I am sticking with that article and its information for the next consideration. If we know digital revenue is unpredictable and not that extraordinary: is it possible to get into the charts and get exposure from that? Again, going back to 2011, there were some definite trends emerging:
“In the last 5 years (2006-11) I estimate that there have been no more than 20 bands reach the top 40 without record label backing. This figure is a guess, but is backed up by Ditto music, who are one of the few companies that have successfully broken unsigned acts in the UK.
Ditto go on to suggest that, “without record label backing, you would need substantial financial backing to have a serious shot in the industry”.
So why such a low figure? Mark Robinson, vice-president of Warner Music said that “on average, it costs £621,000 to promote and launch a new band”. This marketing budget would be out of reach for almost all bands.
Certainly, there have been many bands who have succeeded with far lower budgets than this, but breaking an act is undeniably costly. PR plays a role in this cost. A band cannot make it to the higher levels without having media contacts. The whole process is much more time consuming and involved than many musicians think. Unless you employ someone with media contacts and experience many marketing avenues will simply not be available to the average band.
Recording, touring, promotion and PR costs add up. Most DIY musicians struggle to turn enough profit to fund growth and fail to gain enough exposure to generate real momentum”.
This all amount to this: around twenty bands (a few years ago, mind) who are unsigned make it into the charts. At the moments, the charts are getting overhauled and it means no one artist can dominate like Ed Sheeran did – when he has nineteen songs in the top-twenty. Since 2011, digital music has taken over so Spotify and its figures have more of an impact on the charts. That said; it is still challenging for new artists to rub shoulders with the big players and make it into the lofty positions. I’d say the figures we have been given are subject to a bit of flexibility. You do get some unsigned acts breaking the top-forty but, for the most part, it is mainstream artists who find success here. Radio interviews and chart exposure is crucial for musicians so one wonders, again, if new artists are suffering?
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Let’s get to the issue of the record deal and its benefits and negatives. Sourcing from this article and they lay out some cogent and practical pros and cons:
Major Label Deals: The Pros
1. Money: Deep, deep pockets have to be at the top of any major label "pros" list. Even with major-label music sales declining and the industry as a whole struggling to keep up with changes in the way people purchase and listen to music, major labels still have a huge financial advantage over just about every indie label. When your label has a lot of money, that means they'll be able to spend a lot of money promoting your record - which is exactly what you want. It also means they may be able to offer you a large advance and invest a lot in recording, touring, video shoots and other opportunities for you.
2. Connections: Money helps open a lot of doors, and when a major label comes knocking, most media outlets are ready to let them in. Additionally, most major labels have been in the business for decades and have long established connections that help you reach your music career goals.
1. Size: Alas, size CAN matter when it comes to record labels. Major labels are behind the vast majority of music sold, and this scale of operations can bring many advantages. First, they can get the best deals on manufacturing, advertising, and other expenses since they do business in such enormous bulk (they have way more purchasing power than indie labels). Second, because of all of the artists on their roster, they can pull some pretty big strings in the media. Here's a VERY common scenario: a major label may call up a big music magazine and say, "hey, if you want to interview (insert mega-selling artist), we suggest you review/feature (insert brand new, unknown label signing)." This is great for you, if you're that new label signing, because you get instant press in all of the top spots, giving you maximum exposure overnight.
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Major Label Deals: The Cons
1. Big Pond, Small Fish: A lot of major labels tend to sign a lot of musicians and throw out a lot of music, just to see what will stick. As a new signing, except in very special circumstances, you're likely to find yourself fighting for attention from the label. If your music doesn't start sticking - read: selling - pronto - then you can find yourself with a record out that isn't getting much promotion and a label that doesn't return your phone calls.
2. Continuity: A big part of avoiding the aforementioned "big pond, small fish" syndrome is having a big fan at the label. Usually, this is the person who signed you. However, turn over at a major label can be pretty high - especially in this day and age - and you run a high risk of waking up one day to find out that the person who loved your music is no longer working at the label. The new person who takes over your album may not be such a big fan, and suddenly, no one is too interested in making your album a priority. You can include a "key man" clause in your contract to try to avoid this, but often the bargaining power is against you when you sign a major label deal, so scoring this set up is not guaranteed.
3. Artist Unfriendly Deals: Not every major label deal is unfriendly to the artist, but many of them are set up so that if a cashier accidentally gives you an extra dollar in change, you have to pay the label 50 cents. OK, that's an exaggeration, but many major labels want to sign artist for multi-album deals that offer them very little flexibility and that hand over a lot of creative control to the label. They know all of the loopholes, they want a piece of everything, and they have better lawyers than you.
1. The Passion Question: Many dedicated music lovers work on the major label side of the music industry. However, not everyone who works at major labels loves music. You'll find a higher concentration of people who are in the business strictly for the money in major labels than you will at indie labels, and that often ends up rubbing musicians the wrong way.
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I have been provoked to write this piece for a number of reasons. I wanted to see how much bands/artists made gigging; whether digital outlets are good sources of income and the financial/profitability issues for unsigned artists. The record label, as I will look at in depth at the conclusion, is that contract and golden ticket that is not as sexy as you’d imagine. Let’s look at this article:
“However, once you delve into the inner workings of major record labels and the contracts these artists sign, it becomes clear the musicians most likely are not reaping the financial rewards themselves.
IBTimes UK recently attended a roundtable hosted at London's Real Deal Store where a panel of industry insiders discussed the urban music scene and the pros and cons of being an independent artist.
A&R manager at Island Records, Benny Scarrs, stated that while many aspiring musicians may be under the assumption that it is impossible to succeed without the backing of a major label, they are wrong.
He explained: "There are lots of people making music and they get frustrated because they feel like 'I need a label and [I] need a deal'. You don't really need a label or a deal”
It goes on to give more exposition and revelation – this article was written in 2015:
“Young Money, run by parent company Cash Money, is in charge creatively of its artists but receives funding from Universal's Republic Records.
While it is true YMCMB is one of the most successful hip hop imprints around, being signed to the label is not completely a bed of roses.
British artist Jay Sean was hot property in the UK when he headed over to the States in 2009 and signed to Cash Money. However, each year brought hopes of a huge album with a big promotional push but Sean failed to have a single hit while signed to the hip hop label.
In October 2014, he parted ways and is now going it alone independently. Not to mention both Young Money members Tyga and Lil Wayne are trying to get off the label due to their albums being continuously shelved".
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Becoming an independent artist is the direction that an increasing amount of acts are now opting for and Scarrs notes that ultimately, this means more money going directly into their pockets.
Among the perks are few arguments with labels over royalties or the fear of getting dropped without warning despite being signed to a multi single or album deal.
Plus, who needs a major label to take control of promotion when artists now have social media at their disposal to reach fans directly…Signing to an independent label is by no means an easy route but it does give the artist more control - both creative and financially. If Arcade Fire, Lecrae and Mumford & Sons can make it alone, then surely everyone else can”.
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So, then: how many bands/artists are ever likely to get signed in the first place? I shall bring you back to this trusted source and their findings
“So, what action can a band take to increase their chances of success in an overcrowded market? I will revert back to the Music-Think-Tank Blog once more and agree with the author that moving against the crowd can in some cases be very advantageous.
Creating music that is of high quality, yet different in some respects will instantly give you a unique selling point (USP), which is very important in standing out in a saturated market.
What are the odds of getting signed?
The problem with statistics (where unique talent is concerned) is that they can often be way off.
For example, let’s look at the likelihood of securing a record deal in the UK. We will assume the following;
§ There are roughly 700 independent record labels in the UK large enough to ‘break an act’
§ Each signs 1 acts per year
§ There are 600,000 bands vying for their attention
§ 1 in every 4 acts signed make £18,200/year (per band member)
Assuming you are average, you would therefore have a 1 in 3428 chance of being signed (0.029%). However, lets make some further assumptions on the quality of the song submissions;
§ 34% of song submissions are not right for the label (wrong genre etc)
§ 39% of song submissions are of low quality
§ 10% of song submissions are not considered for other reasons
§ 17% of song submissions are considered for signing
This would mean that talented bands would have a more attractive 1 in 582 chance of getting signed. Of course, the record label would be looking for much more than a good song, ability to perform live, being nice people and reliability etc would all go into the decision making process”.
Another huge factor in getting signed is getting noticed. Many A&R will not be able to listen to all demo submissions. This would provide a strong argument for submitting multiple demos to a wide range of record labels.
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IS BEING UNSIGNED THE WAY FORWARD?
I am fortune enough to see a few musicians provide a signature for a record label. It is the result of hard work and talent but, it seems there are big problems for independent artists and the association with a record label. I shall provide my own interpretation but I want to bring in some information from Mic.
1. Indie music is being threatened by the online platforms it needs.
It's one thing to get paid nothing for your music on the Internet. It's another not even to be able to distribute it online.
Recently, YouTube threatened to take down videos from independent labels and their artists (including the Arctic Monkeys) if the labels didn't agree to YouTube's unfavorable terms. And smaller labels and independent musicians could soon be slammed by the changing net neutrality landscape, which would favor bigger sites like Amazon that can afford to negotiate pricey agreements with Internet service providers, thus giving them all the bargaining power when it comes to cutting deals with musicians. All of this leaves small artists and labels with less and less power over careers and finances.
2. Independent labels can't afford to help their artists out.
Beggars Group, a collective of U.K. independent labels including Rough Trade (home to Arcade Fire and the Strokes) and 4AD (Bon Iver, the National) recently announced it will no longer split streaming royalty rates 50/50 with its artists.
The principle reasons, according to Beggars Group chairman Martin Mills, were "economical," because it was getting difficult to sustain. It's also possible that the rate could be lowered even further as streaming becomes more popular.
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3. Moving to a city where there’s a big, established music scene is costly.
The traditional narrative of "making it" in music generally involves being discovered. Unless your social media game is really top notch, that involves moving to a city with a real music scene — one where you can play lots of shows and find other bands to support your bills.
But if you want to follow in the National's footsteps and make the jump from Cincinnati to New York City to get discovered, you better be prepared to swallow a 110.8% hike in the cost of living.
4. No one wants to spend money on music — let alone on something they haven't heard.
Digital downloads dropped 12.5% in the first few months of 2014, while streaming rates skyrocketed.
"No musician I know is making their living from selling music," explainedNicolas Jaar, an experimental electronic musician whose 2011 debut album was a critical, if not commercial, success.
Even if you can convince people to buy your music, you see a diminishing slice of the pie — iTunes pays 70 cents per song, and that 70 cents could be distributed any number of ways, depending on whether an artist is on a label or not. If you go grassroots and sell via Bandcamp, the site takes a 10-15% cut before PayPal takes a cut, too. Even without labels, there are still middle men.
5. Streaming royalties are insultingly low.
Navigating Spotify's payment process is difficult, and sites work out different deals with different labels, but independent artists could be making as little as $0.005 per play. That's what inspired indie soul band Vulfpeck to encourage fans to stream music on repeat while they slept so the group could earn a bit more money for frivolous things like, you know, touring.
But non-scheming artists, more established are hardly making ends meet with the money that they're making online. As Marc Ribot, a guitarist who has played with the Black Keys and Tom Waits, pointed out: "If we can't make enough from digital media to pay for the record that we’ve just made, then we can't make another one."
6. Even if you make it to a major label, your career has no security.
Heard of St. Vincent? Probably. She just closed out the most recent season of Saturday Night Live, played the Pitchfork Music Festival and performed Nirvana's "Lithium" at the 2014 Rock and Roll Hall of Fame Induction Ceremony. You'd think she was in the clear.
But her touring partner and collaborator, Talking Heads frontman David Byrne, predicts a grim future for the indie rock superstar and others of similar ilk: "Many musicians like her, who seem to be well established, will eventually have to find employment elsewhere or change what they do to make more money."
Some professional musicians, like a few members of Grizzly Bear, even lackhealth care — to say nothing of musicians who aren't on a label.
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7. Touring is a big risk for young musicians.
A lot of independent artists have day jobs, since, as previously mentioned, it is really difficult to make a living selling music. But live music is increasingly an essential part of making it in music. That means that going on tour necessarily means leaving behind a steadier cash flow and prayingthat the job will still be there upon your return. In short, touring is more important for a young band than an established one, but its risk is far higher.
Still, it's one that makes indie music feel all the more vital. Just listen to Mutual Benefit's beautiful Love's Crushing Diamond, a bold celebration of what happened after the lead singer quit his job and went all out on music.
8. Touring is more expensive than ever.
If an independent artist is funding their own tour, that means paying for gas, lodging and other various travel expenses. The average price for gasoline hovers around $3.60 per gallon, which adds up if you're driving around the country. And it really adds up if, like Bear's Den, you're driving around the country in less-than-fuel efficient VW vans. Ah, the '60s — when the vans were stylish and gas cost 30 cents a gallon (not adjusted for inflation).
9. There's already more music out there than anyone will ever hear.
There are pros and cons to the Internet age: It's now easier than ever for someone to make and distribute music, but it's far harder to be noticed. Market oversaturation is real, making it difficult for consumers to know where to start when it comes to independent artists. Approximately four million songs on Spotify have never even been touched by the service's users — so many that they've since been collected into an app called Forgotify.
10. It’s just not profitable for labels to sign artists.
Labels that spend money on developing artists rarely recoup their money, so they’re taking a huge risk every time they sign a new artist.
"Most labels' artists’ signings are not ultimately profitable," Darius Van Armen, the co-owner of indie labels including Jagjaguwar (which launched Bon Iver) and Secretly Canadian, explained in a recent statement to Congress regarding copyrights and intellectual property. If that attitude went to its logical extreme under the duress of streaming service royalties, we may well miss the next Bon Iver.
11. Labels don't develop acts, they only sign popular ones.
Labels are hedging their bets by signing any band, and most likely will not make a profit off of a new artist.
"In the future, artists will get record deals because they have fans, not the other way around," Taylor Swift wrote in a recent op-ed piece for the Wall Street Journal.
This creates a cyclical trap for independent artists, who face the issue of having to promote their music on their own in order to garner enough fans to get the attention of the bigger players in the industry so they can have fans that pay them nothing.
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It seems there is no easy answer but there is this assumption getting a record label is the be-all-and-end-all. So many go chasing it; assuming it will gain them money and stability. If physical sales are unstable and capricious; digital outlets are flawed and geared more to the mainstream acts – surely, then, record labels are the way forward?! We have seen all the arguments and sides laid out. I think, if you get the right label behind you – that can be impossible to define – you get the best of every world. I find P.R. companies are more supportive and give an artist a better deal. They are not steering them for the mainstream or trying to strip them of their cash – not looking at the bottom-line and motivated, as much, by profit. P.R. companies are about promoting music and getting that artist out there. I work with a lot of them and know how tirelessly they work. It is good because you get a promoter looking after interview requests and interviews etc. – helping get gigs and all the things a record label might deal with. In terms of the actual selling and marketing of the track: there is a lot more freedom for the artist. It is hard to give simple answers to but I feel record deals are ONLY desirable and secure if you do your research and know what you are getting into. So many artists are struggling to make money – through streaming and gigs – they go chasing this carrot with everything they have. It is hard and exhausting taking care of all your music but it means you can steer your career and have a lot more say. Maybe it will take more than this article to get to the bottom of things: every artist is different and will have different ideas of how they want their career to unfold. Don’t get me wrong. I am not down on record labels – they can be brilliant and life-changing for artists – but the romance one associates with the label is exaggerated and false. Do not think the record deal is the goal and sign of a successful musician because, as we have seen, it is…
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NOT all it is cracked up to be.