Music Industry, Business, Fame and Art

This is what I understand about the music industry. There are just three major corporations that own the various record companies, in the world (Sony, Universal, Warner). Each record company, or label, like Capitol Records, look for talent called the A&R process. The label backs the talent, and in exchange keeps the rights on their recordings. The talent earn their portion of royalties, that is like a commission, but the rest it goes to the record label. The idea behind this arrangement is that nothing, no matter how good, sells itself, so the artist needs the backing of the record label.

Some artists create their own record label. If it is not owned by the three major corporations it is an indie label. If you were offered your own label, it would report to the corporate headquarters, like Capitol Records would as well. You would be the CEO of your label alongside the CEO of Capitol Records reporting to the CEO of the corporation like Sony. As CEO of your own label, you take on the role of executive, accountant, marketer and so on. Jay Z has control over his library because he is CEO of his own label, and his division under Universal(sic) is responsible for profits and losses. Hypothetically a CEO of a money losing label can be replaced on the order of the corporate CEO.

The artist who earns money from their royalties still have to save money because it is like a salary not corporate profits. An artist with their own label can draw a higher salary as a CEO. There is a separation called limited liability that works both ways: protecting private wealth but it also means you can’t use corporate wealth for your own pleasure.

The corporation that owns the artists recordings will have radio play it all the time, until the artist is incredibly famous. But the artist, who earns only a portion of the entire royalties, might not like their instant fame because of bad media coverage.