Monday, August 9, 2010

How To Know When You Need A Label

It's time for another excerpt from Music 3.0: A Survival Guide For Making Music In The Internet Age. Although DIY (do it yourself) is very in vogue these days, there comes a time when the only way you can jump to the next level is to partner with a record label. This excerpt details when to know that time has come.


This entire book so far has been about getting along in the new music world without a record label, but there does come a time when having a label is worth considering if you want to jump to the next level as an artist. Record labels are not intrinsically bad, it’s just that you have to weigh the advantages versus the disadvantages to determine whether the time is right for you to be associated with one or not. 
It’s easy to look at them as buffoons (like we do politicians), but most of them are surprisingly smart. This last 10 years has been humbling for them. It’s shaken out the people that were only in it for the money, so most of the people at labels today are in it for the right reasons and are more entrepreneurial.
Derek Sivers
You might want to consider a label if:
They’re offering you a staggering amount of money. If this happens, you either must be hot enough for a bidding war to have broken out or they really, really believe in your future. Just remember that this might be the last money you’ll ever see and it may have a significant negative impact on any credibility that you have with your fan base. Best to test the notion of signing with a label with your tribe just to see the reaction first since they won’t buy anything from you if they feel you sold them out.
You need money for recording, touring, or any other needs. One of the things that labels do really well is act like a bank using your music as collateral. Major labels still do this as well as ever before, but is it worth the price you’re going to pay in terms of the freedom that M30 offers?
You’re spending too much time on certain aspects of a career. A label can take some of the burden of marketing and distribution off your shoulders. You still have to be involved on some level though, or you run the risk of things getting way off course before it’s brought to your attention. If you don’t have a manager already, this might be a better association than a label when you reach this point.
You need expanded distribution. If you need distribution into brick and mortar stores beyond what a small indie label can provide, a major label can be your friend. They have the relationships, the sales force and the means to collect the money. If you’re distributing by yourself, you’ll get paid if and when the stores feel like it since you have no clout. In some cases, you can’t even get into the remaining chains and retail stores because you don’t sell enough to get on their radar. A major label or large indie sells the stores a lot of product and they’re trusted, so it’s a lot easier for them to get the retailer to take a chance. Plus, the label has some leverage in that they can always threaten to withhold in-demand product if they don’t get paid.
You want to expand into foreign territories. Let’s say that you have a huge following in Germany via your online efforts, but you can’t service them properly because you live in Kansas City. A major label can use their overseas resources to promote you and get product in the stores there. It saves you the hassle of reinventing the distribution and marketing wheels.
You need economies of scale. Sometimes the power of a big label can be used to your advantage as they can cut a better deal with a service (YouTube and MTV come to mind) than you ever could as an indie.
In the video business there was a conscious decision made that video was no longer going to be free anymore. How can it be promotional if MTV doesn’t play it? It has become a product, so we’re going to make money out of it. It turns out there’s a tremendous demand for music videos and they can be monetized. Now we’re the biggest channel on YouTube. But it’s better for us to deal with YouTube on a centralized basis, than as individual labels.
Howard Soroka - Vice-President of Media Technologies - Universal Music Group
You need major marketing. The one thing a major label does well is to market you traditionally. If you want airplay on radio and appearances on television, a label may be your only hope. If you want reviews and articles in mainstream media, they still have the clout to get it done. 
If you feel that you’ve gone as far as you can go as an indie artist. If you need help to push your career over the edge to stardom, then a major label or major label imprint may be the way to go. This is what they do, sometimes well, sometimes not. 
Unless you have a specific need for any of the above that you’re sure you can’t fill any other way, it’s best to stay independent for as long as you can as long as M30 is around. Who knows how long it will last? Maybe a year or two if we’re lucky, but maybe a lot less than that, which might be lucky too since it will spell the latest music business evolution.
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