Music Business & Entertainment Business
HOW RECORD LABELS OPERATE
(Major vs. Independent)
What a Record Label Actually Does
A record label is essentially a business that helps artists create, promote, and distribute music to the public. Their main goal? To make the artist's music profitable.
Most Labels Handle:
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Funding: Paying for studio sessions, producers, videos, photos, marketing & touring.
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Distribution: Getting the music on platforms like Spotify, Apple Music, YouTube, and in some cases, physical formats.
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Marketing & PR: Promoting songs, building the artists image, and getting media coverage.
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Artist Development: Helping shape the artist sound, image, and brand identity.
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Business Administration: Managing royalties, copyrights, publishing, and contracts.
In return the label takes a percentage of revenue and often owns the master recordings (meaning they control how the music is used).
Major Record Labels
Major labels are the "big players" that dominate the global music industry.
The Big Three are:
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Universal Music Group (UMG)
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Sony Music Entertainment
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Warner Music Group (WMG)
These companies have massive resources, global marketing teams, radio connections, and powerful distribution networks.
How They Operate:
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Investment: They offer big budgets for recording, marketing, and touring.
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Control: Because they invest heavily, they often control the master rights and decision-making power.
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Contracts: Artists typically sign multi-album deals that last several years.
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Departments: They have full teams — A&R (talent scouting), marketing, PR, radio promotion, legal, and touring divisions.
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Reach: They make a new artist go global almost instantly.
Pros:
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Access to major funding and resources.
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Large-scale exposure and radio play.
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Connections with top producers, songwriters, and media outlets.
Cons:
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Loss of creative control
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Lower percentage of profits (labels often take 80-90%)
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Long-term contracts that can be hard to exit.
Example: Artists like Drake, Taylor Swift (previously), and Doja Cat started or worked under major labels.
Independent Record
Labels
Independent labels operate without the financial backing of a major corporation.
They're usually smaller, more personal, and focused on niches markets or specific genres (like R&B, Hip-Hop, or Alternative music).
How They Operate:
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Flexible Deals: Indie labels often negotiate fairer slips (like 50/50) and may let artists keep their masters.
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Smaller Teams: They have fewer people, so artist often have a closer relationship with their label.
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DIY Spirit: They focus on organic growth, fan engagement, and creative freedom.
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Distribution: They often partner with independent distributors like DistroKid, TuneCore, or EMPIRE.
Pros:
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Greater creative control and transparency
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More ownership of your music
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Personalized attention from label staff
Cons:
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Smaller budgets for marketing and promotion
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Limited access to mainstream media or radio play
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Slower growth compared to major label support
Example: Labels like EMPIRE, Top Dawg Entertainment (TDE), & LVRN are well-known successful indies that grew their artists into household names like SZA & Kendrick Lamar.
The Business Side
(HOW MONEY FLOWS)
When a label signs an artist, they often give and advance — an upfront payment that must be recouped (paid back) before the artist sees profits.
Here's how it typically works:
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Label invests in production, marketing, and distribution.
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Music is released and generated income (streams, sales, licensing).
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Label recoup all expenses from the artist's share.
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Only after recoupment does the artist start earning royalties.
Example: If your deal gives you 20% & your album makes $100,000, but the label spent $60,000 in expenses, you don't get paid until that $60k is made back.
Before signing anything, get a music attorney to review your deal. A good lawyer can help negotiate ownership terms, royalty splits, and creative control — protecting your long-term career and income.
Roles of Manager's A&R's & Agents
Behind every successful artist is a strong team. While the artist is the face of the brand, their team works behind the scenes to manage business, growth, and opportunities. Three of the most important roles are the Manager, Agent, & A&R — each with a unique responsibility in building & sustaining an artist's career.
The Manger — The CEO of the Artist's Career
A manager is like the artist's business partner and advisor. They oversee the artist's overall career, helping make major decisions, organize the brand, & execute long-term strategies.
Think of them as the "CEO" of the artist's career — guiding the vision while balancing creativity and business.
Main Responsibilities:
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Career Planning: Helps map out short-term and long-term goals (albums, tours, partnerships).
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Business Negotiation: Hires and manages the rest of the team — publicists, agent, lawyer, etc.
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Scheduling & Logistics: Keeps the artist organized with meetings, appearances, and deadlines.
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Brand Strategy: Shapes the artist's image, messaging, & marketing direction.
Key Traits of a Good Manager:
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Trustworthy & Loyal
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Business-Saavy with strong industry connections
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Good communicator & problem-solver.
Example: Think of Scooter Braun (Justin Bieber, Ariana Grande) or Rich Paul (Lebron James in sports) — both manage talent and business with strategy and influence.
The Agent — The Deal Maker for Live Opportunities
An agent focuses on booking paid opportunities for the artist — like live shows, tours, festivals, appearances, and brand sponsorships.
They're licensed professionals (in most states) and often work for booking agencies that represents multiple artists.
Main Responsibilities:
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Booking Shows: Finds and negotiates liver performances, tours, and event appearances.
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Tour Planning: Works with promoters, venues, and tour manager to create tour schedules.
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Brand & Endorsement Deals: Sometimes helps secure partnerships pr collaborations that pay.
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Contract Negotiations: Handles performance agreements and ensures fair pay and conditions.
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Revenue Maximization: Helps the artist ear more by increasing booking rates and expanding reach.
How Agents Get Paid:
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Usually take 10-15% commission from the artist's earning for gigs they book.
Example: A talent agent might book an artist for Rolling Loud, a college show, or a brand-sponsored tour—making sure all travel, performance fees, and logistics are covered.
The A&R (Artist & Repertoire)— The Talent Scout & Developer
An A&R works for a record label or music publisher, an their job is to discover, develop, and guide artists creatively.
They act as the bridge between the artist & the label — finding new talent and helping shape the sound, style, & potential hits.
Main Responsibilities:
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Talent Scouting: Finds & signs new artist with potential (through social media, showcases, word of mouth).
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Creative Development: Helps artists find producers, songwriters, and then right sound for their music.
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Project Coordination: Oversees recording sessions, album rollouts, and song selection.
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Connecting Artists to Opportunities: Aligns artists with collaborations and partnerships that elevate their career.
Key Skills of a Good A&R:
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Great ear for talent & trends
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Deep music and market knowledge
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Relationship-building with artists, producers, & executives
Example: A&R executives like Tunde Balogun (LVRN) or Tunji Balogun (Def Jam) have discovered & developed talent like SZA 6Lack, & Bryson Tiller.
Pro Tips for Artist:
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Choose a manager who believes in your vision — not just your potential profits.
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Don't hire an agent until you're ready for constant live performances.
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Build a relationship with A&R's, even if you're independent — they can open powerful doors.
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Always keep communication open between all three roles — your career is strongest when EVERYONE is ALIGNED.
Distribution & Publishing
Music Distribution (Getting Your Music Out There)
Think of distribution like delivery. You made the product (your song), and now you need someone to deliver it to stores so people can buy or stream it.
What distributors do:
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They take your music and send it to all the major streaming platforms — like Spotify, Apple Music, YouTube Music, Tidal, Amazon Music, and more.
Examples of distributors:
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DistroKid, TuneCore, CD Baby, UnitedMasters, and EMPIRE.
How they make money:
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Some charge a flat fee (like $20 a year), others take a percentage (like 15–20%) of your royalties.
Why it matters:
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Without a distributor, your music can’t be streamed or sold anywhere officially. They make sure your music is everywhere fans listen — and that you get paid when it’s played.
Distribution = getting your music delivered to all streaming platforms so fans can find it.
Music Publishing (Protecting & Getting Paid for Your Songwriting)
Think of publishing like ownership and collection. You wrote a song — that means you own a piece of intellectual property (like owning land). A publisher helps you protect it and get all the money you’re owed from it.
What publishers do:
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They register your songs with performing rights organizations (like BMI, ASCAP, or SESAC) and make sure you get paid when your music is:
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Played on radio
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Streamed online
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Performed live
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Used in movies, TV shows, or commercials
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Types of publishing royalties:
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Performance royalties – when your song is played in public (radio, TV, concerts)
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Mechanical royalties – when your song is reproduced (streamed or sold)
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Sync royalties – when your song is synced with visuals (like film or TikTok videos)
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Examples of publishers:
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Sony Music Publishing, Universal Music Publishing Group, Warner Chappell, Kobalt, or independent ones like Songtrust.
Publishing = managing your songwriting rights and collecting every dollar your music earns.
HOW ARTISTS GET PAID
Streaming Royalties
When your song gets played on Spotify, Apple Music, YouTube, etc.
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You earn money every time someone streams your song.
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The streaming platform pays your distributor (like DistroKid, TuneCore, or UnitedMasters).
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The distributor then pays you (the artist) your share.
Important: Streaming pays small — usually fractions of a cent per stream — but it adds up over time.
Example: 1 million Spotify streams might earn around $3,000–$5,000 depending on the platform and splits.
ROYALTIES
Performance Royalties
When your song is played publicly.
You get paid if your music is:
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Played on the radio
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Performed live (by you or someone else)
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Played in a restaurant, store, or club
These are collected by PROs (Performing Rights Organizations) like BMI, ASCAP, or SESAC.
They send you a check for your share as the songwriter or composer.
Tip: You must register your songs with a PRO to get paid these royalties!
Mechanical Royalties
When your song is reproduced or streamed.
That means:
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Every time someone downloads your song
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Every time it’s streamed on platforms like Spotify or Apple Music
These are paid to the songwriter and publisher, not the performer. Companies like The MLC (Mechanical Licensing Collective) or Songtrust help collect them.
Example: If you wrote the song but another artist records it, you still get paid mechanical royalties.
Publishing Royalties
These come from your songwriting — the lyrics, melody, and composition.
You earn:
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Performance royalties (radio, concerts, TV)
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Mechanical royalties (sales, streams)
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Sync royalties (TV, film, ads)
These are usually collected by your publisher or a publishing admin (like Songtrust, Kobalt, or a major publisher).
Even if you’re an indie artist, you’re still a songwriter — so don’t skip publishing!
Producer & Artist Splits
When multiple people work on a song, the earnings are split between them.
Common examples:
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Artist: 50%
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Producer: 50%
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Or, Artist: 60%, Producer: 40%
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Songwriters split the publishing side (lyrics/melody)
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Beat makers split the master side (recording)
Always use split sheets to agree on who gets what before you release your song.
This prevents arguments and ensures everyone gets paid correctly.
Label Deals
If you’re signed to a label:
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The label usually owns part (or all) of the masters.
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You get an advance (upfront payment) that you have to recoup (pay back) from your future royalties.
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After recoupment, you earn a percentage (royalty rate) — usually 10–20% for artists.
Indie artists keep more control and money because they usually own their masters.
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