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Indie Labels vs Major Record Companies
The music industry has been bemoaning its fate, as the costs of promoting artists and their songs soar while sales slump. It seems that it's facing a slow, self-inflicted implosion. It blames its demise on the Internet and the easy access that fans have to music that has yet to be released for public consumption. Independent record labels, on the other hand, are revelling in the public attention that the Internet brings to their artists. According to independent record labels, business is booming and prospects have never looked better.
An expense that major record companies have that Indie labels have been clever enough to avoid is playtime on commercial radio stations. Major labels have to pay from $400,000 up, in order to get one song on air. Indie labels tend not to even approach large commercial stations as they know that they can't afford all the promotion costs that are included in the deal. They prefer to work with college and public radio stations that are usually more receptive to music that is not mainstream and conformist.
Another marketing strategy that has helped to increase album sales for indie labels is that they target consumers who are still willing to pay for music. This group consists mostly of grown-ups who feel that they have to pay for what they own and don't have a "if I can get it for free I will" attitude. Adults have a greater sense of ethical responsibility and a respect for hard work, and are less likely to download music for free.
Many artists are adopting a more extreme independent approach by forming their own record labels. This allows them to have complete creative control over the record making process and is the ultimate in self-expression for any indie artist.
Most artists think that signing with a major label will be their ticket to the big time and that the money will come rolling in. In fact, artists have to sell about 1 million albums before they start seeing their share of the profits, as their studio time and all of the "perks" of the business, such as the limo rides, are charged against their royalties. Royalties might also be heavily weighted in favour of the label. Many artists are surprised to find that they earn only $1 per disc sold.
Compare that with an indie label, which with careful planning and budgeting, is able to keep marketing and overhead expenses within a manageable range. With expenses down, the profit margin is larger. They also have fairer profit sharing deals, often splitting profits equally between the label and the artist. When it comes to selling discs, indie artists can sell discs at a concert and make a decent profit from sales numbering in the thousands only.
One of the biggest and perhaps most distinguishing differences between indie and major labels is that indie labels let artists keep the rights to their work. Large labels have the option of not releasing any music an artist has recorded, and all the while the artist remains bound to them by contract and can't sign up with any other label. The artist is taken out of the public eye and effectively has his or her career terminated at the whim of the label.
Many experts involved in the music industry have predicted that major record labels are going the way of the dinosaur. They attribute this mainly to the large labels' inability to read and react to activity in the music market. Large labels create such huge promotional vehicles around their artists that it takes them too long to react to a drop in record sales, and change their marketing strategy. Conversely, if an artist's sales pick up after a slump, it takes the label too long to get a large promotional and marketing strategy off the ground. Indie labels, on the other hand, are ideally placed to take advantage of market movements, as they are small and can move quickly to capitalise on opportunities or invest in some damage control.
It's been said that big labels have forgotten what's important in the music industry, that the artists are the resource to be treasured and not the songs. Indie music and, as a product, indie labels have never forgotten this fact. Artists have always been recognised as respected contributors to the music industry. They have always been fairly counted into whatever profits there may have been. Indie labels do their best to adhere to the principles and culture upon which the indie scene has been built. By doing this, they have managed to achieve comparatively more success than the big boys in the industry. This must be a big blow to those who believe that non-conformists will never be successful in life.