Record labels are music industry companies that handle everything from discovering new artists to distributing their music. I'll explain exactly how they work and what they do for artists.

A record label's primary function is to act as both a bank and a business partner for musicians. They provide the financial backing and industry expertise needed to create, market, and distribute music professionally.

Here's what record labels typically do:

1. Discover and sign new talent
2. Fund recording sessions and album production
3. Handle marketing and promotion
4. Manage music distribution
5. Provide legal support and copyright protection

When an artist signs with a label, they typically receive an advance payment. This is essentially a loan that gets paid back through future music sales. The label then invests in recording, production, marketing, and distribution of the artist's music.

There are three main types of record labels:

• Major Labels: Universal, Sony, and Warner Music Group
• Independent Labels: Smaller companies with their own distribution
• Subsidiary Labels: Owned by major labels but operate separately

The revenue split between artists and labels varies, but traditionally labels take 80-85% of revenue while artists receive 15-20%. This might seem unfair, but labels argue this covers their significant upfront investments and ongoing costs.

Modern record labels have adapted to digital streaming. They now focus heavily on playlist placement, social media promotion, and digital marketing strategies. Many also offer 360 deals, where they receive a percentage of all artist income, including touring and merchandise.

DIY artists can now bypass traditional labels thanks to digital distribution platforms. However, record labels still offer valuable resources, industry connections, and expertise that can be difficult to replicate independently.

The key difference between major and independent labels is scale and resources. Major labels have massive budgets and global reach, while independent labels often provide more creative freedom and better revenue splits but with limited resources.

Record labels make money through:

• Streaming and digital downloads
• Physical album sales
• Licensing deals for movies, TV, and commercials
• Publishing rights
• Merchandise sales (in 360 deals)

To get signed by a record label, artists typically need:

• A strong following on social media
• Proven streaming numbers
• Professional recordings
• Live performance experience
• A unique sound or image

The music industry continues to evolve, but record labels remain central to launching and sustaining successful music careers. They provide the capital, expertise, and connections needed to turn talented artists into profitable acts.

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