Indie vs Major Label

There is always the discussion on which type of record label an artist should sign to if he really wants to get a good deal; an Indie (Independent) record label, or a major one. Before I go on, you should know that there are 4 Major Labels, with hundreds of subsidiary labels under them. The big 4 are- Universal Music Group, Sony BMG, EMI, and Warner Music group. There are a lot of Indie labels, but the most popular are E1 Music (formerly known as Koch Records), XL Recordings and Red Distribution.

 Just for the record, know that most of your favourite rappers like Drake, Lil Wayne, Kanye West, and Jay-Z are signed to Major labels. Drake is signed to Young Money, which is under Cash Money Records, which is a subsidiary of Universal Records. Kanye west is signed to Def Jam Records, which is also a subsidiary of Universal Records. 50 Cent, Eminem and Dr. Dre are signed to Interscope Records, which is also a subsidiary of Universal Records. Rick Ross is signed to Def Jam Records, which is a subsidiary of Universal Records. But, his own label, Maybach Music Group (with artists like Meek Mill, Wale and Omarion), is a stand alone label, and a subsidiary of Warner Music Group. Lupe Fiasco is signed to Atlantic Records, which is a subsidiary of Warner Music Group. The large YMCMB (Young Money Cash Money Records) empire is a subsidiary of Universal Music Group, and distributed by Republic Records. The advantage of signing to a major label is the bigger budget for music video shoots, larger advance money, better distribution of music CDs internationally, bigger promotions and so on.




In the case of the Indie labels like E1 Music (former Koch Records), the artist isn't privileged with such big budgets, but he has better creative control of the music he makes, and also earns more on each CD sold. Where artists on Major labels make 10-15% on each CD sold, Indie artists make between 40-70% depending on the deal signed. And with the case of the major label artist who gets a higher record advance money of between $300,000-$1,000,000 (which is like a loan) after signing their deals, they wont start earning on Royalties on their albums till they recoup the advance money they were given by the label. So, let's use Chief Keef as an example. His whole 3 album deal with Interscope Records is worth $6 mill, but his actual advance money was $440k. So, he has to recoup on that before he even gets a cent in royalty payment.




Right now, his Finally Rich album has sold 107,000 copies since it was released in December last year. Interscope has given him till December this year (2013) to hit 250k sold, or they pull the plug on his other 2 albums and his compilation album. Why? Because it's called the music business, they have to make profits. At 100k sold, and with the label making an average of 3 dollars on each Cd sold (depending on whether it is an online sell or offline), he has not made back the advance he was given. And also, an additional $300k was spent on the recording of the actual album. So, that is 740k he is owing Interscope. If he can sell 250k copies by December  he would have brought in $750k for Interscope Records, and recouped the $740k investment on him.





So much complications in the music business.  That's why artists really depend on shows and concerts. But, some artists sign 360 deals, which allows the record companies to get bulk of their tour money as well. So, what about the Indie world? Well, it is more of a "do it yourself" field of play. But if you have a loyal fanbase already, then it can make a lot of sense to go that route. I remember the intro of Fat Joe's Elephant in the Room where he had this line- "major label dropped me, what did I do? I got richer." Fat Joe had been on Atlantic Records till they dropped him in 2005. But after he went the independent way, and making about $6 dollars on a CD, instead of 70 cents, he was able to go from where selling 150k copies would get him zero dollars (because he might not have recouped money spent on him), to making $900k copies on the same amount of albums sold. So, since he was never a big seller, it made sense for him to stay indie...and he got richer. And with his singles like Make It Rain selling 2-3 million downloads (like 50 cent on each download), and with better control of his material, he made more money.

So, which is more advisable? Indie or Major? As I said, it all depends on the status of the artist. Drake is on a major, but since he is a platinum selling artist, he would easily recoup money spent on him in the first week of his album being out, and start earning royalties on each CD right afterwards. You have rappers like Tyler The Creator and Tech N9ne getting their money the independent way. Macklemore & Ryan Lewis are on an indie label, and their The Heist album is almost at 300k sold; that is great commercial success for them.