Most Independent Labels Will FAIL without Implementing this Business Model | Label is the Artist

Why the "Label is the Artist" business model is the future for music labels

The first recording contract on record was via the Victor Talking-Machine Company back in 1904. The deal provided one artist $4000 per song, plus 40 cents (or 26% to 40%) per sale. After the U.S. Congress passed the Copyright Act of 1909, this created the compulsory mechanical license to ensure publishers and writers (not performers) received a small piece of every record sold. During this time, many A&R scouts would buy songs, usually from black musicians for $25 to $50. Victor did a rare performer-friendly deal with singer Enrico Caruso, guaranteeing him $100K a year for 10 years, plus royalties, compared to a typical performer salary of $15K and no royalties.

From the 1930s to the 90s, artist royalties with majors were mostly lopsided with percentages ranging from 5%-12% on average in the U.S. because of the extreme risks of discovering, developing, distributing, and marketing artists in a world of physical music. Of course, some indie labels and production companies enjoyed joint ventures (50/50 splits). Then came Napster and other peer-to-peer file-sharing apps and websites that ended up ending the rise of CD sales. Music listeners good practically get any song they wanted without paying a dime. With the introduction and adoption of iTunes, and with record sales at record lows, labels had to find a way to generate more income. Enter 360 deals where labels would earn from every recording artist's revenue stream. For example, income from endorsements (15 – 30%), touring (10 – 30%), merch (20 – 50%), and synch (15 – 40%).

Streaming and advancements in technology changed things once again between 2013-2016. Labels had to adapt because artists now had the option of uploading their music digitally to storefronts where fans could listen to an infinite amount of music for one cost a month. There were always label services companies owned by major labels but now, independent entities started to pop up to take advantage of the lower barrier of entry for artists.

With the consolidation of label services companies, we're now at a new age for music labels. With streaming and hyper-segmented music discovery, superstar recording artists are bringing in less of a majority percentage of income for labels than before. Warner Music Group has already moved to rely less on individual artists and is using the consistent results of many to increase its bottom line. This leads way for a alternative business model, the "label is the artist".

In this video, Valholla Records Founder and Chairman Vince Valholla explains this business model in a case study available here: https://valhol.la/labelistheartistcas...

Vince is also the founder of the rotating collective Vince & The Valholla Empire. This collective is run on the "label is the artist" business model and Vince believes in this model so much, he recently committed to return masters to previous recording artists of Valholla and will not sign any new artists to traditional record deals.

Listen to Vince & The Valholla Empire here: https://music.valholla.com/empirepack

About our company: Valholla Worldwide Entertainment Group (formerly Valholla Entertainment) has 19 years of experience, and we've worked through 3 eras of the music business.

For more from our company, visit https://valholla.com