Record label

A record label or record company makes and sells sound and video recordings, on various formats including compact discs, LPs, DVD-Audio, SACDs, and cassettes. The name "record label" is from the paper label at the center of a gramophone record (what is also known as a "phonograph record" in American English).

Most major record labels are owned by a few large multinational companies. They make up most of the global recording industry, although there now more independent record labels.

Labels as brands

Recording companies often spend a lot of time and money in discovering new musicians or developing the talent of people they already have signed up with a contract. The association of the brand with the musicians helps define the image of both the brand and the musician.

In spite of the fact that they need each other to survive, the relationship between record labels and musicians can be difficult. Many musician have had albums changed or censored in some way by the labels before they are released—songs being edited, artwork or titles being changed, etc. Record labels generally do this because they believe that the album will sell better if the changes are made. Often the record label's decisions are correct ones from a business perspective, but this typically frustrates the musicians who feels that their work is being destroyed.

In the early days of the recording industry, record labels were absolutely necessary for success. The first goal of any new musician or band was to get signed to a contract as soon as possible. In the 1940s, 1950s and 1960s, many were so desperate to sign a contract with a record company that they signed a bad contract, sometimes giving away the rights to their music in the process. Entertainment lawyers are now used by some to look over any contract before it is signed.

Industry consolidation

In the 1970s and 1980s, there was a phase of consolidation in the record industry that led to almost all major labels being owned by a very few multinational companies, who were mostly members of the RIAA.

See also: List of record labels

The resurgence of independent labels

In the 1990s, due to the widespread use of home studios, consumer CD recorders, and the Internet, independent labels became more common. Independent labels are often musician-owned (although not always), with a focus on making good music and not always on making lots of money. Independent musicians usually receive less radio play and sell fewer CDs than artists signed to major labels. However, they usually have more control over the music and packaging of the released product.

Established artists, once their record contract has finished, sometimes move to an independent label. This often gives the combined advantage of name recognition and more control over one's music. Singers Dolly Parton, Aimee Mann and Prince, among others, have done this.

While there are many independent labels, folk singer Ani DiFranco's Righteous Babe Records is often cited as an ideal example. The singer turned down lucrative contracts from several labels in order to establish her own New-York-based company. Constant touring resulted in success for an act without significant major funding. Ani and others from the company have spoken on several occasions about their business model in hopes of encouraging others.

Some independent labels become successful enough that major record companies negotiate contracts to either distribute music for the label or purchase the label completely.

On the punk rock scene, the DIY punk ethic encouraged bands to self-publish and self-distribute. This approach has been around since the early 1980s, in an attempt to stay true to the punk ideals of doing it yourself and not selling out to corporate profits and control. They have a reputation for being unwilling to cooperate with the big record labels.

The emergence of net labels

With the Internet now being a viable source for music, net labels started. Depending on the ideals of the net label, music files from the artists may be downloaded free of charge or for a fee that is paid via PayPal or an online payment system. Some of these labels also offer hard copy CDs in addition to direct download (for example, Baltimore's Schismatik Archived 2005-04-02 at the Wayback Machine record label ships CDs for a nominal charge). Most net labels acknowledge the Creative Commons licensing system thus reserving certain rights for the artist.

The emergence of open-source labels

The new century brought open-source or open-content record labels. These are inspired by the free software and open-source movement and the success of GNU/Linux.

Examples are

• LOCA Records
• Magnatune
• Opsound