Music Business: What is a Record Label?

A record label is a chartered corporate entity whose main focus is turning an art form (i.e music) into a money making machine primarily in the music industry but can venture in other fields via the use of a 360 deal signed with an artist.

So it lies in the best interest for a record label to take care of their investment which is the “artist” with the end goal of promoting and marketing the artist while at the same time expecting a reasonable return on investment (ROI).

However, a record label can only put up with the mandate to finance and promote an artist to a reasonable extent without exposing themselves too much to any financial risk.

That is, if a record label fails to address the issue of risk management in making contractual provisions to the artist’s needs. Then the end result can have the similarity of polishing a turd whereby the record label continues to push an artist that is constantly failing to make waves and not building a loyal fan base.

Examples of Major Record Labels

You can think of major records labels as huge multinational companies which have their tentacles in almost every aspect of the music industry whether it’s from a record company division or a music publishing division, you name it.

Nonetheless the following is a list of notable major record labels in the music industry:

  • Sony Entertainment Music (i.e Sony Music)
  • Warner Music Group (i.e WMG)
  • Universal Music Group i.e UMG)

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