Contracts offered by Record labels and Production companies today, as pointed out previously, have elements and clauses included in them which might seem a little intimidating to those just starting out. These clauses have been included to protect the massive investment most labels and companies put into their artists.

As with any business, record labels and production companies are trying to minimize their risk while maximizing their investment so they include provisions in their contract that define how much an artist will get for a project; who the producer on the project is responsible to; how all money spent on the project for such items as advertising, recording, production, and promotion will be re-paid; and what exactly is or is not a “commercial” release. These clauses have added to the frustration of artists trying to establish their career, but rather than give up, many artists have opted to go the route that is steadily becoming the norm in the industry: establishing their own label.

Independent labels have been around the music industry for as long as there has been a music industry. Back in the days of vinyl, small record companies were usually the ones who put out regional and local talent the major labels had ignored. These labels were known to be risk-takers and would often put out material that many “experts” had deemed foolhardy to produce, such as rock and roll, rap, and techno. Motown proved to be one of the most successful of these independents, and is often seen as the definitive entrepreneurial model for those seeking to go that route.

The overwhelming success of Motown--and other labels like Stax, Philadelphia International, and Def Jam--proved that it was possible to become successful without the aid or assistance of a major company. Many artists, songwriters, promoters, managers, producers, lawyers, and even former major label executives decided to cast their nets in the wide-open waters of independent music production and established such companies as Cash Money Records; J Records; LaFace Records; Bad Boy; Aftermath; Tommy Boy; A&M, and others.

By establishing their own labels, many artists, producers, and songwriters saw an opportunity to thrive and survive in ways that working with a major label could not--or would not--guarantee. By being the owner of a label, the most positive aspect was that there was no intense pressure to sell a certain number of records. If an artist who had a sound that he estimated would take the general public time to acclimate itself to, he could possibly construct a marketing plan that would take into account that it may be months--or years--before a profit was seen. He could then take a slow and steady approach in building his fan and customer base, and as a residual effect, have time to develop his artistic skills as well.

Another advantage of establishing and running a small independent label is that the costs to make the project would be low and therefore the amount needed to make a profit through CD sales would be low as well. For a small label, selling about 20 copies a week for two months straight would be cause for celebration, whereas a major label would consider that an abject disaster. With a small independent label, an artist may also feel that his needs and concerns could be more addressed more adequately. At Motown, one of the prevailing feelings its artists had during its formative years (1959-1969) was how much the company felt like a family, and how coming to work there was such a pleasurable experience.

The downside to running the company is that at times the business end of the industry may take the artist, songwriter, or producer away from the creative elements that they really love. Doing taxes, payroll, account statements, spread sheets, cost analyses, and invoices is even more boring than it sounds and many people getting in to this may have bitten off way more than they could chew, failing miserably in keeping their company afloat.

For those companies that have prospered, many have used their regional and local positions to establish a “test market” for the eventual national launch of their music by establishing that there is a market for their product in a microcosm such as their local city.

Many independent labels have also used non-traditional means in getting their project noticed and marketed, including street vendoring where a car literally pulls up to a busy intersection or shopping center and CDs are then sold out of the trunk. Another method used in marketing the small label is to hire “street teams” of individuals who plaster advertisements and flyers on any flat surface they can legally--and sometimes illegally--get away with. These methods, first started by rap labels in the early 80’s, have become so commonplace and successful that even major labels have adopted this approach.

In marketing the independent release successfully, label heads and production companies should use the approach of thinking backwards. Their approach to selling the product should not start when the project is finished, but before the project has even begun. If a CD is scheduled for release in December, the plan to produce, promote, and prepare the project should begin in, say, January.

Once success has been garnered at the local level, many small labels have had the satisfaction of having the major labels courting them for the big dance. Some independent labels have used their new-found status as hit makers to leverage deals with major labels that may have been unattainable before such as retaining ownership of master recordings; distribution deals; co-publishing deals; development deals, and even positions on the board of directors at the major labels.

With such clout, each and every point, clause, or condition mentioned previously in a recording or production contract is now up for some serious negotiation. No longer does the artist have to come begging to the major labels accepting any crumbs or scraps they deem befitting a “new” artist; the major labels are now forced to view any negotiating session as a session of equals. This has allowed independent companies like Aftermath, LaFace, and Bad Boy to structure contracts more favorable to them and their artists.

Those artists still desiring to go with a major label should still do so--but only if the conditions that would allow the artist to grow, both professional and financially, are present. A small label independent label may be the route best taken due to their willingness to take more of a risk, and their demonstrated patience. Although a major may seem to have the money readily available for a project, sometimes bigger is NOT necessarily better.