Record companies nowadays see themselves as entertainment companies - since the 1980s specifically defining themselves as 'global'. The major labels involved are no longer seeking the local artiste, they are now interested in developing personalities which can be communicated across multiple media.
In recent years approximately 70% of recorded popular music sold in the world has been produced, manufactured and distributed by 5 major companies: EMI Music, Polygram, Sony Music Entertainment, Warner Music International and BMG Music Group. These companies are themselves owned by larger companies which have interests encompassing a range of leisure and entertainment media, electronic and industrial manufacturing and firms providing domestic products and services.
In general, early record companies developed alongside technological innovations relating to equipment used in the production and consumption of music and other mass entertainments, and the introduction of copyright in music. EMI was owned by Thorn-EMI with interests in lighting, domestic appliance rental, musical and retail outlets, security systems, computer software and electronic technology. It is now owned by Sony, which has interests in manufacture of domestic and industrial audio and visual products, semiconductors, telecommunications equipment. Polygram is part of Philips, which owns companies with interests in manufacturing lighting equipment and a range of electronic consumer products. It is probably sensible to assume that most labels belong to a bigger company in one way or another.
Before recording became possible and widespread people had been paying for music for centuries but this was only ever for the performance itself. Money could also come from commissions, where someone requested the creation of a piece of music for an event for example.
It was the introduction of copyright which turned music into a business. Music copyright was introduced to protect its creators. The first music publishers were given the job of publishing songwriters' or composers' works in the form of sheet music, registering the copyright and collecting the payments from anyone who used that music for personal financial gain. The publisher would then take a cut before paying the creator a royalty. Once recording became commonplace, so the protection and exploitation of copyright became a more complex and lucrative business. The record companies came into being in order to organise, carry out and develop this business.
Record companies have changed considerably since they came into being with the arrival of the recordable cylinder back in the late nineteenth century. The most noticeable change in the last twenty or thirty years is that have increasingly become like proper businesses, in other words run to make a profit rather than by people who simply love or enjoy music. this is, in fact, the cause of one of the biggest criticisms levelled at record companies and the music business as a whole these days - that it is now run by faceless accountants in grey suits rather than people who know and care about the artistes and their creations. There is some truth in this although there must be some passion for music in there somewhere.
There are broadly 3 types of record company.
Majors - Indies within majors - Indies
These companies, without doubt, dominate the music industry. So much so that they can obscure the presence of less powerful labels and music styles.
Most of the services needed to turn a song into a mass marketable item exist within the company itself. One of the differences between an indie and a major is that majors do not particularly attempt to gain and preserve an identity based on a small hard core of artistes within the company. Majors tend to cast their net ever wider for new artistes and will often comprise of a series of labels to which the artistes are signed, depending on where their musical style fits into the market place as a whole.
Majors are also multi-national, and therefore have outlets for their products worldwide. Indies have to license their products to other labels overseas in order to sell abroad. In other words the licensor will allow the licensee to manufacture records from the master provided by the licensor. The licensee will then sell and market the record in their territory in return for a percentage paid to the licensor.
Majors also have many departments responsible for coordinating their operations. They are;
The A&R department
The marketing department
The creative services department
The production department
The sales and distribution department
The international department
You'll have to excuse me at this point. I find the breakdown of departments in huge record companies an utterly boring subject. It can be found in tremendous detail in almost any book on the industry. I find them useful as an aid to describing what tasks you have to do if you start your own label - stressing that you have to do all of it yourself!!! I will describe them only very briefly.
Either representatives of major shareholders or employees of the company. This is usually only in large record companies.
These are people that go out and find acts for the record company. Once an act is found it is the A&R dept which negotiates the deal with the company and overseas recording and promotion.
This department organises advertising schedules and the like for releases and events by the company.
Overseas all the issues to do with manufacturing associated with releasing products.
Creative Services Department
Responsible for many of the visual art components of a release or advertising campaign - sleeve art design, posters, etc.
Sales and Distribution
This department deals with the machinery of getting the products to the point of sale, takingorders and satisfying demand.
Respsonsible for getting product into other 'terrotories' abroad, usually through licensing.
See also DIY Label.
An indie record label can be run from home. All that's needed is a phone, although these days a computer and email facilities would be very useful. A small amount of capital will also be required. Indies usually start with an artiste or group of artistes, a bunch of songs and the ability and desire to record them.
For example, a record label which acts on behalf of one band...........
First take the band and the song into the recording studio. You will probably be the producer of the recording, taking advice from the studio engineer. This recording will be the first major expense. If the plan is for a single or ep (3-6 songs) you will need a day or two in the studio, no more. When the recording is done it needs to be mixed down onto DAT or CDR in order for the manufacturing to take place (more cost).
You than take this master to a pressing plant, which will press any number you request, usually with a minimum of 500. The more that are pressed the cheaper the cost per unit. After the records or cds have been made, they need to be distributed to the relevant points of sale, most obviously record shops. Marketing needs to done - flypostering (illegal!), leafleting venues and colleges or wherever you feel your market is, advertising in the press and on radio if your budget will allow it. The key is persuade record retailers to take your release.
A better, but more difficult, way is to get a distribution deal. Distribution companies exist simply to get other peoples' records into the shops and are usually servicing many different labels at the same time. If you intend striking a deal with a distributor - and a distributor will only take your record if it sees that it is going to be properly promoted and thinks it will sell - the deal will see the distributor taking just under 30% of the dealer price, rather than the retail price of the record.
Then the record must be plugged. Exposure on radio and television is still the best means. To get a record on a radio playlist is one of the toughest jobs in the music business.
The tough world of independence.
It is not difficult to set yourself up as a record label, and it is not difficult to make records. It isn't even all that expensive! What is difficult is getting rid if records and surviving the competition. There are over 200 records released every week in the UK alone, not to mention the vast amount of imports from the rest of the world, principally America.
The main concern of the small independent label has to be distribution. This is the method by which the records that are produced find themselves in the record shops, the most important point of sale. There is little point in going through the process of recording and manufacturing what you consider to be great sounds if there is no way for them to reach the buying public, your record buying public. Self-distribution is not viable, carting records around the whole country in a van would be part of the way to madness, and would increase the costs many times. Apart from that the majority of shops won't take records off your hands unless you have the support of a legitimate distributor on your side.