What role record labels play in the current digital music industry?

Music distribution - Record labels

Among other reasons than the availability of using the internet to learn how to play and release music yourself, digital music distribution is defeating physical music distribution more and more.

How does that change the role record labels play in music distribution?

And if you are a record label that wants to distribute music and your artists’ catalog via online channels, what are the most important things you need to know?

Read the highlights in this blog.

What is the difference between music publishing and music distribution?

Music publishing focuses mainly on two things: copyright for songwriting, music and lyrics (the composition) and synchronization/licensing (making good deals for artists to get their songs used in the media, like TV, movies and advertisements and making sure artists get their license issued).

Since copyrights are divided into two parts, a publisher only handles the composition copyright, not the sound recording (master rights).

If an artist wants to collect all his royalties, he has to hire a publishing administrator to get his master rights as well.

When the artist has registered with all the copyrights for his song, the distribution part comes in.

This is the moment where the music really gets released and made public.

A music distributor gets the music into physical and online stores, like Spotify, Apple Music, Deezer and other digital music platforms where the listeners can find it.

If the music gets sold or streamed, music distribution platforms or music aggregators help with the distribution and the managing of royalties in a way that record labels can split them according to their business model.

Of course, there are many varieties and variables in these business models.

For example, independent record labels are more flexible than majors labels.

The major record labels have similar deals with different artists, while most independent record labels make deals that are more ‘customized’ to meet the needs of the artist.

How do artists get their music published and distributed?

Nowadays, it seems like it doesn’t take much for people to produce, publish and distribute music themselves.

A lot of independent artists want to record, publish, release, distribute and promote their music themselves due to the flexibility the digital music industry at all levels is providing them.

But it usually takes a lot of investment – both in capital and effort – to really get somewhere professionally, where they can be ‘discovered’ by a large group of people.

Therefore, they need a record label or music distribution service.

Artists looking for more freedom

Before the existence of DSP’s like YouTube and Spotify, getting signed by a record label was a big milestone for most artists.

With a record label on their side, money, promotion, concerts, a record studio and distribution were all taken care of. But it comes with a price.

When a record label starts investing in an artist, they also have rights to ‘meddle’ in the artist’s business.

Of course, many artists don’t want to lose this freedom.

Think about the ways in which they record and have a final say about their songs, choosing which people to work with, working around their own schedule, choosing their artwork, choosing when and where to perform, choosing DSP’s and – one of the most important reasons: everything they earn from their music, goes directly to themselves.

But even though being an independent artist offers many positive sides, record labels can really help in accelerating and professionalizing a career in the music industry.

But of course, record labels do know that artists aren’t that desirous anymore for record labels that take too much from them.

So to set up a contract that’s as good for the record label as well as it is for the artist, that’s where everyone benefits. But what are the best business models for record labels?

The added value of record labels in the current digital music distribution sector

First, there is a big difference between major record labels and small niche or independent labels.

In most cases the rule of ‘’the bigger the label, the smaller the freedom’’ applies.

But in general, the added value of record labels in the current digital music distribution sector is to provide artists with what they need, when they can’t pay or arrange it themselves.

Independent artists can try to put their own – or money gathered from crowdfunding – into recording, publishing and distributing their music, but if a record label signs them, they will be provided with everything they need.

Artwork, merchandise, performance bookings (in some cases) and effective marketing options without having to invest hours and hours into sending messages to every big music blog on the internet.

Think about the possibilities that the network of connections around a record label can offer, or the fan base around it.

In most cases, record labels are actively engaging with a community around them, communicating throughout various channels with lots of followers and, despite a pandemic, online network webinars and fairs.

A trusted place by fans

Record labels offer a trusted place in a digital world where people are constantly presented with new music, getting overwhelmed by the variety and volumes in which new music releases emerge and pop up from all corners of the world.

Record labels have an important role to play in curating music for a specific type of listener.

Many smaller record labels see themselves in this way, to give fans a product they can trust.

They offer a place for fans to meet each other, online as well as offline (at shows).

Sharing a passion for the same kind of music is very bonding!

Digital music distribution - record labels

Business models for record labels

  • Letting the artists pay a fee (for example every month) for the services you’re providing, and still paying all their royalties to them
  • Keeping a percentage of the royalties to pay for the services and investment you provide to the artists

With SonoSuite, record labels can implement which business model they want and beign SonoSuite a white-label solution allows them to customize the platform according to their business needs from support for distribution to quality control, always in line with the DPS¡s guidlines.

Why does a record label need a white-label platform like SonoSuite?

In times like these, where the amount of DSP’s and other music distribution platforms are growing, it is becoming more and more time-consuming to publish and distribute everything remotely.

In the ideal situation, record labels make use of bulk music distribution where all important metadata gets distributed all at once, through selected channels.

If you’re looking for a service that lets you run your music business and distribute your catalog independently – without relying on a third-party – SonoSuite is a great option.

With SonoSuite, record labels can:

  • Distribute, organize and review your artist’s catalog all in the same platform;
  • Promptly take action of possible metadata corrections thanks to SonoSuite’s built-in alerts;
  • Use in-depth reporting tools to track performance;
  • See a detailed list of all out-payments requests, directly contact each artist if any issue arises and block payments if fraudulent activity is recognized by the platform
  • Have full financial control by setting a custom business model for each one of them (pay-as-you-go, revenue share);
  • Use the Zendesk ticketing system integrated with the platform, to easily review your account for any support tickets from your artists or escalate tickets to SonoSuite’s excellent Support team whenever necessary;
  • Use other important features that make the work of record labels and music publishers easier, providing the flexibility and independence needed.

If you want to know more about all the features SonoSuite offers, check out here how it works.

Let’s stay connected

Subscribe now to our newsletter to receive the latest music business and tech news straight to your inbox every month.