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Why Record Labels Will Never Be Defeated or Die!



If you’re building a label or if you’re an artist who wants to know if record deals can still work in your favor, hear me out. This all has to deal with financing, how cheap you can get it, and your positioning in your career. The problem is most artists give up in the beginning and sign, and most new labels sign too early. This is why the stigma of the big bad labels exists. It wouldn’t exist if both sides understood this strategy.


Artists Need Low-Interest Cash Loans

In my findings and dealings in the music industry, launching a great music product takes a lot of cash to produce unless all elements are in place to make the work free. An independent label can slide by on a lot of these costs, but in the beginning, music is costly because you don’t earn the full profit when you get streams—you earn a royalty from the profit. You don't get rich off royalties unless you’ve got a lot of them. Because you cannot flip an album remarkably well like you could in the 2000s, you’re going to need cash at a zero percent interest rate. Who’s going to take that chance? You or an uneducated street loan shark.


Record Labels Accept IP as Collateral

To issue a loan like this, record labels need collateral in return. In many cases, it will be your masters because you have nothing else to give and no proof of concept. Even if you have mild success, the label knows that they can license the songs later for more revenue and they also know they can sell your masters in a bundle with other masters to catalog investment companies. IP is king in the copyright world, and your masters are gold.


You Can’t Use a Line of Credit When Starting

If you’re just starting, lines of credit are way too expensive to use on music creation. The only time you should use an LOC is on your second project after your fanbase is primed and ready to buy. LOCs should only be used in strategies where the return has a high guarantee of at least 85-87% or more.


Credit Card Interest Rates Are Too High

The same thing goes for credit cards; the interest rate is too high. One could argue that you could use the 0% interest introductory period to do what you need to do. However, if your fanbase is not gathered and proven, you’ll never be able to pay the money back within 12 months, which then hurts your business credit score needed to secure bigger lines of credit down the road.


So What Are You Saying?

I’m saying save up as much cash as you possibly can to start your career. You’ll want to have no strings attached in the beginning just in case things don’t work out and you have to walk away.


When Should I Seek a Record Company?

Seek them if their loan terms make sense and you get to keep control of your touring and merchandise avenues of revenue. This allows you to free up risk and capital. If you can make a great deal on ownership of the masters or a great licensing play, then go for it. However, if you get to the point where you can fully finance and administrate all of your records, do not go to a record label.


If You Can Solve the Money Issue, You Win, Right?

Yes, this is ultimately how you defeat Bowser in the final castle. Securing the proper financing amongst other marketing tactics is how you will get to green pastures on the other side. However, this is a complex maze and will take severe planning and strategy.



Check This Out!

If you're a music creative or executive looking to build your label or publishing company in 60 days or less, grab the 60-Day Record Label Course and get it done today! You’ll gain the ability to get real funding, avoid contractual pitfalls, and keep the middleman out of your pockets. Click the link below to get started now! If you’re skeptical, grab the free guide, "10 Ways to Increase Your Record Label Profits," which comes with a free split sheet download.


If You Can Secure Funding

  1. You’ll be able to get off the ground without interference from third parties.

  2. This will raise your confidence in finding funding down the line.

  3. It will ultimately allow you to escape the horrible offers of the record label.


If You Cannot Secure Funding

  1. Record deals are not always bad.

  2. However, try to save up as much as you can.

  3. And find as many favors as you can.


Conclusion

If you were wondering if building a record label to sign people in 2024 was a good idea or why the record labels are not going down, now you know why and what you need to do to move accordingly.

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