The music industry is a fascinating, yet oftentimes frustrating business. If you’re new to the music game you may have heard some words thrown around that you don’t understand. Or maybe you get the idea but have trouble fully wrapping your mind around the concept. Here are a few of the most important music business concepts you should understand if you want to profit as an artist or producer.

Record Label

A record label is a company that finances, markets and distributes phonographic records (i.e. music). There are major labels and independent labels. There are three major labels; Universal, Sony and Warner Brothers, each of which has multiple subsidiaries. Any label that is not owned or associated with one of these three companies is considered an independent label.

Although major labels often employ large marketing teams and offer thousands if not millions of dollars to artists in exchange for their music, these traits do not define a record label. A label is simply a company that publishes music for commercial purposes.

If you are an independent artist who distributes your own music, you are technically acting as your own label. Established record labels make money by handling the complex tasks required to build a sustainable career in music.

There are pros and cons to signing to a label. Major labels offer resources and funding but are difficult to approach and are known for predatory practices. Independent labels offer more support and accessibility for newer acts but often times can’t do much more than what an artist can do by themselves. Whether or not you choose to sign to a label and what kind of contract you sign, depends on your goals as an artist.


The master refers to the original recording of a musical composition. All subsequent copies are made from the master and it signifies the finished product of your musical ideas. The master is an important concept to understand because it’s a valuable commodity that will affect the longevity of your career.

Owning your masters means you retain the ownership rights of your music and are able to do with it what you please. If you sign to a label, it is common that they will require you to give up the rights to your masters, unless you negotiate some other deal.

Whoever owns the master has the rights to the intellectual property. Think of it like this – say you’re a sneaker designer with an idea for a shoe. You can either start your own brand and market the product independently or you can go to Nike with your idea. Nike is providing you a huge audience and infrastructure that you wouldn’t have on your own. But if you go that route, it becomes a Nike product and your right to modify it or sell it somewhere else is either diminished or completely taken.

The music business works the same way. If a record label is paying for a record to be created, they’re going to look for a way to recoup their investment. Once you’ve signed the deal, the label has the final say over the content of the product and how it is licensed sold.

Although it’s difficult to do if you are newer in the industry, owning your masters will benefit you in the long run. Music is a business with very little certainty and if you believe in your art, it’s better to pass on the short-term money to invest in your legacy.

If an opportunity comes along, like a movie placement or a big feature, and you don’t own your music, the label could get in the way. Labels have their own agendas when it comes to the music business and not every move they make is in your best interest. It’s better to hold out, build your leverage as an artist and negotiate a good deal than to get stuck in a bad contract.


In the music industry, publishing is the business of licensing music and collecting the due compensation. Record labels often act as publishing companies, but independent publishing companies also exist. Their job is to create new licensing opportunities and income streams for artists and to manage the revenue that is generated.

The main difference between this and a record label is that publishing companies are not involved in the creative process of music – they are only responsible for finding ways to license a finished product.

If you are an independent artist who has the means to finance and produce their own music, you may choose to sign a publishing deal. It’s a viable alternative to a record deal for those looking to protect creative freedom because publishing companies will are less likely to require ownership of your masters unless they are associated with a record label.

Publishing companies help get your songs licensed in movies, TV shows, video games, digital content and other key mediums that may be difficult for an artist to tap into on their own. They can be a valuable resource if they do their job but can eat into profits be harmful to your business if they don’t. Always be vigilant and vet any company you’re thinking of doing business with because signing away certain rights to the wrong people can be disastrous to your career.


Distribution refers to how your product is delivered to consumers. Before the digital age, the supply chains for music distribution were much more complex and difficult to manage. In order to get an album from the studio to the listener, CDs had to be burned, the packaging had to be manufactured, retailer partnerships had to be brokered, the product had to be delivered from wherever it was manufactured and listeners would have to visit stores to buy the music. Now, all you have to do it take the audio file upload it through a website and your fans and listeners can hear it instantly.

Control over the distribution systems of the music industry has slowly shifted in favor of the artist with the rise of digital media. However, there are still reasons some artists choose to use the label system to handle their distribution. Labels have the ability to distribute your music to a larger audience and can better manage more complex products like vinyl records or merch. Distribution deals, in which an artist retains ownership of their music but pays a record label a percentage of their revenue for handling distributions, are not uncommon.


Royalties are the sum of money you are paid whenever your music is bought or played. This could be from a CD sale, music stream, live performance, radio play or any other avenue that your music may be sold or performed.

If you sign to a label, your record label will collect royalties on your behalf and cut you a check. If you are independent, you’ll be responsible for collecting your own royalties. There are not-for-profit companies called PROs that all artists who license their music should register with. The major three are ASCAP, BMI, and SESAC. They monitor radio plays, TV and film and other avenues where music is being played in a commercial setting and collect royalties on the artist’s behalf.

Royalties are a major source of revenue for most artists, so it’s in your best interest to pay attention to who is collecting your royalties and how much you’re being paid. It’s easy for record companies to take advantage of an artist who isn’t paying attention to their money, so always be aware of how much you’re owed.