Roger McGuinn, the former founder of the Byrds has been without a record label for years. He still records "digital only" albums which he records himself and makes available to various online music services like Amazon, iTunes, Napster, and Rhapsody. McGuinn's basic agreement with all of the online music services is a 50/50 split on all sales. The retailer keeps 50% and McGuinn receives 50% as his royalty payment.
McGuinn told me that he's made more money as producing his own albums in digital forum using this 50/50 split with online retailers, then he ever did even when the Byrds were at the peak of their popularity in the 60s and 70s. During that era, the Byrds had six albums that sold 1 million+ units and McGuinn says he was never paid a penny in royalties by Columbia Records. Columbia would mail McGuinn a yearly "royalty statement" which billed him for studio use, advertising and promotion costs, touring support, management & advances and he always ended up owing money to Columbia Records.
The fact is that musicians no longer need a record label to be successful recording artists. For a small investment a band can purchase their own studio production software, record their own music, promote their album releases online and use online retailers to sell their music.
Prior to the rise of digital music, musicians were more or less slaves to music labels because record labels owned all the recording studios, the album pressing & production facilities and had the distribution networks to make the musician's album available in thousands of bricks and mortar music retail stores all over the nation. Now that 75% of music buyers purchase most of their music at online music services, record labels have become irrelevant to the process.
If an artist like Roger McGuinn can make money selling his own self produced albums online and managing his own tour appearances... and McGuinn can make more money than he ever did as a full fledged rock star at Columbia Records, what use does any band have for a record label?
The only reason many musicians continue to sign with labels is they often get multi-million dollar advances to sign with music labels... BUT those monetary advances are only loans to the musician that have to be repaid to the music label out of future royalties on album sales. Very few artists end up ever seeing a royalty check after their record label skims off productions costs, touring support, management fees and repayment of money owed the record label in past cash advances to the band or musician.
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There are two types of music: the first type is the blues and the second type is all the other stuff.
Townes Van Zandt
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