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What is an Independent Record Label Contract?

A contract is a combination of two elements, that is, an agreement and an obligation. Thus, an Independent Record Label Contract is an agreement between parties to a contract that record labels use to create their trademark; copyrights of music recordings of the lead recorder, that is, an artist, singer or band. It consists of clauses such as royalties, payments, advances etc. which creates an obligation on each party to a contract regarding the aspect of music recordings. A record label can get licensing, selling, promotional etc. rights in relation to music recordings via this contract which helps them avoid any illegal claim on it henceforth, that is, related to Patent/copyrights.

Indie contracts (Independent Record Label Contracts) are generally artist-friendly, i.e., they offer creative freedom, huge royalties – 50-50 profit sharing ratio and are considerate towards artist’s opinion. The term indie label is used to refer to those record labels and music publishers that are not Major Labels or under the control of ‘the big three’ in the music industry, even if they are large corporations with complex structures.  Independent label is often owned by artists and adheres to an independent working style, that is, a non-complex structure. Some contemplate Indie labels as any label that releases non-mainstream music, irrespective of the structure of a corporation.

A major record label and an independent record label

The Association of Independent Music (AIM) defines a ‘major’ as “a multinational company which (together with the companies in its group) has more than 5% of the world market(s) for the sale of records or music videos.”

There are various constituents of a record or music group, i.e., record labels, record (sound recording) manufacturers etc. which can be termed as “divisions of the group”. As of 2012, the three labels which can be referred to as ‘Major Record Labels’ are Universal Music Group, Sony Music Entertainment, and Warner Music Group.

Independent record labels may be small, localized and “independent” (“indie”), or they may be part of a large international media group, or somewhere in between. These record labels focus on each artist’s potential, and earning profits is not their sole objective.

Significance of Record Labels

A record label can ‘make or break’ an artist’s career, thus, it becomes important to have a cordial relationship with each other as a party to a contract. A label enters into an exclusive contract with an artist as it can earn royalties on the selling price of the recordings by marketing an artist’s music recordings, whereas, for an artist, it is a journey of thousand miles that has just begun with a single step towards fame and success.  A contract can extend up to the long or short term, may or may not be related to specific recordings.

A contract either tends to artists delivering complete music recordings to the label, or the label working cordially on music recordings along with the artist. For artists that do not have any or much experience in recording history, the label undertakes the responsibility to provide producers, recording studios, songs to be recorded etc. Established artists barely have any control or restrictions posed on their creative freedom. The clauses of the contracts are favourable to them, but there are certain exceptions like Prince, Roger McGuinn etc.

There can often arise conflicts between the artists and record labels as to creative freedom, poor attention, no promotion etc. Sometimes, record labels can be overbearing, that is, they can change the artist’s titles or artwork before release, music being prevented from release or shelved etc. which can leave an artist in a state of limbo. Several artists have had disputes over ownership and control of their music such as Taylor Swift, Kesha, Kanye West etc. In the early days, an artist needed to sign a contract under a record label to flourish their career, but now times have changed. An artist/singer/band should weigh the pros and cons of a record label.

Pros of signing with a record label are available resources and budget, existing network and connections, reputation and influence, implemented marketing strategy etc. Whereas, cons of signing with a record label are limited creative control, fewer profits, transfer of copyright ownership, bad contract deals etc. Hence, an artist should be able to assess what hinders their growth and what can build their success. It is up to them if they have the proper resources and talent to go independent, then they should otherwise sign under a record label is always an option.

There are certain new label strategies in the market today which one can avail to such as internet and digital labels, open-source labels, publishers as labels. The new type of deals that are made are called “Multiple rights” or “360” deals with artists. Therefore, in today’s techno-savvy world, an artist has various options to tend to when it comes to signing a deal with a label. It is important to go through every clause under a record label contract.  It is recommended that an artist/singer/band while signing a contract under a record label must go through the contract in presence of an Entertainment Attorney. Once it’s sealed you cannot undo it, thus, it is preferable to be cautious beforehand.

Record labels play a significant role in the career of an artist. They should not use that as personal gain and neglect their responsibilities. Its role is undiminished till today, it should live up to the expectations of its artist/singer/band and should serve as an asset to the music industry that promotes talented artists and their music.  

Legal rights of an Artist and its infringement

An artist’s moral rights consist of the right to be identified as the creator of a work (Attribution), the right to decide when and whether to publish the work (Disclosure), the right to withdraw a work from circulation (Withdrawal), and the right to preserve the integrity of the work (Integrity). Sampling is an example of infringement of moral rights. It occurs when a portion of a prior recording is incorporated into a new recording without the prior consent of the record label or the artist.

There are several incidents where there is plagiarism of an artist’s content, they do not possess ownership or control over their music etc. This is an infringement of their moral rights. An artist is entitled to the moral rights stated above, violation of which should result in severe consequences, such as, penalties. Moral and economic rights protect the expression of an artist’s personality through his/her work. In countries like India, the moral rights of an artist are protected under statutes/associations such as The Copyright Act, 1957; Phonographic Performance Limited (PPL); Indian Performing Rights Society (IPRS); ISRA (Indian Singers’ Rights Association). These days, K-pop is thriving across the world. They face violations of their rights as per the Slave Contract. “A slave contract refers to an unfair, long-term contract between Korean idols and their management agencies.”

This is repulsive, and it is violative of their Human Rights. Artists are not machines but human beings that can make mistakes and slack off sometimes. We should treat them as humans and not expect them to be perfect at every stance of their music career. Three members of TVXQ, a famous K-pop boy band, filed a lawsuit against SM Entertainment stating that the “13-year contract was excessively long, schedules were held out without the confirmation or permission of the members, contract terms had been extended and changed without their knowledge or consent, and that the group’s earnings were not fairly distributed to the members. An early termination penalty of their contract would cost them twice the profit that the group was estimated to earn for S.M. Entertainment in the rest of the contract period.”

South Korea’s Fair Trade Commission (KFTC) have improvised clauses under the contract and reduced penalties for an artist who break their contract, but still, this impedes the career of an artist and music industries as they cannot make use of their full potential. The treatment is the worst and should be put a full stop to. This is not just limited to Asian artists; western artists also face similar circumstances at the hands of the record labels they are signed with. Some such examples have been mentioned above. The representatives, that is, personal managers, agents, business managers, and attorneys of the artists, songwriters etc. also commit fraud and embezzlement which becomes a hurdle in the artist’s career.


There should be a proper committee or act to prevent the violation of moral, economic and human rights of an artist and help them to succeed in the music industry without any impediments. I believe that an artist is not a plastic doll that just needs to tend to its fans, audience across the globe but is also ‘homo sapiens’ like the rest of us that need proper rest, care, physical strength, good mental health to produce and enjoy the art of music. Hence, setting up a committee comprising artists/composers etc. can help those in the music industry to thrive, survive and reach great heights.

To conclude, currently, social media is the primary marketing tool for the industry. Independent record labels, major labels, are just a step to achieve an artist’s lifelong goals. Whether it will be fulfilled or not is at the question in itself. As often stated “Music can heal”, so it is important that the artists that produce music are not pressurized, dominated to create it. Artists are individuals who should be treated as a human and not money-making machine.

 “Whoever is happy will make others happy”, this is the role that the music industry and its artists plays in our lives, and it should continue to do so. I hope this postulates the legalities in the music industry.

Author(s) Name:  Aashansa Varma (MIT-WPU, Kothrud, Pune)

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