For many years the major record companies enjoyed a “stranglehold” over the record industry. There have been many successful independent labels but with few exceptions when independents have reached a certain level of success they have been acquired by one of the majors.
A “major” was a record company which owned and controlled its own manufacturing and distribution facilities. This gave the major an insuperable advantage over an independent label.
An apparent advantage of signing to an indie is that the artist may retain greater creative or artistic control. Majors usually insist on a substantial degree of control over certain elements of the creative process (for example, the choice of songs, producer and studio). The major will wish to control these elements if it does not approve of the artist's plans. Indies are reputed to be more sympathetic to the artist's wishes. They will generally allow the artist to go in whatever artistic direction the artist wants. One reason for this more sympathetic approach is that an indie usually invests significantly less in an artist than a major, in terms of "up front" money put at risk.
Short or Long Term
Even if the indie wants options for additional albums, this may matter less to the artist because of the creative factors. Indies often allow an artist to develop at the artist’s own pace, and so avoid the pressures of becoming a "mainstream" act too quickly, with the artistic compromises this may involve. An artist might start off with an indie and move to a major later. If the artist is successful and receives some critical acclaim with the indie the artist might then extract a better deal from the major over creative issues.
Share of Profit
An artist signed to an indie will often be paid a share of profit or "net receipts" instead of a percentage of the price of each record sold. The profit share is usually 50% of the indie's net receipts. (after costs have been paid) This might increase (or "escalate", in record company jargon) for later albums and perhaps for overseas income. The relationship bet ween an artist and an indie is more like a partnership. The artist takes less money up front (sometimes none) on the basis that, if the artist succeeds, the artist and the record company share more or less equally in the fruits of success.
However, there are considerable problems with the indie route. An indie is more likely than a major to have cash flow problems or perhaps go bust. It may not have the sophisticated structures, financial disciplines and professional management of the majors. This becomes a matter of particular concern when an artist "breaks" (whether domestically or internationally) because at that stage substantial investment and resource is needed to maintain the artist’s momentum and to capitalise fully on all opportunities.
Indies do not usually pay substantial advances to their artists. Conversely, majors often do so, which gives a degree of financial security. Similarly, indies are less inclined to allow the artist to spend as much on recording costs so the indie artist is less likely to use the top studios and producers. Once an artist breaks, majors are more likely to have the resources toexploit the opportunities fully. They can fund more expensive videos and more substantial marketing campaigns, including TV advertising. Majors can usually co-ordinate international campaigns more effectively. A lower advance may however be a blessing in disguise, as the artist gets into much less debt, and therefore gets a better percentage of the profits more quickly, but a percentage of what? 50% of £100,000 is the same as 5% of £1,000,000, but which is more realistic for any given band or artist?
Some of the more interesting artists in recent years have come from indies. Other artists, signed to majors, may well have made less impact had they been on indie...