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...