What is a Record label? How do Record Labels Turn a Profit?


Have you ever considered your existence without music? We are surrounded by music every step of the way and every minute of the day. The sound of typing, footfall, birds tweeting, and bees buzzing reminds us of lovely music. Music may help us connect with our inner emotions and even relax our minds. Many people find music therapeutic and spend a significant time listening to their favourite tunes. Singers and musicians spend their time writing new songs. However, not all musicians have the chance or suitable platform to share their music with the rest of the world. Here is where record labels come into play.

The Internet has proved to be a blessing to artists. Artists can create new songs and release them on social media platforms with the latest technology. However, the exposure of the artist and their songs remains minimal and dependent on their followers. The Internet might not do what a record label company can do for an artist and his compositions. Hence if you are an inspiring music artist looking for a big break, you must take the help of a record label company. This article will assist you in understanding how a record label could help you put your music out into the world and profit from it.

What is a record label?

To help you understand what a record label is, we will mention three golden words: Create, Distribute and Promote. The definition of a record label revolves around these three words. A record label is a company that creates new songs, distributes them to the audience, and then promotes the songs and the artist on various platforms. The record label company does all the work for the artist, from creating the right music to marketing it to the right audience. However, there are certain limitations an artist needs to keep in mind. These limitations depend from company to company, and the artist must check the terms and conditions of the record label company before signing the deal.

Once the artist creates an album for the record label, the recording company begins marketing it to ensure maximum visibility. It may include a music video, promotion advertisements, or even live tours. As per the signed deal, the record label company will do its best to promote the album or artist under their brand. Record label companies have promoted many artists and their songs in the past.

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Benefits of working under a record label

First and foremost, it is considered very impressive if an artist gets the opportunity to work under a record label company. The reason is that record label companies come with many advantages. The record label company does everything from developing the artist, grooming them to promoting their songs.

1. They provide the finance

A lot of capital is required to release an album. An artist alone cannot provide the necessary finance to launch their album unless they have deep pockets. However, this is where a record label comes in. Under the record label, the artist need not worry about the finances for the promotions and anything related to releasing the song. It is taken care of by the record label company.

2. All marketing plans are taken care

Just releasing the song or album and putting it on the required platform is not enough. The songs need to be promoted to reach a wider audience, whether it is via print media or television media. All record labels have a professional team that takes care of all the marketing plans and promotions. It is all a part of the package or the deal signed between the company and the artist.

3. They provide broad exposure to the artist and their songs

Many record label companies are associated with publishing houses or big music recording studios. If one is signed under the record label, those in collaboration with motion houses might like the song and allow you to sing in their film projects or even feature your music in the film. Joining a record label has a lot of benefits for the artist and his career.

How do record labels make profits?

So what does the record label get in return for promoting the song and artist? How do they make a profit? Well, record labels make money from the overall revenue generated by the song, artist, or album. However, each company has a different deal signed with the artist. Sometimes, they only invest in the promotions and creating the album, while some invest in the entire cycle from producing, marketing to promoting. Whatever the deal is, record labels always look for a bigger catch or profit on the whole making of the artist or album.


Regardless of the contract with the record labels, these companies have proven highly successful for artists and corporations. Many musicians have achieved worldwide fame due to their association with well-known record label firms. Sign a deal with a record label firm if you are an aspiring artist searching for exposure in the music industry.

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