Why You Should NOT Sign a record deal in 2021

· By Matej Harangozo

Why You Should NOT Sign a record deal in 2021

If you can help it in 2021 and beyond, you should really consider not ever signing a record deal if you can help it. Why is that? Let's break down why you should not consider whatsoever to sign a record deal if you can help it. 

Another day for MusicBizDaily. I want to make this video and I made it a thing every year. In 2020 I made one. In 2019 I made one. In 2018 I made one. That guys don't signed a record deal. This is why so on and so forth. We're making another one for 2021 early, right. In my last recent couple of videos are talking about how the major labels are starting to feel the squeeze. And how year after year independent labels and artists are getting a little bit more the [pie]. When it comes to streaming revenue, touring, all of that, right. So why wouldn't you sign a deal in 2021 if you can help it. 

First of all, we've never had the amount of resources we have available to us now as artists, producers or small labels to run our own companies. Fifteen years ago, even, you do not have these major distribution channels that we have today. Even the word distribution almost is a completely different meaning than in the past. In the past, to get a distribution deal that meant you needed a major label to the relationship with all the Walmart's targets and goodies and all of the different stores that have massive 18 wheelers and trucks and factories to press CDs, put them on the truck, drive them around, you know, cities and towns to put them in the stores.

That whole thing doesn't even exist anymore. Yes, do few CDs get sold here and there? Of course. But streaming is where it’s at digital sales is where its at.. And this just one example, right. And even though I say that, you know, a deal may be useful for some people, especially if artists don't want to run their companies. Because it takes a lot to run the company. But that's your personal decision and usually when you have that much leverage, you're partnering up with a company to run. And let me explain that to you, because these resources that I'm talking about, not just being able to distribute your music anywhere instantly all the time. But your ability to market on your own or hiring a marketing team that's competent, like my agency, for example, to handle that piece for you.

[00:02:45] To handle another or to hire another company that can maybe focus on the touring aspect, tour management, the liability of the concert, the security, you know, getting or transporting the stage props and all the instrumentation to these places. Companies will do that, HR, financial and all that. So where I'm heading with this is that where the industry is going and this is kind of where my company's heading to as well, is that each one of these departments that you will need as a label, as long as you get your music to the next level, you have a lot to demand. You'll be able to partner up with these small or medium sized companies that are offering these services.

Let me give an example. When I had or have still my company, you know, in software development, when I had my company and energy efficiency, these major components like HR Human Resources, to help you hire people, make sure you got the laws in place, make sure you know how to do W2 forms and wages and do payroll and all that. You can outsource that to a company, local to you. Financial bookkeeping, you can outsource that somewhere else, you know, I'm saying warehousing and merchandising, having your products somewhere. You can outsource that to somebody else. Website development, you can outsource that to somebody else. 

As long as you understand business in these companies like mine are coming into this marketplace understanding how to sort of do these, you know, how to operate these departments specific to the music industry is going to enable more and more artists to become independent. And, you know, I'm saying operate their company like a major label. So the major labels are going to continue to feel the squeeze. Let me also tell you how major labels operate or what they really have that the smaller companies don't. They're essentially a bank. They got the money, right. And they sort of operate like a venture capital firm. And this is why a lot of artists get screwed.

So let me give you an example. The venture capital firm may invest into ten companies. Let's say they invest a quarter million dollars in ten separate companies with the equation that eight of those companies can completely flop. And the investments can't completely go down the drain. As long as the two of the 10 companies do a 10x scale. They basically blow up as a company. So those two companies that do really, really well, cover the losses of the other eight. That's what a major label does. They'll give a deal to 10 artists. Maybe artists producer a combination, even small teams. Right, like the artist is coming in with their own management or whatever, they give them the bank, the money to support and maybe some connections, maybe, you know, some other resources that the smaller team didn't have.

They'll fund them. They'll give them the money. They'll give them access to some resources and they'll see which ones take advantage of it, which will succeed. As long as two of those artists hit on the major, major scale, that'll more than take care of the losses they invested into the other eight, right. So don't be a guinea pig. You could be one, but why would you want to be a, nobody wants to be a guinea pig. Right? And I know you're saying, look, it depends on the genre and where the artist comes from. And, you know, understand how somewhere, some of these artists come from. And the first time they get offered a deal, they need to take the money. There's a lot of people to taken care of.

I do understand that, trust me. You know, I'm saying I've built companies out of nothing, had no backing, no bank. None of that, was struggling, you know, say minimum wage, food stamps in the past, whatever. I'm not saying I can relate to every situation. All I'm saying is if you can figure out how to do the business as well as your music, you can slowly start incorporating some of these services into your music to have more and more leverage. So if you do have to take a deal with the label, if you do have to do that, then take a partnership. Outsource certain things to that label that, you know, are just not wise to try to reverse engineer at this point. Because it costs too much money, like maybe touring, things like that.

But the marketing, the distribution, the content creation, obviously even the merch sales, all of that can be very easily done at the lower levels. And the bigger things the world tour, the world distribution, the world sync licensing and all that. In the meantime, partner up. But eventually, if you stick it out, learn the business, grow the business, expand the business, learn how to do certain things, delegate it down, outsourcers, whatever, you can become sort of a independent major yourself. You know, I'm saying i just wanted to make that video a little bit more long form for 2021 as to why you do not need a label and why you should not take a record deal if you and your team can help it.

And hopefully what I do and the services my company offers currently can help a lot of you guys be on that path. You know, I'm saying so. And girls, of course, you know what I mean. I will leave you with that. Let me know in the comments which you guys think. Let me know why you feel that you will need to take a record deal. Let me know some of the deals you guys got going on. Some of the issues you're dealing with. Let's talk about in the comments. Show this video with whoever needs to see it. Whoever needs to share it with somebody? 

Because I know there's a lot of artists that are super talented getting close to that level where they're about to do a major thing. But they're probably also the ones that are going to make up that 90 percent the artist, they get screwed every year with being guinea pigs at these bad, you now, I'm saying deals with some of these labels. Because they like to experiment. They got their equation down, the majors got their equation down. But you need to get your equation down as well. So I'm leaving you with that. See you guys tomorrow for the next video. As always, if you guys need to do what me and my team do, link to the bio, link in the description, depending where you're watching this, I'll see you tomorrow.