Record labels tend to sign a lot of bands, but they give their really good contracts to one or two artists who they then prioritize over all others. When you let yourself sign a bad record deal, you are almost guaranteeing that the label will shelve the record in the end.
- To get the credibility associated with being affiliated with a label. This is the most common reason that bands make mistakes when signing record deals. Music is a very subjective thing. It’s difficult for investors to predict what consumers will like. Bands often feel these professional associations will take them to the next level, when, in truth, bad record deals ultimately break up bands. You could get the same credibility just by saving up a few hundred dollars and having a really nice recording or music video made. People just want to see quality stuff. If you get the credibility without a label, you’re more likely to have one offer you a contract worth signing.
- Misunderstanding the difference between the size of a record advance and how much money the musicians actually receive. Occasionally, there are record deals which are large enough to pay the band’s living or tour expenses for some period of time, but this is extremely uncommon in the modern music industry. It is more likely that a label will invest money which will then be used immediately by the band to record and promote their music. This means that bands should consider the record advance to be, rather than the amount they will be receiving, the amount they will be owing. The total value of a record deal is a debt, not an amount that the band members can divide up and claim. This misunderstanding causes bands to sign record deals that force them to work without pay until they become more popular, only to find out then that they signed away all those revenues in that contract they rushed to sign after letting their mind run wild with the possibilities of the total amount of the advance(which they actually now owe as a debt, which eats up whatever cut they would be making by that time).
- To get a hit song on the radio. I hate to be the bearer of bad news, but the massive radio hit passed away a couple of years ago. There are some syndicated radio networks out there that still have enough listeners to significantly boost an album’s sales, but the extravagant costs associated with keeping a radio promoter mean that the results have to be a huge success or else it will be an enormous loss of money. This means labels only do this for their top artists. When you consider that terrestrial commercial radio is quickly losing listeners to more boutique web-based alternatives, spending these funds on radio promotion is even riskier given that the same dollars might bring in more fans if spent on something like pay-per-click ads online. People can’t click on your song on the radio and buy merch. In fact, they may not even remember who you were, even if they liked the song. Older, established artists will still be able to use commercial radio to promote for a little while longer, but newer artists won’t have time to establish a relationship with a record label before terrestrial radio completely dies to a global network of podcasts. The huge hit radio song is dead. It has been replaced by the viral video on YouTube, and record labels don’t have control over that.