A record label is a brand created by companies that specialize in manufacturing, distributing and promoting audio and video recordings, on various formats including compact discs, LPs, DVD-Audio, SACDs, and cassettes. The name derives from the paper label at the center of a gramophone record (what is also known as a "phonograph record" in American English).
Most major record labels are owned by a few large multinational companies that make up the almost all of the global recording industry, although there is a recent resurgence in independent record labels.
Labels as brands
Recording companies often invest a lot of time and money in discovering new talent or developing the talent of artists already under contract. The association of the brand with the artists helps define the image of both the brand and the artist.
In spite of the fact that both parties need each other to survive, the relationship between record labels and artists can, at times, be a difficult one. Many artists have had albums altered or censored in some way by the labels before they are released -- songs being edited, artwork or titles being changed, etc. Record labels generally do this because they believe that the album will sell better if the changes are made. Often the record label's decisions are correct ones from a commercial perspective, but this typically frustrates the artist who feels that their artwork is being destroyed.
In the early days of the recording industry, record labels were absolutely necessary for the success of any artist. The first goal of any new artist or band was to get signed to a contract as soon as possible. In the 1940s, 1950s and 1960s, many artists were so desperate to sign a contract with a record company that they usually ended up signing a bad contract, sometimes giving away the rights to their music in the process. It is a good idea for artists to hire an entertainment lawyer to look over any contract before it is signed.
In the 1970s and 1980s, there was a phase of consolidation in the record industry that led to almost all major labels being owned by a very few multinational companies, who in turn were members of the RIAA.
See also: List of record labels
The resurgence of independent labels
In the 1990s, due to the widespread use of home studios, consumer CD recorders, and the internet, independent labels began to become more commonplace. Independent labels are typically artist-owned (although not always), with a focus usually on making good music and not necessarily on the business aspects of the industry or making lots of money. Because of this, independent artists usually receive less radio play and sell fewer CDs than artists signed to major labels. However, they usually have more control over the music and packaging of the released product.
Some independent labels become successful enough that major record companies negotiate contracts to either distribute music for the label or in some cases, purchase the label completely.
On the punk rock scene, the DIY punk ethic encourages bands to self-publish and self-distribute. This approach has been around since the early 1980s, in an attempt to stay true to the punk ideals of doing it yourself and not selling out to corporate profits and control. Such labels have a reputation for being fiercely uncompromising and especially unwilling to cooperate with the Big Five record labels at all.
See also: List of independent record labels
The emergence of open-source labels
Main Article: Open source record label
The new century brings the phenomena of the open-source or open-content record label. These are inspired by the free software and open-source movement and the success of GNU/Linux.