More major artists are starting their own labels. Don’t expect them to be any more equitable

It was only three months ago that Kanye West tweeted out over 100 pages of his recording contracts with Roc-A-Fella Records and Island/Def Jam, declaring in the same breath that the record industry was like “modern-day slavery.” In response, several commentators clapped back with a counterargument that has had little additional examination ever since: The contracts that West is offering emerging artists through his label G.O.O.D. Music, an imprint of Universal Music Group, probably has many of the same unfair terms that West was complaining about himself.

In fact, even though West paid lip service to giving back his 50% master ownership stake to G.O.O.D. Music’s artists, some roster signees like Teyana Taylor have since spoken out about the brand’s inequitable practices.

“Everything that you guys see of me, everything that I put out, everything that I do is like, 100% me … So yes, I am going to feel under-appreciated if I’m putting in 110% and my label … they’re reciprocating, what, 10% of that,” Taylor, who released her first album through G.O.O.D. Music in 2014, shared in a video posted to her Instagram account in early December 2020. “I constantly feel alone, I constantly feel under-appreciated, I constantly feel failed … there is literally no push.”

This ongoing saga is just one part of a major contradiction in the wider conversation about “artist empowerment” and “artist entrepreneurship”: Most labels founded and run by major artists end up looking a lot like the more corporate labels that said artists complain about in the press.

Why artists want to enter the label game

Let’s back up a bit. Apart from West, several artists like Taylor Swift, Megan Thee Stallion and Migos have been caught in the middle of lawsuits and contractual disputes with their labels this year. Building on the legacies of stars like Prince, these celebs have taken to social media to speak more transparently about their contract terms, while encouraging the next generation of artists to prioritize ownership of their master recordings and of their careers as a whole. As part of the Blackout Tuesday movement, many artists and industry executives have also recommended that labels and publishers revise their historical exploitative contracts with Black artists and songwriters.

You might think that having artists run the labels themselves would be a surefire solution to these woes. To clarify, by “artist-run labels,” we’re referring not just to artists self-releasing their own music (they can do that with an indie distributor), but rather to artists founding more expansive label brands, where they are signing multiple other acts to their roster. J. Cole’s Dreamville, Diplo’s Mad Decent, Kanye West’s G.O.O.D. Music and Skrillex’s OWSLA are just a handful of examples of these kinds of artist-helmed brands — which have wielded enormous influence over the music industry in recent years, helping to nurture some of today’s most exciting acts from the ground up.

The trend doesn’t seem to be slowing down anytime soon. In 2020 alone, we saw the launch of Kendrick Lamar’s pgLang (with Columbia Records), Phoebe Bridgers’ Saddest Factory Records (with Secretly Group / Dead Oceans), BENEE’s Olive (with Universal Music Group) and Quavo’s Huncho Records (with Universal’s Quality Control). Big Sean — who, ironically, is still signed to G.O.O.D. Music — announced he will also be starting his own label in the near future.

For an established artist, starting a label is a marker of status and prestige, and usually comes with good intentions in mind, particularly around engaging more niche music scenes and communities that might otherwise be neglected by mainstream media gatekeepers. From the signee’s perspective, joining an artist-run label can have major perks in terms of brand recognition (like a contractually binding co-sign), as well as a nimbler, more hands-on approach to artist development that often comes with more boutique label operations. In an ideal world, an artist founding their own label would also give signees fairer contracts, presumably having more empathy for their struggles.

Red flag #1: Understaffed, under-informed and/or under-invested

With all that said, none of these perks are guaranteed. For one, just because a well-known artist founded a label doesn’t mean that they’re actively involved in developing and marketing their roster day-to-day, nor that signees will have regular, direct access to that artist for career guidance.

Of course, there are some exceptions. For instance, with DaBaby and his label Billion Dollar Baby Entertainment, the rapper “is fully involved with anyone who’s signed to him — he drops their music from his YouTube channel, features them on his projects, takes them everywhere,” says Karl Fowlkes, managing partner of The Fowlkes Firm, a law firm that works with several artists and producers. “If you’re an emerging artist, that exposure is probably worth it.” Out of the 30 or so music videos DaBaby released on his channel in the last year, 10 are from Billion Dollar Baby artists.

In contrast, with Drake’s OVO Sound, while most artists on the label have collaborated with the star over the past five years, Drake’s social media channels seem much more focused on his own music and brand partnerships (e.g. his new Nike sublabel Nocta and BAPExOVO collection). “Someone else is clearly running that label,” says Fowlkes. “At this juncture, I’m not sure if Drake has any knowledge of what’s going on, nor do I think he cares.”

As far as staffing goes, there’s also a fine line between having a small team and being too short-staffed to provide the services that artists need to grow their careers. In several cases, an artist-founded label is run just by that artist, their manager and, if they’re lucky, a couple of assistants. Running a label requires a lot of extra work and responsibility on top of an artist’s existing, full-time touring and/or recording career that they might not be prepared to invest. In turn, multiple sources suggest that being understaffed and inexperienced can lead to a variety of issues with regards to reliability, professionalism and pay.

“The issue with many of these artist-run labels is that they don’t actually know what they’re doing,” says Adam Freedman, an entertainment attorney who works with several music clients including Charlie Shuffer and Sunday Sauuce. “They sign all these songs from up-and-coming artists before even setting up their accounting systems, which ends up becoming a mess.”

Case in point: One of Freedman’s producer clients worked on a recent G.O.O.D. Music release, but has yet to receive any royalty statements because “Kanye has yet to countersign our contract.”

Red flag #2: New faces on legacy contracts

Speaking of contracts, artist-run labels actually face many of the same copyright- and ownership-related issues for which major labels are notorious.

Such a similarity might be avoidable if artists decided to launch their own labels as entirely standalone brands, with their own organizational and legal norms. But instead, most established artists decide (or are required contractually) to build their labels as joint ventures or imprints with a major. Aside from Dreamville and G.O.O.D. Music, there are dozens of other examples of artist-run label partnerships with majors, such as Atlantic Records’ JVs with Issa Rae and James McMillan, Elektra Records’ JV with Travis Barker, Def Jam’s JV with Logic and Warner Records’ JV with IDK.

While this partnership structure can be a boon for the artist brand with respect to marketing and distribution, it usually means that the JV or imprint is then subject to its parent company’s legal and contractual norms. Short on time, resources and/or knowledge, these kinds of sub-labels tend to copy-and-paste contracts from majors that take full ownership of master recordings and 80% of master royalties, multiple sources say. In some cases, artist-run labels actually want to take more copyright ownership, not less, because of the inherent risk involved.

“One of the biggest cons of signing directly to an artist is that they’re not a billion-dollar company,” says Fowlkes. “The artist might be putting $50,000 of their own money into launching the venture. They have a much lower ability to absorb risk, so they’re going to care more about ROI and want more stringent terms. It then becomes this big, vicious cycle, because they end up agreeing with the dominant label structure.”

The blog The Fashion Law made a similar argument with regards to Kanye West’s G.O.O.D. Music: Because the label’s agreement with UMG is structured as a 50/50 profit split, West “very likely cannot then offer profit splits to his G.O.O.D. Music artists” — namely, “he is almost certainly applying some of the same royalty and ownership terms he is complaining about to his own label artists.”

One hypothetical way for artist labels under major-label umbrellas to avoid inequitable contracts could be to sign a distribution deal instead of a JV deal, which leaves the artist brand with the majority of recording royalties to split in a fairer way with their signees. Labels like Cash Money and Master P’s No Limit technically set a precedent for this model when they signed their respective distribution deals with Priority Records, which offered the brands 75% to 80% of recording royalties to split with their roster.

“Especially with a distribution partner who’s willing to cough upfront money to fund a record, you could actually have a chance to offer artists fairer deals than they would otherwise get in the label ecosystem,” says Fowlkes. But partially in the wake of multiple complaints and lawsuits — e.g. Lil Wayne, Tyga and T-Pain suing Cash Money for $51 million, $10 million and $500,000, respectively — the model has largely been abandoned.

The importance of artist education and advocacy

To take the transformative potential of artist-run labels seriously, potential signees should be on the lookout not just for fairer agreements, but also for the proper time and resources from the label team to deliver on their marketing promises.

But it’s not enough just to undo past legal wrongs; the entire internal culture around labels has to change as well. For instance, a lot of artists end up unhappy with their major-label contracts because they didn’t have an attorney or other business resources to help decipher legalese (or worked with an attorney who had an inherent conflict of interest). “There’s so many question marks” in the process, says Suzi Analogue, a producer, songwriter and founder of her own independent label Never Normal Records. “There’s so much exploitation, especially when you’re young and you’re a young Black artist or artist of color.”

Unsurprisingly, the push for financial and legal transparency is coming primarily from outside the existing major-label ecosystem — e.g. through CreateSafe’s Record Deal Simulator, which plainly visualizes the sheer imbalance in profits between a label and an artist in a traditional 80/20 royalty deal.

“Looking after” artists also means more than just making sure their catalogs are commercially successful. In this vein, indie labels seem to be making more progress than the majors. Never Normal artists not only own their master recordings and split profits 50/50 with the label, but also get access to internal skill-sharing resources as part of their contracts. In early 2019, the indie label Royal Mountain Records began incorporating a $1,500 mental health stipend into their artist contracts, an initiative that is still rare in the music industry as a whole. “Healthy workers means better work,” the label wrote in a statement. “Although this is not the primary goal, it would be foolish not to acknowledge the economic benefits of bands being healthier and happier.”

This is all not to say that everyone should avoid signing with major artists’ labels like the plague, especially if they provide unprecedented career opportunities for acts who might otherwise go ignored by the rest of the industry.

But as more celebrities start their own label brands, it’s important to be honest about how “artist-driven” they really are on an infrastructural level. In many cases, these brands are offering emerging acts the chance to give up ownership in their recordings as the price for clout, with no guarantee of the right marketing and accounting resources to keep them well-fed. That sounds a lot like what we tend to hear about major labels — and if our idea of “empowerment” and an “artist-driven” industry involves simply making artists the executive face of an imbalanced business practice, we might as well be running in circles.