You might think that every musical artist would want to be signed by a major label, and you might think that any artist signed to a major label would be making a decent living -- a far better one than anyone could make selling records on their own. But the truth is that it doesn't always work that way.

Aimee Mann, Amy Ray (Indigo Girls), and Mac and Laura of Superchunk are just three examples of artists who have decided to go it alone by making and selling their own records. I recently spoke with them about their decisions to start their own record labels. It turns out that a major label record deal comes with a lot of strings attached. There are definite benefits -- like the fact that major labels have the money and people to build careers -- but the problem is that the big labels are increasingly reluctant to spend their money and time developing artists that don't fit a narrow pop formula. Music corporations want big results now. Artists who can sell well over time, though they may never go platinum -- called catalog artists in the business, like Rickie Lee Jones, Joan Armatrading, Richard Thompson and Tom Waits -- used to be a primary focus for A&R executives at major labels. Not anymore. These days, the major labels are only willing to spend the big bucks if they "hear a single" they can sell on pop radio. If your music doesn't fit the mold, you may be better off somewhere else.

And, major labels take a lot in return for their services. The artist contracts are notoriously one-sided. Most major label artists, for example, will never see any money from the sale of a record until that record has sold about a million copies. This is because the major label contract stipulates that artist royalties are paid only after the label has been paid back all the money they've spent on recording the record, promoting it to radio, making videos (usually 50% of this is the artist's responsibility), touring costs and the artist's advance. But these costs can only be paid off using the artist's royalty percentage. In other words, if the artist is supposed to be paid about $1 of the retail price for every CD sold, then only $1 of the income made from the sale of each CD goes against paying off the artist's debt to the label. If the label's costs were a million dollars, which is pretty standard, the artist would have to sell one million CDs to break even.

Not many artists sell a million copies of any of their records. So, except for the advance that labels pay their artists in anticipation of a new record, the vast majority of artists on a major label will never make any money from the sale of their records.

Contrast that with the artists that start their own labels and sell their own CDs. With digital technology, a CD can be recorded these days quite inexpensively. And, CDs can be manufactured for less than $1 apiece. Artists who record and manufacture their own CDs can sell them at shows for as much as $15 or $20 a piece. About 1,000 CDs sold means revenue of $15,000 to $20,000, minus recording and manufacturing costs. When you add in sales of merchandise and tickets, an independent touring musician can begin to make a living wage on relatively modest record sales. Of course, I'm talking about a solo artist -- bands have a tougher time of it.

So, while making a living as a musician is a relative rarity, what most of us, including the artists, don't realize is that signing with a major label is no guarantee of a good income. In fact, many artists are discovering that life on their own can provide them with a greater financial return and greater artistic freedom.

If you'd like to learn more about the artists I spoke with, and the music they make and sell, try their Web sites:

www.mergerecords.com
www.daemonrecords.com
www.aimeemann.com/home.html

If you'd like to suggest some additional artist-owned labels that your fellow Marketplace listeners might enjoy, contact us at letters@marketplace.org. We'll post at least some of your suggestions.

Christian Bordal
Marketplace's Entertainment Desk

Listen to other related stories by Christian Bordal: Royalty Auditing, Life of the DJ and House Concerts