Independent records labels are usually more profitable for the 
owner of the label than being allied with a major label because 
the artist gets to keep 100% of the profit. So if money is the 
only measure of profitably, independence puts more money in the 
artist's pocket.

But if you are part of a new genre of music, you will probably 
need the big boys to make your genre become popular enough to 
command a world wide audience.  Take rap music as an example. 
Without the backing of the big record labels, rap would still be 
basically a local phenomenon. The support that the major record 
labels gave to rap artists is the reason it has become so 
successful. 

Riding on the tails of that success is a very profitable 
independent market for rapsters and because of the national 
market created by the major labels marketing and distribution 
efforts, the independents are raking in huge amounts of money.

Without the initial backing of their genre, the independent 
artists will still be making more money than artists working for 
a big label, but the total amount of profit would be less because 
of the much smaller market for the music.

The smart independent will leverage the money spent by the big 
labels to help increase the popularity of their own genre of 
music as the basis for making their own independent label more 
successful.


Other Factors 

Some of the changes that can help out the independent artist make 
more money include:

 * Home-studio systems like ProTools have dramatically reduced 
   recording costs. A sound studio can be built in your home 
   for around $10,000. 

 * Selling directly to the customer through the internet and 
   eliminating the 70-80% that goes to the retailer. As a result 
   they can offer the public lower prices, take the lessons 
   taught over at http://www.SellMusicOnlineLikeCrazy.com for 
   example.

 * Sell music in MP3 format and burn CDs only when they are 
   actually ordered. One of the biggest distribution costs is 
   burning, labeling and shipping CDs to retail outlets with 
   no guarantee the CDS will actually sell.


You need to understand that all of the above savings will not 
eliminate the need to aggressively market your music. Artists who 
already have a following have been very successful with their 
independent labels. The major benefit of signing with a major 
record label is the marketing they provide.  Smaller media 
consultants can do the marketing and promotion of a CD for much 
less than a major record label but good marketing and promotion 
people will never come cheap. However, you may be able to get a 
smaller media company to work on a low flat rate that covers 
their basic costs plus a % of the profits from the sale of the 
music.


Piracy...Help or Hindrance?

Piracy is not necessarily hurting the artist. It does hurt the 
big record labels and many of the larger independent labels that 
produce other people's work because they only make money from the 
sale of the CD or from licensing fees if they own the copyright 
to the music.

The file sharing networks that allow the piracy of so much of 
today's music can raise the music's and therefore the artist's 
visibility. Being more visible can actually lead to increased 
sales for artists who don't have huge promotional budgets. By 
being more visible, the artist can become more popular and will 
be able to book more live performances. Even the most die-hard 
"free downloader" will shell out money to attend a live concert. 

The bottom line is music piracy hurts everyone involved in the 
creation and distribution of the music except the performer. 
Historically, under the big record labels, the performer usually 
got the smallest piece of the profit pie. That fact is behind 
some performers giving away MP3 versions of their music so they 
can draw bigger crowds to live performances and also charge their 
fans for professional quality CDs.     
 

Ty Cohen is the acclaimed author of over a dozen best-selling 
music industry "How to" books and courses. Grab a copy of 
Ty Cohen's latest book title by visiting: 
http://www.MusicBooksByTy.com and to learn more about 
starting or turning your existing record label into 
a world wide, profit pulling record label visit:   
http://www.TheUltimateRecordLabel.com/landing_page.htm  
Start A Record Label Today!