Record labels entitled to make money like all companies
The work artists produce is owned by the record label that is their employer.
This is to vaguely give you an idea of why record labels offer the contracts that they do with artists.
The principle behind the deals is built on universal practice of the corporate world – a world artists refer to as capitalist. It is not exclusive to the music industry.
When a food chemical engineer is employed at, say, Woolworths and comes up with a formula that becomes a hit and changes the yoghurt industry forever, when she leaves the company, she leaves the formula behind. She signed a clause that says all content produced during her employment became the property of the company. And she will not be allowed to use the same formula at her new job.
On to soccer. When Lionel Messi plays for Barcelona and single- handedly wins tons of trophies for the club (hypothetically) – the day Messi leaves Barcelona he will not leave with the trophies.
He does not take the Champions League trophy with him. He can go to another club and win the Champions League again, but he cannot take the one he won for the club. He leaves everything behind.
On to, let’s say, a sales company. Bangi works for Company A and when he arrived the company was doing badly in sales. Bangi comes up with a brilliant sales strategy.
The company becomes an overnight hit. When he leaves, the company will continue to use that strategy without needing to consult with Bangi. Bangi relinquished ownership of all intellectual property created while employed.
So we all understand that these are the ways of the world.
Added to that, nobody is bigger than the company they work for. Their ideas or what they produce might be, but the individual never is. Messi does not make more money than Barcelona. The food chemical specialist does not make more money than Woolworths. Bangi does not make more money than his employer. These are universal basics.
Musicians/artists also produce work. And the work is owned by the record label that is essentially their “employer/investor”. This is a standard universal corporate principle. I am still to understand why artists believe that record labels are not allowed to make more money than them off their hard work and creativity.
If you don’t want anyone owning any piece of your work, then employ yourself. Many entrepreneurs have done this. Your Patrice Motsepe, Steve Jobs etc ... and in the music industry, Cassper Nyovest.
But if you sign a record deal – taking up employment at a record label – you will receive a standard corporate-aligned contract.
The same artists who claim record labels are sharks usually go solo for a while and, before you know it, start their own record label and what kind of contracts do they give their artists? The exact same contract they turned down. Because in business, you cannot give someone the lion’s share of the cake when you are the one who invested 100% of the start-up capital. It’s purely business. Nothing personal.
We need to put things into perspective. The music industry does not work in isolation to universal rules of business.