The labels may receive a percentage of the revenues generated from concerts and music festivals, however, this solely depends on the nature of the record deal they have with a certain artist.
One of the most common types of deals in the industry right now is 360 deals. The label receives rights to the artist’s recording services as well as the percentage from various areas of the artist’s career. If an artist has a 360 deal, then the label receives royalties from touring, sales of merch, streams, licensing, sync, etc.
To better understand how this works, it’s important to learn about various types of deals and which percentage the label can potentially receive from concerts of the touring artist.
Do Labels Get A Percentage From Artists’ Concerts Or Festivals?
The simple answer is yes, they may get the percentage from the artist’s performance during the concert or a music festival. However, it’s important to remember that the artists may have various contracts, which means that there are various conditions under which the label is getting paid.
First, let’s dive deeper into different deals that get signed between artists and labels to better understand how the royalties from music and other aspects are shared.
Types of artists' contracts
As for artists, it's important to know the objectives of their partnership with the label. Some labels can offer terms that can really either benefit or hurt artists.
In 360 deals, the artist has to share a certain percentage of the revenue from various areas such as publishing, merchandising, and touring with their record company. The label may play an active or a passive role in these areas, but still an artist will have to share the percentage of their income. These percentages may vary from 10 to even 25%.
This type of deal may be quite beneficial for an artist who has momentum. The label is interested in promoting their music, as they’re then getting more revenue based on the artist's success in various areas.
Standard record deal
This is a standard deal for artists who already have a large and engaged following. They supply labels with several options of albums and songs and the label decides which to promote and what will be included in the finished project. In these deals, the label works as a lending resource to the artists.
Multi rights deal
The idea of this deal is that if a label helps market an artist and brings him fame, then the label is entitled to a portion of income streams. With this deal, the artist and label can agree on a certain point of leverage.
In the distribution deal, labels are mostly focused on getting music out there and concentrating on promoting it. This option is great for artists whose music doesn't have an established fan base or marketing strategy. These deals hardly ever have any money upfront, the artist is responsible for all expenses.
Even with the stated deals, there are many others, some might be even specific to an artist and the label they're signing to. The other deals might be like this: a single deal recording contract - the label produces a single song or album; a profit split record deal - the more fair deal for artists; 50/50 deals; and many more.
Percentage The Labels Can Get From Festivals
The percentage of revenue that labels get depends on the contract that's signed with the artist. If we are talking about festivals specifically, they bring a lot of money.
They are also very profitable, as they bring several aspects like live shows, sponsorships, merchandise sales, food and beverage sales, etc. All combined make a great experience as well as a great revenue.
FAQ: What Other Ways Do Record Labels Make Money?
Record labels are not getting paid solely for concerts and music festival performances. Record companies have always been a powerful source in the music industry, even now as many artists turn away from the label model, they still know the secrets to get a good revenue stream for their business.
To understand how record labels make money, we need to understand the inner working of a label, and the business side of things. The main jobs of a label are to manufacture, distribute, and promote products and their artists.
When a label signs a contract with an artist the label is responsible for marketing both the artists and their music. These companies shell out money to improve the artist's work and roll them out to the public. The money that they invest into artists and music then comes back to them from these main revenue streams:
Sales and streaming
While this isn't a surprise but the obvious way labels make money comes from sales and streams. To be exact, this is the main way they earn a huge amount of revenue. Even though streaming does give less revenue than sales, streaming is much more popular and many apps offer great terms for labels.
Publishing and licensing
Publishing and licensing are another major revenue stream for record labels. Publishing refers to the ownership of the music while licensing the music allows it to be used in visual media, TV shows, movies, or video games. Licensed music is often shared once, but some labels sign deals that license their music for extended amounts of time.
Royalties are considered another great stream of income for labels than sales or licensing. Labels get money whenever their music is played on the radio, streamed online, or played in public places, all these payments add up quickly and are considered some good revenue.
Artists and labels always make some additional money by selling merch, like t-shirts, hats, and posters at concerts and live events. This is especially true for big artists with a big fanbase that is willing to buy anything with the artist's name on it. However, the quality and design of the merch do make a big difference, it's not enough to just have good music.
Finally, the topic that we are talking about today is live performances. This type of revenue is quite tricky at the start, but as an artist books more concerts and festivals, labels will make a lot of money.
What Is The Label’s Revenue During Touring And Festivals?
As festivals have become a popular feature among the people, artists and labels have caught onto it. Concert tours and festivals have grown into major moneymakers in the industry. This is happy news to labels since for an artist to appear at a festival is much cheaper than depending on record sales.
Record labels that have multiple artists in the same genre have a loyal fanbase, which is great for promoting festivals and concerts since the customers know all about the artist's material.
With the right deals and marketing, a label can make a lot of money from the touring artist. It all depends, if an artist and his music do good, so will the label do well.
The label’s revenue from the festivals and concerts may vary depending on which type of deal the artist has. Festivals may be very profitable, however, there are no official numbers on how much the labels get from the shows during the festivals.
Another thing is playing concerts during a tour. Here it’s also important to know the peculiarities of the contract the artist has, whether it’s a 360 deal or any other type of deal.