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Indie (music)

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Encyclopedia
In music, independent music, often shortened to indie music or "indie" is a term used to describe independence from major commercial record labels or their subsidiaries, and an autonomous, Do-It-Yourself approach
DIY ethic
The DIY ethic refers to the ethic of self-sufficiency through completing tasks oneself as opposed to having others who are more experienced or able complete them for one's behalf. It promotes the idea that an ordinary person can learn to do more than he or she thought was possible...

 to recording and publishing.

Independent record labels


Independent labels have a long history of promoting developments in popular music, stretching back to the post-war period in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, with labels such as Sun Records
Sun Records
Sun Records is a record label founded in Memphis, Tennessee, starting operations on March 27, 1952.Founded by Sam Phillips, Sun Records was known for giving notable musicians such as Elvis Presley , Carl Perkins, Roy Orbison, and Johnny Cash...

, King Records
King Records (USA)
King Records is an American record label, started in 1943 by Syd Nathan and originally headquartered in Cincinnati, Ohio.-History:At first it specialized in country music, at the time still known as "hillbilly music." King advertised, "If it's a King, It's a Hillbilly -- If it's a Hillbilly, it's a...

, Stax
Stax Records
Stax Records is an American record label, originally based in Memphis, Tennessee.Founded in 1957 as Satellite Records, the name Stax Records was adopted in 1961. The label was a major factor in the creation of the Southern soul and Memphis soul music styles, also releasing gospel, funk, jazz, and...

, etc.

In the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 during the 1950s and 1960s, the major record companies had so much power that independent labels struggled to become established. Several British producers and artists launched independent labels as outlets for their work and artists they liked, but the majority failed as commercial ventures or were swallowed up by the majors.

In the United States Independent labels and distributors often banded together to form organizations to promote trade and parity within the industry. The National Academy of Recording Arts and Sciences (NARAS), famous as the organization behind the Grammy Awards, began in the 1950s as an organization of 25 independent record labels including Herald and Ember Records, and Atlantic Records. The 1970s heralded the founding of the National Association of Independent Record Distributors (NAIRD), which became A2IM in 2004. Smaller organizations also existed including the Independent Music Association (IMA), founded by Don Kulak in the late 1980s. At its zenith it had 1,000 independent labels on its member rosters. The 1990s brought Affiliated Independent Record Companies (AIRCO), whose most notable member was upstart punk - thrash label Mystic Records and The Independent Music Retailer's Association (IMRA), a short-lived organization founded by Mark Wilkins and Don Kulak. The latter is most notable for a lawsuit involving co-op money it filed on behalf of its member Digital Distributors . in conjunction with Warehouse Record Stores. The adjudication of the case grossed $178,000,000 from the distribution arms of major labels. The proceeds were distributed amongst all plaintiffs.

During the punk rock
Punk rock
Punk rock is a rock music genre that developed between 1974 and 1976 in the United States, the United Kingdom, and Australia. Rooted in garage rock and other forms of what is now known as protopunk music, punk rock bands eschewed perceived excesses of mainstream 1970s rock...

 era the number of independent labels grew. The UK Indie Chart
UK Indie Chart
The UK Independent Chart or Indie Chart is a chart of the best-selling independent record releases in the UK.- History :In the wake of punk, small record labels began to spring up, as an outlet for artists that were unwilling to sign contracts with major record companies, or were not considered...

 was first compiled in 1980, and independent distribution became better organized from the late 1970s onwards.

In the late 1980s, Seattle-based Sub Pop
Sub Pop
Sub Pop is a record label founded in 1986 by Bruce Pavitt and Jonathan Poneman in Seattle, Washington. Sub Pop achieved fame in the late 1980s for first signing Nirvana, Soundgarden, Mudhoney and many other bands from the Seattle music scene...

 Records was at the center of the grunge
Grunge
Grunge is a subgenre of alternative rock that emerged during the mid-1980s in the American state of Washington, particularly in the Seattle area. Inspired by hardcore punk, heavy metal, and indie rock, grunge is generally characterized by heavily distorted electric guitars, contrasting song...

 scene. In the late 1990s and into the 2000s as the advent of MP3
MP3
MPEG-1 or MPEG-2 Audio Layer III, more commonly referred to as MP3, is a patented digital audio encoding format using a form of lossy data compression...

 files and digital download sites such as Apple's iTunes
ITunes
iTunes is a media player computer program, used for playing, downloading, and organizing digital music and video files on desktop computers. It can also manage contents on iPod, iPhone, iPod Touch and iPad....

 changed the recording industry, an indie Neo-soul scene soon emerged from the urban Underground soul
Underground soul
Underground Soul is a project created in 2002 by Italian born DJ, A&R and entrepreneur Eleonora Cutaia.Originally started as a "cult" community for Soulful music fans, it used to feature reviews, features and interviews with the scene's most representative artists, as well as promising...

 scenes of London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...

, NYC, Philadelphia, Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...

 and L.A., primarily due to commercial radio and the major label's biased focus on the marketing, promotion & Airplay of Pop
Pop music
Pop music is usually understood to be commercially recorded music, often oriented toward a youth market, usually consisting of relatively short, simple songs utilizing technological innovations to produce new variations on existing themes.- Definitions :David Hatch and Stephen Millward define pop...

 and hip hop
Hip hop
Hip hop is a form of musical expression and artistic culture that originated in African-American and Latino communities during the 1970s in New York City, specifically the Bronx. DJ Afrika Bambaataa outlined the four pillars of hip hop culture: MCing, DJing, breaking and graffiti writing...

 music during this period. Independent Labels such as Dome Records & Expansion Records in the U.K. and Ubiquity Records
Ubiquity Records
Ubiquity Records is an American music label that focuses on funk, rare groove, soul, and hip hop and other musical genres. It is located in Costa Mesa, California and has a satellite office based in San Francisco, California...

 in the U.S. and a plethora of others around the world as well as various "online stores" such as www.dustygroove.com, www.soultracks.com, etc., support the Nu soul movement today.

Independent artists and technology


Internet technology allows artists to introduce their music to a potentially enormous audience at low cost without necessarily affiliating with a major recording label. The design of digital music software encourages the discovery of new music. This, in turn, creates many opportunities for independent bands. Royalties
Royalties
Royalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...

 from digital services could prove to be an important source of income. If an artist has already paid to record, manufacture, and promote their album, there is little to no additional cost for independent artists to distribute their music online. Digital services offer the opportunity of exposure to new fans and the possibility of increased sales through online retailers. Artists can also release music more frequently and quickly if it is made available online. Additionally, artists have the option of releasing limited edition, out-of-print, or live material that would be too costly to produce through traditional means. No limit is the largest independent record company in the US with sales of over 75 million records.

Some independent artists have used the Internet (and an established fan base) to successfully fund new recording projects, relying on services like ArtistShare
ArtistShare
ArtistShare is a crowdfunding website and labelWharton Innovation and Entrepreneurship Consulted on 10/12/2011 for musicians and other creative artists which allows them to fund their projects utilizing a "fan-funding" model to allow the general public to directly finance, watch the creative...

 or using their own sites. For instance, singer-songwriter Jill Sobule released "California Years" in 2009, an album for which she'd raised nearly $90,000 online. Sobule explained her telethon-like fundraising approach thusly: "The contribution levels went from $10, which got you a digital download of the record, to $10,000, which gave you the chance to sing on the record." (One generous donor did contribute at the $10,000 level.)

With the arrival of newer and relatively inexpensive recording devices and instruments, more individuals are able to participate in the creation of music than ever before. Studio
Recording studio
A recording studio is a facility for sound recording and mixing. Ideally both the recording and monitoring spaces are specially designed by an acoustician to achieve optimum acoustic properties...

 time is extremely expensive and difficult to obtain. The result of new technology is that anyone can produce studio-quality music from their own home. Additionally, the development of new technology allows for greater experimentation with sound
Sound
Sound is a mechanical wave that is an oscillation of pressure transmitted through a solid, liquid, or gas, composed of frequencies within the range of hearing and of a level sufficiently strong to be heard, or the sensation stimulated in organs of hearing by such vibrations.-Propagation of...

. An artist is able to experiment without necessarily spending the money to do it in an expensive studio. A complete proof of concept
Proof of concept
A proof of concept or a proof of principle is a realization of a certain method or idea to demonstrate its feasibility, or a demonstration in principle, whose purpose is to verify that some concept or theory that has the potential of being used...

 that a whole 'Do it yourself
Do it yourself
Do it yourself is a term used to describe building, modifying, or repairing of something without the aid of experts or professionals...

' CD production process – from beginning to end (including: recording, mixing, graphics, page layout
Page layout
Page layout is the part of graphic design that deals in the arrangement and style treatment of elements on a page.- History and development :...

, prepress
Prepress
Prepress is the term used in the printing and publishing industries for the processes and procedures that occur between the creation of a print layout and the final printing...

, etc.) – can compete with professional quality, using exclusively Free Software
Free software
Free software, software libre or libre software is software that can be used, studied, and modified without restriction, and which can be copied and redistributed in modified or unmodified form either without restriction, or with restrictions that only ensure that further recipients can also do...

, was made by the Austrian band 'XBloome' in November 2010.

Most artists maintain their own websites as well as having a presence on sites such as Myspace.com, Audimated
Audimated
Audimated is a social networking website for independent musicians and their fans. Audimated.com, which launched in June 2010, offers a platform in which both artists and fans can sell music and related products to make a profit...

, or 'Indie Music Highway'. Technological advances such as message boards, music blog
Blog
A blog is a type of website or part of a website supposed to be updated with new content from time to time. Blogs are usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video. Entries are commonly displayed in...

s, and social networks are also being used by independent music companies to make big advances in the business. Some sites rely on audience participation to rate a band, allowing listeners to have a significant impact on the success of a band. This eliminates new talent search and development, one of the most costly areas of the music business. Other sites allow artists to upload their music and sell it at a price of their choosing. Visitors to the site can browse by genre, listen to free samples, view artist information, and purchase the tracks they want to buy. Acts such as Wilco
Wilco
Wilco is an American alternative rock band based in Chicago, Illinois. The band was formed in 1994 by the remaining members of alternative country group Uncle Tupelo following singer Jay Farrar's departure. Wilco's lineup has changed frequently, with only singer Jeff Tweedy and bassist John...

 have chosen to make their new albums available for streaming before they are released.

Many bands have chosen to forego a record label and instead market and distribute their music only on the Internet. Digital marketing firms such as CDBaby, Magnatune
Magnatune
Magnatune is an American independent record label based in Berkeley, California, founded in spring 2003 by John Buckman, then-CEO of e-mail software company Lyris. It aims at treating both its musicians and its customers fairly—its tagline is "We are not evil"...

 and iTunes
ITunes
iTunes is a media player computer program, used for playing, downloading, and organizing digital music and video files on desktop computers. It can also manage contents on iPod, iPhone, iPod Touch and iPad....

 offer opportunities such as podcast
Podcast
A podcast is a series of digital media files that are released episodically and often downloaded through web syndication...

 creation and promotion and video hosting. In the case of digital distribution, musicians lend a company the right to distribute their music. The contract is often non-exclusive, and the rights to the music generally remain with the artist. The non-exclusivity of the contract allows many artists to have an online presence while continuing to sell directly through their local independent music stores.

A more recent trend is seen in artists who give their music away for free, such as the "record label" Quote Unquote Records
Quote Unquote Records
Quote Unquote Records is a donation-based online independent record label, founded and run by Bomb the Music Industry! and The Arrogant Sons of Bitches frontman Jeff Rosenstock. The label is an example of Rosenstock's DIY ideals...

, featuring bands such as Bomb the Music Industry!
Bomb The Music Industry!
Bomb the Music Industry! is band from Baldwin, Nassau County, New York. They write, produce, record, and distribute all of their music under the leadership of songwriter and producer Jeff Rosenstock....

, Radiohead
Radiohead
Radiohead are an English rock band from Abingdon, Oxfordshire, formed in 1985. The band consists of Thom Yorke , Jonny Greenwood , Ed O'Brien , Colin Greenwood and Phil Selway .Radiohead released their debut single "Creep" in 1992...

, with their 2007 album In Rainbows
In Rainbows
In Rainbows is the seventh studio album by the English rock band Radiohead. It was first released on 10 October 2007 as a digital download self-released, that customers could order for whatever price they saw fit, followed by a standard CD release in most countries during the last week of 2007. The...

, The Go! Team
The Go! Team
The Go! Team are a six-piece band from Brighton, England. They combine indie rock and garage rock with a mixture of blaxploitation and Bollywood soundtracks, double dutch chants, old school hip hop and distorted guitars similar to the style of Sonic Youth. Their songs are a mix of live...

 with their single "Milk Crisis" and Trent Reznor
Trent Reznor
Michael Trent Reznor is an American multi-instrumentalist, composer, record producer, and leader of industrial rock band Nine Inch Nails. Reznor is also a member of How to Destroy Angels alongside his wife, Mariqueen Maandig, and Atticus Ross. He was previously associated with bands Option 30,...

 of Nine Inch Nails
Nine Inch Nails
Nine Inch Nails is an American industrial rock project, founded in 1988 by Trent Reznor in Cleveland, Ohio. As its main producer, singer, songwriter, and instrumentalist, Reznor is the only official member of Nine Inch Nails and remains solely responsible for its direction...

 with the 2008 albums Ghosts I–IV
Ghosts I–IV
Ghosts I–IV is the sixth studio album by American industrial rock act Nine Inch Nails, released on March 2, 2008. The team behind the project included Nine Inch Nails front man Trent Reznor, studio-collaborators Atticus Ross and Alan Moulder, and instrumental contributions from Alessandro Cortini,...

 and The Slip
The Slip (album)
The Slip is the seventh studio album by American industrial rock act Nine Inch Nails, released on July 22, 2008. It was the fourth consecutive Nine Inch Nails release to be produced by frontman Trent Reznor with collaborators Atticus Ross and Alan Moulder...

.

Going major versus staying independent


Many acts choose to go from an independent label to a major label if given the opportunity as major labels have considerably more power and financial means to promote and distribute product; thus increasing the chances of greater success. Some acts, however, may choose not to go to a major label if given the opportunity as independents generally offer more freedom. Similarly, others become independent label acts, after having already experienced recording on a major label, either due to their own accord or having been dropped from a major label. Bradley Joseph
Bradley Joseph
Bradley Joseph is an American composer, arranger, and producer of contemporary instrumental music. His compositions include works for orchestra, quartet, and solo piano, while his musical style ranges from "quietly pensive mood music to a rich orchestration of classical depth and breadth".Active...

 requested to be let go from his major label deal with Narada/Virgin Records and subsequently became an independent artist. He states "As an independent, business is a prime concern and can take over if not controlled. A lot of musicians don't learn the business. You just have to be well-rounded in both areas. You have to understand publishing. You have to understand how you make money, what's in demand, and what helps you make the most out of your talent. But some artists just want to be involved in the music and don't like the added problems or have the personality to work with both". Joseph suggests newer artists read and study both courses and pick one that best suits their own needs and wants. Another option may be for an act to start its own independent label and release its own music. However, it should be pointed out that this means the artist must also become a business owner in order to run the label, and that leaves less time to focus on the aspect of being a performer. Established independent labels find it challenging to get albums into stores or played on the radio, so it is unlikely an unknown act releasing on their own label will have greater success. An act that has never released any product or does not have a solid following may find it daunting to release an album on their own record label and have any level of success.

If an act moves to a major label from an independent, they are awarded greater opportunity for success, but it does not guarantee success. About one in ten albums released by major labels make a profit for the label. Some artists have recorded for independent record companies for their entire careers and have had solid careers. Independent labels tend to be more open creatively, however, an independent label that is creatively productive is not necessarily financially lucrative. Independent labels are often operations of one, two, or only half a dozen people, with almost no outside assistance and run out of tiny offices. This lack of resources can make it extremely difficult for a band to make revenue from sales. It can also be more difficult for the indie label to get its artists music played on radio stations around the country when compared to the pull of a major label. A testament to this fact could be that since 1991, there have only been twelve independent label albums that have reached the number one spot on the US Billboard 200
Billboard 200
The Billboard 200 is a ranking of the 200 highest-selling music albums and EPs in the United States, published weekly by Billboard magazine. It is frequently used to convey the popularity of an artist or groups of artists...

 Album Chart. There have, however, been dozens of independent albums that have reached the top 40 of the US Album Chart.

Some major labels have created an opportunity for independent artists to be featured on a distribution/marketing CD project with no strings attached in an effort to help boost awareness of the Independent Music community.

The difference among various independent labels lies with distribution; this is probably the most important aspect of running a label. Examples are:

Independent label that signs and distributes its own acts. These independent labels find and sign their own acts; then the label manufactures, distributes, and promotes its own product.

Independent label distributed by a major label. These independent labels are similar to the type mentioned above in that they find and sign their own acts, but they have a separate contract with a major label to handle manufacturing, distribution, and/or promotion. The major label has no control over the independent label, simply an agreement to distribute its product. Either the independent or the major can terminate the pact at the end of the contractual agreement if they so choose. The independent provides for its own financial stability, and has no outside monetary assistance from a major label. -If signing to an independent label, this type of venture probably affords the better benefit. This is because the act's contract is actually with the independent label, which may offer more creative control, yet the act is having its album distributed by a major label, which also has an interest in seeing the album become successful.

Independent label owned by a major label. Some major labels have started independent labels or purchased an existing independent label outright, and have these labels use, or continue to use, independent distribution for their product. The reason for this is because independents usually are on the cutting edge of new sounds and potential hit artists, and signs acts and releases albums for less money than would have otherwise been spent if the acts were signed directly to the major label. One benefit of this scenario is that if the act eventually proves successful enough on this type of independent, and is seeking a major label deal, it may see its subsequent albums released directly on the major-label owner of its independent label. The moniker "independent" is sometimes associated with these major-label owned independent labels because they use independent distributors to distribute their albums instead of their affiliated major-label distribution system. However, these labels are not true independents, the differences being: a) these independent labels can seek the financial backing of their major-label owner should they ever fall on hard financial times. b) the major-label owner can sign acts itself, and then place acts on its independent label if it chooses, even though the independent label signs acts itself. c) the major-label owner can potentially steal away any act from its independent label at any time and bring that act directly to the major-label owner, regardless of if the act is still under contract to the independent label. d) the major-label owner could completely shut down the independent label entirely or sale it off for financial reasons or for restructuring of the overall conglomerate. None of these are circumstances that pertain to true independent labels like those in the first two examples. A record label needs more than independent distribution to qualify as an independent label, otherwise it is an arm of a major label.

It can be very difficult for independent bands to sign to a record label that may not be familiar with their specific style. It can take years of dedicated effort, self-promotion, and rejections before landing a contract with either an independent or major record label. Bands that are ready to go this route need to be sure they are prepared both in terms of the music they offer as well as their realistic expectations for success.

The three main ways for an artist to make money are record deals,
touring, and publishing rights.

Major label contracts


Most major label artists earn a 10–15% royalty
Royalties
Royalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...

 rate. However, before a band is able to receive any of their royalties, they must clear their label for all of their debts, known as recoupable expenses. These expenses arise from the cost of such things as album packaging and artwork, tour support, and video production. An additional part of the recoupable expenses are the artist's advance
Advance payment
An advance payment, or simply an advance, is the part of a contractually due sum that is paid in advance for goods or services, while the balance included in the invoice will only follow the delivery. It is called a prepaid expense in accrual accounting.-See also:*Advance against royalties*Pay or...

. An advance is like a loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....

. It allows the artist to have money to live and record with until their record is released. However, before they can gain any royalties, the advance must be paid back in full to the record label. Since only the most successful artists recoup production and marketing costs, an unsuccessful artist's debt may carry over to their next album, meaning that they see little to no royalties.

Major label advances are generally much larger than independent labels can offer. If an independent label is able to offer an advance, it will likely fall in the $5,000–$100,000 range. On the other hand, major labels are able to offer artists advances in the range of $150,000–$500,000. Some smaller independent labels offer no advance at all; just recording cost, album packaging, and artwork, which is also recoupable. If an artist gets no advance at all, they owe their record company less money, thus allowing them to start receiving royalty checks earlier; that is, if sales warrant any royalty checks at all. However, since the record label typically recoups so many different costs, it's actually to the artist's advantage to get the largest advance possible because they may not see any royalties checks for quite some time; again, that is, if sales warrant any royalties checks at all. Another advantage of getting an advance; the advance money the artist owes the label is only recoupable through the artist's royalties, not through a return of the advance itself.

In a record contract, options
Real option
Real options valuation, also often termed Real options analysis, applies option valuation techniques to capital budgeting decisions. A real option itself, is the right — but not the obligation — to undertake some business decision; typically the option to make, abandon, expand, or contract a...

 are agreed upon between the record company and the act. Options allow the label to request additional albums from the act if they so choose. Major labels tend to ask for more options in a contract than independents. For instance, a contract may state "one album, with an option for four". This would mean a total of five possible albums. This means that if the first album was recorded and released by the label and was profitable, the label is going to pick up its option for a second album. The act, therefore, must deliver a second album to the label. If that album is successful, the label will pick up its option for a third album; and so on and so on, depending on how many options are stated in the contract. Picking up the option for another album lies strictly with the label, not the act. The label can pick up as many options as it wants, up to the amount stated in the contract, it does not have to pick up all the options. That means, although a contract may state it has an option for four albums, the label does not have to pick up all four of these options. The reason for this is, say the act's first album is successful and the label picks up an option for a second album, but that second album fails miserably. The label could decide it is not about to spend more money on another album, and not pick up any more options and drop the act from its roster. Another ploy the label could utilize is to pick up an option for another album, even after a failed album had been released. If the label doesn't like the finished product of the new album the act has recorded, the label may not release that album, and then pick up its option for yet another album! The label then may not release that album as well! But the money spent for recording these unreleased albums may still be recoupable from the albums that have already been released. Because the act is under contract with the label, it cannot record music for another record label without permission. This scenario could potentially tie an act down to a label for years, even though the label has no intentions of releasing any more product from this act, in a career that guarantees no success, and if so, typically only sees a few prime years of prosperity. Some acts consider this unfair because the label has the right to not distribute an artist's work, yet legally keep them bound and prevent them from recording elsewhere. In effect, the label could continue to demand more albums through the options clause until it deems one commercially or artistically acceptable. Record labels also effectively own the product recorded (released or not) by an act during the duration of their contract with the label.

Options are only beneficial to the record label. The fewer options allowed in the contract, the better for the act. An example: if an act's first and/or second album is successful, but there are no more options left, the label will re-sign the act all over again anyway. This time it will most likely be with a much better royalty rate and more creative freedom than the previous contract stated. Or, the act can decide to move to another label altogether, one that is offering a better royalty rate or creative freedom. However, when the label holds a clause for lots of options for additional albums, it has the advantage. Besides the scenario in the above paragraph of the label requesting albums it may not release and preventing the act from recording elsewhere, the exact opposite could happen instead. The act could release a blockbuster album on their very first release. The label will surely pick up its options for future albums and distribute them, but the act will continue to see all its royalty checks and recoupable expenses calculated under the same contract it signed many years ago. When its contract is finally up (with all those options), the act may have declined considerably in music popularity and may not have the same bargaining position that it had so many years ago when it released that blockbuster album. Had there been fewer options on the initial contract, the act could have negotiated a new and better contract while in its prime.

Independent label contracts


Independent label contracts typically resemble contracts offered by major labels because they have similar legal liabilities to define before representing an artist. There are differences, however, usually with regards to less advances, lower studio costs, lower royalties, but fewer album options. Due to financial constraints, independents typically spend much less on marketing and promotion than major labels. But with lower royalties rates typically paid to artists and lower production and promotion costs, independent labels generally can turn a profit off lower volumes of sales than a major label can.

Although not common, there have been instances of profit-sharing deals with independent labels in which an act can get as much as 40–50% of the net profits. In this type of contract, the net gain after all expenses have been taken out are divided between the label and artist by a negotiated percentage. However, deals in this form can take longer for an artist to gain any profits, if at all, since all expenses – such as recording, manufacturing, publicity
Publicity
Publicity is the deliberate attempt to manage the public's perception of a subject. The subjects of publicity include people , goods and services, organizations of all kinds, and works of art or entertainment.From a marketing perspective, publicity is one component of promotion which is one...

 and marketing, music videos, etc., are also taken into account. Only if an independent artist becomes vastly popular are deals of this type more advantageous.

Independent labels also rely on "word of mouth" to expose their acts. Independent labels tend to avoid high budget marketing tactics, which usually does not fall in the budget of an independent label. This of course contributes to the overall lower production cost, and may help the artist to receive royalties sooner, if warranted. Major labels tend to watch indie label artists and gauge their success, and may offer to sign acts from independents when their contract is up. The major may also request to buy the contract of the act from the independent label before the contract is up, giving the independent label a hefty financial payment if they choose to sell the contract.

Publishing


If a band or artist writes their own material, publishing can be one of the best ways to earn a profit. It is one of the few guaranteed ways to earn revenue for artists. Basic copyright law protects songwriters by giving them exclusive rights to grant or deny the reproduction, distribution, or performance of their work. The majority of a band's publishing income comes from its mechanical and performance rights. Mechanical rights cover the reproduction of a song on a record. In the standard contract between a band and a label, the label is required by law to pay the composer a fixed rate per song simply for the right to use the composition on commercially sold recordings. The mechanical licensing rate in 2006 for the U.S. and Canada is 9.1 cents per song. With the performance rights, a song's copyright covers every time it appears on radio and television.

However, in recent years touring is also becoming one of the ways to make money, though its revenue is not so much as that of major artists'. That's not only because ticket sales and ticket prices are increasing, but also because they are selling their goods, such as T-shirts, towels, wristbands, and so on. Most of artists tend to sell their goods in addition to publishing their works. Moreover, there are some examples that sound sources which have been just recorded are sold after concerts.

Increasingly the internet is making new methods of publication accessible to independent musicians. Services have been set up to distribute independent music over the internet with many different types of payment models. This often allows artists to reach a much wider audience than would normally be possible as a local band.