Why it Makes Sense for Record Labels to Own the Masters

1. Strategic Investments and Trade-offs

Record labels often argue that they should own the masters as a result of upfront investments they make.

It's comparable to buying stocks in a company like Facebook – if you invest in a venture, you expect to see outsized returns, in perpetuity. Similarly, labels contend that if they fund an artist's production and promotion, they should have a stake in the future earnings of those master recordings.

Moreover, some artists willingly trade away these rights in exchange for advances or support, recognizing the value the label brings to their career.

2. Navigating Uncertainty in the Music Business

The music industry is inherently risky, with some releases soaring in popularity and others falling flat.

By owning the masters of various recordings, record labels can build a back catalog of revenue-generating assets. This consistent income stream not only offsets losses from underperforming releases but also fuels future signings and investments.

This approach is akin to financial diversification, ensuring stability even in the face of unpredictable market trends.

3. The Kate Bush Effect and Resurgence of Classics

Certain albums and songs have demonstrated the remarkable profitability potential years after their initial release.

The "Kate Bush Effect" refers to albums that continue to generate revenue long after their debut, much like how legacy artists' backcatalog songs find new life through platforms like TikTok.

Investors and record labels have realized that classic albums and songs can remain evergreen through streaming and frequent reissues, catering to both existing and future generations of music enthusiasts.

Why it Doesn't Make Sense for Record Labels to Own the Masters

1. Pioneering a New, Fairer Model

Critics of the traditional model argue that the time has come to redefine the artist-label relationship, that’s what indie labels do best!

They advocate for a fairer distribution of control and revenue, where artists maintain a greater stake in their own creative output.

This shift reflects a broader trend in the entertainment industry, where creators are seeking more equitable partnerships.

2. Unease in Artist-Label Relationships

Ownership of masters can create an uneasy dynamic between artists and labels.

Artists may feel trapped in agreements where they lose control over their own work, leading to frustration and a strained professional relationship. Even when the arrangement has been beneficial, an artist still may feel “trapped” which can strain the label/artist relationship, and impact future creativity.

This tension can ultimately hinder collaboration and creativity, impacting the quality of future releases.

3. Questioning Deserved Ownership

Some labels are called into question over whether they genuinely deserve to own the masters.

For instance, if a label hasn't contributed substantially to the production costs or lacks the promotional leverage to justify such ownership, it raises ethical concerns.

The question of whether the label's contribution justifies the extent of ownership becomes a central point of contention. Label’s shouldn’t automatically assume this position of power based solely on “the old way of doing things.”