Record labels often don't like to pay artists large amounts
for a few key (and sometimes controversial) reasons:
1. **They take on the financial risk**: Labels front the costs of recording, marketing, distribution, tour support, and sometimes living expenses. They justify taking a bigger cut because they’re investing upfront in artists who might not make that money back.
2. **Recoupment clauses**: Most artists don’t get paid until the label recoups all the money it spent on them—meaning even if your music sells, the label takes its cut *first*. This can delay or reduce what the artist actually sees.
3. **Control and ownership**: Labels usually own the master recordings and control the licensing. That means they collect ongoing revenue while artists often rely on touring, merch, and publishing rights to earn.
4. **Outdated deal structures**: Traditional label contracts haven’t evolved much with the streaming era. Artists get fractions of a penny per stream, and after the label takes their piece, there’s not much left.
5. **Power imbalance**: Labels usually have more leverage, especially with new artists. So, they negotiate deals that benefit them long-term—unless the artist is already big enough to demand better terms.
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