The 3 Major Record Labels & Their Role in the Music Industry

Author: Hugh McIntyre

Expert Sources: Jerry Beltran • Anthony Mundle

Last updated: Jun 6, 2022

Hugh McIntyre is a music journalist, social media expert, and marketing professional based in both NYC and LA. He has spent a decade writing about music and the music industry, primarily for Forbes, but also for Billboard, Fuse, MTV, and many more. He has also managed social media for Grammy-winning musicians, Olympic medal-winning athletes, and CEOs.
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Table of Contents

Introduction
What Major Record Labels Do
What Are the 3 Major Record Labels?
1. Universal Music Group
2. Sony Music
3. Warner Music Group
What It's Like Being Signed to a Major Record Label
Sources
References

What Major Record Labels Do

The definition¹ of the phrase “record label” is simple: “a company that produces and sells records, CDs, and recordings.” Adding the word “major” to that is pretty self-explanatory. Explaining in greater detail what exactly one of these companies, let alone one of the biggest examples of one does, is not.

At its most basic, major record labels find Singers and musicians, sign them to exclusive contracts, and release the music they create in order to make both the company and the artists money. Of course, doing so successfully involves a lot of people with different jobs, and the largest firms can have thousands of employees worldwide.

Major record labels are always on the hunt for rising talents, and while they used to search for them in small nightclubs, these days many new signees are discovered on social media or on platforms like Spotify, Apple Music, or YouTube, where anyone who is going viral with a clip or a song instantly becomes a must-have for the biggest players in the space.

After a contract is signed, major record labels can help pair musicians with Producers, Writers, Engineers and Mixers, all of whom come together to create songs and albums. The company then creates promotion plans, distributes the music via digital platforms (streaming sites and download stores like iTunes) and manufactures CDs and vinyl, then ships them out to stores.

Major record labels can then help promote the music, via traditional publicity routes (magazines, blogs, TV, advertising), radio, and marketing (which can involve everything from the cover art to selling the tunes themselves). They also help develop musicians, both new and established, helping them find new sounds and creative outlets.

It’s worth noting that while major record labels will have their hand in all of these activities for all of their artists, the company itself doesn’t always do them. For example, the major record labels have publicity and radio divisions, but that doesn’t mean they work every project themselves. Sometimes the Managers of artists and bands will work out a deal to do PR/marketing/radio themselves or perhaps hire another outside firm.

Major record labels also focus on publishing and licensing of the music they own the rights to, helping supply songs for film, TV, advertisements, and so on.

How do artists get signed to labels?

Jerry Beltran (DMX, French Montana, MIKA)

There’s no one answer to that. There are many different paths to getting signed. The old school, traditional way is that an A&R goes out and scouts artists. The romanticized idea of it is they go out to bars and clubs and see a band, they have a vision for the band, “this is gonna be the next Rolling Stones or Nirvana or whoever,” and they bring it back to the label.

They get the label all excited about it, they do a deal, then they develop. That’s the old way, that rarely ever happens.

Now, more and more artists are doing it without the labels. The artist and their team are the ones doing the development side of things. Labels now have the tools to be much more research-based, more data-centric, where we can see that an artist is bubbling on TikTok, for instance. Several years ago it was SoundCloud. A few years before that it was in the blogosphere. An artist just getting the right attention from the consumer directly: that’s the model that’s been built in the last ten to fifteen years.

When a label and A&R can see that there’s an audience in demand of something, that’s a huge advantage. It’s never been clearer than it is nowadays with things like social media, Instagram, back to TikTok, and streaming that show pretty much to the minute where people are tuning in and finding artists and really getting the experience of what an artist’s life is like. They’re much more exposed than they were twenty or thirty years ago.

Anthony Mundle (YG, 2Chainz, Alessia Cara)

There are different ways. I grew up around a time where, in the ‘90s, you’d read up on people getting signed, as I said, from an elevator, or L.A. Reid locking you into a room and pretty much not letting you leave because he wanted to sign you. Reading all those stories … that was super exciting to me.

Nowadays, it’s not like that. But I do believe some labels still have that old-school mentality and a way of being like, “Hey, you’re gonna sign today. But let’s put Lawyers, let’s put Managers, Executives, CEOs on the phone. Let’s figure this deal out.” I believe that still happens because it’s so competitive now.

Anything can just go up in streams within a day, within a few hours. Every label is looking at the same thing. A lot of labels are either looking at the same thing on a competitive route or looking at things that they can actually bring in and do artist development with.

The way of getting people signed is, of course, you get in contact with the A&R or the A&R reaches out or just stumbles across you, and then the A&R sets up a meeting. So on that level, you meet the artist, and then from there you report back to your team and let them know the meeting went well. Go to the A&R meeting and play it. Get people buying into it.

Then, depending on the structure of the label and your position, you put an executive into play, or you put people from the team into play to close in the deal. And then from there, you talk to Attorneys, see what the terms are, and it goes back and forth until the negotiation where the artist and team come to terms and sign off.

What are the 4 big record labels?

Hugh McIntyre

This article is all about the big three record labels, but for those who have been following or working in the music industry for at least a decade, they remember when there were four competitors in the business.

For decades, the fourth major record label was EMI (which originally stood for Electric and Musical Industries), a U.K.-based company founded in the ‘30s. The brand featured several sub-labels which had impressive rosters of their own, including Parlophone, Virgin Records, and Capitol Records. EMI shuttered in 2012, and most of its assets, including several of those brands, were snapped up by other labels.

It’s worth mentioning that in addition to the majors, independent record labels also do fairly well in the music industry, and their market share is steadily climbing. In the U.K. in 2022, indie labels were responsible for nearly 27% of that country’s business, according to the BPI (British Phonographic Industry).

What Are the 3 Major Record Labels?

Now that we’ve discussed what major record labels are, what they do, and why you may want to be signed to one, it’s time we took a look at the companies themselves.

There are only a handful of top competitors in the music industry, and they claim the vast majority of well-known musicians and groups, as well as countless subsidiary labels with even more signees.

It’s easy to get to know the three largest names, and then it gets a bit more confusing from there, but a basic understanding of the most important brands is important, whether you desire to be a part of them or not.

The 3 major record labels are:

Universal Music Group
Sony Music
Warner Music Group

Is it hard to get signed to a record label?

Anthony Mundle (YG, 2Chainz, Alessia Cara)

The competitive stuff is super competitive because you have things that are really high in streams. Like, this song can be doing a million streams a day, and that’s competitive. People are gonna wanna get that. Those recording deals can start off at a million dollars.

I think a standard recording deal now is around $500,000. That’s for artist development. So it can be extremely competitive, especially when all different labels are on it. When you get artists earlier, the number isn’t as competitive. The artist is valuable, of course—when you’re signing an artist, you see extreme value. You see growth, you see stuff that you can actually do on the artist development side. You’re thinking more long-term.

A lot of the time now, artists want ownership, and some artists don’t even want to go to a label so soon. They might want to be indie and “run their plays up,” as they like to say, and then come to a label. When other labels get into the conversation, the value goes up, extremely.

So I would say it’s very competitive. Especially when you have artists that are growing that people are extremely excited for, that you can hear outside your house, see on platforms, things of that sort.

Jerry Beltran (DMX, French Montana, MIKA)

It’s not hard. I think if you do all the things I said before, nine out of ten times, the labels are going to come to you. Find out who your audience is and embrace them, no matter if it’s ten, twenty, or thirty people. They’re going to be your biggest supporters and advocates. When someone is excited about an artist, they’re quick to tell their friends. So that peer-to-peer endorsement or peer-to-peer cosign is still the most important part of promoting an artist.

If I have a friend who listens to the same kind of music that I do and he says, “Hey, listen to so and so,” I’m going to do so. And I would have done so when I was fourteen or fifteen years old. My best friend on the first day of seventh grade said, “Hey man, do you listen to Wu-Tang?” and I was like, “Yeah,” and we became best friends because of that. That seems to be universal in people’s lives.

My advice to an artist would be to embrace your audience and cater to them. I think a lot of artists find it difficult to understand how important they are to their fanbase. Or because it’s not a large number, they overlook it.

But again, if there are twenty people and you continue to feed that audience, to engage that audience: that’s going to be your support team. The Beliebers and whatever Ariana’s calling her fanbase, they started somewhere. Trust me, that continues to multiply and grow as time goes on.

Who is the richest record label?

Hugh McIntyre

For many years now, Universal Music has reigned over the music industry as the largest record label. In 2020, the brand claimed a 32% market share, which is impressive considering the pie is split into four sections. That year, the conglomerate reported revenues of $8.82 billion.

To put that market share figure into perspective, in the same year, Sony Music Entertainment claimed 21%, Warner Music Group owned 16%, and independent labels (which are lumped together into one entity for these purposes) did 31%, almost collectively matching Universal’s power.

Universal Music Group

Year Founded: 1934
Headquarters: Santa Monica, CA
Annual Revenue: $7.7 billion² (2019)
Market Share: 54.5% (2019)
Subsidiary Labels: Interscope Geffen A&M, Capitol, Island, Republic, Def Jam
Artists: 5 Seconds of Summer, Blackpink, DaBaby, Dr. Dre, Eminem, Selena Gomez, Imagine Dragons, Lady Gaga, J. Cole, Kendrick Lamar, Maroon 5, U2, The Rolling Stones, Beck, Halsey, Katy Perry, Drake, Post Malone, Ariana Grande, Taylor Swift, etc.

The largest of the three major record labels by a very sizable margin, Universal Music Group also claims the largest roster of musicians across its many, many subsidiary labels (which could number into the triple digits). The company incredibly employs more than 8,000 people and has offices in dozens of countries. Amazingly, Universal Music Group itself is owned by even larger firms, with Vivendi and Tencent each owning part of the brand.

In recent years, the giant has worked hard to keep up with the changing music industry, putting digital and streaming first and looking for new revenue streams with its vast library of musicians, songs, and albums. In doing so, UMG has been praised by countless publications as “forward-thinking.”

Universal Music Group

Sony Music

Year Founded: 1929
Headquarters: New York City, NY
Annual Revenue: $4.51 billion³ (2020)
Market Share: 23.4% (2019)
Subsidiary Labels: Columbia, Epic, RCA, Sony Music Nashville, Sony Masterworks, Legacy, The Orchard/RED Music
Artists: Adele, AC/DC, Barbra Streisand, Billy Joel, Bob Dylan, Beyonce, Bruce Springsteen, Daft Punk, Travis Scott, Mariah Carey, OutKast, Alicia Keys, Britney Spears, Justin Timberlake, Kesha, Pink, Miley Cyrus, Usher, Tool, Luke Combs

The second-largest of the big three major record labels, Sony Music also owns Sony/ATV, which is the largest music publisher in the entire world, so the company does win in another respect. The label (and its many subsidiaries, which could be as many as 100 different brands) may bring in billions, but it is still just one piece of the Sony empire, which touches every form of entertainment.

Sony Music

Warner Music Group

Year Founded: 1958
Headquarters: New York City, NY
Annual Revenue: $4.4 billion⁴ (2020)
Market Share: 12.1% (2019)
Subsidiary Labels: Elektra, Warner, Parlophone, Atlantic, Rhino Entertainment, Alternative Distribution Alliance
Artists: ABBA, Aretha Franklin, Bruno Mars, Cardi B, Coldplay, Ed Sheeran, Kelly Clarkson, Lizzo, Lil Uzi Vert, Meek Mill, David Guetta, Dua Lipa, Linkin Park, Neil Young, Alanis Morissette, Fleetwood Mac, Frank Sinatra, Green Day, Madonna, Metallica

The youngest of the three major record labels by several decades, it’s not shocking that Warner Music Group also claims the smallest market share. Less than twenty years ago, the company differentiated itself from its competitors by going public on the stock market, and for a number of years, shares were traded.

It was then purchased entirely by Access Industries, which chose to make it public once again in 2020. The company, which was once part of the entire Warner conglomerate but which now stands on its own, moved into online media a few years back, expanding its revenue streams.

Warner Music Group

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What It's Like Being Signed to a Major Record Label

Many rising musicians dream of being signed to famous record labels, and for good reason! It’s an understandable goal. Here’s what being signed to a major means.

Perhaps the biggest pro to signing to a major record label is the fact that those few companies are responsible for creating almost all the biggest musical stars in the world. For many decades, the only real way to become a household name by playing music was to sign to a major label, and while that isn’t necessarily entirely true anymore…the same idea still holds.

Making a living as an artist continues to be notoriously difficult, and becoming the kind of musician whose music is all over the Billboard charts, who tours the world, who wins a Grammy and who eventually becomes known the world over all but requires a major label.

There are a handful of examples of people who have been able to make it work with the rise of social media and streaming platforms, but the chances are still very, very small that such a fate is in the future for any band or solo act not signed to one of the biggest labels looking for artists.

Major record labels have the connections, the know-how, the talented staff, and perhaps most importantly, the money to turn an unknown talent into a star.

What happens when a record label signs you?

Jerry Beltran (DMX, French Montana, MIKA)

We always say, once you’re signed, that’s when the real work happens. Everybody puts so much emphasis on getting signed. They’re like, “Oh, I’ve made it,” and no, no you haven’t made it yet. There’s so much work going into being signed and after the fact of being signed. You can’t expect a record company to come in and wave a magic wand and turn you into the next pop star. It just doesn’t happen that way.

You have to remember that the artist did something right to get signed. Don’t underestimate that; what has worked, has worked to a point and caught the attention of a record company. At that point, an artist should have fans.

If an artist has a project that they want to work on, A&R is the first person to work with them and put them in the studio. Getting them Producers they maybe haven’t had access to before, getting them Writers they couldn’t collaborate with before, creating music.

Then once that’s done, we sit collectively with the artist and the artist’s team to figure out: how do we go into the marketplace with this? Who do we have to identify with? Who do we have to target? Is there a song that stands out in the bunch, or is this more of an experience project where maybe it’s ten songs and it doesn’t really hold a single? Will the audience embrace that? We live in a very “give it to me now” generation where things get tuned out very quickly.

Do we go to DSPs with a full project or do we do an EP? EPs have come to life after many years of not being existent because they’re shorter projects. They’re quicker to consume. They get the message through. It’s still the same quality music. It’s a good way to introduce the artist to a fanbase who hasn’t normally tuned in there.

There are many questions that come up when an artist gets signed onto a label. Maybe they have a song that’s resonating at the moment, and as a result, it got them signed to the label. Maybe you take that song and promote it up to a point where it sees more eyes and gets more ears than the artist has gotten up to that point.

Maybe the song hasn’t worked on radio. Radio is still a very huge component of introducing fans to music. There’s a lot of people who spend a good amount of time per day in the car. So hearing a song on the radio is still very much a way to introduce people to them.

Some artists don’t even see radio. That’s why it’s important to see who the people are who are consuming your music. Who are the fans that are embracing this artist? A fan who’s listening to Ariana Grande on the radio may not be the same fan that’s listening to Snoh Aalegra on DSPs. A fan who’s listening to Tyler, the Creator may not be the same fan that’s listening to Drake.

You have to know who you’re dealing with. Artists like The Weeknd have gone from being this very mysterious, underground personality with a cult following to having a bigger commercial following and now playing the Super Bowl. It’s a matter of figuring those things out once an artist gets signed to a label.

Anthony Mundle (YG, 2Chainz, Alessia Cara)

Well, I’m always gonna refer back to the traditional route. A&R stands for artists and repertoire. Back in the days of Motown, The Supremes, The Temptations, all these guys … they had a house: [Motown Founder Berry] Gordy built a house for artist development. He would teach them how to walk, how to eat, how to perform, and how to look. That’s the stage of artist development: taking someone and slowly making them into a star. So, the next step after someone gets signed is supposed to be artist development.

When you take an artist that’s already streaming, you’re hoping that artist already has a project. They should be like, “I’m gonna drop X, Y, and Z,” and be ready to have those talks with management and know their game plan. Because, especially on the hip hop side, Rappers are constantly coming out with music, constantly coming out with content. So you’re thinking very differently when you sign them. They already have music that they want to release.

The label might have signed an artist because of a single or something. A lot of things are coming in single-heavy these days. A single is going crazy and labels are going after it.

TikTok is one of those platforms that can get things really moving. Young teens, they’re listening to these things, and adults are getting on these things, too. Older people are getting into it. It’s really exciting. The music industry is shifting and being like, “Hey, we need to look at that, too.” So there are different ways for artists to come in.

But it should start with the artist development phase. You signed that artist because of that single, but you’re working with that artist on their craft, their music, finding Producers, Writers, Vocalists, whatever you think the artist needs. You’re working on a project and adding different elements to really enhance it, and then planning from there.

Working with the marketing team; working with the digital team; working with a commerce team. Thinking about, what’s the vision? What’s the message of the artist? How do we roll this out and put it into the world? Having a pre-plan and a post-plan is very important. A lot of times, people release things without having a plan after that.

There are different types of artists coming in. They’re not all in development. The majority of them already have music out, already got themselves moving. So they’re coming to a label saying, “I wanna do this project next month,” and we need to get it cleared and processed, get Producers and all that stuff. Mixing, mastering, side artists, all that stuff.

We need a marketing plan, digital plan, commerce plan, we need to decide what the content rollout looks like. We need to ask ourselves, what other opportunities do we have for the artist? And figure out grassroots marketing, because, for a street artist, you have to cater to that audience.

If the artist is more commercial, what is radio looking like? What’s the radio plan? What’s the impact date? So there’s a lot. You have to look at it from all different angles: what kind of artist are they, and where are they at in their career? Because A&R can play many different roles.

Who has the biggest record deal?

Hugh McIntyre

There are only a handful of examples of musicians or bands signing deals with record companies for $100 million or more, and a select few have gone even higher.

The largest record deal ever signed was with Michael Jackson’s estate, as the singer himself had passed away the year prior. The family he left behind accepted a contract of $250 million in exchange for the rights to his music, including unreleased material and his many, many hits.

U2 still reportedly holds the record for the second-largest record deal ever, as they once signed on for six more albums with Island Records for $200 million. That sum wasn’t revealed until later, and some still argue it might not have been that high.

Other artists who have signed deals for $100 million or more include Whitney Houston, Lil Wayne, Jay-Z, Bruce Springsteen, Adele, and a few others.

Sources

Jerry Beltran

Jerry Beltran is a music executive with over 12 years of experience, working in various roles in the music business as an A&R, Manager, Artist Developer and Artist Relations across companies such as Def Jam, TIDAL, SRC Records, and R I Entertainment.

He’s worked with the likes of DMX, French Montana, MIKA, Akon, Gustavo Santolalla, Charles Bradley, 070Shake, Sam Fischer, and several others, across many genres in music including Hip Hop, Rap, R&B, Pop, Rock, Soul, Latin, Reggaeton, Latin Trap, and Dance.

Jerry has always been an artist first executive, and nurturer of creativity, utilizing his experience in the music business to help guide young artists. In 2020, he launched his own creative house 212JERRY, in order to provide direction and development to artists in need of A&R, development, digital marketing, and other resources.

Born in the Hell’s Kitchen section of New York City, growing up Jerry was surrounded by the big lights of Broadway, the sounds of the busy streets, and the music coming from car stereos. A graduate of Five Towns College’s Music Business program in 2003, Jerry has gone on to work with many top-level music executives including Rich Isaacson, Steve Rifkind, Monte Lipman, Bruce Carbone, and Paul Rosenberg. Jerry continues to live out his passion in the pursuit of developing and breaking artists, in the hopes of living out their dreams.

Anthony Mundle

Anthony Mundle works in Def Jam Recordings’ A&R department, which has been a dream of his since he was a kid. He has coordinated, operated, and A&R on projects for artists such as YG, 2Chainz, Alessia Cara, Nasty C, Fabolous, 10K.Caash, GUN40, Saint Bodhi, Dave East, Jadakiss, Beau Young Prince, and more.

Anthony is from Queens, New York, and has instilled the essence of a hard-working NYC creative. He attended Florida A&M University for undergrad and earned his master’s degree from City College of New York. With degrees in Public Relations, Marketing and Brands Integrated Communications, Anthony knew he wanted to make his music dreams a reality by moving back to NYC. He has since worked for Sony Music Group, Viacom, CBS Radio, and UMG–he previously worked for the EVP of Universal Music Group for two years before assuming his current role. As a young man of many hats, Anthony has enjoyed success while in PR, marketing, artist development, and even as the manager of three acts.