Do record labels make money from concerts?

Yes, record labels often make money from concerts through various means. For example, in a 360 deal, they may receive a portion of the ticket sales and a percentage of merchandise sales or a share of the profits from sponsorship deals. Moreover, a record company may earn money from mechanical royalties generated by the music played at the concert due to sound copyright ownership.

In addition to direct revenue from concerts, record labels also benefit from concerts through increased exposure and promotion of their artists. The success of a concert can lead to increased sales of a band or a musician’s body of work. For example, an increase in demand for record singles, long-playing projects, merchandise, and other products will, in turn, generate good money for a record label.

Labels can negotiate exclusive agreements with busy venues (e.g., sports events or nightclubs). As a result, artists on their roster are only scheduled to perform live for a period of time. This usually works for large record companies but not for tiny indie labels since the latter often have a small roster of musicians. There has got to be some form of variety. People will get bored with the same rotation.

Is it fair for record companies to have a share of money from concerts?

Record labels invest time and resources into developing (e.g., paying for mixing and mastering) and promoting an artist’s career. So, it is fair for them to receive a share of the revenue from the artist’s concerts.

However, the artist and the record label need to have a transparent and fair agreement in place. Doing so ensures that both parties are fairly compensated for their contributions. For instance, it makes sense to cut that arrangement if a recording artist leaves the label.