Before artists could upload their music directly to the internet, getting heard by the masses almost always meant signing with a record label. These companies were the gatekeepers and financiers of the music world, handling everything needed to turn a song into a commercial product.

A label's primary job was to discover and develop talent. Scouts, known as A&R (Artists and Repertoire) representatives, would search for new acts in clubs and demo tapes. Once an artist was signed, the label would fund the entire recording process, from studio time to hiring producers. They also managed manufacturing, pressing vinyl records and CDs, and distributing them to stores worldwide.

Marketing was another huge piece of the puzzle. Labels worked to get songs on the radio, place music videos on television, and secure press coverage in magazines. This ecosystem was dominated by a few massive companies, often called "the majors," who controlled a large portion of the market. Alongside them were countless independent labels, or "indies," which often catered to niche genres and offered artists more creative freedom, though with smaller budgets.

The relationship between an artist and a label was formalized in a recording contract. These legal documents were often complex, but they revolved around a few key concepts.

Typically, the label would pay the artist a sum of money upfront. This was not a gift, but an advance against future earnings. All costs incurred by the label, including the advance, recording expenses, and marketing budgets, had to be paid back from the artist's share of sales before they could earn any more money.

The artist's earnings came from royalties, which were a small percentage of the revenue generated from selling their music. A typical royalty rate might be 10-15% of the record's wholesale price. However, this percentage was subject to numerous deductions, such as packaging costs and a breakage allowance, which further reduced the artist's take-home pay.

Crucially, traditional contracts often stipulated that the record label owned the master recordings, the official source from which all copies are made. This meant the label controlled the music indefinitely, even after the artist's contract ended.

In the pre-digital era, revenue came from several distinct streams. Each one offered a different way for artists and labels to make money from a piece of music.

The most significant source of income was physical sales. Consumers bought vinyl albums, cassettes, and later, compact discs (CDs) from record stores. The money from each sale was split between the retailer, the distributor, the label, the publisher, and finally, the artist. After everyone took their cut, the artist received their small royalty percentage, but only if they were recouped.

Another important revenue stream was licensing. This involves granting permission for a song to be used in other media. When a song appears in a movie, TV show, or commercial, it requires a synchronization license, often called a "sync" license. The fees for these licenses could be substantial and were typically split between the label (who owned the master recording) and the publisher (who represented the songwriter).

Finally, there was live performance. While labels were less directly involved in touring, it was a vital part of the ecosystem. Concerts drove album sales and built an artist's fanbase. For many musicians, especially those who were unrecouped, touring was their primary source of personal income through ticket and merchandise sales. A successful tour could be highly profitable and was essential for promoting a new album.