Most major record labels are owned by a few large multinational companies that make up the almost all of the global recording industry, although there is a recent resurgence in independent record labels[?].
Recording companies often invest a lot of time and money in discovering new talent or developing the talent of artists already under contract. The association of the brand with the artists helps define the image of both the brand and the artist.
In spite of the fact that both parties need each other to survive, the relationship between record labels and artists can, at times, be a difficult one. Many artists have had albums altered or censored in some way by the labels before they are released -- songs being edited, artwork or titles being changed, etc. Record labels generally do this because they believe that the album will sell better if the changes are made. Many times, the record label's decisions are correct ones, but this typically frustrates the artist who feels that their artwork is being destroyed.
In the early days of the recording industry, record labels were absolutely necessary for the success of any artist. The first goal of any new artist or band was to get signed to a contract as soon as possible. In the 1940s, 1950s and 1960s, many artists were so desperate to sign a contract with a record company that they usually ended up signing a bad contract, sometimes giving away the rights to their music in the process. It is a good idea for artists to hire an entertainment lawyer to look over any contract before it is signed.
In the 1970s and 1980s, there was a phase of consolidation in the record industry that led to almost all major labels being owned by a very few multinational companies, who in turn were members of the RIAA.
In the 1990s, due to the widespread use of home studios, consumer CD recorders, and the internet, independent labels began to become more commonplace. Independent labels are typically artist-owned (although not always), with a focus usually on making good music and not necessarily on the business aspects of the industry or making lots of money. Because of this, independent artists usually receive less radio play and sell fewer CDs than artists singed to major labels. However, they usually have more control over the music and packaging of the released product.
Some independent labels become successful enough that major record companies negotiate contracts to either distribute music for the label or in some cases, purchase the label completely.