Financial resources are the foundation of any prosperous enterprise, including the global music industry. Consequently money is made from the artist through many ways, from recording, through to tours and down to merchandising; practically everything including brand partnership.

Record labels make money by investing in the release cycle be it the entire cycle(traditional record deal), that is, from recording to marketing or partly (licensing deal), and taking a portion of the revenue generated by the album to recoup their investments in order to make profit.

Record labels make earnings by selling recordings of artists though it is a high risk business. What hurts most is that approximately 90% of the recordings of artists fail to make profits.

Record labels or music groups typically make money on song’s master recordings by

• Music sales

Money is made from music sales by record labels through downloading and streaming of an artist’s song.

• Brand Partnership

Brand partnership is yet another way a record label makes earnings by taking the position of an ambassador to the brand through endorsing products of the brand in mention.

• Master Licensing

Master licensing involves the permitted use of an artist’s song in TV shows or commercial or movie.

Record Labels pay two royalties after making money on recordings.

• Record Royalty

This is the royalty paid to an artist after the advance in order to recoup all expenses that were borne on the recordings of the artist.

• Mechanical Royalty

This is the royalty paid to composers and publishers following all composing and publishing costs.

In actuality some music companies pay record royalties on a percentage of the suggested retail price while others base the royalties on the wholesale price to distributors. Musical artists should always have in mind that recording costs are borne by the artist and not the record label or music group that is why recoupments are made after money is made from the recordings.

written by Ruth Ama Onumah