Streaming and social media; two possible body blows to the major label construct that has so defined both hip-hop and commercial music. Streaming brings with it the promise of significantly reduced distribution costs. Record a track today, upload it immediately, and potentially anyone with an internet connection can have it, and monetize it for you, in minutes. It doesn’t need to be shipped, physical copies don’t need to be pressed up, and actual record stores don’t even need to exist.
Social media can cut enormous chunks from promotional budgets, as artists can now build an organic following, free of charge, and use that platform to sell every product or service they offer. Million dollar promotional budgets that targeted print and traditional media like TV and radio are now reserved only for the absolute top-tier of acts. Why bother with billboards when an orange tile on Instagram can provoke 5,000 people to spend $500 to $1,500 on tickets to a first-time event like Fyre Festival? Artists are the influencers, and their social media real estate is more cost-effective than anything devised in the '90s and early 2000s.
And advances in technology have turned home computers into lavish beat-making devices. Artists can record their vocals with portable microphones and engineer everything themselves, using YouTube videos to learn the process. The need for the physical arm of major labels: distribution and recording, is almost eliminated.
So major labels must be dead, yeah?
Nah. Not even close.
91.9% of the Top 10 chart weeks (Billboard 200 + Hot 100) between 2010 and 2018 have come from major labels. It’s even higher for hip-hop: 93.3%. If we’re judging the impact of streaming on the importance of major labels, the 2019 numbers thus far are even further proof:
Remember that streams have counted towards first-week album sales for over four years now (since December 2014), and towards RIAA Gold and Platinum status for over three years (since February 2016).
Social media already dashed to ubiquity last decade, the 2010s have only seen it solidify as one of the single most important technological advancements in communication and marketing in human history. Theoretically, the numbers above should be significantly lower, yet we have this graph:
A very slight downward trend, however the correlation between years and major label dominance is not significant enough to even begin to think of a causation. The prediction that major labels would suffer at the hands of streaming and social media has not come to pass.
Why aren't major labels losing?
We must go back in time. Let’s focus on hip-hop—as the youngest major genre, our story can begin in the 1980s and 1990s. Furthermore, hip-hop is now undoubtedly (and statistically) the most popular genre in North America. If the effects of streaming and social media are going to be felt by any genre, it’s likely to be hip-hop.
Hip-hop labels, not yet pulled into the major label system, were part of the fabric of hip-hop in the 1980s and early 1990s. Def Jam were pioneers in commercial hip-hop, and found a market via LL Cool J and The Beastie Boys. Through this early success, a distribution deal with Columbia, under Sony parentage, was secured. The Beastie Boys were the first hip-hop act with a No. 1 album, Licensed to Ill in 1987, but it was LL Cool J who assumed the role of Def Jam’s premier artist, and he acted as a beacon for rappers seeking mainstream success. When he popped up on TV stalwart American Bandstand in 1986, he became the first hip-hop artist ever on the three-decade deep show. LL’s first three albums, all released in the late ‘80s, came out via Def Jam and Sony.
Hip-hop began to explode onto the mainstream radar, and major labels were beginning to dive in. Early No. 1 albums flitted between independent and major. Tone Loc dropped Loced After Dark on independent Delicious Vinyl, MC Hammer’s Please Hammer Don’t Hurt ‘Em was major, via Capitol and EMI. Vanilla Ice, Kriss Kross, Ice Cube and Snoop Dogg all dropped No. 1 albums on majors in the early '90s, and from there, that taste of peak mainstream success intoxicated hip-hop, and a relationship forged on mutual benefit was built. Majors could cash in on the enormous influence and fan base hip-hop had already amassed during the 1980s, and local legends like Warren G and Snoop Dogg found themselves at the forefront of North American pop culture.
The uptake of major label deals during the mid-to-late '90s directly correlates with a serious upswing in success of hip-hop albums. The three years from 1997-1999, there were 19 No. 1 hip-hop albums, which was more than the entire 18 years of hip-hop prior (17). 77.7% of those 19 No. 1s between 1997 and 1999 came from major labels.
The singles chart was even more blatant. Using the same metric for No. 1 singles as for albums, major labels were behind 87.5% of the 16 hip-hop tracks that topped the Hot 100 from 1990-1999. Only Coolio’s “Gangsta’s Paradise” (Rhino, Tommy Boy) and Bone Thugs-n-Harmony’s “The Crossroads” (Ruthless) topped the chart without a true major label behind them. The other 14 songs were spread across Sony (8), Universal (5), and Warner (1).
Why is this relevant?
The major label system runs deep in the veins of mainstream hip-hop, and to recognize why it is still so influential, it’s important to view how deeply it was established during this golden '90s run. The importance of the system in the late '90s is exemplified by The Source’s “Unsigned Hype” column. The premise was to expose readers to rappers who haven’t signed a record deal. The underlying message: if you weren’t signed, much of hip-hop didn’t know you existed. Some artists remain household names to this day, and the common denominator? They all signed major label deals.
DMX: Unsigned Hype 1991, signed to Columbia in 1992 and Def Jam in 1998
Mobb Deep (formerly Poetical Prophets): Unsigned Hype 1991, signed to 4th & B’way (Polygram) in 1992
DJ Shadow: Unsigned Hype 1991, signed to Universal in 2006
Common: Unsigned Hype 1991, signed to MCA in 1999
The Notorious B.I.G.: Unsigned Hype 1992, signed to Bad Boy (Epic/Sony) in 1993
Capone & Noreaga: Unsigned Hype 1995, signed with Def Jam in 2001
David Banner: Unsigned Hype 1996, signed with Universal in 2003
Eminem: Unsigned Hype 1998, signed with Interscope in 1999
Other artists and groups on the list fell off the collective map when their Unsigned Hype column didn’t bear major label fruit. In a land before a boundless internet, traditional media was the platform lifting local legends to national rap stars. Labels would select an artist and cultivate their career on every level, and in the '90s and 2000s the budget for promotion was crucial.
Once all of that is in place, the product still needs to be distributed to the public. Record labels press the physical copies up, pay for the artwork, and use their physical distribution channels (shipping especially) to get that product to the consumer. They also have to ensure the singles are chosen and ready, and get those singles to radio.
Now imagine doing all of this alone, or as an independent label with significantly fewer funds, fewer connections, relationships that haven’t been forged on decades of mutual benefit. This was sometimes referred to as selling out the trunk, a classic simplification of the independent process. There’s a legendary conversation during the classic 1995 freestyle by Jay-Z and Big L that highlights how limiting the independent hustle could be in the '90s. During a break between verses, Stretch and Bobbito ask Jay-Z about “In My Lifetime,” his first promoted single release. Is it available in stores, for people to buy? "It’s an independent joint.” Jay replies, “Yeah, it’s in some stores but once we lock this distribution deal down it’ll be in all stores.” That initial deal was with independent label Payday, and while “In My Lifetime” was a local hit, Jay didn’t truly hit until “Dead Presidents / Ain’t No” dropped, distributed via Priority Records, which had just been flooded with money thanks to a distribution deal with major label EMI.
Major labels played a crucial role during the formative years of mainstream hip-hop, at all levels, and if an artist wanted to ascend to the pinnacle of mainstream success, they almost certainly needed, at the very least, distribution from a major.
But the 2010s are different.
As the intro revealed, it's significantly easier for artists to promote and distribute their music than ever before. Streams have overtaken physical and digital sales (labeled as “pure” sales by Billboard) to become the dominant form of consumption for the mainstream hip-hop audience. In 2018, 65.2% of the first week sales of every top five hip-hop album came from streaming. It’s not implausible to see that number rise to 80% by 2022, and higher still after.
And social media following has a direct statistical impact on first week sales:
Running a regression analysis on every hip-hop album that charted top 10 on the Billboard 200 in 2018, their first week sales, and the social media following of the lead artist yielded the above graphic, which shows for every extra million followers an artist has, their first week numbers increase by 4,000 units. It’s a powerful promotional tool, and unsurprising that social media stars are being signed to major label contracts.
So, why are major labels still relevant?
There is much more to cultivating a successful career in music in 2019 than recording and uploading your music to a streaming service. Contracts must be signed, distribution deals must be negotiated, and artists without a physical sales structure—not just selling hard copies of their music but merchandise too—lose out on valuable revenue streams. Not only that, touring is an essential part of any artist's journey towards building a devoted fan base.
There are around 40,000 uploads of new music to Spotify every single day. To stand out among that avalanche of music, a team can be necessary, and some of the most effective and efficient teams come from labels with decades of experience in the industry. On top of that, they've got the resources to allow artists to make the best music they can and focus full-time on their creative career (recording budgets and advances), and connections to add fuel to the fire once an artist starts gaining traction (streaming platforms, radio, video directors, lawyers, data analysts, marketing professionals, etc.). Those connections with streaming platforms are becoming increasingly important, and major labels have a huge advantage in that playing field.
As artists rush to put out product to maintain relevance in an age of endless content, the time and energy they have to devote to all of the above aspects of their career is minimal. Major labels provide a crucial service and flow of resources to mainstream artists, taking the business and administrative responsibility off the shoulders of the artist and allowing them to focus on their passion—creating great art. With all the changes in the music industry over the last years, could that change? Sure. Some artists have proven that there are other paths to a sustainable career, and a few have even gone mainstream without one of the Big Three. But as the data proves, major labels still dominate most measures of commercial success in the music industry, especially the charts. But how long will the charts matter? That's another question, with varying answers.