How does indie label benefit by shopping to bigger label?

[moelar2]

If an indie label has produced/managed a band who has potential, what is their best interest, to keep them or shop them? One would think that keeping them would be a good move since it would bring publicity/attention to their label if the artist indeed "blows up." However, the indie label probably does not have the distribution power that the bigger labels have, hence the minimizing the possibility of allowing the band to "blow up."

What type of figures are we talking about when the indie label succesfully shops an artist to say, universal or warner?

[zekthedeadcow]

my understanding of the system is this

Indielable signs band and does an album

indielable sells contract to major lable for $10,000

Indie lable keeps $10,000 AND the rights to the first CD

Major lable markets band nationally

Sales of Indie release improve due to bigger exposure.

(Fans will buy every album regardless of what lable it's under)

[moelar2]

That sounds interesting. The big label must then REALLY have faith in the band if they are willing to give up rights to the first CD. That obviously means that the Indie Label collects on the first CD right?

[zekthedeadcow]

Well you have to demonstrate that you "don't need a lable in order to get one"

Yes if you have the rights and it sells then you collect... they would be responsible for seperate distribution and may negotiate to go along with the larger lables distribution chain for a "small fee"

It's more complicated than this of course but thats the general idea.

[donkeystyle]

when nirvana left sub pop and went to geffen, sub pop got like $50,000 and a few points (not sure how many) on the album. the rest went to geffen and the change left over went to nirvana.

also, i find it hard to believe that a major label would market something they don't have the rights to. I think that they just give the indie label some money and a few points on the record....... I believe that sub pop only got 3 points.

i could definitely be wrong though.