In 2009, 40 billion dollars circulated internationally in the music industry – 11 billion of that was in the United States. This figure shows that all talented professional musicians should be loaded with cash, right? Wrong. About 11 billion dollars circulated in the United States music industry in 2009, but rather than artists and bands making boatloads of cash, major record labels took about 9 billion of those dollars. The system left only 2 billion dollars to be allotted amongst thousands of bands and artists that are signed (Research and Markets). Bands then have to split the income between several direct assets (drummer, lead guitarist, singer, etc.) and all artists also have to pay producers, marketers, and most devastating of all, recoupable costs.
Let's take a step back; many people do not understand the relationship between the artist and the record label. A record label is defined as "a company that produces and sells records, CDs, and recordings of artists who identify with that company" ("record-label"). The artist or artists who belong to the record label are given effective distribution – assuming our record label is large and successful – in return for loyalty to the label. The artists are required to put the label's name on every song or skit released publicly and must pay a percentage of all income to the record label. A good deal on paper, it doesn't work out so well realistically for the artist. Once signed to the record label, an artist may be forced to sign a "non-compete clause," which means the artist is not allowed to distribute music outside of their label – the label owns all distribution. Consequently, an artist who quits the label may have to change his stage name because that specific artist (under that stage name) most likely belongs forever to his former label. It is then illegal for him to distribute music outside of the label without changing his stage name, or real name, depending on the severity of the non-compete clause.