The Death of the Record Deal

The distribution layer is now more valuable than the music itself and major labels are just bad venture capital funds.

Everything I thought I understood about the music business broke at lunch last week. A friend who runs a major Canadian publisher put his fork down and said:

“Look at some of the biggest acts this country has produced in the last twenty years. Drake. The Weeknd. Alessia Cara. They have three very specific things in common. None of them has to do with how good they are.”

He counted them off on his fingers. First, they are internet-native. Their careers exploded on a screen long before any A&R exec got involved. Second, they are immigrants or the children of immigrants, raised outside the Canadian music establishment with no allegiance to it. And third, the one that made me put down my glass: every single one of them was already a household name before they ever played a live show.

The Weeknd’s very first live show was at the Mod Club in Toronto. He walked into that room after 200,000 people had already downloaded House of Balloons. He was the most talked-about artist in the city before he ever picked up a live microphone. The stage was the absolute last thing to catch up.

I know world-class artists who have been grinding it out in vans for a decade and still can’t sell out the Mod Club on a Friday night. It’s a fascinating and brutal contrast. That conversation completely rewired my understanding of the traditional music business, and it’s the realization that led me to write this.

Because if the biggest acts in the world can build empire-level careers without the club circuit, without the regional radio tours, and without an A&R guy flying in from NYC with a briefcase and a promise, what was the record label ever actually for?

The Platform Took Control

The data says he might be right.

Chris Dalla Riva wrote recently that he was “only half kidding” when he said every piece of music will eventually be controlled by a single company. And this is why he’s not fully kidding.

Universal just spent $775 million buying Downtown Music (and with that CD Baby, FUGA, Songtrust) after a year of EU regulators and indie-community protest. Bill Ackman’s Pershing Square is now trying to buy Universal itself for $64 billion. The playbook is the same at every layer: when a sector’s largest players can’t grow organically anymore, they buy their competition. That’s late-stage cable. Late-stage radio. Late-stage magazines. The major record labels are now running the same play.

Meanwhile, the real power has already moved next door. Spotify’s market cap sits at roughly $110 billion. To understand how crazy that is, you have to remember that the entire recorded music industry is essentially owned by just three companies: Universal, Warner, and Sony. For decades, those three labels have been the undisputed gatekeepers of the business.

But today’s music economy is different: Universal is worth around $38 billion. Warner is $16 billion. Sony Music is private, but generously valued at maybe $15–20 billion as a standalone operation. Add those three legacy empires together, and you still don’t reach 75% of Spotify alone. This means that the distribution pipe is worth more than everything that flows through it, combined.

That number should end every argument about who controls the music business in 2026. But somehow it doesn’t - because the labels still speak with the authority of the empire they used to run, and most of the press still covers them that way. But the empire is already gone. What’s left is a consolidation spiral among three companies fighting over the last catalogs in the basement while Spotify collects rent upstairs.

The labels are shrinking and they’ll continue to shrink. The only real question left is: what did we actually need them for in the first place?

The End of the All-in-One Model

So let’s open the hood.

The traditional record label did five things for an artist: distribution, marketing, radio, A&R, and touring support. Every one of those functions is now available à la carte, at a fraction of the price, with better specialists than the majors employ in-house.

Distribution. DistroKid will put your song on Spotify in an afternoon for twenty dollars a year. The shelves the majors used to own don’t exist. The shelves are APIs.

Marketing. This is the one function the majors still do at scale — and even here, the in-house team mostly coordinates the work of the same third-party PR firms, brand-deal shops, playlist pluggers, and TikTok strategists that any artist with a credit card can hire. Chaotic Good will pitch your record whether you’re on Columbia or no one. The majors don’t have a secret rolodex of experts anymore. They have the same rolodex everyone has, plus an internal markup.

Radio. Terrestrial radio is no longer the centre of discovery in 2026. Satellite pays real money in mechanicals but doesn’t move fandoms. The playlist pluggers that used to be locked inside label promo departments now work freelance for $1,250 a quarter. You get the same relationships. You keep your masters.

A&R. This is the one that should embarrass the industry. The concept of traditional A&R — the guy in the back of the 100-cap venue with a clipboard, developing acts from nothing — is effectively extinct. Modern A&R is a spreadsheet job. Pull up Chartmetric, sort by monthly listener growth, DM the top ten managers. The C-suite pitch isn’t “we believe in this artist” anymore. It’s “the numbers already work.” Which means labels aren’t signing acts they develop - they’re just signing acts who developed themselves and throwing gasoline on the fire.

Touring. Labels don’t tour artists. Agents do. WME, CAA, UTA, and Wasserman (now “The Team”) have had the actual power here for a decade. If you have a live demand curve, you can get a booking agent without a label deal. If you don’t have the demand curve, a label signature won’t manufacture it.

Five functions and five easy replacements. Every one of them is either cheaper, more specialized, or both.

The label defender will naturally push back here and say that the majors still have one thing no independent setup can match: capital and global scale. A $5 million marketing budget in forty territories is not something you’re assembling from freelancers on Monday morning. This is true, but also becoming increasingly irrelevant.

Because the question is no longer whether the majors can still deploy capital at scale. It’s whether that capital is worth the 80% equity take in your career forever. For the last two decades the answer for most signed artists has been no - they just didn’t have another option. In 2026, they do. The Kickstarter-to-arena pipeline is hardly theoretical. It’s happening. And the artists running it are keeping their master rights. Which brings us to the masters themselves. Because that’s where the real collapse is hiding.

The Asset That Built the Industry

The entire music industry is built on a single assumption: that master recordings are scarce.

Masters were always valuable because they were the only version that mattered. That’s no longer true - but the entire economic model depends on that still being true. Roughly 80% of every streaming royalty flows to the master side (the label’s side), and about 20% to publishing. Labels collect roughly four dollars for every one dollar that writers and publishers split. That ratio only works if the master recording remains the definitive version of a song. It’s why catalogs trade for hundreds of millions. It’s why Universal can justify a $775 million check for Downtown. It’s why Hipgnosis existed. Own the master, own the income stream, forever.

The entire system only works if that remains true.

Taylor Swift proved the first crack in the system. After her masters were sold to a buyer she didn’t choose, she re-recorded her catalog from scratch and proved the original recording is replaceable. The most valuable asset in the industry was shown to be optional. The fans switched tracks, the playlists swapped out the old for the new, and the labels lost their shit. They slammed the loophole shut, wrapping modern record deals in aggressive, decades-long “Taylor Swift clauses” to prevent anyone else from doing it. But a contract can only lock an artist out of the studio. It cannot quarantine the song itself.

Real excerpt from a client contract that never would have existed before 2023

The architecture of copyright holds a fatal trapdoor for the master recording: compulsory licensing. The master recording has a structural weakness: it can’t stop anyone from making another version. It has no right of refusal, meaning anyone can legally cover your song, release it, and own their new master without your permission.

Now introduce AI, where studio-quality production becomes a weekend project. A producer with current tools can cut a polished cover of any song on the Billboard Hot 100 in a single afternoon. Multiply that by every bedroom in the world. We enter an era of infinite covers, remixes, and alternative takes. As thousands of derivatives flood the ecosystem, publishing royalties become exponential. A master recording used to be the definitive version of a song. AI turns it into just one version among thousands - no longer definitive and increasingly interchangeable.

As supply approaches infinity, ownership stops being about the recording. The recording becomes just one instance of a song that can exist in thousands of forms. Value starts to migrate toward the things that can’t be duplicated at scale — the identity behind the music, the context it lives in, and the relationship between the artist and the listener.

The original master recording remains a static, single, increasingly insignificant slice of the revenue. Which means the core asset the industry was built on is no longer the one capturing the upside. And the label holding that master earns absolutely nothing from the rest of the pie.

Now stack that against the catalog-buying frenzy of the last five years. Private equity bought Dylan. Springsteen. Queen. Prices were set by the assumption that masters are a hundred-year annuity, compounding forever. Those prices are the high-water mark of a model that’s already being replaced.

If you control the publishing, you control the system. The master recording is just a single dollar bill in an economy that’s about to print infinite copies. And in a world of infinite versions, ownership of one stops mattering. The industry didn’t just overpay for catalogs of masters; it may have overvalued the entire asset class those catalogs are built on.

The Bank With a Cool Logo

Strip away the mythology of the A&R visionary, and you are left with a hard business reality: modern record labels function primarily as venture capital funds for talent.

It raises capital. It deploys that capital across a portfolio of bets. It expects most of those bets to fail, and it expects a small number of outliers to return the fund. It structures its deals to capture disproportionate upside on the outliers - the 360 deal, the master ownership in perpetuity, the publishing carve-out - because it knows the math doesn’t work any other way. Sign a hundred acts, write off eighty, break even on fifteen, and ride five to the moon.

The problem is that every other corner of the venture capital world has evolved. Tech investing got more efficient, more founder-friendly, and more transparent over the last decade. Music didn’t.

A tech founder with a hot idea in 2026 can raise money using standardized, founder-friendly contracts, keep 70% of their company, and pick from twenty different kinds of investors depending on what they need. Meanwhile, a musician with a hot idea signs a 360 deal, takes a cash advance they have to pay back out of a tiny 15% royalty cut, and permanently surrenders ownership of their life’s work before they even have a hit. The record label is essentially the last VC fund running 2005 terms.

And the capital is starting to route around it. Artists are raising private money from family offices and high-net-worth fans. Funds are emerging that will write six-figure checks for a revenue share instead of a master take. Kickstarter campaigns are hitting seven figures. A growing number of artists are realizing that if a label is willing to spend $2 million breaking them, there’s a room full of investors who’d write that same check for 10% of touring revenue and zero ownership of the recordings.

The Post-Label Company

I had lunch with an artist recently. A family friend wanted to fund her career, and she asked me a question I haven’t been able to stop thinking about: if you had access to infinite capital, how would you build this?

I’ve been sketching the exact answer ever since.

The smartest money in the room isn’t asking how to build a better record label. They’re asking what a modern music company looks like when you collapse the label, the publisher, the management firm, and the fan platform into a single holding company. With infinite capital I wouldn’t be building a label. I’d be building what I’ll call a Portfolio of Five.

Five undeniably great artists with a centralized data layer and zero master rights surrendered. A unified revenue engine that the majors literally cannot replicate because it requires burning the old blueprints and starting from zero. You structure it the way a modern tech operator would, not the way a 1985 A&R rep imagined it.

This isn’t the death of music capitalism. Music has never needed capital more than it does right now. What’s dying is the corporate structure that sat between the artist and the fan for seventy-five years, extracting a premium to do work that no longer requires them. The major labels will still exist in ten years. They just won’t matter.

The real power is moving to the people building what replaces them. You should be one of them.