When the Smashing Pumpkins recently announced that they were leaving the major-label system, they joined a growing group of musicians who have discovered they can put out music, connect with fans and earn more money while not working with a major record company. "We're free," says Pumpkins frontman Billy Corgan, who plans to distribute songs directly to fans online. "We're out of purgatory. And we're excited to take on everybody in the open trench warfare of the new-media world."
The trend signals a shift in thinking among artists and managers: Thanks to digital distribution, sites like MySpace and YouTube, and an ever-expanding array of companies looking to partner with musicians, the labels are less necessary than ever.
The Eagles – who founded their own label, Eagles Recording Company 2, in 2003 – released Long Road Out of Eden exclusively through Wal-Mart in October. The retail chain offered "a royalty that no record company could come close to matching," Glenn Frey said at the time. The two-disc set sold for a discounted $11.88 at all stores and was given prominent shelf space and a $40 million advertising campaign. It became the third-best-selling album of 2007.
Wal-Mart has since inked similar deals with Journey and Bryan Adams. "When you have established groups, you don't need all the things that a record company would offer: marketing, press, art departments," says Journey manager John Baruck, who works for Eagles manager Irving Azoff. "You just need to get a record out there." Baruck says the band's royalty from Wal-Mart is about four times more than it would get with a typical record deal.
Trent Reznor wanted to release Nine Inch Nails' last major-label record, Year Zero, on his Website without copy protection for five dollars, make all the songs available for fans to remix, and sell a deluxe package including an elaborate book and other merchandise. His label, Interscope, wouldn't allow it. After releasing the disc, Reznor opted not to renew his contract. "It gives me great pleasure to be able to finally have a direct relationship with the audience as I see fit," he wrote on nin.com at the time.
In March, Reznor released a new thirty-six-track Nine Inch Nails album, Ghosts I-IV, on the band's Website. Some 780,000 fans got the instrumental album from the site in a week, earning Reznor more than $1.6 million. "It really takes three things to get this done right," says Reznor's manager, Jim Guerinot. "You have to control your publishing, you have to be able to control your masters, and you have to be able to control the brand. Trent has all three of them." For Guerinot, the freedom that comes with independence has a price. "It was an enormous amount of work," says the manager. "Trying to figure out licensing arrangements in Scandinavia, Germany, France, Italy – it requires a tremendous amount of human resource."
Last year, Dolly Parton and her manager, Danny Nozell, met with several major labels in hopes of scoring a deal for a new record. Unhappy with the offers she was getting, Parton founded Dolly Records in 2007. "I decided, 'I'm going to really make an all-out effort to get back on country radio and in the charts,'" says Parton. Nozell and Parton launched a digital-music company, Echo Music, and hired an independent publicist and a team of independent radio promoters. "We're just kind of covering the whole market, like gravy on a biscuit," says Parton.
Parton's first single, "Better Get to Livin'," landed at Number Forty-eight on the Hot Country chart – her highest position in fifteen years. And Parton gets to keep a much bigger percentage of profits than she would with a label contract. "I'll own it all," she says. "It's not going to take but a few weeks for us to recoup what we've put in it."
The Black Crowes, who earn a large portion of their income from touring, were willing to trade off the marketing and promotional drive that their former label, Columbia, could provide in order to have more control of their music. "We were stuck in a system, and it was depressing," says frontman Chris Robinson, who founded Silver Arrow Records to release the band's new album, Warpaint, after years of frustration with the majors. "Now we don't have to have 5,000 conversations about why this isn't right for us. We know what's right."
Other artists, such as Prince and Pearl Jam, sign one-album deals with majors while releasing bootlegs and other bonus material directly to fans on the Web. "I think the notion of doing things on a one-off basis makes a lot of sense," says Guerinot, who also manages Gwen Stefani and the Offspring. "People who have been doing this for a long time, career artists, like flexibility."
The idea of releasing music independently – and keeping more of the profits – isn't new: Jimmy Buffett launched his own label, Mailboat Records, in 1999 after becoming frustrated with label politics. He earns about five dollars per album sold, and he made about $44 million in total revenue in 2005, including touring.
Smaller bands, which would typically sign to an indie label, are also finding ways to get their music directly to fans. Electrodance duo Ghostland Observatory have released three albums, attracting a national audience and scoring an appearance on Conan O'Brien while consistently rejecting opportunities to sign with any label, major or indie. "The deals weren't sweet enough to change what we were doing," says the band's drummer and producer, Thomas Turner, who estimates the group has sold about 50,000 albums so far.
Conventional wisdom holds that established artists can succeed outside the major labels, but new acts – especially mainstream artists who depend on radio play – need the promotional, marketing and publicity push that a major label can offer. But that is less true than ever. Singer-song-writer Ingrid Michaelson released her debut album, Girls and Boys, on her own label, Cabin 24. When her songs got played on Grey's Anatomy, labels came calling, but she decided to stay on her own. "It's going really well, and I don't owe anybody anything," she says. "So why would we give the reins to somebody else?"
This story is from the April 17th, 2008 issue of Rolling Stone.