NIN, Eagles, Pumpkins: Who Needs Labels?

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."

In the past year, artists including Radiohead, Madonna, Nine Inch Nails, the Eagles and the Black Crowes have all released — or announced plans to release — music without a major label. 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."