One of the most fascinating — and controversial — things about the music business? Labels.

Right after the artist and their music, of course... let's not get carried away.

But if you pause for a second and look closely, it’s incredible to see how their role has evolved over the last hundred years. And more importantly, why today labels are walking on a minefield.

The label model is cracking. Not dead. But at risk. And we’ll see why — together.

Since day one — maybe a side effect of my business background — I’ve always thought one simple thing: a label is a private equity fund. Maybe even a venture capital firm.

Its job? Bet. Invest in talent. That’s it.

Out of ten artists, maybe one blows up. But if it's the right one — if it’s a Drake, a Billie Eilish, a David Guetta — it pays for all the other bets.

It’s the logic of “at bats,” like they say in Silicon Valley: it’s not about the batting average, it’s about hitting the home run.

But today, labels seem to have lost control of the fire they themselves started.

Before we talk about the present, though, let’s take a quick trip back in time.

In the early 1900s, record labels were tech companies, focused on producing and distributing phonographic formats: cylinders, discs, phonographs.

Edison Records and Columbia Records weren’t trying to create pop stars. They were selling hardware. Content was just a way to sell the container. No record deals like we know them today. The priority was to produce and distribute recordings.

And artists? Just extras in an industrial-mechanical system.

Then came radio. And with it, magic.

For the first time, music wasn’t just a product to be sold — it was an experience to be transmitted. Whoever controlled the airwaves, controlled the attention.

Labels got the memo fast: if you get an artist on the radio, you sell more records. Boom. Music marketing was born. And from that moment on, content — the song — stopped being just an accessory to the physical format. It became the product.

In the ‘20s and ‘30s, labels realized that promoting an artist could drive sales. So they started signing artists, offering advances, and pushing singles.

In short, they had a revelation:

"Okay, I control the whole chain from production to the shelf… wait a minute. I want a slice of the artist’s cake. Can I accelerate their growth? Then I’ll sign them!"

And the rest is history. In the 20th century, if you wanted to make music for real, you needed a label.

Period.

They decided who got in and who stayed out.

They had everything: studios, radio networks, printing plants, physical distribution, media relations. Music was an industrial product. The label was the factory. The artist? The worker hoping for a promotion.

They called them the Big Six: Warner, EMI, Sony, BMG, PolyGram, Universal. If you weren’t with one of them, you were out. No radio, no records in stores, no career. Then came the mergers: PolyGram absorbed by Universal. BMG merged and later swallowed by Sony. EMI split between Universal and Sony in 2012.

Result? Today, only three queens sit on the throne: Universal, Sony, and Warner. Three giants controlling nearly 70% of the global recorded music market.

More than the market, they control memory. And cash flow. Because today, the real asset isn’t talent — it’s catalog.

The history of music turned into passive income. Every stream of Hotel California, every ad with Bohemian Rhapsody, every cover of Hallelujah equals money in. The past, capitalized.

Classics? Automated jukeboxes printing cash.

But in the meantime, it really blew things up. Labels took a hit. Major revenue collapsed. Artist income crumbled. To keep the castle standing, they cut: layoffs, mergers, streamlining. A giant that once dictated the rules suddenly found itself chasing, defending. Chasing piracy instead of setting the terms. For a moment, it looked like the whole system might fall apart.

And in the middle of it all, one uncomfortable truth emerged: people don’t want to pay to listen to music. Sounds absurd, right? You pay for a sandwich, a coffee, a Netflix movie. But a song? Zero. I didn’t believe it at first either. But then I realized: it’s not that music lost value. It’s that the container changed. And when the container becomes infinite, replicable, liquid… then value gets reset.

And when the container is infinite, the only real asset left is control. Of what? The catalog.

That’s what opened the door for Spotify. But Spotify had to enter quietly… because it faced its biggest challenge: the label, and its catalog.

And the labels’ position was brutally clear: you want to put music online? You go through me.

Spotify got it fast. Without major label catalogs, there was no product. No playlists. No algorithm. No users. Just silence. Spotify didn’t save the industry. It saved itself. It solved a consumption problem, not an equity problem. And to do it, it had to kneel before the bosses of the catalog.

And so came the deal. A pact born out of necessity. A forced marriage between old power and new distribution (Watch The Playlist on Netflix — it captures that early tension between Daniel Ek and the industry bosses beautifully. That scene with the Sony CEO? A real masterclass in music realpolitik).

Spotify wasn’t created to “save” the industry. It was built to solve a user problem. People didn’t want to pay to listen. So, make listening accessible, legal — and above all, controllable. But to do that, it needed the catalog. And the catalog wasn’t open source. It was an asset to negotiate.

And who held it? The labels.

Back then, it was simple: the label was the gatekeeper. Period. If you wanted in, you signed. End of story. The record store shelf — and even more so, the radio — were the filters. But who decided what got on the radio? The Majors. And if you weren’t in the circle, you stayed out. Get signed, and your chances of blowing up skyrocketed.

Today? Not quite. Distributing music has become easy. Maybe too easy. Thanks to digital, one click and you’re “on the market.” Spotify, TikTok, and a catalog that grows at breakneck speed.

The funnel widened not just because publishing got simpler — but because radio lost its centrality. With it, labels lost their monopoly on discovery. Algorithms and social platforms took over: the new "playlist" is your feed. What used to be curated by an A&R is now decided by a like, a swipe, a trend. Welcome to the new playground.

The paradox? More access, less attention. More content, less discovery. Everyone can get in. But almost no one breaks through. Labels are no longer the gatekeepers. But often, they still have the elevator key. And in a saturated market, that elevator makes a difference.

Yet while scouting power is fragmenting, majors are losing ground. In 2024, independent artists and non-major labels account for around 46% of the global recorded music market. Nearly half the industry. And growing. More and more artists are choosing independence. Signing with a label is no longer a dream — it’s an option. And often, a tradeoff.

So how do the majors stay afloat? With the one asset no one can improvise: the catalog. The past keeps paying for the present. Every stream of Hotel California. Every ad with Bohemian Rhapsody. Every Hallelujah cover. They're automated jukeboxes that print cash.

Without that, we’d be back in 2000. With Napster. And the industry in pieces.

The madness of looking forward, with your feet firmly in the present. Because right now — in the noise, in the chaos, in the labels starting to crack — a new path is opening. There’s never been a better time to be in music.

But something fundamental has shifted.

If the label is a VC, then the artist is the new founder. They build a team, find their first fans, launch their project on the market. They’re not just looking for a deal — they’re raising an early round. It’s a total mindset shift. You don’t wait to get signed — you build your own stack, your own ecosystem.

Kind of like a Y Combinator for musicians (ycombinator.com).

That’s what Fankee is about: treating every artist like a cultural startup, and every fan as a potential co-founder. Contribute, promote, grow — together.

So here’s the real question: who’s funding who?

We’ll talk about that in the next issue.