As complex as record companies can appear from the outside, it is essential that you consider this fact. A record company is defined by three things:

1. Some equity in the copyright of the sound recording (CD or download).
2. An ability to promote.
3. An ability to distribute.

While the major labels (SonyBMG, EMI, Warner Music Group, and Universal) have equity in thousands of copyrights, and have vast numbers of people to make sure their records are well promoted and distributed, the label that is run out of a college dorm room is effectively doing the same things, though with fewer copyrights.

Whether you are an artist who wants to get signed to a label, or an entrepreneur who wants to start a label, understanding the function of a label is essential.

Next Steps: Check out the videos in this section, in order to hear from those who are on both sides of the development arc, and note the similar nature of their concerns. Also, check out the charts on the architecture of a record label, making sure that you understand that whether 400 people or 4 are working for the label, ALL of the functions must be addressed.