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Hip hop artists Macklemore (R) and Ryan Lewis pose backstage with their awards for Best New Artist, Best Rap Performance for "Thrift Shop", Best Rap Song for "Thrift Shop" and Best Rap Album for "The Heist" at the 56th annual Grammy Awards in Los Angeles, California January 26, 2014. REUTERS/Lucy Nicholson Hip hop artists Macklemore (R) and Ryan Lewis pose backstage with their awards for Best New Artist, Best Rap Performance for "Thrift Shop", Best Rap Song for "Thrift Shop" and Best Rap Album for "The Heist" at the 56th annual Grammy Awards in Los Angeles, California January 26, 2014. REUTERS/Lucy Nicholson  

How Macklemore and Ryan Lewis revolutionized the music industry

Today, all you need to make it in the music industry is an internet connection, a video recorder and talent — not a big record label that will take a chunk of your profits.

Last Sunday, Macklemore and Ryan Lewis took home the “Best New Artist” award at the Grammys, beating out the likes of James Blake and Kendrick Lamar. They also swept the rap category with the “Best New Rap Song” and “Best Rap Album.”

Bringing home souvenirs from the Grammys is not an easy feat, and artists often have a long laundry-list of people to thank. But what makes Macklemore and Ryan Lewis’ success so remarkable is who they did not acknowledge when they made one of their acceptance speeches.

“We made this album without a record label, we made it independently,” Macklemore told the crowd of celebrities.

Macklemore and Lewis were unanimously rejected by record labels big and small when they first entered the music industry. After labels dismissed the white rapper and his producer-DJ, Macklemore and Lewis were forced to leverage themselves as artists without the funding and promotional support that comes along with signing a label contract.

With minimal funds and a YouTube account, the team wrote, produced and then uploaded their music onto the internet. By using various social media outlets, sending their music to iTunes, and performing at any venue that would take them, Macklemore and Ryan Lewis eventually developed a cult following. This loyal group of followers grew into a huge fan base when they released their full length album, “The Heist,” in 2012.

For any artist, climbing to the number one spot on iTunes albums and consistently holding the number one position on the Billboard charts for six weeks is a moment to be relished, a time to congratulate yourself for “making it.”

But for Macklemore and Ryan Lewis the rewards came afterward. Their record has sold around 500,000 copies thus far, with a sticker price of $9.99. For the typical label-contracted artist, this would mean roughly $1 million in take-home revenue. The overwhelming majority of their earnings would go to their record label.  As self-made performers with full ownership of their work, Macklemore and Lewis keep 70 percent of the sale revenue — meaning, they have likely earned around $3.4 million from album sales and another $8.4 million from the over 12 million singles they have sold worldwide.

The Heist’s popularity and the payoff Macklemore and Lewis received from owning their own music has made some artists reconsider whether signing a record contract is still a necessity.

Streaming services, such as Spotify, have added further wrinkles to these questions. These platforms have revolutionized the music industry. Fans can now access limitless hours of songs for free or at a minimal price, which has tapered the widespread practice of illegal downloading that was prevalent during the Napster era. However, as more and more listeners turn away from the now outdated CD-ROM and often rely almost exclusively on these services to access their favorite tunes, label-recorded artists are wondering why they are not earning more money from the hundreds of hours their music has been streamed.

Angered by their slim profit margins, both A-list and little-known musicians have protested, boycotted, or even attempted to sue some of the streaming services, arguing that the businesses are reaping all the profits and shortcutting artists.

But this is just not true, says Emily White of the talent managing firm Whitesmith Entertainment. It is not that streaming services are greedily profiting off of the artists’ work, it is that the majority of the earnings are going to the music’s rights holders –the record labels.

Streaming services pay whoever owns the music — typically the record label — and then the label pays the artist depending on what the two parties agreed upon in their contract.

Emily explained to The Daily Caller News Foundation that some of these record agreements made sense in the 1980s when artists depended on labels to fund and promote their work, but now it may not make sense for artists to sign all their rights away at the beginning of their careers.

“I generally recommend and love it when an artist starts by owning and controlling their own content and building up their fan base one by one because, if anything, that is going to make you more attractive to bigger partners and will put the artist in a better situation with regards to leverage,” she says.

And most importantly, artists must “educate themselves” and be “aware of their rights” before they jump into a contract. There is not a one-size-fits-all agreement and artists should understand that before they sign.

In the end, Macklemore and Lewis’s unconventional musical journey may revolutionize the industry, making record companies obsolete.

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