There is so much you should know before starting a record label, and quite a lot of it is covered by this article, but what isn’t often mentioned is that running a company like a label is extremely hard work. It requires long hours, dedication, persistence, and the confidence to keep going, no matter what roadblocks may pop up. Many people quit simply because they don’t find success fast enough.
How to Start a Record Label: Advice for Independent Record Labels
Owning and running a music company seems exciting, but not that many people actually know how to start a record label.
The idea of running one certainly looks sexy, enticing and thrilling, from the outside. In some ways, it can be, but too many young entrepreneurs jump right in without thinking long and hard about what the job actually entails, why they’ve decided on this course of action, and all the many, many pieces that make up a functioning record label.
Read below and then consider again if starting and running a record label is really for you.
What You Need to Know Before Starting a Record Label
Is Owning a Record Label Profitable?
It can be profitable, but it’s very hard to get to that point, especially as an indie record label. The majors are all making a profit, but they have the biggest and most successful acts on their rosters, and they have business practices in place that ensure the money keeps coming. As someone just starting out, profit will be very hard to come by, and it may never appear, at least from just sales and streaming sums.
Are Record Labels Dying?
Yes and no. An entire article could be written on this topic (and may have). For many decades, it was essentially necessary for any band or musician to sign with a major label in order to make a living with their art. That is no longer the case, and in the past twenty years or so indie labels have become much more powerful. Some unsigned or self-signed acts have been able to make a splash as well.
So, are labels dying? No, but the power and place they held in the music industry for a long, long time have changed significantly.
What Percentage Does a Record Label Take?
Typically, a record label will give a band what’s called an advance, which is money for them to record an album. It may be as high as $50,000. Once the songs or a full-length album is recorded and released, the group doesn’t earn a cent until that advance is recouped by the company. Then, the record deal between the two parties is enacted, and all royalties earned from that point on are split between them. What percentage each receives differs widely based on the act, but the musicians themselves can collect anywhere between 15% and 65% of royalties moving forward.
Questions You Must Ask Yourself Before Starting a Record Label
Okay, we’ve quickly gone over the most basic of basics. Now there are a few questions you should ask yourself before officially launching your record label. The answers to these queries will help you find direction and be a better entrepreneur.
What Genre(s) Will You Focus On?
Genre doesn’t mean what it used to in today’s music industry, but it’s still good for you to pick a general style and stick with it, at least in the beginning. What kind of music do you love most? Pop? Electronic? Hip-hop? Pop punk? It can be whatever you want, but make sure you’re really a fan, as you’ll be listening to a lot of that type of tune in your working life.
What Are Your Goals?
Ask yourself why you’re starting a record label and what you’d like to accomplish by doing so. Are you passionate about finding new talent, developing it, and sharing that musc with the world, or are you just looking for a way to work in the music business? It’s not that there’s a wrong answer, but be honest with yourself.
Also, it’s good to have concrete goals, such as reaching a Billboard chart with one of your acts or one day signing a distribution deal with a major.
Are You Okay Not Getting Rich With This?
As is stated above, it’s very, very difficult for underground record labels to make a lot of money, so if you’re looking to get rich, this probably isn’t your best bet. Many young people believe they will become wealthy if they sign the right act and work hard, but the music business is fickle and notoriously hard to crack, so ask yourself, are you okay with not making a ton of money through this venture? You should say yes…and then strive to be the greatest out there. Monetary rewards will follow if you’re doing great work.
Do You Have Access to Artists Who’d Sign With Your Label?
If you’re planning on starting an EDM record label, you need to make sure you have acts to sign. So…are you involved in the DJ world? Are you friends with many musicians and others working specifically in that arena? Do you regularly spend time with those creating the kind of art you’d want to release on your label? If not, you have a major problem, and you need to find a way into that world before officially launching your company.
Do You Have Music Business Experience?
Reading about how the music industry works online is a great start, but nothing can beat real-world experience. Do you have any of that in the music space, or do you just dream about being a major label bigwig? Perhaps you should start by finding an internship, getting an entry-level job, or even volunteering to help an act you love.
If you’re just starting out, you can gain experience and insight into how the music industry works doing almost anything. You don’t have to work only for a label, so look around for opportunities at booking agencies, PR firms, blogs and magazines, venues, management companies, and so on. You may find that what you really want isn’t to run a record label of your own after all!
Building Your Record Label
Okay, so now you’ve asked yourself some tough questions and provided honest answers, and possibly even taken a job or internship with some company in the music world. If you’re still convinced that what you want to do most is run a record label, there’s a good chance that it might be your destiny. So go ahead and create one!
Choose a Name
The name of your record label is incredibly important, as sometimes your brand is all you have. Your name should help you stand out, be instantly recognizable, in line with the kind of music you’re putting out into the world…and belong to you and you alone. Do your research and make sure no one has taken it or anything like it!
You might not realize it, but aesthetics are crucial to running a successful company. If you’re already following other record labels, you’re familiar with the look of everything attached to their brands, and you should pay close attention to ensure yours is consistent and strong as well. Your aesthetic includes a logo, the colors, and the font you’ll use on everything from your social channels to your website to any documents connected to your work. Don’t steal anything, because you want to look and feel completely different, but try to find inspiration in your competition.
Website and Social Media
Once you have both your name and your aesthetic decided on, it’s time to claim your online presence. Buy your domain name and secure your pages on all social media channels. Even if you’re not ready to launch, the sooner you ensure you own all of this (so no one else can take them), the better.
It’s not enough to simply decide the name you’ve chosen for your record label is yours, you have to trademark it. Yes, this is an extra step and more work, but there’s going to be a lot of that when it comes to running your own company. Do your research when it comes to how to trademark a brand and move forward quickly before someone scoops you!
Register With a PRO
We could talk at length about what PROs are and what they do, but those are topics for another article. PROs are performance rights organizations, and every musician and record label needs to work with at least one, whether it be BMI, ASCAP, or others. Spend some time looking into what they offer and speak to those who work with all of these organizations to see which feels like the best fit for your fledgling company.
Creating Your Record Label's Team
When you first start out, you may very well be doing absolutely everything at your record label yourself, but if you want to grow, you’ll need to recruit a team eventually. Major labels have departments for everything, including A&R, marketing, radio, PR, websites, and more. Of course, you don’t need all of these functions right away, but anything you can’t do yourself, you’ll either have to find someone who will work for cheap (assuming you aren’t flush with cash) or perhaps you can hire an outside company to pick up these tasks for you.
One thing you really shouldn’t do for yourself is anything involving the law. This is perhaps the only area where you can’t mess up! Lawyers will draw up contracts between you and the artists you want to sign, so you’ll want someone who is familiar with this kind of work. Unfortunately, hiring a Lawyer is a huge expense, but you shouldn’t skimp here and look for ways around paying the bill.
Thankfully, music distribution is easier than ever to acquire for the tracks your artists will make, as the vast majority of musicians choose to release their tunes online, and only the biggest acts still sell CDs and vinyl in stores. In the early days of your record label, you should be fine with a simple digital distributor like CDBaby, TuneCore, LANDR, or many others. You can still have physical products made, but keep those items for your online store and for when your artists tour.
This is likely an area you’ll need to spend some real time educating yourself about before you know what you’re doing. A lot of marketing and advertising is done online these days via social channels, and for the most part, the platforms have tried to make things simple…but as the owner of a record label, the acts you’ve signed will demand so much more from you than the basics. Study what other musicians and the companies behind them are doing to promote their latest releases and then try to find out how they made these marketing marvels happen.
Marketing and advertising are, in some ways, the simplest parts of the job, but only at a base level. If you want to really succeed, you’ll need to think outside the box and become an expert in these fields.
Until you become large enough to hire someone who knows the radio world to spend a good chunk of their time pitching Programmers and those who decide what to put on air, this is probably another “department” you’re going to need to outsource. Radio is still a great way for up-and-coming acts to reach new fans, especially when it comes to alternative and college stations…but it’s a lot of work just to get a few plays. Yes, there are Radio Promoters that do this work for you, but, as with all things, it’s going to cost you.
Like radio, public relations, or PR, is another task that can eat up so much of your time that you may need to hire an outside Publicist or PR firm to do this work for you. It is sadly not as easy as responding to a few emails and writing a pitch or two–just ask anyone who does this for a living.
PR is a must in today’s music world, and you’ll want to look for a company that has experience working with artists that are similar to the ones on your roster. Keep your expectations low, but do everything you can to assist your musicians and the PR team to make sure everything is ready and that they have whatever they need to make your latest campaign a success.
Some record labels sign Producers to work exclusively with the artists on their roster, though this isn’t common practice in the American music industry. You can take it upon yourself to recruit a Producer who shows real talent and promise, and then both partner them with the acts signed to your company or take a cut of everything they do with other musicians, but this is separate from what many well-known companies do, and it might be something better left for when you’re a bit more established.
In the first stages of running this new creation, it might be in your best interest to either let your acts produce their own tunes or source them elsewhere.