How to Start a Record Label

Everything you need to know about starting a record label

Research & Refine your Business Idea

Starting a record label business does necessitate a lot of preliminary planning. The first thing to focus on is the purpose of setting up the label. If you’re doing it solely to have your music recorded and released, you’ll be subjecting your business to various limitations.

Distributors could be hesitant to work with you in such instances. In addition, the potential for monetizing the business idea is limited.

You need a strong, well-formulated concept in order to make the most of the record label and ensure its long term survival.

Think about the types of music you want to release. Having several projects lined up right from the start is very important to sign distribution deals and ensure comprehensiveness in the business concept. Quality and consistency both matter. It’s very important to have strong faith in the projects you’re launching. If you’re doing it solely because you believe in their commercial potential, the business will be doomed right from the start.

Before moving on to the next steps, ask yourself what’s the purpose of setting up the record label. Are you doing it for fun? Do you want to promote music/artists that aren’t finding market representation right now? There’s no right answer here – any goal is fine. You simply need to be aware of the concept and you need to stand behind it 100 percent.

Once these questions are answered, you can move on to the legal and practical aspects of setting the business. Will it be a partnership or an LLC cooperation? What’s the leadership team going to look like? You can definitely benefit from a consultation with an experienced corporate attorney to address these issues.

Creating your Business Website

Adequate online representation is vitally important for a brand new music releasing business. It will help you present your mission to the world and also get in touch with artists you can potentially add to your portfolio.

There’s a lot of freedom you can benefit from in terms of website development.

A record label website doesn’t have to be strictly corporate. It can be much more visual and artistic to enforce the brand identity.

Audio components and an artist presentation is another great choice for a record label website. You will let the music speak for itself and show website visitors exactly what you stand for.

Even if you want to focus on multimedia and an audio presentation, website development doesn’t have to be challenging, complicated and expensive.

Setting up a website isn’t as hard as it may sound, in-fact, many hosting providers have tailored their service around small businesses who may not be tech savvy. We suggest going with BlueHost to host your website, they’re service is simple and easy to use/setup and they’re currently offering 60% off hosting, including free domain registration.

Additionally, creating a blog on your website is also a great way to attract organic traffic and expand your business. Checkout our full guide on the best and easiest way to setup a WordPress blog here.

Get Ideas for your record label business name!

Marketing Your Business

Record labels exist in a highly competitive niche. In order to thrive, they need a strong emphasis on targeted and creative marketing campaigns. Both digital and traditional offline channels should be added to the mix for optimal reach.

A content-based strategy is one of the first essentials.

In the case of record labels, content can have many forms. It could include articles and presentations that put emphasis on industry experience, expertise and commitment. Building the record label’s reputation is one of the keys to signing on new acts.

Content can also come in the form of music presentations and videos. These are indicative of the quality of the final outcome, winning both potential clients and new fans.

Apart from content-based marketing, a record label could employ an array of additional digital strategies:

  • Social media marketing in relevant channels
  • YouTube and live streaming (Periscope) promotional campaigns
  • Purchasing advertising space on some of the biggest and most popular music-related websites, platforms and communities
  • Label page on websites like Bandcamp that enable artists/record labels present their work to a large audience
    Spotify and Soundcloud presence (for example, creating playlists featuring the artists you represent and promoting those)
  • Have your artists featured in online radio shows

While online advertising is readily accessible and cost-efficient, it’s not the only popularization method you should rely on. There are multiple old-school advertising approaches that still deliver excellent results today.

T-shirts, stickers and music event promotion/participation can help you reach a massive targeted audience.

Local and genre radios can also be quite helpful for generating buzz if you get in touch and you could strike some kind of deal. Radio advertising and featuring your music in as many shows as possible will grow your reach quickly and efficiently.

Other methods of online promotion you should consider include flyers and artwork distributed locally, providing free CDs to relevant entities you’re interested in partnering up with, using street teams to promote the message and even investing in high quality music videos that can be played on TV.

Setting Goals and KPI’s

Tracking the right KPIs will help you make sure that your business is performing well. A few of the most telling record label KPIs include the following:

  • Sales numbers: these should be tracked for all the artists you’re promoting and distributing. How many CDs and records have you sold? How about concert tickets? Merchandise? Licensing and sync deals? This information will give you a good idea about the future of the respective deal.
  • Media coverage: how many stories are written about the musicians you represent in local or national media? Are your press releases leading to the creation of texts or reports about the record label? This metric will give you a good idea about the effectiveness of your buzz generation efforts.
  • Distribution deals: keep track of the distribution deals you’ve managed to maintain in the long run, the new ones and the ones you’ve lost.
  • Total plays: on streaming services like Soundcloud and Spotify.
  • Event attendance: if you’re holding events like concerts or fests, you should definitely keep track of attendance in relationship to the number of tickets you’ve issued.

Don’t forget to try our record label business name generator!

Plan your Finances

Your business plan should feature financial projections for the foreseeable years.

Record labels will have a range of expenditures in the very beginning (on top of the operational expenses) that you will need to account for.

Some of the financial burdens you’ll need to plan include the business incorporation fees, insurance fees, the cost of acquiring a facility or a studio, the cost of equipment, website development, marketing, accounting, staffing and the cost of managing music artists.

If you have an idea about these various types of expenditure, you’ll ensure a source of financing that will give you a smooth start.

To fund your business, consider partnerships, angel investment pitches, crowdsourcing, business loans and peer to peer lending. Depending on your location and the competition landscape, some of these sources of financing may be unavailable. Thus, you’ll need to attempt securing funds in multiple ways to be 100 percent confident and successful.

Adopt an Entrepreneurial Mindset

Apart from being passionate about music, you should also learn how to be a successful businessman.

This means selecting projects that have the potential to go big, securing distribution deals and ensuring visibility. Having a long-term strategy will also be required to avoid the early failure that’s inevitable for so many startups.

Even if you don’t have the knowledge, you can learn how to develop an entrepreneurial mindset.

Record label owners can learn from some of the best through books, courses and podcasts. A few great choices for beginners include All You Need to Know about the Music Business and Music Money and Success 7th Edition.

Other things to consider when starting your record label

Legal Requirements: 

A record label is a business just like any other, which means that it has to be incorporated under the right form.

Liability insurance is also essential for the functioning of the business.

If you have no idea about the legal and administrative requirements, you should get in touch with an experienced corporate attorney.

Paying for one consultation will cost you much less than having to pay losses or fines stemming from a regulatory compliance failure.

Accounting & Bookkeeping: 

Record labels represent multiple artists and they deal with a wide range of activities. All of these are connected to expenditures or the generation of revenue. Partnering up with an experienced accountant or bookkeeper is vitally important.

If you can’t hire a full-time accountant, consider outsourcing the process.

There are numerous accounting firms that have the knowledge to help clients in the music industry. Freelance accountants can also be of great help. The benefit here is that working with a freelance professional tends to cost a lot less.

Apart from choosing the right bookkeeper, you’ll also need to select the right accounting software for your record label. Solutions like Xero are ideal for representatives of various industries because of the numerous functionalities and the flexibility in terms of performing accounting/invoicing tasks.

Hiring Employees:

It will be incredibly difficult to run a record label on your own.

Even if you’re trying to limit expenditure in the very beginning, you’ll still need to put together a team that consist of at least three to five people (depending on the number of musicians you intend on representing).

Some of the key record positions you’ll have to fill include artists and repertoire manager/coordinator, promotion staff, licensing rep, sales and marketing staff, consumer research expert, field merchandiser, CEO and publicist.

Obviously, you don’t have to fill all of these positions right from the start. As your record label grows, however, you should anticipate the need for team expansion.

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