How to Start a Record Label

Everything you need to know about starting a record label

A Step-by-step Guide on Starting a Record Label

There are many opportunities in the music industry, and you don’t have to be an artist to own a record label. However, if you are an artist, creating a music label could help you take full ownership of your songs and reach out to a new audience. With time, you can develop your music label to sign more artists. This article will reveal the steps you can take to start and manage your record label. Stay tuned!

What is a Record Label?

A record label is a trademark that represents the songs of one or more artists. Furthermore, this company oversees all activities, including its music production, contract signings, promotions, publishing, distribution of tracks in electronic and physical formats. While all of these operations are carried out by a typical record label, independent record labels entrust the distributions and publication of their music to other companies.

How Much Does a Record Label Cost?

It would be best to have enough capital to start a small record label. However, if you don’t have much capital, you can establish a music label by naming it and creating an online presence. Nevertheless, you can seek investors to financially support your business as soon as you start working with artists.

Are Record Labels Profitable?

A record label covers so many costs, including publishing records, paying artists, recording expenses, and many others. However, these costs must be subtracted from the total sales before you can boast of profit. Although owning a record label can be highly profitable, don’t expect to start generating profit immediately.

Choose Your Genre

Choosing the type of music you want to produce is a fundamental decision. As soon as you start operations as a record label, lots of artists will reach out to you to book a session or request a trial. You may offer them studio sessions for discount prices and free sessions to promote your business.

Curation is required for your label to be successful, and it is important to narrow focus on a genre as a startup label. Take some time to reflect if your record label will sell physical copies or will be a download-only label.

Good planning is required when it comes to selling physical products because of the cost of production. We believe you don’t want to be left with a store full of Vinyl and CDs that you could not sell. You may also seek the advice of business specialists in your field to ensure that you’re taking the right steps.

Develop a Name For Your Label

After choosing a genre, the next step is to develop a name for your record label. Observe your competitors and see how they are branded. Building an ideal identity for your label is important and can serve as your shop window in this international digital age. Create a list of name ideas and share them with friends and family. Pay attention and remember to be open to suggestions and not get caught up on one idea.

It is important to choose a unique and memorable name when coming up with a business name. To develop a unique name, you can check if there are other labels with the same name as yours using sources like the federal trademark database, state registries, and Google. You also need to make sure the name is available as a website domain. However, you can check our business name generator if you encounter any problem coming up with an ideal label name.

Create a Good Brand Identity

Creating a good brand logo and identity is as important as having a record label name. You must keep your logo simple and visible because the size of your logo will always be adjusted to fit in website posts and banners. Your logo is the first thing your audience will see, and it will represent your brand for years.

Take all the time you need to create an ideal logo. Your brand needs to have a professional look if you want your business to be taken seriously, and the touch of an expert may come in handy. You can hire a freelance designer on Upwork or Fiverr, but ensure you communicate your brand aspirations and objectives to whom you’ve delegated the task.

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Choose a Business Structure

Do you have a structure in mind for your record label? Are you planning to be a sole owner, or do you want a partnership? There are several business structures to consider, but the following three are the most common:

  • Sole proprietorship – This is the simplest business structure, and it can be established without any formal action since the individual owner and business can be the same legal entity. The business owner has access to all earnings and is legally accountable for the whole business in a sole proprietorship.
  • Partnership – This is a business owned by two or more persons. Each partner then invests in the business. For instance, a partner might provide finances while the other provides skills. Then, each partner will share the business profits and losses. It is good to create a legal partnership agreement when choosing this business structure because it helps determine each partner’s responsibility and roles.
  • LLC – This business structure combines the features of a sole proprietorship & a corporation. A limited liability company protects its owner’s personal assets in case of debts or liabilities. Additionally, LLCs are not taxed as independent business entities, unlike shareholders in corporations.

Register a Business Bank Account

Before you begin your business financial operations, ensure to open a business bank account. A business account helps incorporate professionalism into your small business and organize your record label by separating your personal finances from business.

Buy Essential Equipment

What equipment and tools do you need to start your music label? If you are on a tight budget, you can delegate the distribution and publishing of your music and pay for studio sessions to record an album.

However, if you want to set up your studio, you can create a basic recording getup by purchasing basic computer & software equipment for as low as $150. If you want it big, you can purchase high-quality recording equipment, costing over $15,000. These may include microphones, acoustic drum kits, mixers, monitors, cables, chairs, and tables.

Build Your Website

Websites offer room for your customers to explore and discover so much about your label and services. You can also display your past releases, videos, gigs, and most significantly, a medium to sell your music. Although it is possible to utilize a free website builder, the professional impression a .com address gives is important for your label rather than a long URL. However, sites like WordPress can handle both simultaneously. Ensure you do your research before choosing a web provider, as you’ll be depending on their services for years.

Alongside your label website, make sure you create social media accounts and profiles and link them to your official website. These channels can be an entry point for your fans and customers to engage with your label. This includes inquiring about an event or purchasing your physical products.

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Produce Songs With Good Sound Quality

Good music should be one of the major products your label will be selling. Therefore, your tracks need to sound professional. Two things can affect the performance of a song. One is the mix, while the other is the arrangement. However, improving any one of these features is enough to determine if a track is going to be a hit or a flop.

We believe you don’t want your label to be known for poorly mixed songs. To improve your production quality, you can compare the quality of your tracks with that of your competitors on good playback devices or speakers. You can try to get some constructive criticism out of your friends even if they tend to be supportive of everything you do.

These days, several bedroom producers don’t mix and master their tracks properly, which is a reason for the bad performance of their songs. Although mastering can be quite expensive, it is a valuable investment for labels that intend to sound and look professional. Find new ways to improve your production quality and invest money into your business by employing professionals to mix and master your songs.

Keep Contract Records

Starting a music label requires lots of hard work but can be really profitable. Besides making money from physical products, you can make money off your artists. However, if your label will be releasing songs by other artists, you must ensure that the agreement between both parties is fair and binding. This doesn’t have to involve big lawyers. You can start your operation once you and the artist have signed the agreement’s printed document. You also need to ensure that all terms are clearly stated.

It is okay to negotiate the agreement and terms. Just remember to keep all agreement documents in case anything happens.

Organize Live Shows For your Artistes

Although the cost of purchasing and streaming music is on the rise, similarly, the population of fans that go out to watch their favorite artists has also increased. Hosting live concerts is one effective form of publicizing your brand and generating more income. You can also set up a stall displaying your CDs, T-Shirts, merchandise, etc.

Obtain Royalties

Collecting royalties may be time-consuming, and there is usually a minimum time lag of six months. Thus, it would be best to consider this factor when planning releases. Register with the MCPS and PRS and analyze what they have to offer. This may be in the form of collecting publishing money or registering your tracks.

As a label owner, you need to be in charge of sampling issues. If you’re in doubts about a particular sample, you can spot the problems and provide working solutions.

Get Business Insurance

It’s always crucial to get the best insurance for your music label. Getting insurance helps protect your business in case of occurrences like a fire outbreak, natural disaster, theft, crisis, etc. To get the ideal type of insurance for your label, you must identify your needs. Below are the types of business insurance by small business owners:

  • Property insurance — A business that owns any physical property of any type should own property insurance regardless of the nature of the business. This insurance will help protect the property & equipment of your label, irrespective of where it is stored.
  • Liability insurance — To shield your music label from future financial losses and devastation, liability insurance covers legal fees and medical expenses for which your label may be legally accountable.
  • Cyber insurance — Businesses that operate online should get themselves protected by cyber insurance. This protects businesses from cyber attacks, malware intrusions, and data loss. Also, if you advertise your music label on a website, you must guard your activities with cyber insurance.

Pay Income Taxes

As your income increases and your tracks start hitting gold or platinum, you must pay your income tax. Due to this, it is essential to account for every pound and penny by creating a spreadsheet with expenditure and income columns. Fortunately, it is possible to claim business-related expenses against tax. For example, you don’t need to pay tax on trips, business phone calls, website operations, etc.

Conclusion

The music industry is fast-changing, and forward-thinking record labels are highly demanded. As an independent record label owner, you need to seek new talents, cover the costs of track recordings, mixing, tours, promotion, and marketing activities.

As mentioned, anyone can start a music label, even with little money. However, you’ll need funds to expand your business along the line, and this is possible with the help of several funding options like business grants and loans.

Networking with musicians costs nothing, allowing you to get an artist to sign a contract with your label without spending a dime. Nevertheless, you must be ready to invest lots of time and effort into building your label & concentrate on the values you can offer the artists under your label.

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