Starting your own record label is a great idea. If you are cynical, you may not agree to this. But then if your passion involves music, the record label is your type of business venture. The music industry needs people like you today, more than ever. However, setting-up any business venture that is linked with music is not an easy journey. In fact, any creative and art based career or business is not easy at all. Unless you are willing to give yourself completely, don’t think of starting a business in the music industry.
But if you have decided to do it, you have already started it. Our post is for such music lovers; we have outlined the steps to start a record label and essential things you will need to begin your journey.
The Four Important Things You Need Before Starting a Record Label
1. First of All, You Need a Business Plan
Everything, mind you, everything begins with a plan. If you read most of our start-up’s blogs, we make sure to inform you that. When you go on a road trip or a vacation, you make a plan, when you make a dish, you go through the preparation steps; similarly, a successful business totally thrives on a solid business plan.
Most often music lovers who get into the record label business start out without knowing how the industry operates or what the music companies do. That’s why most crumble within a year of establishing. Therefore, a business plan is an absolute must when it comes to running the company for years.
The three questions you need to answer in your business plan include:
- Is the record label going to serve you alone or you have intentions of signing other musicians too?
- What do you want out of your business? Are you seeking fame, profit or a music break?
- What will be your record label’s key selling point? How would you differentiate your music – by demography, by geography or by genre?
2. Ofc, You Would Need Money
If you are not in this just for cash, then the record label is good. However, you need to spend money to earn money. It is up to you and your business plan that will determine how much money you need. However, before investing heavily on anything, understand the basics funding system and know that the amount you will to invest should help you set up the business to run smoothly. Find out the costs of distributing albums, legal fees, recording costs, instruments and more.
You will have to pay bills, fees, and other few surprises that may run a couple of hundred dollars when it comes to releasing your album. You have to be prepared for the expenses as the results will not be immediate. You will take at least 6 months to break even, provided you are successful.
However, payments in media industry work differently. Ensure you know everything in detail before sketching your budget plan.
3. How Will You Distribute?
Today distribution is nothing like the yesteryears. 15 years ago, record labels truly ruled the world, as access to distribution channels, contracts, CDs and DVDs to be sold, transactions and solid companies who distributed music was easy. Money making was easier. Now the internet has made this access a memory. Now the digital versions are released and streamed and then the physical versions are launched.
Now working in the music industry is democratic as anyone can launch their own music channel on YouTube and every other site online.
However, you’ll need to partner with a distributor to upload a song, video or album on platforms like iTunes, Spotify, Gaana, to lesser known options specific to each country. However, since the democrat factor is taking shape now, more artists are becoming wise enough to directly connect with the Digital Service Providers of DSPs and work things according to their wish. So, you have to do much more than getting their songs on several platforms; for instance, you may have to do the marketing and promotion bit too.
4. You Need Financial Aid and Legal Help
Business is a legal entity. Initially, you probably won’t need a lot of legal advice or assistance. However, as you grow bigger, you will have to prepare yourself to hire a lawyer and spend a few hundred dollars on him. A legally -registered business has awesome benefits. You should hire an entertainment attorney as they are the best kind of people who can assist you in forming a business in the music world. You need law and legal papers while binding contracts with bands to protect everyone. You will also need an Accountant and Tax Professional to handle your business money in a best possible way. Lawyers, Auditors, Tax Professionals should be hired for short stint of time.
Steps Involved in Starting a Record Label Quickly
1. Choose the Music
Have a relatively narrow focus in the genres you want to sell. You have to also think about the type of format you want to release – physical or a digital download label.
Get your product right; don’t get too stuck with physical products as they are hard to sell these days. Evaluate the market trend before you choose your music genre.
2. Your Label Name
Your label name will be your shop window. Decide wisely and consider your competitors’ brands. Make a list of names and test them out with your friends, social media followers and family. Listen to their suggestions. You can also create a website with your record label name. If planning to, consider the internet parameters as well. Once you have decided the name, register your business first.
3. Create a Brand Identity
You need to produce a logo to develop a brand identity. Keep your logo simple and easy to read even at small sizes. Get someone professional to design your website and logo as both will represent your brand. Your logo and website should look professional and serious with easy user navigation.
4. Register Your Website
A website is a direct link where your customers can find you, contact you and buy your products. Your website is the place where upcoming releases, gigs, popular lists, videos and everything about you is updated in real-time.
You can either choose a free service like WordPress to start your website or get it done from an established website development company.
5. Get Your Tracks Improvised and Mastered
Two things you need to consider for making your tracks sound professional – mix and arrangement. Compare your tracks with your competitors, listen to them with different speakers and devices, and get some constructive criticisms.
Get your tracks mastered to a professional standard by investing some money. Don’t use free plug-ins for mastering your tracks. Buy tools and get it done professionally.
6. Self-Publicize and Promote Your Brand
Advertise your brand free of cost using your social media presence; even big stars and artists use social media for marketing their movies and albums. Create accounts on Facebook, Instagram, Myspace, YouTube and Soundcloud. Keep your accounts interesting with personal posts and full of life stories. Try replying messages and interact with your audience whenever you can.
7. Bind with Contract
If your record label is releasing music made by other artists, make sure you bind with them in a fair agreement. Clearly set out your terms in a legal document, printed and signed by you and the artist. Even negotiations and terms have to be presented in writing so that everything, including your company and artist, is legally bound.
8. Make Sure Your Artists are Playing Live
Although record sales are starting to increase by the day, the time we spend to go out and watch our favorite artists play on stage has also incredibly increased. Considering the current scenario, playing live is one of the best types of publicity stunt which leads to direct sales. You can plug in the live footage to your site and get merchandises ready for selling, such as CDs, t-Shirts, caps, pens and so on.
9. Don’t Forget to Collect Royalties
Royalties to flow in your way takes time, probably 6 – 8 months. So, you have to plan your releases accordingly. Talk with several PRS and MCPs to understand what they offer as publishing money. However, as a Record Label owner, you have to deal with sampling issues as well. Although, you will have full control over this, think twice before releasing any track.
There are so many terms in the music industry that you really need to pick-up your phase to get to know each of them and by-heart them.
10. Taxes, Accounts, and Auditing
You will have to pay a percentage of your revenue as Income Tax. And so, we ask you to account every penny and pound to conform to the tax law. You will have to pay bills for phone calls, driving, having lunch with artists and running your website. Tax doesn’t apply to such expenses. Hence, we suggest you set up an income and expenditure column and record everything that goes in and goes out. Appoint a tax professional and an accountant to get these works done faster and effectively.
We have tried to outline the basic requirements to start a record label business. However, we suggest you talk with experts from the field to understand the business in depth. Come back to us for more tips on start-up businesses.