If you’re thinking about starting a record label but you’re not sure where to begin, today’s guide is for you! We will discuss how to start a record label and break down everything you need to do. This way, you will be able to prepare and make your vision come true sooner rather than later.
What Is a Record Label?
A record label is a company that handles the manufacture, distribution, and promotion of music created by affiliated musicians. Essentially, they help musicians brand themselves and their products.
Now, there are two kinds of record labels; major record labels and indie record labels. Major record labels are large companies that have in-house distribution, promotion, press, and they have big production budgets.
Indie record labels, on the other hand, are smaller companies that outsource distribution, promotion, and press. Usually, their budgets are small, but they vary depending on how successful the label is.
4 Reasons to Start a Record Label
Before we get into the guide on how to start a record label, we want you to do a bit of soul searching. Starting a record label is no small or easy feat, so you need to make sure you’re doing it for the right reasons.
If you’re doing it strictly to make money, you must manage your expectations because it won’t be an easy road. Even if you have A-list talent and a substantial marketing budget, you’re still competing with larger companies. All this to say that there are far better reasons to start a record label that will keep you motivated when things get hard. Such as:
1. Your Scene Needs More Representation
If you want to help your scene grow, representation is a great reason to start a record label. Giving artists you love a bigger platform and supporting their journey is a good way to do that.
2. You Want A Platform For Your Art
If you’re constantly collaborating with other creators and making music under different monikers, it’s a good idea to have all your projects under the same umbrella. It will be more efficient and you’ll be able to promote your art a lot better.
3. You Want To Get Funding
Having your own record label will not only help you increase awareness about your projects, but it will also make you look like a legitimate entity, which makes it easier to get funding, partners, and patrons.
4.You Want To Have A Marketing Channel
For most artists, marketing is a chore and it’s difficult to get opportunities. But when you have an indie label, it’s a bit easier to get opportunities for promotion. Not to mention, you can outsource your marketing efforts if there’s a budget for it.
An Important Consideration to Keep in Mind
Starting an independent record label can be fun, but it’s also a lot of work and it requires serious investment and commitment. We want you to get into this with your eyes open, so there are a few considerations to keep in mind.
If you’re doing this to release your own music, you must be aware of the limitations. There’s a risk, despite your best intentions, of others perceiving your label as a vanity project.
In that case, distributors will not be as open to working with you, and funding sources may be more difficult to secure. Now, that doesn’t mean you shouldn’t start this project. It just means you have to be aware of the complications so you can navigate them.
Additionally, starting a record label is something you’ll have to work on every day. So, be honest with yourself. Can you make that time commitment? Can you be consistent?
Budget is also something you need to think about realistically. Whatever your budgeting says you’ll need, you’ll need more. So, can you start this project and still pay your bills?
These are all very important questions to answer before you get into this. If you still need more time to get ready for this project so you can start on a more solid footing, there’s no shame in that.
How to Start a Record Label: 6 Steps To Guide You
1. Pick A Name and Decide On A Business Structure
Indie record labels often skip this at the beginning, but it’s best to set it up as a legal business entity right out of the gate. If you want to have a business bank account or credit card and have access to business loans and other funding, you need to be registered as a legal business. That means you’ll need a name, so take your time choosing one.
When it comes to business structure, the names and specifics vary depending on where you live. That means you have to do your research or get professional advice to understand the law in your area, especially when it comes to creating partnership agreements.
For indie record labels, it’s best to keep the business structure simple and make sure partners are protected from personal liability. Additionally, you want to determine how the record label will operate. All the issues regarding your indie record label need to be addressed in the setup paperwork. If something has been left out, make sure there’s a separate contract for that. All your bases need to be covered.
2. Determine What Kind of Music You Want to Represent
Most people who start record labels do so with the idea of giving a specific scene more representation and boosting great music that no one is making or paying attention to. If you’re one of those people or if you’re starting the label to promote your own music, you already know what you want to represent.
If you still don’t know, now is the time to determine what kind of music you want to release. This can be quite challenging, but the easiest way to go about it is to focus on your local music scene. There, you will find local artists to work with because you like what they’re doing and you see something in them.
Indie record labels are born out of love and passion for music, so it’s important to represent artists you believe in and music you can’t wait to bring into the world. If you haven’t found that yet, waiting for it will be worth it, so keep looking!
3. Set Up Deals With Artists
When you know what kind of music you want to release and you’ve found artists you want to work with, it’s important to set up a deal with them. The great thing about having your indie record label is that you have the freedom to make mutually beneficial deals.
However, you still need to be aware of your limitations and there are a few basic principles you should apply. There are many things you’ll have to determine, such as:
- Are you willing to cover the costs of recording or do you want musicians to provide a master?
- Are you going to pay advances? If so, how much? If your budget is tight, convince artists to accept small advances so the money can go into promotion.
- How will you split the profits from the releases? Will it be 50/50 or will artists get a percentage? If so, how much?
- Will the label recover the costs of manufacture and promotion before paying the artists?
- Will artists be able to approve promotional expenses over a specific amount? If so, how much?
- Will the artist receive promos or free copies? If so, how much? And how much do they have to pay for additional copies?
- What length will the deal have? Is it for one album or several?
- Will artists be able to audit your books? If so, how often and what kind of notice do they have to provide?
4. Determine Distribution
When it comes to finding music and setting up distribution, distributors often want to be certain you have music to release and artists want to be certain you have distribution before they sign. As you can imagine, that can be challenging to navigate.
In the best case scenario, unsigned musicians will be willing to sign before you have distribution all set up. If not, the only thing you can do is try to get soft commitments from both distributors and artists so you can work something out.
When it comes to distribution, digital is a lot easier to land than physical distribution. There are aggregating services you can set up from the start so your releases can go on iTunes and Amazon. That way, you won’t have to wait to release what you have. One of the best digital distribution services is DistroKid, which is the easiest way to get music into Amazon, Apple, Spotify, YouTube, Tidal, and more.
They offer unlimited uploads and allow artists to receive 100% of the earning they make from their music. DistroKid offers features such as unlimited backups, music video generator, Spotify pre-save, Apple Music page management, and much more! We highly recommend their services.
Some physical distributors work with anyone, but it’s best to get a deal with a company that’s selective about the labels they take on. Why? Because they will be more involved in advertising and selling your releases. To land them, you need to have a busy release schedule on your hands.
5. Determine Promotion
As you can imagine, promotion is the lifeline of your indie record label. It will directly affect the sales of your releases, so you need a strong strategy. There are certain areas of promotion that are important and you need to cover them as far as your budget allows.
That includes radio (terrestrial, satellite, and internet), print media, online media, clubs, and any kind of advertising. The first big choice you have to make is whether you’ll be handling promotion on your own or if you want to outsource it.
It’s worth noting that PR companies often focus on one area of promotion, so if you’re planning on outsourcing, you may have to hire several companies to cover different areas of promotion.
Most indie labels can’t afford that, so the best thing you can do is handle your promotion in-house or most of it, and hire PR firms for certain parts of your promotion campaign. For example, you can handle web promotion and outsource radio promotion if you don’t know how to navigate it. Whatever you do, make sure you have a plan for your promotion.
6. Prepare Your First Release
Once you’ve addressed all the essentials and everything is ready to go, the next step is to prepare your first release. What an exciting time! The first thing you need to do is choose a release date and decide what kind of distribution you’re going for.
If you’re focusing only on digital distribution, you won’t have to factor in manufacturing turnaround time. If you’re focusing on physical distribution, you will have to pay attention to the factors that will have an impact on your release date. Some of the factors include:
- Manufacture. Delays in manufacture happen often, so that’s something you need to prepare for. Also, in your first few jobs with the manufacturer of your choice, you likely have to sign off on the artwork and printing before the job is finished.
- Distributor release date. Distributors will want to have a decent lead time and they will need to give your release a good place on your schedule so it’s not overshadowed by other releases. It can be annoying to adjust your release date based on other releases, but it’s important because you want your distributor to be focused on your release.
- Promotion. You need to give yourself enough time to promote the release either before the release or as it’s coming out. That means you have to consider the schedules of promotion channels such as radio, magazines, etc.
As you can see, there’s a lot that goes into starting a record label. It’s a learning experience and no matter how thorough your plan is, you’re bound to encounter unexpected challenges or make mistakes. Especially with your first release.
Remember, failures are as valuable as successes because they teach you important things, such as what to avoid and what to improve. Apply the lessons you learn consistently, avoid making the same mistakes, educate yourself, and commit to your work so you can realize your record label dreams.