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It could be your lifelong dream to start a record label business, and that’s probably because you have nurtured this desire for a very long time now. You are not doing something wrong because many record label businesses have started just like that. They started from nothing and became very successful.

Nevertheless, if you would love to avail yourself of the best opportunity to succeed in this business, and not to mention the fact that you have to protect your business. You also have to understand that having a proper guide on how you can start and get your record label business up and running is so vital. And if it is done the wrong way, it could be detrimental to your overall success.

Thus this post will help you accomplish, take you by the hand and lead you into accomplishing your dream.

Although just before we jump right into that, let’s think this whole record label business through carefully first. We have to ensure that this is something that you would love to dedicate your life to.

Running a successful record label company is fun; however, it will demand that you sacrifice a lot of commitment and money. Hence you must go into this business with your eyes wide open.

Here are a few things to consider:

If you are starting a record label business to release your music, you should understand that being both a label owner and an artist on the roaster brings some level of limitations. Hence even when you have the best intentions, you stand the risk of running a vanity project.

This implies that some distributors would be hesitant to work with you, and some potential funding sources may hold off investing in you. Nevertheless, if you plan to do your production in-house, you should keep in mind that it could prove to be a little bit uncomfortable for everyone if you start calling up journalists asking them what they think of your album.

And this does not also imply that you should not start your record label business and release your music. This means you need to be aware that it brings along a few complications other labels do not face.

You will most likely have to work on your record label business every day if you have a full-time job. But do you have the time to invest in making your record label business productive? Also, keep in mind that whatever budget you have set aside for starting your record label business could cost even more.

Here are some practical tips to help you get started on your record label business:

1. Decide on your record label business structure and the label name.

So many record label businesses often tend to skip this step when starting. However, it is smart to have your record label set up as a legal business enterprise from the onset.

You will need to operate as an actual business if you want a business bank account or credit card, and it does make tax time a lot more manageable. Besides, if you would need some bit of funding, you will need to be seen as a legal business to qualify for funding.

The names and specifics of various business structures differ from region to region, state to state and city to city—for example, sole proprietorship, LLC, corporation. You have to take your time to do your homework to be equipped with the knowledge about laws in your region, and you should do well to print up the forms that you might require setting up your company.

There are a few general guidelines to keep in mind, and it applies in every place:

• If you are starting your record label business with some other partners, you will require a partnership agreement that would detail each of the partners’ percentage ownership. Also, how each partner can eventually leave the business, how decisions will be made, and so on.

Depending on your location, the laws associated with your record label business structure might dictate your partnership agreement, or you may have to come up with a separate agreement.

• For most of the record label businesses, the best framework is the simple one, and that protects its partners from personal liability in case if anything goes wrong in the business.

This is also the time to figure out how your record label business will function, who will be responsible for what? And how will your people be paid? If, by any chance, some issues are not addressed in your initial paperwork, then draw a separate document detailing all this information.

Read Also: Reasons for Business Partnership Failure

Of course, in this phase, you have to decide on the name of your record label business. Try to do a little online research to make sure that your name is available.

2. Find your Music

For most individuals starting a record label business, the idea to start a record label business was born out of listening to a great song that no else is putting out there. If that is your current situation, then that is fantastic. You should move over to the next phase.

However, if what you have is just starting a label and requiring some music, now is the time to get going. You need to have a release or even a couple of releases lined up to move on to the next steps, such as finding distribution and PR.

Finding music to release could prove to be more complicated than it seems. It’s just like finding the proverbial needle in the haystack. One of the easiest ways to get started is to go locally.

Do well to check some local musicians and see if you can any one of them to work with. You might want to listen to some music on the following platforms, Bandcamp, ReverbNation, MySpace, and other platforms that feature unsigned artists.

Starting a record label business is labor about your passion. This means that some emotions go into this kind of work. Thus it is vital to hold out for some music that you believe in. When starting your record label business, it can get pretty urgent for you to want to move very quickly. Moreover, in the long run, having to wait for the record label to bring your record label dreams to fruition is worth waiting.

3. Record Label Contracts: Structure and Artist Deals

Once you know the music that you want to release, you will have to set up a record deal with your artists. One of the most beautiful things about record label businesses is that you can have any kind of deal. To make life a lot easier, you should create a deal that works for you and the artist on a case-by-case basis.

Nevertheless, it is essential to know your limitations and to have some basic principles in mind.

Here are a few things that you have to think about:

• Would you like your musicians to deliver a master, or would you instead go in on recording expenses?
• Will you be paying for advances, if yes, how much? A tip here is that if you have a tiny budget, then it is recommended to convince your potential signings to keep any advance small, so money is left to promote your artist release.
• How will the earnings from the release be shared? Will, your artist, receive a percentage, would you instead go 50 – 50? Will your record label business recover the production and promotional cost before any payment is made?
• Will your artist get to approve promotional costs over a certain amount? If this is affirmative, then how much?
• How many promos/free copies will your artist receive? Over that limit, how much will they pay for additional copies?
• What is the duration of your artist record contract?
• Will the contract be for only one album or several?
• Will your artist be permitted to audit your books? If yes, then how often, and what kind of notice do they give?

You need to consider all these factors to help you get things up and running effectively.

4. Figure out distribution

When you start your record label business, finding the music to release and finding the distribution channels is much like a chicken and egg situation.

Most distributors would want to know that you have some music ready to go before they commit to working with you. However, most artists also want to know that you have set up a channel of distribution before they sign on to your label.

In some cases, unsigned artists will be more willing to come on board to your record label when you have sorted out your distribution. And this would be your best foot upfront, but if you cannot get this lined up, there is not much that you can do. Except to try to juggle a little bit and work on getting soft commitments from people.

Here are some things to keep in mind about distribution:

• It is a lot easier to deal with digital distribution than physical distribution. Aggregating services such as Tunecore will help put your songs on iTunes and Amazon. You could easily set up these services, so you don’t have to wait around having good releases in your library that cannot go anywhere.
• Most physical distribution channels will work with almost anyone. Nevertheless, your ideal situation should be to land a distribution deal with a service that is selective about record label business that they work with. These companies will actively get involved in selling your releases to the stores and will often help you to get your release advertised. These kinds of companies always want to know that you have got lined up a busy schedule of releases scheduled. They do not work with a record label business with only one release.

These are some factors to keep in mind when it comes to distribution.

5. Figure out the promotion

Promotion is so vital in the selling of your releases. There are quite a few areas of promotion that you will need to cover or think about covering:

• Radio: terrestrial radio, satellite radio, and internet radio
• Print media
• Online media
• Clubs
• Advertising: posters, print ads, internet ads, and if you are super flashy, TV ads will suffice.

Your initial decision is whether you will handle the promotion yourself or hire someone else to do the job for you. You should note that most PR services specialize in a specific area of promotion.

Some might cover commercial and college radio, or only print media and so on. If you give your promotion to a third party company, you will most likely be paying for several companies.

Also, you might want to reserve the bulk of your budget for any release for promotional expenses. New record label companies may not have enough money to hire outside PR for all parts of a promotional campaign.

To cope with your budget constraints, here are a few options to consider:

• Perform all your promotions in – house. If you have never done promotion work before, you should do some groundwork, like building up a press database.
• Hire PR for certain aspects of your campaign. If you think for some reason that you could handle print and web promotions by yourself, but you are not sure how to navigate the radio, for example, this is the way to go.

If you will be performing your press, and the whole experience is entirely foreign to you, be sure to build in some extra time before your first release to make your promotion plan.

6. Prepare your first release.

Okay, now, you are ready to go. So at this point, you have to select your release date. If you are going for digital distribution, you don’t have to worry about production turnaround time.

If you are pressing physical items, there’s a little more to it.

Here are some factors that could potentially impact your scheduled date for release. You should understand that it is assumed that you have a finished master in hand and that promotional factors are being skipped here:

• Approval of Artwork
• Manufacturing (plan for unexpected delays, which happens so often. You should also be aware that, at least in your first few jobs with a manufacturer, you will have t sign off on the printing just before the job is complete.
• The release date that your distributor wants. Understand that they will require a suitable release date for their stores. They will also require that your release has a right place on their schedule, so your release is not overshadowed by more significant releases that they might have. Although trying to shuffle your release date to accommodate a more significant release may be a bit annoying. Nevertheless, it is in your best interest to have your distributor focused on your project.

Now let’s consider the promotion. You have to give yourself ample lead time when it comes to promotion. So that way, reviews, interviews, and radio plays are already on airplay right before or just as the release becomes available.

You might consider the print schedule of some magazine services, which you think might give you coverage. Also, you should ensure that your release date lets you write about your album’s scheduled time of release. As a rule of thumb, it is smart to give yourself up to eight weeks or more to produce a promotional campaign.

There are sometimes that these promo time constraints may not be met. Don’t sweat it because reviews might trickle after the release date, and that is not a problem. You should expect that your first release should very well be a slow burn.

7. Enjoy the learning curve.

Running a successful record label is a gradual and a learning curve. Nevertheless, chances are even with the best intentions and carefully made plans. It is possible to make mistakes with your first release still. You don’t have to worry because you can get it right in your second, third, or thirtieth release.

Here’s the catch: ensure that you don’t make the same mistakes twice. When your first release flops, Take the time to make out some reviews to understand what you didn’t do right.

Apply what you learned to the second release, and then move on. The bottom line is that as long as you’re learning something new from each release, you are doing well.

Additional Tips

• As highlighted in the above point, starting a record label business is a learning curve. Hence when you have committed yourself to start a record label business, you should expect the best and expect the worst too. Sometimes, you will plan everything just well, but something just goes wrong along the way. The bottom line here is never to let any form of disappointment stop you from making progress.
• Do not overshoot or just bluff your way through things that aren’t very clear to you. If you don’t have a lot of music industry experience, but you desire to learn about the process. Then asking questions and being honest about what you don’t know is the only way to gain the knowledge you need.

 Read Also: The Hidden Benefits of Not Having Sufficient Capital

Five essential factors to consider before starting a record label business

As a Record Label owner, here are a few things you might need to know before you start preparing your first release;

• Money

Sure, you do this for love, not money, right? However, Sad to say, everybody else you’re going to need to work with to launch your label may not be doing that. There are a lot of costs to incur, such as pressing records to market and paying royalties.

Though you’re willing to start on a tiny scale, it’s a good idea. The expense of launching and operating an independent record label has reduced substantially over the last two decades, thanks to the digital revolution in the music business.

• Working with brands

Please ensure you have a talented artist that you can sign on to your label. There’s nothing quite like being fully prepared to go to business and not having anyone to sign and promote. Some labels can start with one artist. If you have somebody in your family or a network of friends who is a talented artist and hasn’t been noticed by a major label, you can step in! You should both support each other out — you can get their music out to the world, and then they can help you gain traction to your record label in the music world.

• Distribution

If you’d like to make some of that money you invested into your record label back, you need to get your releases into music fans’ hands. The easiest way to get yourself out is through digital platforms. Because there is no expense of physically manufacturing any music, you can conveniently upload albums and singles created by your label when you press export on the editing software. It’s all about making a digital copy and having it on a streaming service like iTunes or Spotify. In some instances, the services are not even charged, and it’s available for free.

• Promotion

Just like you would need to give people a way to purchase your records, you need to let them know that your records exist in the first place. You have to promote it to do that.

Once you’re just getting established, promotion can be a real enormous challenge. If you don’t do your home promotion, it can get costly, and there’s no expected payoff. Promotion is a must, although it’s hard work, so you should be prepared for a big learning curve.

• You will get a collection of Hats.

Once you’re running a record label, you must do the jobs many different people at significant record labels end up doing. So essentially, you will become jack-of-all. When running a record label, you will perform the function of a manager, promoter, agent, video director, graphic designer, PR officer, radio plugger, A&R, accountant, lawyer, dealer, webmaster, travel agent, secretary and maker of tea/coffee and snacks. And that’s just for a start. If only you’ve been paying to do all those jobs!

Conclusion

The record label business can make either two ways, a significant boost that could potentially set you up financially for life, or it could end up becoming a colossal disaster that will leave in debts.

These spectrums are realistic; however, it could depend on where you want to end up. We believe everyone will go for the former. Nevertheless, this article is an excellent place to start, f you’re looking for that significant break in a record label business.

Arts

Tags: Arts business ideas, Business ideas