Overview
Can you describe yourself as a music fan? Do you have a musical soul; do you take pleasure in exploring new music? Could it be that you’re a musician with a desire to expose others to your original sounds? If that’s the case, you might want to think about opening your own record label. Before you can launch a record label, you need to study the industry.
The music business earned a staggering $23.1 billion worldwide in 2020, up 27% from the first half of 2021. Large record companies like Universal Music Group, Sony Music Entertainment, and Warner Music Group were largely responsible for raising that sum of money. While the major labels contributed 62%, the independents only contributed 38%. More and more people in 2023 are looking to start their own independent record labels.
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This book will help you get your record label up and running.
Best tips for starting a record label
Find The Right Music
The quality of the music released by a label is directly proportional to that of its artists. Without songs that you’re confident fans will enjoy and, more importantly, that you enjoy performing, you won’t get very far. You should seek out collaborators in the arts who share your artistic ethos and with whom you can develop a close working relationship. If you want to succeed with the music you want to release, it’s important to solicit feedback from a wide variety of people. The goal of starting a record label is to get your music heard by as many people as possible, and for that to happen, there has to be an interest in the type of music you plan to release. To ensure the highest possible quality of your releases, you should always have them mixed and mastered by experts. Keep in mind that you only get a single chance to make a good first impression, so put a lot of thought into the first thing you put out.
Build A Brand
In addition to releasing music, the best record labels also serve as brands that their listeners can easily recognize and relate to. Despite its commercial nature, music is more than a simple good; it’s an expressive art form that moves listeners. As a result, the record industry is in a better position than nearly any other to build meaningful connections with their target audiences through their brand. The most popular companies have built brands that their followers use to express who they are. Given the vast scope for brand interaction, branding is a crucial factor to think about when launching a record label. The many services we provide labels at MN2S are all geared toward the same goal: to help you build a name for yourself that stands for something distinct and memorable.
Build a website/register the name
The average cost to launch a record label is $. A website is a possible up-front expense. Websites provide a central hub where fans can go to learn about your music and purchase it, as well as learn about your latest releases, upcoming shows, and other multimedia content. Although it is possible to make a website with a free website builder, many people value the professional image that a.com address provides over a longer URL. WordPress sites, for example, can handle both simultaneously, but you should still do your research before settling on a web host, as you will likely be using their services for the foreseeable future.
In addition to your website, you should also create accounts on various social media platforms and ensure that all of these accounts are linked to your main website. Customers and fans may use any of these entry points to interact with your label, so it’s important to direct them in the right direction, whether they’re looking to make a purchase or learn more about upcoming events.
Defining Your Label’s Audience
Although it’s not a very nice way to put it, it’s important to think of your listeners as “targets” when planning your marketing strategy.
Spending time and money pressing rare vinyl variants or advertising on Facebook if you don’t know your audience is likely to see the post is counterproductive. Instead, you should begin your marketing initiatives by precisely identifying your target demographic, the values they hold dear, and the channels through which they access information.
It’s important to know what kind of presentation methods they favor. Just where do they go to discover fresh bands? And what other artistic pursuits capture their attention?
Signing New Artists
Artist and Repertoire is the abbreviation for this industry term. This is a term from the days when record labels actually had employees whose job it was to help their artists find songs to record. These “A&R reps” would aid in the administration of the artists’ catalogs.
Modern usage of the term “label relationship” is more colloquial, and it is used to describe the broader partnership between a record company and its artists.
If you’re just starting out as a musician or in a band, it’s smart to practice on your friends first. Consider working with a musician who would be more understanding of your inexperience as a record label executive and/or who would be willing to work with you on a trial basis.
Find up-and-coming acts by posting an open call for submissions on Instagram, digging deep into Bandcamp’s catalog, or searching Spotify for independent artists.
Drawing Up Contracts Via A Music Lawyer
So, you’ve found your band, and you want to sign them to your label before the competition does. A recording contract should be established.
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Do not, no matter how tempting it may be, use a template of a contract found online and change the terms to suit your needs. Don’t just go to any lawyer, especially not one who isn’t specialized in your case. You should consult a music attorney because the law surrounding musical works is highly nuanced.
It is crucial that you have signed legal contracts with your artists. Royalty splits between the artist and the label need to be agreed upon and signed, and the artist needs to commit to delivering a certain number of albums to you by a certain date (and specify which territories these albums will be released in).
A record label might offer you a two or three album deal; your attorney can tell you more about this. If the record label is unsure whether or not the artist is ready, you could propose a “production deal” in which you both save money and spend time developing the artist without committing to an entire album.
You want your artists to sign “exclusive” contracts with your record label so that they can’t work with any competitors. You’re investing a lot in the artist, and your label needs an exclusive contract to reap the benefits of that investment.
Create An Online Presence
Any new record label will have a hard time getting noticed and promoting itself without a strong online presence. When first launching a record label, the right kind of exposure is essential, and social media and public relations (PR) campaigns can play a crucial role in achieving this. Get yourself set up with a MySpace, Facebook, Instagram, and Twitter account. Create a website that is visually arresting and accurately reflects your personality. Distribute your records to music critics and prominent bloggers who reach your target demographic. Make a splash with your public relations strategies to get your music heard by the right people at the right time.
We understand that these aren’t easy to complete alongside all the other duties associated with running a successful label, which is why we’re here to help. MN2S is able to help with the creation of social media plans, account management, and campaign execution across all channels. We can coordinate online coverage in addition to TV, radio, and print media campaigns thanks to our extensive network of PR, promotional, and media contacts.
Plan your launch calendar
A plan for the artist’s next release should always be part of the signing process.
We’ve talked about how to create a music marketing strategy before, but in general, you should start planning at least two to three months in advance of your release date.
Deadlines for the final master, album and insert artwork, social media campaigns, video shoots, press release and radio sampler mailings, social media content, and more should be included.
Every detail, especially if you’re shooting a music video, will require you to work around additional time constraints.
After you’ve signed an artist, it’s time to put in some hard work and start making plans.
Plan your merchandising
Exactly what will it be that your label will be selling? Which stores will carry them? I’m curious as to how much you’d like to charge.
Money made in the beginning stages will come largely from the sale of merchandise bearing your label’s name.
The initial funding for a record label is similar to that of any other business. You have to fork over your own cash to buy cassettes, records, compact discs, digital downloads, tee shirts, and whatever else the band may sell.
Tapes and CDs are great low-cost options for getting started.
There are surprisingly many dedicated tape and CD collectors, despite the fact that these are much cheaper to produce than vinyl.
If you have a talented designer and can find a reliable (and ideally fair trade) wholesaler, you can make a killing on T-shirts.
Promotion
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Previously, a record label could not be founded without financial backing; however, these days, all that is needed for promotion is time and an internet connection. Build up some buzz about your brand new music, branding, and website. This is where your social media profiles like Facebook, Soundcloud, YouTube, Instagram, and Twitter come in handy. Make an effort to participate in social media without overwhelming your followers with irrelevant details about your life, but also avoid coming across as too corporate and lifeless.
Additionally, it’s important to respond to all of your message recipients, as people appreciate hearing back from you. People will be more likely to sign up for your newsletter if you start off by offering them something for free, so get to work collecting email addresses.
Sweat The Small Stuff
One can easily idealize the process of launching a record label, complete with instantaneous wealth, opulent album release parties, and gilded Grammy Award invitations. However, 99 percent of your regular routine will not even come close. Launching a label is similar to launching any other business in that it requires careful attention to a wide range of administrative and legal details.
Your label won’t be successful unless you pay close attention to detail and put in the time to learn the challenging material. However, most people don’t launch a record label because they’re eager to spend hours poring over contracts and getting to know Microsoft Excel. Instead, they do so because they have a creative and artistic vision that they’re eager to put into action. Through our partnership, you can concentrate on the vision itself while we handle the bulk of the operational details. Our decades of experience in the music business allow us to offer a full range of legal and business services, including guidance on licensing and sync, as well as help with finances, IP management, and royalties.
Accounts/income tax
Your tracks are going platinum, and with that success comes the obligation to pay income tax. That’s the rule of law, so count every cent and pound carefully. Create a spreadsheet to track your income and expenses, as legitimate business expenses can be deducted from your taxable income. This includes things like mileage and tolls incurred while transporting artists to and from performances, maintaining a website, and paying for advertising. To the extent that your label is responsible for distributing the work of others, you may be obligated to pay those individuals a portion of the profits.
Manage Your Label’s Royalties
Accounting for artist royalties can be a daunting task, but the more you plan ahead of time and set up a system that works for you, the better off you’ll be.
In the independent music scene, 50/50 is the most typical split. More important than how often you pay your artists is that you do so in a reliable and transparent manner. However, quarterly royalty reports are standard practice for most record labels. Monthly reporting could be warranted if the artist is extremely successful.
A royalty tracking spreadsheet is available for free download in our record label toolkit, or you can purchase dedicated royalty tracking software.
FAQs
How much does it cost to set up a record label?
The initial investment needed to launch a record label can range widely, depending on factors such as the label’s intended reach and the availability of funding. Studio rental, equipment, legal fees, marketing, distribution, and staffing are all potential expenses when launching a record label.
The average cost of launching a record label is estimated to be between $10,000 and $50,000.
Is it worth starting a record label?
It’s possible to make a lot of money and a lot of music by starting your own record label, but it’s also a lot of work. It’s challenging to break into the industry and requires a significant investment of time and energy.
It could be worthwhile to launch your own record label if you have the financial backing, industry experience, and enthusiasm to make it work.
Conclusion
One must begin at the bottom if they wish to climb the ladder of success in the music business.
If you’re serious about making it as a musician, you need do nothing more than release something fresh and innovative.
That alone will make a splash in your local art community.
Keep your focus on the big picture and your aesthetic and your objectives. If you put in the time and effort, you will eventually succeed, so long as you are motivated by the right things.
Good luck in the industry now that you know the basics of launching a record label.
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