Tips for Starting A Record Label
Want to launch your own record label? “Okay, I’ve got a record label,” has been the catalyst for the launch of numerous labels. It IS that simple in some respects. Some of the best record firms invented their genre as they went along.
Going through a comprehensive setup process is crucial if you want to give yourself the best chance of success and preserve your investment. You can follow along with this instruction as you set up your label.
However, let’s make sure you’ve given this record label thing some thought before we move forward. Although running an independent record label is enjoyable, it also requires a significant financial investment. You must approach this with an open mind. Here are some things to think about:
Being the single artist on the roster and the record label owner both come with some restrictions if you’re launching a record company just to release your songs. Your label runs the risk of coming across as a vanity project, even with the greatest of intentions.
That implies that some retailers would be reluctant to collaborate with you, and some finance sources might be reluctant to invest in you. If you’re thinking about doing internal promotion, keep in mind that calling journalists and asking them what they think of your record label can be a little awkward for everyone. Not that you shouldn’t launch your own label and distribute your own music, either. It simply implies that you should be mindful of the additional challenges that it presents that other labels do not.
What is a Record Label?
A musician’s records are typically recorded, mixed, and master by record labels, who also frequently offer criticism and suggestions during the process. Along with publicists and management teams, they are also in charge of handling distribution, promotion, and marketing, from creating music videos to organizing album releases and tours.
Record labels frequently agree to give artists a portion of net sales even though they own the master recording of a work and all associated sound recording rights (royalties). Or, if it’s a 360-degree deal, the label will take a cut of everything the artist is involved in, not just record sales, including books, movies, merchandise, and so on.
Separate royalty streams exist for the song’s authorship and master recording. Whether or whether you have a record deal, you would need a publishing administrator to collect your global publishing royalties in order to get payment for the composition.
Also Read: Music Promotion: how to get your song played on Radio in 8 Proven Steps
Tips for Starting a Record Label
Even if you hold a full-time job, you will almost probably need to work on your record label every day. Have you have the time to devote to make the label successful? Whatever money you have set aside for your label, the price will increase. Can you launch a label while paying your bills? Here are some helpful tips for starting a record label of your own.
Select your Company’s Legal Form and Brand Name:
Initially, many independent record labels omit this stage, but it is a good idea to have your record label established up as a legitimate business from the beginning. If you want a business bank account or credit card, you must be an actual, legitimate business. This makes tax time much easier. Likewise, you must be a legitimate firm if you want to be considered for business loans or other forms of capital.
Different business frameworks have different names and specifications depending on the nation, state, and locality (for example, sole proprietorship, LLC, corporation, etc). To study about the law in your area and print the forms you need to establish your firm, you will need to spend a few hours at your computer or in the library. There are some broad rules to follow that are applicable everywhere:
- A partnership agreement that specifies the percentage of ownership each partner has, how they can leave the company, how decisions will be made in the partnership, and other specifics are required if you are launching the label with other partners. Depending on where you live, your partnership agreement may be required by the rules governing your business structure, or you may need to create a separate agreement.
- The best corporate structure for the majority of independent record labels is one that is straightforward and shields the partners from personal liability in the event that the business encounters difficulties.
- Additionally, now is the time to decide how the business will run, including who will be in charge of what duties and how salaries will be distributed. If there are concerns that are not covered in the business registration documents, you should draft a separate contract outlining these details.
- Of course, the moment has come for a record label name as well. Check the availability of your name online to be sure it’s not already taken.
Find your Music:
Most people who establish record labels got the inspiration to create one after discovering some excellent music that nobody else was releasing. If that applies to you, great! Continue to the next step. The moment is now if you only have a label idea and need some music to launch it. To proceed to the following steps, such as locating distribution and PR, you must already have a release—or even a few releases—planned.
It can be more difficult than it seems to discover music to release; it’s similar to looking for the proverbial needle in a haystack. Start locally because it is one of the simplest things you can do. Go listen to some local music and see if you can identify any musicians you’d like to collaborate with. Additionally, Bandcamp, ReverbNation, MySpace, and other websites that showcase unsigned artists have some music available for listening.
Because an independent label is a labor of love, it’s crucial to wait for some music you genuinely believe in. When you’ve made the decision to launch a record label, you could feel very pressured to get going immediately. Waiting until you have a record you adore and can’t wait to share with the world is ultimately worthwhile.
Independent Label Contracts: Artist Deals and Framework
You must negotiate a contract with the musicians once you are aware of the song you intend to release. You can very much have any kind of arrangement you want with independent record labels, which is one of their best qualities. In reality, making deals that work for both you and the artist individually makes things much simpler. Having said that, it is a wise idea to be aware of your restrictions and to keep a few fundamental ideas in mind. Here are some considerations you should keep in mind:
- Do you want the musicians to provide a master, or will you contribute to the expense of recording?
- If so, how much will you be paying in advances? (If you have a really limited budget, your best bet is to try and persuade your prospective signings to make any advance small so that there is money remaining to promote their release.)
- What will happen to any profits from releases? Will you split the proceeds equally or give your artists a percentage? Before making a payment, will the record label recover its manufacturing and marketing expenses?
- Will the artists be given the option to authorize promotional spending above a particular threshold? How much, if at all?
- How many free/promotional albums will the musician receive? How much more will they pay for extra copies if they go beyond that number?
- What is the duration of the agreement?
- Is there a deal for multiple albums or just one?
- Do the musicians have the right to check your books? How often must they provide notice, and what kind of notice?
Finding music to release and distribution methods are somewhat of a chicken and egg problem when starting a record label. However, musicians will want to know that you have distribution before they sign to your label. In most cases, distributors want to see that you have some music ready to go before they will commit to working with you.
When creating an independent label, unsigned performers may occasionally be willing to join before you find distribution. Your best case scenario is that. There isn’t much you can do if you can’t arrange this other than try to juggle a little and try to get folks to make soft promises. Here are some distribution-related considerations:
- Compared to physical distribution, digital distribution is significantly more accessible. Your music will be uploaded to streaming services like iTunes and Amazon by companies like Tunecore. You don’t have to sit around with good releases in your palm that you can’t move at all because you can set up these services right away.
- Although some physical distributors will collaborate with anyone, your ideal scenario is to secure a distribution agreement with a business that is picky about the labels it partners with. These businesses will actively participate in selling your releases to retailers and will frequently assist you in promoting your releases. These organizations typically ask whether you have a busy release calendar planned because they don’t enjoy dealing with record labels who only have one release.
- Distributors occasionally engage in M&D agreements, whereby they pay for production in advance and recover the cost from sales. In the short term, it helps with cash flow, but these transactions are getting harder to come by.
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Promoting your releases will be essential to their success. If funds permit, there are a few different areas of promotion you should focus on or at least consider:
- Internet radio, satellite radio, and terrestrial radio
- Print Media
- Internet Media
- Posters, print ads, online ads, and, if you’re really flashy, TV ads are all forms of advertising.
The first choice you must make is whether you will manage promotion yourself or if you will hire a third party. Keep in mind that most PR firms focus on a single aspect of promotion. They may only cover print media, they may cover commercial and college radio, etc. In other words, if you contract the work out, you should expect to pay a number of different businesses.
Upstart independent record labels might not have the money to hire outside PR for all aspects of a promotional campaign, even though you should set aside the majority of your budget for promotional fees for any release. There are a few ways to work within your financial restrictions:
- Make all of your internal marketing. If you have never worked in promotion, you will need to undertake some preliminary work, such as creating a press database.
- For certain aspects of a campaign, use a PR company. This is the way to go if you believe you can manage print and web promotion on your own but are unsure about how to use radio, for example.
- Build in extra time before your first release to create your promotional strategy if you intend to handle your own press and the entire process is new to you.
Also Read:Managerial requirements: qualifications and career tips
Make your Initial Release
Good, then You’re all set to go! You must now choose a date for your initial release. You won’t have to worry about things like manufacturing turnaround time if you decide to go with digital distribution only. There is a little more to it if you are pressing actual objects. Here are a few factors that will affect the date of your release. Please take note that we are skipping promotion elements at this time and assuming you already have a finished master:
- Approving the Artwork
- Production (be prepared for delays, which frequently occur. Be aware that you will need to approve the printing before the project is finished, at least on your first few jobs with a manufacturer.
- The date of release that your distributor desires. To sell your release to their stores, they’ll need a sufficient amount of lead time. In order to avoid being overshadowed by any other major releases they may have, they will also want your release to be placed appropriately on their timetable. It may be irritating to move your release date to make room for a larger release, but it is in your best interest to have your distributor pay attention to your project.
Let’s now talk about promotion. To ensure that reviews, interviews, and radio plays are published immediately before or at the same time as the release is made available, you must give yourself ample advance time when it comes to promotion.
Make sure your release date offers the magazines a chance to write about the release around the time of release by taking into account the print schedules of the publications you believe would give you coverage. Giving yourself a solid eight weeks or more to plan a promo campaign is desirable in general, especially for your first release.
Of course, there are situations when these time restrictions for promotions just cannot be met. Not to worry. It’s fine if reviews start to appear after the release date. It’s possible that your initial release will burn slowly.
Frequently Asked Questions about Record Labels
How is a Record Label Compensated Financially?
Record labels profit from music by investing in the release cycle, whether it be the entire cycle, from recording to marketing (as in a traditional record deal), or just a specific portion of it (as in a licensing deal), and then taking a portion of the revenue generated by that album to recoup their investments.
Do musicians need a label?
Getting signed can be on your list, depending on your demands and objectives. A record label is unquestionably something to aim for if you’re looking for a significant financial investment in your artist brand and if you want a seasoned team handling everything behind the scenes for you.
Your music: Is it owned by a Record Label?
The artist or record label to whom they are signed typically owns the copyright to the sound recording. When a song is played or replicated, whoever owns the master recordings will receive royalties (including radio, streaming, downloads).
What is the purpose of Record Labels?
Do not be misled; a record label exists to generate revenue. Record labels used to find music artists, nurture them, promote them, produce and distribute their music in exchange for a cut of sales in order to accomplish that purpose.
Conclusion: Final Tips
Running a record label is a learning process, as has been noted before but is still important to remember. When you decide to launch a record label, you must also choose to endure its ups and downs. Despite doing everything correctly, things will occasionally go awry. The key is to avoid allowing setbacks to hinder your development as a whole. Although it may sound corny, maintaining a good attitude and the ability to adapt to changing circumstances are crucial for the long-term success of your label.
- Avoid trying to bluff your way through situations that you don’t comprehend. Asking questions and being realistic and honest about what you don’t know are the only ways to get the knowledge you require if you don’t have a lot of experience in the music industry and must learn on the fly.
- Tell your artists the truth about your abilities and limitations. Be open and honest with them if a problem arises. In the business, dishonesty is virtually always the source of bad reputations.
- Starting a record business nearly generally involves incurring debt unless you have a substantial financial safety net. By making wise financial decisions, you can lessen the impact of the financial freefall.
We wish you success as you proceed to establish your record label, while on the process of putting necessary things in place, you are advised to painstakingly sign your artistes, contractual obligations and financial outputs to avoid unwanted upsets.