How to Start Your Own Record Label

In the past starting a record label was not for the faint of heart. Today it's possible for any musician to do so. But, what are the potential pitfalls you need to know about to make it work?  

If you’re in band, electronic act or if you’re a DJ, you have probably thought about starting your own label. More and more people are moving away from the traditional methods of promoting their material and taking matters in their own hands.

Whether you want to release your own tracks, promote other artists or simply start a homegrown business, it pays to have a plan of attack before you dive in feet first. I’ve been involved with several electronic label startups that are now running successfully and these are the things I have learned while acting as a consultant.

Invest... Carefully 

This is right at the top of my list for a reason, and I really can’t stress that point enough. You have to spend money to get a professional, well-run record label off the ground. There will probably be some of you jumping up and down at this point shouting “but I released my album for nothing!” 

To clear this up, I’m not talking about just promoting your music or stamping ‘Homemade Records’ on your latest CD or SounCloud page. I’m talking about a real company with infrastructure, management, distribution, accounts, a roadmap for the future, and most importantly, solid product.

You won’t need millions to get going, but there are costs involved. Distribution, remixing, mastering, accounting and design all cost money. You may be able to cut corners in places, but if you get everything done on the cheap, you will end up looking exactly like that. Cheap. 

Unless you are loaded, you will need to think very carefully about where you get your funds from and how you spend them once the business is realized. Getting some business advice is probably the best way forward here. Writing a business plan and generally mapping things out is a solid move too.

Another thing to realize is that, even with the best intentions, best product and best team, you will probably have to take a hit in the wallet for the first year or so. This is true of most new businesses but especially record labels. The truth is that the market place is flooded with music (both good and bad) and it is getting tougher to get noticed and get your product to the right ears.

With the harsh realities out of the way, if you are truly dedicated to getting your new label off the ground, you can start to think about the things you’ll need to arm yourself with to ensure your new venture has the best chance of thriving.


Prep Your Product


With a few quid in the bank, a business plan and some solid determination, you are pretty much good to go. The first solid thing, you’ll need to lay your hands on is some quality product. By this I mean original music, and once you don the hat of label A&R (Artist and repertoire), this is your bread and butter.

You should aim to have your first three or four releases in the bag, or at least nearing completion before you get going. This will just mean you are prepared as you move forward. Saying this, you really can’t have too much fresh music, it is in fact the life blood of any record label.

 So get busy sourcing new tracks, making your own music and developing new artists. This can happen some time before you start the label for real, and it’s a great idea to have more music than you really need to get going. This will give you a pool of material to dip into when needed.

You’ll need to develop artist contracts, work out percentages and possibly prepare contracts for remixers as well. Remixes can play a pretty heavy part in a label’s dynamic, especially if you plan to release electronic material. 

If you are unsure about how to formulate a custom contract, you may need to seek legal advice, and of course this will cost you money (there’s that nasty word again). In this case though, if you know someone that runs a label already and has a tight contract system, they may be willing to help you out with your first drafts.

Know Your Revenue Streams

If you are starting a label, it’s likely that you are passionate about music, but of course at some point you’ll probably want to make some money! If you have invested your own cash into the business, then you’ll simply have to. When it comes to recouping your expenses and generating some profit, it’s essential to know the different places money can come from and how to collect it. 

Things like artist royalties are all reasonably easy to get your head around and are probably all things you are aware of if you have scratched the surface of running a label, but there are plenty of other ways to generate cash.

Publishing, merchandising and licensing are all valid revenue streams and dealt with correctly, could make you more money than the more straightforward forms of income. It’s worthwhile educating yourself in the differences between performance-based and mechanical royalties, publishing, licensing and sync deals.

Considering Label Management

Even if you plan to run your label full time and you’ll be devoting all your time to it, you may find that covering everything yourself is a bit overwhelming. The truth of it is that you will probably discover that there are some aspects that you just aren’t equipped to deal with and qualified professionals need to be brought in.

Many things like editing artist contracts, organizing royalty statements and even developing art work can be researched and taken in hand, but if you are short on time or experience, even these simple tasks may seem a bit daunting.

If you taste some success, you’ll quickly find out that things can get pretty serious. Major label licensing contracts, sync deals with TV networks and remix contracts from large artist agencies are just some of the things you might come across as things develop.
One way of dealing with a lot of this is to enter into a deal with a label management company. This is basically an agency that deals with a number of labels and they’ll take of all the details for you. 

The services offered will cary from company to company, but most will deal with manufacture (if any is needed), distribution, art work, contracts, royalties and licensing. Some will even sort out publishing and legal work too. 

This doesn’t come cheap though. Most label managers will require a percentage, anything from 20-40% of profits and others will even require some cold hard cash up front. It’s all about choosing the right outfit for you. Go by recommendation, word of mouth and most importantly your gut instinct. You need to get on with the people you work with here as you will be in contact with them a lot.

Getting Your Promo Right

If you head down the label management route, then all your promotional material will be taken care of, but if you plan to step out on your own, then you will have to make sure it’s water tight.

Organizing contact databases, bulk mail-outs and an audio storage system are all things you will have to think about here but thankfully none of these are too complex if you are already tech savvy. If however you don’t want to get your hands dirty, but are adverse to handing over a large percentage of your profits to a label management company, you’ll be happy to know there are other options here.

There are dedicated promo companies that will take care of everything for you, and the fees are very reasonable on the whole. With this in mind, you can actually farm out any part of your label, piece by piece. For example, if you feel comfortable with doing your accounts but not design, then hire a designer and get into the books yourself. 
The trick is being honest about your strengths and weaknesses, and working with what you have. You have to weigh up the services you need to pay for and the funds you have to get started. Just make sure that you put your resources into the right areas.

Final Thoughts

Hopefully this is useful to some of you starting your own labels and rather than put you off, it should really just make you aware of the risks. All this said, the main ingredient needed is passion. Combine this with some excellent music and your product should float to the top of the pile all by itself.

Becoming savvy with copyright, mechanical royalties, performance royalties and the business side of music is essential if you wish to start your own label. That's why AskVideo & macProVideo have created these titles to help you:

Mo has been a professional in the music industry for around 15 years. He has released material with the world's leading record labels and also produces music for TV and Film. Mo is also a prolific writer and is a regular contributor to magazines such as Music Tech, Future Music and EQ magazine. There isn't a piece of music software tha... Read More

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