How To Start A Record Label

I get asked a lot of questions about music, the music business, licensing and so forth. But recently I have been getting a lot of questions about how to start up and independent record label and can an indie record label really be profitable.

This is going to be a two part series; in this article I will be outlining the resources you need in order to make your record label a success. In the second part of this series I will be answering the questions I often get asked by others about running their own record label. Before I get into the steps I would like to say one thing and that is if you want to start your own record label you have to not only have an ear for good music but you also have to be a good businessman.

You’re going to be conducting major business deals and dealing with big business executives, so you must have some sort of business sense.

Have A Business Plan

There are many up and coming Indie Record Labels that don’t have a plan, in fact may indie labels never started with one they sort of did things on the whim. The truth is many new indie labels that don’t have a plan never become successful.
Every business whether small or big needs to have a basic plan at first to start them off and as they grow their business plans change to accommodate that growth.

Business Supplies

You don’t need much just the basics when it comes to business supplies. You will need a fax machine, phone, printer, paper supply, stapler, and writing utensils. You can pick up a lot of these supplies at your local dollar store or get them for cheap at business depot. Keep in mind that these supplier are tax write off for you business so keep the receipts so that you can file them with your tax returns.

Licenses and Forms

Before you start up your record label and start conducting business the first thing you need to do is get a business license. This business license is to state that you are conducting business as an entity and will pay taxes on any monies generated under your business. Under the business license you will have to decide whether you want to run your label as a sole proprietor (independent owner) partnership, or corporation.

 

And please try to be unique when picking a name for your record label. You don’t want to choose a name that’s already taken because if you do and they find out you can be forced to change your name and start all over again. Choose your name wisely. There are also business database websites you can log onto and check if your name is available. You should also check online to see if the domain name is taken, if it is then that’s a clue that the business name is already in use.

You will also need to get tax forms because as you know you need to pay taxes on any revenue you generate or uncle Sam will be all over your ass lol. And the final thing you’re going to need is to go to your bank and open a business account. This is where the revenue generated from the record label will go. It’s important you do this because you should always keep your personal banking separate from your business banking. It only makes sense!

Contracts and Agreement forms

In the record industry there are a lot of contracts and a lot of them can be overwhelming to read and understand. At first you’re not going to be dealing with major contracts so don’t worry about that now. All you need is the basics to get started. The mandatory music contract that record labels use now is called the 360 record deal.

That is when the record label is entitled to a percentage of all revenues generated from your artist, whether it’s through album sales, ticket sales, or merchandise sales. Any contract you decide to come up with for your record label should be drawn up by a lawyer. A lawyer knows what he’s doing and knows how to draw up a legal contract that can hold up in the court of law, you as a record label owner don’t!

Any contract or agreement form between you and anyone in the music business should be looked over by a lawyer, don’t shoot yourself in the foot by trying to draw up your own contracts, why do that when you can get a professional to handle all that for you. If you want certain things added or taken out of your contract just tell your lawyer and he/she will do that for you.
Here is a sample Record Deal Contract that you can use as reference. You can search online if you need any more samples.

Record Label Brand and Logo

Every business needs a brand and logo that represents their company. I have written several times about what a valuable brand is, if you have time please read it as it will help you in your brand creation process.

Start Up Cash

In order to start up your record label and fund the music projects of your artists, you’re going to need some start up cash.

One thing you should never do is invest all your life saving into this. I’ve seen people start up a record label using all their life saving, and when the label fails to become successful all their savings are down the drain and their left in the poor house.
It’s not a guarantee that your label will be successful so it’s wise not to put all of your own money into it.

The best thing is to get a business grant or business loan. There are government agencies as well as business programs that give out thousands of dollars in grants every year and it’s up to find the right one for you in your country. The business loan can come from a family member or friend, or even bank. In the case of getting a bank loan you must have a plan in place to show them how you’re going to make revenue along with a schedule of when you’re going to re-pay them the loan.

Business Location

In order to conduct business you’re going to need a location to work from. When I started my indie record label over nine years ago I used my basement as a work space. When I started to generate some cash I rented out a small office downtown. Now after nine years we own a whole floor in a commercial building.

If you can afford it rent out a small office, if not then work from home but it’s best to get a P.O. Box because you don’t want everyone knowing your home address, anything can happen. Try to find a way to work in a basic environment in order to save funds, then as your record labels start to generate money you can find a bigger space to work from.

Build A Contact List

Building a contact list is one of the most important things you can do as a record label. You need to build a solid list of people within the music industry that can help give your artist exposure when it’s time to market and promote him.

You want a well rounded list of Dj’s, music producers, publications, PR agents, and any music media outlet you can think of.

You can easily search for these outlets online or meet them at music seminars, just don’t forget to do this because you’re going to need these types of contacts all throughout your career as a record label owner. And of course as time goes on and you grow you’ll meet people all the time in the industry that you can add as a contact.

Know Your Market

A lot of indie labels are specific genre driven meaning that their label represents a specific genre of music and all their artists put out music catering to that genre. So pick a style and genre of music that you’re familiar with, it will make pushing that music a whole lot easier.

If you think that you are capable of expanding into putting out artist in different genres then look into it and consult with the professionals around you, and if it can be done then shoot for the stars!


Find Your Artists

After you’ve picked your genre of music you’d like your label to represent, the next step is to find an artist to sign. You want to choose an artist with talent, an artist that write songs with meaning and also has stage presents and can perform really well. You want an artist with his own unique style and that is marketable. Looks does play an important role to some degree but it shouldn’t be the main reason for you signing an artist.

Now a days you can find talent just about anywhere and you don’t have to travel far. A lot of scouting by A&R’s happen online. They visit social media websites such as Youtube and Reverbnation.com to search for artists to sign. So you can start your search their but ultimately you want to see them perform at a live show a few times before even considering to sign them to your record label.

One thing that you should consider when scouting for talent is their online/offline fan base you don’t want to pick an artist that has no fans. You want to pick someone who has a steady growing fan base, has experience in performing and putting out music, and has some album sales. This will make it extremely easier for you to market them.

If the artist you meet has a manager that’s great! Sit down with them both and explain that you would like to sign them to your record label. Be professional, enthusiastic and mention to them what you can offer as a label.

Studio Time

Now that you have your artist it’s time to book some studio time for him so he can start making music. All studio expenses are cover by you so make sure you have a budget and schedule of when and how long you want your artist in the studio.
Also keep in mind that you have to cover the master and mixing of the album as well as the duplication and distribution of the albums. So make that a part of your budget as well.

Promotion, Marketing and Distribution

The last part you’re going to deal with is the promotion marketing and distribution of your artist’s music. In terms of promotion you’re going to go through your contact list and book appointments for your artist to be interviewed on radio stations, tv and other music media outlets.

You’re going to call publications and online music websites to do a Press release for your artist’s new album. And you can even make promotional CD’s, Posters, and T-Shirts for your artist to give away through promotion contests and after shows leading up to the release of the album.

In terms of marketing you can get the word out about your artist through online marketing such as advertisements on music and social media pages. And you can market offline through flyers, performances, magazines, newspapers, and radio.
As far as distribution is concerned you need a distributors help to get your product on retail shelves. You also need a distributor to get your music on major online retail websites such as Itunes, Amazon, and Rhapsody.

The offline distributors will want to see that you’ve established some success on your own (charting locally, selling product on consignment, live shows, mail order and other direct sales methods) before they even consider carrying your music.
So that’s it, that’s how you get things going with your independent record label. Tomorrow I will answer questions I often get through email about running your own indie label.

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Hip Hop Think Tank, Inc. Specializes In Educating Indie Rap Artists On How To Become Successful In The Music Industry.

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