There are a lot of articles on the internet about how to start a record label. A lot of them are written by people who have never done it. This is not one of those articles.
This article is written by an entrepreneur and musician who has started his own record label on a budget. In this article, I will share with you my tips and advice on how to start your own record label without spending a fortune.
Our eleven step plan will take you from zero to hero, as you establish your own independent label.
So, whether you're an entrepreneur starting from scratch or a musician looking to take control of your music career, let's get started!
Part 1: Building The Ground Floor (4 Steps)
To have a successful independent record label, you need professional branding to have a strong foundation. Let's walk through the basics when starting a record label business.
1. Define Your Aesthetic
The first step to starting a record label is to define your aesthetic. What kind of music do you want your label to release? What is your target audience? What kind of image do you want your label to have? Answering these questions will help you to narrow down the scope of your label and make it easier to market your releases.
2. Choose a Name for Your Label
Once you have defined your aesthetic, you need to choose a record label name. A record label's name can be anything that you think represents your label’s identity. It can be something as simple as your own name, or it can be something more creative. Just make sure that it is catchy and easy to remember.
3. Create Some Artwork
Your label’s artwork will be one of the first things that potential customers see, so it is important to make a good impression. You don’t need to spend a lot of money on a logo, but it should be professional looking. You can hire a graphic designer to create artwork for you, or you can use free online tools like Canva to design your own artwork.
4. Invest in Marketing Materials
Lastly, when starting a record label, you should be investing in marketing materials like business cards, flyers, and posters. These are a great to have ready when needed, to get the word out about your label in a physical sense. You can distribute these materials at shows or other events, or you can leave them in record stores or other places where musicians are likely to see them.
Tip: Musicians looking for marketing are most likely not signed to major labels, so these are potential artist's music to explore and negotiate with.
Part 2: Establishing your Record Label (4 Steps)
If you followed part one, you now have the basics down on how to form a record label's business structure. This skeleton now needs to grow, by developing a social media presence and a variety of other factors that most labels have.
Ok, let's keep building our record label.
1. Set Up Social Media Accounts
In today’s world, social media is an essential tool for promoting anything, and that includes independent record labels. Setting up social media accounts for your label will help you to reach a wider audience and promote your releases more effectively. Make sure to post regularly and interact with other users in order to both build up a following and look more professional.
2. Build a Website
A record label's website is another essential tool for promoting your label and reaching potential customers. Your website doesn’t need to be fancy, but it should be easy to navigate and include all of the relevant information about your label (contact info, release catalog, etc.). You can create a website yourself using a platform like WordPress, or you can hire a web designer to do it for you. We recommend using Wix, which we used to build a website for our own record label.
3. Create a Business Plan
No business can succeed without a solid business plan. You'll need to figure out how much money you're willing to invest in your label, what your overhead costs will be, and how you plan on generating revenue.
Are you planning your record label takes a cut of 40% of streaming royalties in exchange for your services? This is called a profit split deal.
Or maybe you claim mostly all of the streaming royalties, and in-exchange, you pay the artists an up-front fee? This is called a traditional deal.
To learn more about the different types of record label deals, click here.
You should also develop, or find a good company that can outsource, various marketing and promotion strategies for your artists and their music. Without a well-thought-out business plan, it will be very difficult for your label to succeed.
4. Invest in Quality Recording Equipment
If you're going to sign quality artists and release quality music, you need to invest in quality recording equipment. This doesn't mean that you need to spend hundreds of thousands of dollars on the latest and greatest gear; however, you should have enough money set aside to purchase or rent quality microphones, mixing boards, and other essential recording equipment. Without good recording equipment, it will be very difficult to produce high-quality recordings that will appeal to listeners.
Note: That being said, if you plan for your record label business to handle the majority of things with music online rather than in-person, you may be able to get away with skipping this step. A physical location, even if that is a makeshift studio in your own house, is better than nothing. However, reimbursing artists for studio time is a feasible option for a new record label.
Part 3: The Finale: Getting Streams (3 Steps)
To take the final leap with your record company, you will need to establish digital distribution, and give artists a real reason to want to join your music label. Record labels need a competitive advantage with benefits they can provide to independent musicians.
For example, does your record label have top of the line marketing tools? Will you handle all graphic design, and even create merchandise? Are you in touch with promoters and can guarantee bookings for your artists? Do you have a network of musicians that you can connect for collaborations and in turn grow each other?
Think about what can set your record label apart from the noise.
If independent record labels are not providing a strong value, it will be hard to complete step one of part 3, as to starting a record label business, you definitely need quality musicians.
1. Find Talented Artists
The most important part of any record label is the artists signed to its roster. You need to find talented musicians who are passionate about their craft and who are willing to work hard to promote their music.
The best way to find talented artists is through word-of-mouth; start by asking your friends if they know any up-and-coming musicians who might be interested in signing with your label. You can also scour local clubs and venues for unsigned talent or look online for independent artists who are looking for a record deal.
Note: As a starting point, simply go through your Spotify or Apple Music and find songs you have saved by smaller artists. Chances are, if you enjoy the music that the artist produces, others will too. Reach out to those musicians and explain your record label business structure and plan to grow their music. After a few pitches, you are due to have an artist interested.
2. Distribute Music
Next, you want to find a good distributor that can get all of your new music to each and every streaming service. Personally, we suggest your music business or record label uses Distrokid, as they are inexpensive and allow for various record label business rates. For example, 10 artists or bands only cost $140/yr total to distribute unlimited music on their behalf. Or, for 100 artists it is only, in total, $1200/yr. That's not bad at all.
However, there are various other options when it comes to distributing music. You can learn more about a few distribution services by clicking here.
3. Promote Your Artists' Music
Once you've signed some talented artists and released some quality music, it's time to start promoting your artists and their music. There are many ways to promote music these days, so take advantage of as many free or low-cost promotion tools as possible.
Create social media accounts for your record label and your signed artists and use them regularly
Submit your artists' music for online streaming services
Send promotional materials (e.g., press kits) to radio stations, TV shows, blogs, magazines, etc.
Host listening parties or live events
Distribute flyers and posters in local clubs, stores, etc.
Basically, do whatever it takes to get people talking about your artists and their music!
For a solid list of even more online music marketing suggestions, click here.
In Conclusion
Whew, well that's how to start a record label business in just 11 steps! Starting a record label is a great way to invest in up-and-coming musical talent while helping them achieve success in the music industry. We wish everyone the best of luck, whether you are a musician with some extra cash or an entrepreneur with a great ear for talent. With hard work and dedication, your record label can achieve success!
Lastly, let's take a quick look at some FAQs in the record label business before we sign off on this article.
FAQ:
Which Distribution Service is the best for a record label business?
As an unsigned artist, getting your music on digital streaming platforms like Spotify and Apple Music can be a daunting task. There are a multitude of digital distributors available, and it can be hard to know which one is right for you. In order to help you make the best decision for your music, here is a list of the best digital distributors for unsigned artists:
DistroKid
DistroKid is a great option for those who want to get music on as many platforms as possible. They offer an unlimited plan for a flat monthly fee, so you can uploading as much music as you want without having to worry about additional costs.
CD Baby
CD Baby is one of the most popular digital distributors for independent musicians for a reason. They make it easy to upload your music to multiple streaming platforms, and they don't charge any upfront fees. They also offer extensive marketing and promotion services to help you get your music heard.
TuneCore
TuneCore is another great option for unsigned artists. They offer flexible pricing plans and a wide range of features, making them a great option for artists of all budgets. They also have a strong focus on customer service, so you can be sure that you're in good hands.
AWAL
AWAL is a digital distributor owned by Kobalt, one of the largest independent music publishers in the world. They offer a variety of plans and services tailored specifically for independent artists, making them a great option if you're serious about taking your career to the next level.
Ditto Music
Ditto Music is a UK-based digital distributor with a global reach. They offer competitive pricing and some unique features, such as automatic song submission to playlist curators and social media promotion tools.
How much does it cost to start a record label?
Typically, starting a record label in the modern music industry can cost anywhere from a few thousand dollars to the tens and hundreds of thousands, if you really want to make a splash. For example, depending on which contracts you are offering your artists, you could be paying a lot of money up-front. Understanding which contracts to offer musicians can greatly lower the cost of starting a record label.
How do you start a record label with no money?
Starting a record label with little to no money involved is possible. You would have to work strictly with profit split deals, so that no upfront payment is required for the artists you work with. Also, you would need to find your competitive advantage, as discussed earlier. {link to competitive advantage section}} Then, the only money you would need to spend would be on digital distribution. {Link to p3step2 section} This is a feasible process of how to start an independent record label without any major financial investment.
Is owning a record label profitable?
Running a record label is no small task. There are countless moving parts and pieces, from finding and signing new artists to promoting and marketing their music. Not to mention the behind-the-scenes work of managing finances, contracts, and day-to-day operations. Given all of this, it's no surprise that many labels struggle to turn a profit. In fact, according to a recent study, only about one in three record labels are profitable.
So why do people continue to start new labels? For many, it's the love of music and the desire to support artists that drives them. Others see it as a way to build a legacy or make a difference in the music industry. Whatever the reason, those who choose to enter the world of music diplomacy must be prepared for long hours and hard work. But for those who persevere in the record label business, the rewards can be great.
Does a record label need a publisher?
You may have noticed we talked extensively about distribution, but very little about publishing. That is because, more often than not, a new record label does not need a publishing company.
A publishing company is a company that owns the copyright to a song or piece of music. A copyright is the exclusive right to make copies of a work, sell or lease the work, and to make derivative works. A recording artist who signs with a record label usually assigns the copyright in their recordings to the label.
This gives the record label the exclusive right to exploit the recordings and to collect royalties on them. The label then pays the artist a royalty based on the sales of the recordings.
In fact, in some cases record labels will even sign an artist who already has a publishing deal. In these cases, we recommend the record label negotiates an agreement with the publisher that allows the music label to exploit the recordings and to collect royalties on them.
Can anyone start a record label?
In theory, yes - anyone can start a record label. But whether or not that label will be successful is another story entirely. The music industry is a competitive and ever-changing field, and there are a number of moving parts to running an independent record label.
From artist development and marketing to managing finances and handling music distribution, it takes a lot of skill and hard work to make a record label thrive.
Of course, it's not impossible - there are plenty of successful independent record labels out there that are doing just fine. But it's certainly not something that should be undertaken lightly. So if you're thinking about starting a record label business, be sure to do your homework first.
If you follow this article step-by-step with how to start a record label correctly, it might just save you a lot of headaches down the road.
Should I start my own record label?
Ok, here is the final test. If after reading this guide on how to start your own record label, you're still thinking of starting your own record label, there are a few final things you should take into account.
First and foremost, do you have a passion for music? If not, it might not be the right business venture for you.
Second, do you have the business acumen to run a successful indie label? It's not enough to just sign a few bands and release their albums - you need to be able to market and promote your artists effectively, and generate interest from both fans and the music industry.
Finally, are you prepared to invest time and money into your record label? Like any business, a record label takes a lot of hard work to get off the ground. However, if you're ready to take on the challenge, then starting your own indie label could be a great way to achieve your goals. Best of luck!