This is a detailed guide on how to start a record label.
If you are an independent musician or music producer and you want your music content to receive the credibility it needs or you are a music lover who is interested in promoting artists, it would be a very good idea to start a record label.
This is because the rigorous works done to be successful in any music industry can not be handled by only one person.
It is actually possible for an independent musician to do all the work of recording, promotion, distribution, and accounting himself but it would prove to be very stressful.
With a record label, not only will the processes be less stressful but also more efficient and profitable.
In modern times, learning to start a record label is easy. These days, record labels are springing up everywhere but starting a record label requires more.
The success of your record label is achieved by striking a balance between creating good music content and making a profit.
Also, a good understanding of the market and determination play a huge role in running a successful record label.
If you wish to learn how to start a record label, this guide will help.
In this guide, I will be telling you what a record label is, the types of record labels, and the steps involved in starting a record label.
What Is A Record Label?
Remember the vinyl record? If you do, ‘record label’ was derived from the circular label at the center of the vinyl records which largely displays the name of the manufacturer of the record and other information about it.
A record label or ‘record company’ as it is also known is a trademark seen accompanying a music recording or music video.
A record label can also be seen as the company that owns this trademark.
A record label also coordinates the manufacture, marketing, distribution, and implementation of the copyright for their music recordings or videos.
Another important role of a record label is discovering new talents and having contractual agreements with musicians.
Types Of Record Labels
There are two types of record labels.
- Major Record Labels
- Independent Record Labels
Major record labels are large international record companies while the independent record labels in contrast are small record companies.
Major record labels contain ‘sub-labels’ which are a group of independent record labels that sign an agreement with a major record label.
The market in recent times is controlled by the major record labels because of their wide reach. Currently, there are only three major record labels referred to as the ‘Big Three’.
The three major record labels are Universal Music Group, Sony Music, and Warner Music Group. As a starter, owning a major record label can only be seen as a goal and not a starting point.
Steps To Start A Record Label
To start a record label and ensure it remains functional after its establishment, following the following steps is very important.
1. Choose The Type Of Music You Want To Make
Before deciding to start a record label, you must have been impressed by some form of music. When you have a record label, the first priority should be quality music, meaning you should specialize in genres in which you will be motivated to release quality music to consumers.
Your choice of music specialty could also be influenced by your target audience. Or what is the use of producing quality music content that the consumers won’t patronize?
You could do a survey, asking different people how they love their music, what they feel about the songs they listen to and what changes need to be made.
The type of music you specialize in will determine the name, branding, and reputation of your record label. It will also be the basis on which you recruit artists.
The music industry is very competitive and the more your record label can represent the genre of music it specializes in, the stronger its brand.
2. Choose A Name For Your Record Label
After deciding on your specialty, the next step is choosing an identity for your record label. This is the name by which your record label will be called and your music recordings and videos will be released under this trademark name.
It might sound like it’s the easiest step in taking towards starting a record label; you might even have a name registered in your head already.
However, choosing a name already being used by another record label could lead to copyright and marketing issues.
This is why it is important to check databases for record label names before going on to choose a name for your own record label.
Your record label name could also include the kind of genre your record label specializes in. If you want your record label’s name to be used to distinguish your music releases and other merchandise (like shirts and caps), trademarking your brand name should be considered.
3. Decide On The Kind Of Business Your Record Label Will Be
Some people who start record labels ignore this step but end up revisiting it when the need arises. It is important to decide if your record label will be a sole proprietorship business, a partnership, or a Limited Liability Company (LLC).
Registering as a Limited Liability Company with the relevant authorities would make your business available for the public to view and your business would be protected in the event of folding. Being a Limited Liability Company also boosts your reputation as a record label.
You could also decide to be a sole proprietor or have a partnership with a partner or more. It means you would be personally responsible if the business were to go under.
For starters, you should establish a sole proprietorship or partnership business instead of being a Limited Liability Company. If things go well as time passes, you can decide to register your company as a Limited Liability Company.
4. Design A Logo
Another important step in setting up a record label is creating a logo that goes along with your brand name.
This logo should be to personal taste and also reflect what your record label stands for. This logo would appear on your record label’s souvenirs, website, contracts, and others.
5. Create An Online Presence For Your Record Label
In recent times, no business thrives without having an online presence. Accounts on social networks like Facebook, Twitter, and Instagram are a must-have and you need to post on these accounts frequently, using hashtags and attractive content that would draw more traffic to your accounts.
You can also have a SoundCloud account where you can regularly upload music.
Having a website is also essential as your audience would easily gain access to information on your record label. A ‘.com’ website is advisable for record labels because your record label should be international but it is more expensive.
6. Make Deals And Contracts With Artistes
Since you have decided on the kind of music your record label should be known for, you can start recruiting artists who meet your set criteria.
Deals including the length of the contract, profit sharing, and recording costs should be made. This should be done with the approval of a trusted and certified lawyer to ensure legal issues don’t occur in the future.
7. Get Distribution Sorted Out
Back in the days, record labels worry about distributing physical copies of their recordings but with modern technology, all they need is a good online presence.
With digital distribution, record labels can distribute their recordings to the biggest online music stores or streaming websites and reach audiences all around the world. Apple Music, Amazon, Spotify, and Deezer are some of the best online music streaming platforms.
8. Choose A Team Of Experts
It is important for a record label to have a team of specialists who work directly with the record label and its artists. Carefully picking this team of experts would result in greater efficiency. Your team of experts should include:
- A lawyer
- A music producer
- A music video director
- A digital distributor
- Accountant
- A public relations company
How Much Does It Cost To Start A Record Label?
Knowing in general how much it costs to start a record label will guide you in making adequate financial plannings and preparation for your record label.
Start-up Costs For A New Record Label
The one-time cost for starting a new record label include:
Licensing fees: Less than $100 for small independent artists and about $1000 for major artists.
Purchase or lease of recording equipment: At least $4000.
Purchase or lease of production equipment: At least$4000.
Purchase or lease of studio: Realistically $40,000 to $50,000 up to $1,000,000 home studios could cost about $10,000 to $20,000.
Purchase of office equipment: A total of about $5,500
Ongoing Costs New Record Labels Include
The ongoing cost for new record label is the estimation of what it will cost you to maintain a recently set up record label.
Rent: $30 to $200 per hour for studios.
Marketing costs: Could cost a total of $3,580
Accounting and legal fees: Accountants charge about $150 to $520 per hour while lawyers charge about $255 to $520 per hour
Equipment maintenance: Varies depending on the equipment
That’s all on how to start a record label.
I hope this guide was helpful?