How To Start A Record Label


Here Are The Steps To Starting Your Own Independent Record Company

UNDERSTAND YOUR WHY?

So you want to start your own record label. There has never been a better time to create your own independent record company in the history of the music business. We now have the technology, education, and resources to do exactly the same thing major labels do. 

Now, the reality is that we don’t have the money, distribution, marketing, or relationships the majors have – yet. If this is something that you would like to do, there are two questions you must ask yourself. 

1.    Why do you want to start a label? Is it your passion? Is it a priority?  Can you give this 110% effort? Like most businesses, it takes time, patience, perseverance and there should not be a fallback plan. If you have a fallback you undoubtedly choose the fallback the moment things get tough. This must be your #1 focus and you can’t imagine doing anything else. That being said now you must decide what type of label do you want to be?

2.    What type of label do you want to be? Do you want to be a label to release and market your own music or do you want to be a label that also releases other artist’s music?  Both options require mostly the same legal actions but are run and executed in different ways.

CREATE THE BUSINESS

Here are 7 factors to consider when creating your record label. 

1.    As in any business, you must first create a business plan detailing business name, vision, executive summary, start-up expenses, products offered, market analysis, competition, brand strategy, implementation, revenue forecast, goals, KPIs (key performance indicators) and monthly overhead goals.

2.    Define your business structure. Do you want to be a sole proprietor, partnership, or limited liability company (LLC)? If you are serious an LLC is best for risk reasons but will have an expensive investment.

3.    Come up with a business name that reflects your values and has positive search attributes.

4.    Acquire a website domain, secure an ISRC code which helps you distribute, track, and monetize your music, and file a trademark application. 

5.    Next, register for taxes, open bank accounts, open credit cards, set up accounting, obtain licenses or permits, and get insurance.

6.    Set up your team whether they work for you or you hire them as a consultant or independent contractor.  Due to the downsizing by most major music companies in the last few years, there are many great available independents out there with experience. 

7.    Finally, you’re going to need equipment including a great laptop, phone, printer/scanner, and good business software for accounting, database, graphics, recording programs, and consistent high-speed internet access.

THE MUSIC

Without great songs none of the other matters. Do you and/or your artist write great songs? Do you have access to great songs?  Do you have the studio, software, musicians, budget and a great producer to create master level productions? 

DEFINE YOUR NICHE AND DISTRIBUTION

Now that you are a legit business, start working on your brand or image. What kinds of music do you want to release? What genre? What message? Who are your consumers and where are they? What is your product? What is your niche? Create a SWOT analysis to figure out your strengths and weaknesses.

There are 3 main channels for distribution to consider.

1.    Start building relationships with distribution outlets and aggregators. An aggregator is a conduit to help you distribute your music globally through digital stores and streaming platforms.   Examples are CD Baby, Tunecore, Distrokid, ReverbNation, and Awal. You can also try the independent route securing placement on editorial playlists by the DSPs (Streaming and Download) such as Spotify, Pandora, Apple, Deezer, Google Play, Tidal, Soundcloud, Bandcamp, Shazam and digital storefronts like Amazon.

2. Secure physical distribution ensuring that listeners can buy your physical albums on platforms like Amazon or what’s left of brick and mortar stores like Walmart and one-off independent record stores, etc.

3.    Radio play while not quite what it used to be is still a major driver of success in the music industry. Radio promotions can be extensive and time-consuming but is imperative. Radio Tour, Commercial (Reporting) Stations, College Radio, Internet, Satellite (SiriusXM), and public radio Triple A.  Typically, you will need to go through an independent radio promoter.

CREATE REVENUE STREAMS

Once you have your physical and digital distribution channels in order you are just getting started. This is not enough to survive on these days and to be successful the label and/or artist must have other revenue streams such as touring, merchandise, sync licensing, music publishing, partnerships, sponsorships, endorsements, YouTube monetization, affiliate income, and fan-funded organizations like Patreon and GoFundMe.

START YOUR MARKETING AND PUBLICITY

Now that you have researched who your consumer is and you have a great record or song, it’s important to consider the traditional four main elements of marketing: Product, Place, Promotion, and Price. 

Relative to these four P’s, I have 3 main principles I like to follow.

1. You have a great product and you have great distribution channels, but if nobody knows it’s there it really doesn’t matter. 

2. The consumer now knows your product is there, but you need to convince them to purchase by showing them what the value proposition is. How will it benefit them to buy? 

3. You must ensure repeat customers to stay in business. This is done with continued great products, consistent communications and mutual trust. 

Online is the key way for fans to discover new music. Factors include brand awareness, social media presence, connection with digital selling points (DSP’s), and finding and using the right data.  

A strong market strategy for social media should encompass the following: Defining your brand, Identify your target audience, optimizing social media platforms, developing the buyer persona, creating a targeted strategy, using data analysis tools, understanding platform algorithms, and having a good social media management tool. 

The obvious platforms to use in your online strategy are Facebook, Twitter, Instagram, YouTube, Vimeo, Linkedin, Messenger, Reddit, Twitch, Snapchat, Pinterest, and the hot new one Tik Tok!   

Get familiar with boosted posts and advertising opportunities on many of these platforms. The rates for boosts and advertising are very low right now and as big corporations start leaving traditional advertising outlets for online, the price is going to rise dramatically.

Now that you understand the social media process and lifecycles it is time to concentrate on creating quality content that is brand-consistent and frequent. We live in a world of short attention spans and need to be entertained so you want to keep your potential consumer engaged and remain top-of-mind. 

Potential content is endless. Examples include live concert photos, lifestyle photos, press photos, blogs, stories, behind the scenes, sharing others’ content, live streams, music videos, lyric videos, interviews, podcasts, event ads, competitions, survey or polls, graphics, news, questions, and quotes.

Technology and social media have become such an integral part of our lives that sometimes we take it for granted. Connection to our consumers and fan base is worldwide and instantaneous. The need for physical marketing is less and less while the need to market on social media is imperative. We must take advantage of the many platforms and their attributes and develop a social media management plan.   

The future in technology is no doubt artificial intelligence, virtual reality, voice technology, and the continued development of holograms. Become familiar now with these technologies and stay ahead of the curve.

CONCLUSION

Starting an independent record label and continuing to succeed isn’t for the faint of heart or impatient. You will need to dive headlong into the rough-and-tumble world of the music industry, equipped only with what little resources you have and whatever experience and expertise you already possess.

The more knowledgeable you are about the ins and outs of the industry, the easier time you’ll have setting up a record label and succeeding.  Education is key, whether through experience or through a music business program at one of the fine institutions like The Dark Horse Institute. Investing in your future will no doubt pay off. I know this is quite a bit of information and you now have a few rabbit holes to dig into.  

The toughest part is balancing the overarching vision of your label’s brand with the more tedious details of the business end. Even if you’ve got the vision and connections, if you can’t work out the logistics of promotion, royalty allocation, or sync management, then your label is doomed to fail. Wherever possible, find mentors and hire experienced people to fill in the gaps within the expertise that you already have.

Having been there, there is no better feeling than seeing the artist you believed in, devoted your blood sweat and tears to and helped make their dreams come true, succeed. Hearing their first song on the radio, first charting song on radio, first music video on a national level, first national TV interview, and a first major award is amazing. 

My personal favorite is standing next to the stage when your artist plays their first hit song in concert in front of thousands, lights dim, phones illuminated and the audience all singing the lyrics. Tears my friends!  

If you are interested in pursuing a music business career, Dark Horse Institute’s Music Business Program is a great way to take things to the next level when you are ready.


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