Record labels are companies that manufacture, distribute, and promote the recordings of affiliated musicians. Those companies monetize music and look for ways to sell the brand of an artist and the products they create.
Major labels such as Sony, Universal, and Warner Music dominate the market with their in-house capabilities and big budgets. However, indie labels that operate with small budgets can also be successful.
Two reasons would make you interested in starting a record label: either to self-release your recordings as an independent artist or to represent other artists in the music industry.
So if you are an independent artist and want to add some credibility to your music or a music-lover who wants to contribute to the success of other artists, this article is for you.
But before thinking about the steps of creating a record label. Take a minute and ask yourself the following question:
Are You Ready To Start a Record Label?
Work For A Record Label
The best way to know if you have what it takes to start a record label is to work for one. A previous work experience should give you a better idea about the business and help you decide if that is what you and to do and if you are up to the challenge.
The more responsibilities you take while working for a record label, the more confidence you will have when it is time to run your own.
But if you are confident enough and ready to dive right in without prior experience, make sure that you have the following:
Knowledge About Distribution
As a record label, your job is to get your music out to the world, which means that you need to know the ins and outs of digital and physical distribution.
Experience In Advertising And Marketing
You also should know how to create excellent marketing campaigns and deal with advertisers. As a record label, you need marketing skills to generate buzz around your music and affiliated artists.
Producers and Musicians To Get Onboard
Having a network of musicians and music producers is a great asset if you want to start a record label. The success of your label will significantly depend on your artists and producers.
So if you are ready, here is how to build a record label from the ground up:
How To Start A Record Label
Choose The Music
The type of music you are going to sell will influence the name of your label and the look of your brand. Thus, it is crucial to decide which kind of music you will focus on as early as possible.
Find A Name For Your Record Label
After figuring out the kind of music you will work with, your next step is to find a name for your record label.
The process of finding a name for your label should start with researching your competitors and studying the strengths and weaknesses of their brands.
Then, you need to come up with a list of options. It is important not to get emotionally attached to one of those options. Instead, you should test those names by sharing them with your friends and family and use their feedback to refine your options and choose the name that will resonate with your target group.
When you find a name that you like, make sure to look it up on google and the various social media platforms. It will tell you if the name is available or is being by someone else.
Remember that in the internet age, your brand can reach anywhere. Not to mention that it is what will attract people to check out your products. Therefore, you should spend all the time and effort it takes to get your brand name right.
Develop The Look Of Your Brand
Additionally, developing a powerful look for your brand is as important as choosing a name. That is because people will recognize your record label either by hearing its name or seeing its visual identity.
The logo is the most important among the visual elements of your brand. It is the first thing people will see, and it should work as a visual representation of your taste and the type of music you release.
Moreover, you need to figure out your style and color schemes. Overall, it is better to keep your brand and its visual elements simple and easy to remember.
If you are not a graphics designer, consider hiring a professional to help you create a stunning look for your record label.
Create A Website For Your Record Label
Ready with a brand name and a visual identity, your next milestone is to create a Website. It will work as a base for your customers to go and find out everything they need to know about you. It should showcase your releases, gigs, videos, and most importantly, it should have a shop to sell your music.
Along with the website, make sure to set up your social media channels. It is where your customers and fans will engage with your label and where you can promote your work, brand, and artists.
Build Your team
To successfully run your label, you will need industry experts to work directly with you and your artists in delivering the best possible product.
The team essentially should consist of a music lawyer, a music producer, a digital distributor, a music video director, and an accountant.
Each member of your team plays a huge part in developing your label and protecting its interests. For this reason, it is necessary to choose the right people for the job and make sure that that they fit the core values of your label.
If you are not ready to hire a team, you can always consider outsourcing the work you cannot or do not have the time to do yourself.
Scout For Talents
As a new label, you might want to scout for talented artists and work with them for a cut of the sales.
Ideally, you want to work with artists who already have a growing fanbase and selling records on their own. Working with such artists will increase the likelihood of recouping your expenses and making a profit.
However, to work with successful independent artists, you need to bring something to the table which shows that you can take their careers to the next level. As an example, you can offer to make a financial investment in their PR and marketing.
Write Your Agreements
If your label is releasing music made by other artists, you should have fair and binding agreements with those artists. The terms of your agreement should be written and signed by the artist in question.
Although there are many generic templates that you can download from the internet and tweak, you should create your agreements through a lawyer who is familiar with the music industry.
These contracts document critical aspects of the relationship you are going to have with your artists. For example, it defines the royalty split as well as the responsibilities of each party.
Master Your Tracks
With a brand and affiliated artists, you are probably ready to sell some recordings at this point. But remember that you should master your tracks before you put them out for your fans and customers.
Mastering prepares your music for the different distribution formats, such as Vinyl, MP3/AAC, streaming services, and broadcast. As a record label, mastering your tracks is ensures a finished and professional sound for your recordings.
If you want your fans to enjoy the best of your work, test your mastered tracks on different speakers and playback devices, including inside a car. You can also compare it with the tracks produced by your competitors to make sure that you are on top of the game.
Mastering your tracks to a professional standard will always be worth it if you aspire to have a successful label.
Get A Distributor
As a label, you will need a distributor to deliver your records to the stores. Most record labels start with a digital distributor to get their music on the major online stores and streaming sites.
Getting your music on shop floors as a physical product (CD/vinyl) will require a different kind of distributor. These kinds of deals are hard and cost more money. Therefore, new labels should play it safe and focus on digital distribution in the beginning.
Work On Marketing
One of the fundamental roles of a record label is to promote and create interest in affiliated artists and their music.
Today, social media can play a significant role in generating publicity for your work. Accordingly, you need to have active social media accounts with engaging content.
Manage Your Finances
The duties of a record label also include managing finances. You can use a spreadsheet to track your income and expenditure and meet your financial obligations towards your artists. But if you want better control of your finances, you can rely on accounting software such as FreshBooks, QuickBooks, or Wave Accounting. The free and paid tools the internet provides can boost your productivity and save a lot of your time and effort. However, you should be mindful of how much you pay monthly for those applications and only subscribe to what you need.
How Record Labels Make Money
Now that you know how to start a record label. It is time to learn how record labels make money.
Typically labels take around 30-50% of an artist’s gross income. Their share should cover any expenses and yield them some profit.
Additionally, labels can make money from streams, video views, publishing, and sync licensing, not to mention touring and selling merchandise.
The money is usually paid directly to the label. You, as a label, will need to work out your cut and pay the remainder to the artist. You are responsible for issuing a royalty statement to the artist detailing the earnings of each record.
Like any other business, starting your record label will always come with risks. However, you can limit the risk by developing a strong brand, working with the right people, and creating a solid marketing strategy.
The reward of taking such a risk is worth it. You will make a profit, release the music you love, and help talented artists build their careers.
At Mello Studio, we equip talented artists with the resources they need to build a successful career. Do you have what it takes to succeed in the music industry? We want to hear from you! Contact us today.