The music industry is changing rapidly and there is always a need for cutting-edge record labels. A successful record label seeks out new talent, tackles the costs of recording and mixing albums, arranges tours, and offers promotion and marketing services to its artists.
Steps
Part 1 of 3: Planning Your Business
Step 1. Define your business
To get off to a good start, focus on a particular genre to build your reputation. You will have to choose a genre considering your goals. If you want to make a lot of money, focus on pop music. If your goal is to become the go-to label for 21st century post avant jazzcore, your approach will have to be very different.
Step 2. Write a business plan
It is a fundamental step. First, you will build the structure of your label: how you intend to find and develop talent, the type of promotion and marketing, how you will understand the market and the competition, how you will finance your business, and how you want to make your business profitable.
- If you have enough money to finance yourself independently, you may not need investors, at least for financial security. However, you may decide to attract investors who can increase your credibility in the market. For example, if you started a pop record label with your own money, getting Sir Paul McCartney to invest in your label would be a great success. To do this, however, you will need to have a credible plan to show to investors, to prove that you know what you are doing.
- If you need financial support, having a plan that shows that you understand the risks and rewards of your business, and that you can predict the way forward, will go a long way in convincing investors to risk their capital in your business.
Step 3. Calculate all the costs necessary to start the business
Consider everything from staplers to the studio's electricity bill to production costs. Calculate costs very precisely - people considering joining your label will no doubt want to do so when they read your plan! Here are some things to consider:
- Administration costs: Rent, utility bills, taxes and licenses must be paid immediately and can represent significant costs. Don't forget to include costs for telephone, internet, printers, paper, computers, business cards, and stationery. You will also need a website, and consequently some staff to create and maintain it. Some of these costs will be weekly, some monthly, and some annual or biennial. The expenses may seem too large at first, but if you create a five-year plan, you should be able to understand how these costs will become a small percentage of the budget.
- Recording costs: As a record label, you will need to produce artists. This means having to take into account the recording chain, including studio time, fees for engineers and producers (one of these figures could be you, and you should consider your salary), audio technicians and musicians.
- Marketing budget: A beautiful song is worth nothing if it's not on the market. To do this, you will need to promote your label with advertisements online, in magazines, press releases and the website. You will also have to work with artists and designers to create your logo, packaging graphics and decide the general direction of the graphic choices.
- Professional services: While you are busy producing beautiful music, someone will have to take care of writing clear and effective legal contracts for your talents and business arrangements. For this, you should secure the services of a qualified lawyer who specializes in the music industry. You will also need an accountant to make sure you don't have a problem with the taxman. You will need people you can trust.
Step 4. Prepare a cash flow forecast
Planning cash flow for one, three and five years requires skill, wisdom and reliable forecasting. The first year should have a very solid plan: you will need to have a good idea of the costs of starting the business and you will probably already know (and have already made contact) with some groups that will be the first of your team. Using this information, determine how much you will spend and try to predict how much you will earn from your early artists.
- For example, you can base your predictions on the current successes of a group: do they fill the premises? In this case, their music is probably appreciated and will allow you to earn a good sum. If, on the other hand, you offer contracts to emerging bands, who don't have a fan base, you will have to do a lot of the promotional part to make them known.
- As you add more artists to your team, the earning potential will continue to grow. In the three or five year forecast you will need to figure out how and when to find new talent, and decide how you will promote them. Here making a prediction will be more difficult: a great band under contract will make it much easier to promote all the other bands on your team. Likewise, an unsuccessful group will cause you to lose money and can lead to financial problems.
Step 5. Create your team
Unless you have a great talent to sell, promote, produce, take care of the economic side, the artistic side, speak and you are not a lawyer as a second job, you will need to develop a team. Here are some key skills that will help you succeed:
- Marketing and Sales: Someone who can promote your label, who knows the industry, has a personal relationship with the artists, promoters and people who fund the artists. This person or persons will be the key to your success: they will be responsible for finding and promoting talent. The more capable they are, the more successful you will be.
- Production. You will need someone who understands the recording process perfectly, who can find good engineers, mixers and producers, and who can lead a recording session.
- Project personnel. To keep costs down, at least initially, consider hiring the rest of the staff on a project basis. The activities you should consider are logo and graphics creation, legal, accounting, engineering and other needs that arise only occasionally.
Part 2 of 3: Execute Your Plan
Step 1. Formalize your business
Create the right company for your business to be able to operate legally, and protect you. You have many options, which may have different definitions according to the country, but which are functionally the same:
- Sole owner. In this case, you will be in charge of everything. A single owner company is easy to start, close and maintain. You could get help from consultants or friends, but in the end, the company will be yours alone. This includes 100% of the profits and all financial liabilities that go with them. Such a company offers little incentive for investors, very little protection for you, and if your business fails, you will have to pay all the debt out of your own pocket. If you want to make your label a real business, or you want to hire people when you expand, this is not the best option.
- Limited Liability Company. This type of company is suitable for small businesses. You have the ability to add people to the team as your business grows, and you can protect your finances if your business fails. It also offers relatively simple and flexible control over finances and legal and tax matters. If you want to look for investors or want to set up an international business, this is not a good option.
- Joint-stock company. If you want to start a very large business, you want to look for investors and you like a formal structure, this is the right way. As a public limited company, you will be protected in case of bankruptcy. You will be able to give shares to your partners, increase the capital of the company and you can exploit decades of legal precedent if necessary. There are strict rules for organizing, and your accountant - and your attorney - will be busy with taxes, fees, budgets, and reports. If you are the type who likes casual and relaxed things, this is not the best option for you… unless you are ready to change your pace!
Step 2. Find the talents
Once you have studied the plan, when your business is in order, you will have licenses and permits, you will have created the graphics for the productions and you have some capital at your disposal, it will be time to get to work!
Step 3. Go for live music in person, but with a critical ear
Observe the audience and their reactions to the group. If they stand up from the start and hang from the singer's lips, you may have found a new revelation!
- Approach the band and talk to them. Find out who they are, how long they have been working, if they have released any productions and what their plans are for the future.
- Find out especially if they already have a record deal. This won't always be an insurmountable obstacle, but to start a recording label, you should choose a band that doesn't have a contract!
Step 4. Meet the press
The music scene is full of writers who will help you spread the word, but they will need to know you to do so. Look for them in local newspapers or music blogs and get in touch. Invite them to lunch or to your studio and continue to have contact with them.
Step 5. Meet the technicians
Find the recording studios in your area and visit them. Some may be extravagant and high-quality studios, while others will be simple one- or two-bedroom apartments, with equipment of various qualities. Although these aspects must be considered, the most important element is the quality of the music coming out of the speakers.
- Get to know the technicians, and talk to them about their recording philosophy, how their relationship with groups is and what bothers them. You will need to know for example, if you have a contract with a rap artist that you think will be a success, that one of the technicians absolutely hates rap. Ask them to play their favorite songs for you, and listen carefully.
- To be really specific, ask for a CD with their works, which you can listen to in your home system. While rare, a great-sounding song in a million-dollar studio could sound terrible on a home rig.
Step 6. Visit the music and record stores
Big or small, their job is to sell records. If they know you, they will be happy to sell your records. They are small steps, but when you are starting out, there are no too small steps.
Step 7. Get to know the agents
They are the people who have the pulse of the local music industry. Groups that have an agent have passed a certain level of legitimacy simply because they are professional enough to hire an agent.
If your services impress agents and promoters, the next time one of their bands says "Hey, we're ready to record an album", they'll say "I know exactly who we can reach!"
Part 3 of 3: Maintain Success
Step 1. Create your brand
Once you are familiar with the practice activities, cultivate and maintain the aesthetic aspect of your label. Create a logo and be sure to use it, along with your "look", on physical discs, on your website, writing papers, t-shirts, mugs, etc. Contract groups and artists who fit the image you hope to nurture.
Study successful DIY labels like Sub Pop and Matador and follow their lead in brand management, and maintaining an independent model
Step 2. Advertise your label creatively
Over the past decade, the internet has drastically changed the way music is bought, listened to and distributed. It will be difficult to achieve success if you use the traditional tour model and rely on CD sales and radio revenue. YouTube videos and "pay what you want" templates are increasingly popular and will help you keep your brand successful.
Consider promotional events, such as printing t-shirts with the code to download a mixtape produced by you on the label. Goner records, a Memphis garage / punk label, even offered 45 free spins to anyone who showed up with the "Goner" tattoo in record stores
Step 3. Increase your fan base
The Sub Pop label began by focusing on grunge bands from the Northwestern United States, but now produces many mainstream bands, such as Iron & Wine and Fleet Foxes. Thanks to this expansion of the sounds, their success and the market share to which they have access have grown a lot. Even if you currently focus on teen pop stars, consider ways you can taint your starting genre and adapt other sounds and visuals to your brand.
In the early 90s, the biggest labels had a greater tendency to take risks, betting on unknown or "underground" artists. Sonic Youth, a noisy independent art band from New York, found themselves in a unique position after receiving a great offer from Geffen, and the deal was enthusiastically received by the label's bosses and fans. If your label is successful, consider surprising your audience by betting on an unexpected project
Advice
- Never say no to any artist. Even if you can't sign someone, keep in touch!
- Insist. Like all new businesses, creating a record label is difficult, and will require a lot of effort and time on your part. If you work hard, find the right talent, and promote your label efficiently, you will be well on your way!
- Don't rest on your laurels! Stay one step ahead of the competition by protecting your rights and finding unique new talent.
