How To Start A Record Label With No Experience

Last Updated on October 16, 2022

You can start Your Own Record Label.

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The Music industry had revenue growth of $23.1 billion and has continued to grow by %27 through to the first half of 2021. Most of this revenue was accrued by large record labels. However, independent, small-time record labels also got their cut. In this case, there is more room for upcoming record labels with the right setup and skills to enter into this space.

In order to do so, knowing the essentials of how to start a record label equals success. So, in this article, we will go through the 3 steps needed to build your own record label without breaking a sweat.

Related Content: How To Become A Music Producer

: Inspirational Record Label Quotes

Planning Your Business

The success of any business is dependent on whether a plan was in place or not. It provides the necessary ground to work out your thoughts.

Create A Business Plan

This is the single most important aspect of starting any business. Many ignore them which often to their failure. It is obviously the first step.

It is like a blueprint for building a house. You don’t just get up and start building. You have to draw out an efficient framework so everything falls into its proper place.

The business plan provides the guidelines for how the record label will be run, how and where to look for talent, and how it will market and make money. In other words, the business plan shows from the onset the company’s goals, marketing strategies, and financial strength.

With a viable business plan in place, your record label will have a high chance of being successful. You will have your goals in focus, your financial plans set and your marketing tactics targeted at the right audience.

Specify the Cost Involved in Starting

All the cost involved in starting a record needs to be assessed before commencing your business. This includes costs related to recording equipment, manufacturing, networking, promotion, contracts, staff, and many others. Depending on the scale of your business, the cost of starting can vary.

The cost varies depending on your country of residence. Averagely, it will cost you between $200- $50,000. If you intend to start a large record label it will cost you between $100,000 – $500,000.

Here is a breakdown of the different costs involved.

Recording Equipment

If you’re starting from scratch without any equipment, then it will cost you some money to buy all the necessary tools for a full-fledged record label business. The cost varies depending on the scale of the studio you want to construct. However, save money by renting a recording studio whenever you need one.

For more insight into the cost involved, check this post on Recording Equipment costs.

Manufacturing cost

The two main forms of physical formats of a recording label are CDs and Vinyl recordings. The cost of CD and Vinyl recording cost $1 and $5 respectively. However, you can opt for online distribution to avoid such costs. Examples of these online distribution channels are Apple Music, Spotify, and Bandcamp. There are many others and some of them are free.

Networking

To make it in the record label business, you need connections. Start mingling with established names in the field at conferences and public shows to help you relate and make friends with them. The more connections you have, the higher your success rate. Approximately it could cost you about $1000 per year to finance your networking efforts.

Promotion

Promotions can be costly but important. After producing a product, you need to make your fans aware. Promotions can cost up to $7000 depending on your budget and your promotional goals. Have it at the back of your mind that advertisements for awareness are expensive.

Contracts

Record label contracts although very important are also a very delicate aspect of running this business. Therefore, as we are not lawyers, we do recommend getting a music layer to endure no hiccups.

A contract in the record label business is a document that gives in-depth details on all the essential information between you and your artists. It includes information on who spends and how much. Specifically, it shows how royalties will be split. Who takes care of recording, mastering touring, distribution costs, etc. are all stated in a recording contract.

Therefore, it is essential to have a recording contract with the help of a lawyer.

The cost involved in creating one is between $1000.00 – $3,000.00.

Select A Structure For Your Record Label

There are several different structures to structure your record label. However, the two most popular are Limited Liability Companies and Sole Proprietorships.

A sole proprietorship is an all-for-your kind of business structure. With this business model, you get to make all the decisions and take all the profits, but at the same time incur all the debts that might accrue during the course of operating the business.

If you prefer to bring in investors, hire new folks, and personally protect your assets in case of any debt, then it’s definitely the right business model for you.

The Limited Liability Company business model on the other hand is great if you have the goal of hiring people, protecting your personal assets on the occurrence of debts, and bringing in local investors. You’re, however, restricted if you want to go international.

Choose A Genre For Your Record Label Business

The genre you choose reflects your goals for your business. Do you want to make a ton of cash? If so, then focus on music that is loved largely by a lot of people. If not, choose a specific genre to build your music around a smaller niche.

Build A Team

Behind every successful record label is a dedicated team. Put time into building the best team to ensure that everything goes smoothly. You can handle every position in the business so don’t this step lightly.

Here are some of the best positions necessary for creating an effective team.

A Digital Distributor
A PR Company
A Radio Plugger
Accountant
Research Assistant
A Music Lawyer
A Music Producer
Music Video Director

To effectively find the best of these key positions, do your homework and research. There are tons of sites out there that will help you with this stuff. If you also have friends in these fields, you can bring them on board.

After you bring these members together, create an engaging environment for them to work together for the success of the record label.

Pick A Name For Your Record Label

Consider your record label a brand like all the other big companies out there. Companies like Google, Nike, Adidas, Coca-Cola, etc. have names that are both memorable and professional.

So, choose a great name for yourself by following these simple steps.

Decide the type of name you want

Names of brands are different. These names can be descriptive like Facebook. Acronymic like KFC. There are also brands with associative names such as Amazon that use the idea of imagery.

Check whether your chosen name is available

After deciding the type of name, you want and have decided on a name, make sure it is available. That is no other companies have already used it. In addition, ensure the name does not sound awkward in other languages.

Keep it simple

No matter the type of name you choose, ensure it checks the box of simplicity. An example of such a simple name is Google. Therefore, ensure your choice of name is as memorable and professional but simple for everybody.

You can use BizNameWiz to look for creative names for your Record Label Business.

Putting The Plan into Motion

Planning is the first step. After that, you need to put those ideas into action. Let’s learn how to do that.

Purchase Equipment for Your Record Label Business

First, after looking at the cost involved which you discovered at the planning stage, start purchasing the essential tools you need to start operating. Recording instruments are key if you intend to build your own studio. However, if not this step won’t be necessary. But if you want to treat this as a real business, consider building your own studio.

Start Bringing In Artists

The next step is to start bringing in talents to start recording. Reach out to the new artist, and start creating music that will be sent out there for your audience to listen to and purchase either through CD and Vinyl sales or through streaming services.

Signing a Recording Contract

To manage artists effectively, you need to have legal documentation with the help of a music lawyer to help protect you from any legal hot water.

Study Your Fans

As you start bringing in artists to create music, have your audience in mind. Listen to how they feel about the music, know their likes and dislikes, and create to impress and elevate them.

At the end of the day, they will be doing the spending for you to make money.

Visit the music and record stores

Now music is being produced, you need to sell them in order to make money. They are all over. There are big and small stores. With just a google search, you can find tons in your community.

This option is great if you intend to sell the recordings physically on CDs.

Ensuring The Success of Your Record Label Business

Now you have begun the business of recording music and now selling it to make money. It is now time to ensure that your record label business stays at the top of its game making money for you and your artists.

Establish Your Brand

Your names and brand need to be the talk of the town. Start by getting yourself a professional logo. This logo will be on every promotion you undertake, every CD you sell, your website, and even your social media profiles.

Seek inspiration from well-known DIY record labels like Matador and Sun Pop who have very interesting professional looks.

Doing this creates within the minds of your audience and potential investors the feeling of community. That is, it constricts their minds to your brand.

To make it easier on yourself, use Canva, an all-inclusive online software that you can use to develop and design your logos professionally.

Try Canva Free For 30 Days

Create A Website and YouTube Channel

A website is one of the best avenues to help you maintain the presence of your brand online. Big companies like Adidas, Nike, and even professional record labels such as Universal Music Group and Sony Music have their own websites which keep them connected to their audience and investors.

A YouTube Channel also is an interesting avenue for both independent and large record labels. Record labels like New Guys and Lauretta Records have their own YouTube to maintain their online presence.

With regard to this, creating one or both of these assets can help you maintain and ensure the long-term success of your record label business.

Market Your Record Label Company

The market frontier has changed over the years thanks to the internet. Music can now be promoted through different channels. Through YouTube, social media websites, Ads, and many others. Many independent professional record labels prefer to create a community on social media and also through press release sites to promote their brands.

Remember, depending on what you choose, the cost involved will fluctuate.

Conclusion

Starting a record label is not all that complicated. All you need is to create a blueprint, follow it through, and create a success map for yourself.

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