We live in a modern digital era, and starting a record label business is more accessible than ever. A record label can produce, manufacture, and promote an artist’s music. Signing with a record label can create unique opportunities for artists, and overseeing a record label can be lucrative for entrepreneurs in the music industry.
There are generally two kinds of music record labels: major record labels and independent record labels.
The major labels are large enterprises with enormous budgets, and they have in-house capabilities for distribution, production, and promotions for all of the artists that they sign. Independent record labels generally will outsource the promotion, distribution, and press activities to third parties. Their budgets can be either very small or quite significant, depending on the record label’s commercial success.
Things that are required to start a record label:
- Choose an area of specialization for your record label, and determine how you want artists to perceive it within the industry. The kind of music you plan to release can help you determine how to brand your label.
- Come up with a unique name for your record label that no one else in the industry has used before. Ultimately, you may want to seek trademark protection for your label’s brand.
- Identify the business structure that your record label will have, such as whether you plan to be a sole proprietor, a limited liability company, a partnership, or a corporation.
- Brand your record label with a solid presence on social media.
- Contact a distributor to help you with the primary task of selling records. A traditional distributor can help you get your artists’ records into stores, and a digital distributor can help get your artists’ music into online stores that sell digital content.
- Join relevant trade associations and royalty collection societies.
- Subscribe to relevant publications.
- Develop a virtual team of industry experts.
When you first start your record label, you can discuss your concerns with an entertainment lawyer who can help prepare you for any legal issue you may face.
Your primary task will be adding artists to your record label.
But the first decision you will need to make is deciding what kinds of artists you want to pursue.
Many of the most popular record labels only sign artists who already have a solid fan base. If you will be making a significant investment in the artist, it is important that you believe you can recoup the initial expenses that you lay out. This is why it is often best to look for artists who are selling their records and doing very well. The media should show some interest, and these artists’ local gigs should sell out.
Because they have already claimed their success as independent artists, they will want you to bring something new to the table that shows how you can take their career to the next level of success. You can demonstrate to them what you can offer that they cannot do by themselves. This may be a bigger investment in marketing and public relations or an infusion of resources that can help them develop as musicians.
Where can you find a good artist to sign with your record label?
Finding a good artist often requires some work, but many record labels spend time searching for new talent on Spotify. Labels generally look for the artists who regularly rack up big streaming numbers. Keep in mind your label’s style, and look for artists’ playlists that feature the music style you want your record label to release. You also have to confirm that they do not yet have a label to which they are committed.
Another option is contacting reputable management companies to learn which artists on their roster are doing well and might be a good fit for your label. In some cases, an artist might have a good manager when they begin to really take off professionally, but they might not yet have a label. In these cases, it is the manager’s job to help the artists obtain record deals.
Once you have begun identifying artists, work with a legal professional to draft a contract.
If you identify an outstanding artist, you will want to sign them on your record label before another label snaps them up. For this, you will require a written agreement. It might be tempting to take the cheap path, but never use a generic contract that you create yourself from an internet template.
The legal agreements between you and your artists are significant. These documents contain the terms that deal with the royalty split between the artist and the label, as well as set out the artist’s responsibilities for delivering songs and albums, the length of the relationship, and the territories that the agreement covers.
With all record label contracts, one of the most important terms you should consider is artist exclusivity. You will likely invest a lot of time, money, and effort into the artists that you sign onto your record label, and the only way to reap the rewards of their achievements is by exclusively signing them to your label. A Los Angeles business attorney with extensive experience in the music industry can guide you through the process of creating a contract that protects your interests.