How to start a record label

Anybody who has an interest in music has probably thought about starting a record label at some point in time. Most people who would like to start a record label have no idea how to do it. Other people wonder if there is even a reason to start a record label anymore with online music distribution becoming so commonplace. Even though the way music is being distributed is changing there is still a need for a record label, nobody is going to download your music if they haven't heard of your band. Starting a record label can be a rewarding enterprise but you also need to keep in mind that it is a lot of hard work.

The first thing that you are going to need to do if you want to start a record label is figure out where the money is going to come from. There are going to be expenses involved in producing an album and you need to make sure that you budget for them. If you are just starting out you are probably going to need to come up with the money on your own. It is very unlikely that you are going to be able to find anybody to invest in your company unless you have a proven track record, there is just to much risk involved in starting a record label.

The next thing that you are going to need is a band, finding bands with potential is a skill that you need to have if you are going to have a successful record label. Once you have found a band that you are interested in working with you will need to negotiate a contract. Normally the record company pays for things like recording and producing the album as well as the costs of manufacturing and distributing the album. This money is normally fully recoup-able, meaning that the record company gets that money back out of any sales before anybody else gets paid. This is because the record company are the ones taking the financial risk, most albums will end up losing money. You will also need to work out how the band are going to be paid, the most common strategy for small record labels is a 50/50 split on net revenues. That is after the expenses are deducted the record label and the band split the remainder.

Once you have an album you are going to need to get it into the stores and get people to buy it. For a small record label this will likely mean contacting the stores yourself and asking them to stock the album. If you are lucky you might be able to get a distribution deal with a larger company but don't count on this. Of course getting the album into the stores is just half the battle, if nobody has heard of the band nobody is going to buy the album, that means promotion is critical. The best way to promote a band is with a tour, lots of touring will be the key. You will also want to take every opportunity to get your band in front of the media, arrange as many interviews as you can for them. A lot of musicians are really bad at this part of the job so you are going to have to really take a leadership role in getting them publicity and making sure that they present themselves in the best possible way.