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How to start a record label: part 1

"label" neon sign

Are you frustrated that some of your favourite indie bands never get signed? Do you feel the same way about your own recordings? The idea of starting your own label in response to these feelings used to be much more terrifying than it is now. Many artists and music lovers are starting their own record labels. The Internet, the DIY music scene and affordable home recording equipment have all opened up previously untouchable opportunities, allowing you to take matters into your own hands. For some inspiration, check out this list of the top 25 independent labels or the story of Rough Trade Records sung by Jeffrey Lewis below!

Starting a record label is not for the fainthearted. If you want to make big money in business, setting up an indie label is probably not the most obvious way forward. If, however, you have a real passion for music and want to enjoy the increased democracy pervading the industry, it might be worth a try!

The first steps

Here are some questions you should ask yourself before starting your own label:

What is your motivation, what do you hope to achieve?

  1. Do you understand the role of a record label?
  2. Do you want to make physical only releases (in accordance with the current vinyl trend), physical and digital releases, or digital only?
  3. Do you have a basic grasp of the most important contracts in the music industry, and do you have some music business knowledge?
  4. Are you prepared to engage with the administration, accounting, time and money you will need to commit to this project?
After you have considered these questions, the first steps are mainly practical. You need to set your label up as a business, which means registering it and filing yearly tax returns. You should work with an accountant who can advise you from the start about how to keep track of your expenses and income, so that when you come to do your tax return (or the accountant does it) everything will be in good order.

You will need some investment or another form of income to help you out, as a record label is just like any other startup – it won’t necessarily make you any profit, especially at the beginning. The amount of funding that you need depends upon how ambitious you are. Many indie labels that are now famous did not start out with a good business plan or a particularly large investment. It’s possible just to print off one batch of your favourite unknown band’s album, or even just to release it digitally, and see where it goes from there!

There are, however, some inevitable costs. These include legal and accounting fees, logo design, Internet, telephone, office premises, and physical products. You can choose the areas in which you want to save money (by doing things like using your house as an office, or making digital only releases at first) but you probably can’t cut corners for everything. The sooner you set up your label as a business with official contracts, studio time, a trusted producer, marketing and release strategies, licensing, copyrights and sync deals etc., the easier it will be for you to keep track of everything and make sure that it doesn’t spiral out of control.

The team

The main things you need at this stage are a passion for music, determination, a clear plan, and people who will help you and work with you. If you have a good team on board from the start, you can also save on some more costs. For example, if you have someone on board who has experience working in music law, you can save money on legal fees and contracts. The same applies for accounting. You will also greatly appreciate help from colleagues with experience or knowledge in marketing and PR, and people with knowledge about the most relevant promoters, journalists and producers for the kind of music you want to put out.

Remember, although it is extremely useful to work in a team, you should be selective. It’s better in the early stages to have a small but trustworthy group of people, rather than involve too many figures in your potential losses. You probably wont be able to pay everyone properly at the beginning, so you need people who are experienced and determined, but prepared to work for free or for very little money (unless you have a huge amount of investment) to help get the label off the ground. Your extended team can also indirectly include fans of the bands you first release, and friends who do not actually work for the label, but are willing to help you out via social networking and word of mouth. These people are also extremely important in building a community around your label. They can help to develop a sense of the unique role that you are playing in putting out your specific choice of music. You should encourage these intimate connections to spread.

In the following blog series we will be exploring the next stages, including market research, building your roster, and contracts with bands and collection societies. The third post will cover studio, producer and recording practices, alongside release and marketing strategies, and the final digital/physical product. We will also be collecting testimonies from people who’ve already started their own labels – so let us know if you have, and have any tips you’d like to share!

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