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12 steps to start a record label

Men writing in Blackboard

The increased democracy pervading the music industry has opened up previously untouchable opportunities for independent labels and artists. Creators’ tools have commercially empowered musicians by enabling them to single handedly master, monetize, distribute, and promote their own music. With artists holding so much more control of their releases, indie labels are changing their role in the music business and standing up for artists that are looking for more than a manager for their musical career.

While majors start seeing a decrease in market share, independent labels are collectively outranking companies such as Universal Music Group. The decline of megahits and the rise of independent music taking over the streaming platforms (DIY Artists uploaded 8x more music to Spotify than the three major labels combined) are just two of the many factors that explain the reduction in major label power - and in that trend, the rise of indie labels.

More than ever, starting a record label is an achievable (and potentially profitable) goal. This guide will take you through ways to begin your own music label - from how to do proper market research to legal advice on how to establish contracts with your artists. Dive into these 12 Steps to start, and succeed, with a record label.

12 Steps To Start A Record Label

You can be an independent artist that wants to release on your own under your brand-new label name or just create a community of friends where you distribute their music. You also can be the producer who recorded and mixed this masterpiece and wants to put it to the world under your name. In any of these situations, here's what you've got to do:

What is the definition of a record label manager and the company itself? It has changed over the years and different types of labels exist. Get to know their roles.

You might sign artists you love or simply projects where you see potential, but your label's aesthetic and genre are key elements to think about when getting started.

Nobody knows you yet. Build your online presence so you can grow your fanbase as well as those of your artists.

In the moment it may seem easy to avoid contracts when the artists you work with are your friends, but in order to avoid any misunderstanding and to protect yourself if someone attempts to steal your work or release one of your artists' work on your behalf, it is important to always have a signed contract.

How much can I spend and where? Should I put all my budget into vinyl production but none into marketing or advertising? Creating a budget plan and sticking to it is key to success.

We're in 2021, the delivery of your artists' releases on streaming shops is a compulsory step in order to push them to the top and get new fans. But how and which distributor?

In today's streaming landscape, the best release strategies can change in the blink of an eye. It is important to educate yourself in order to stay on top of the latest trends and best practices when it comes to releasing music.

Promoting your artists is a no brainer, you'll do it. Where to start and how to do it is another question.

Are you going to get a physical copy of your artist's release? If you do, be sure to already have the delivery time in mind as well as some partners you could work with to press your vinyls or CDs.

You have to be paid and so do your artists, and as a label manager, you need to collect this money for them.

As a legal business, you will need to keep your accounting in order and be transparent with your artists regarding their sales.

Understand the role of a record label and its manager

Black and white picture of a woman showing something to a group of boys

Berklee University defines the label manager as “a high-level record label project manager who coordinates the activities of departments and individuals in order to guide a musical project all the way from the early planning stage into the marketplace. For each release, label managers create and implement an overarching schedule and budget. While the label's specialized employees focus in on their individual goals and tasks—creating the album's cover art, for example, or planning a press tour—the label manager's concern is always the big picture: creating a solid, economical product that represents the label well and releases on time.

Although project management is a common thread for all label managers, the day-to-day duties of the job differ greatly depending on the size of the label in question. Managers for small, independent labels might be directly involved in almost every aspect of the label's releases, including marketing, promotion, publicity, distribution, merchandising, licensing, social media management, tour planning, and more.”

Infographic in blackboard with the tasks of a label manager

Project management is a common thread for all label managers, the day-to-day duties of the job differ greatly depending on the size of the label in question. Managers for small, independent labels might be directly involved in almost every aspect of the label's releases, including marketing, promotion, publicity, distribution, merchandising, licensing, social media management, tour planning, and more.

Before diving deeper into the guide, here are some questions you can ask yourself before starting your own label:

  • Do you understand the role of a record label?

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

  • Do you want to make physical only releases (in accordance with the current vinyl trend), physical and digital releases, or digital only?

  • Do you have a basic grasp of the most important contracts in the music industry, and do you have some music business knowledge?

  • Are you prepared to engage with the administration, accounting, time and money you will need to commit to this project?

Decide on the genre and aesthetic of your label

Vintage picture of a men dressed in a barrel

Your first step might just be defining what kind of music you make. While it’s cool to defy genres and do your own thing, labeling your music will help people find and identify it. There are so many genres and subgenres out there, so start big and go smaller.

Begin by figuring out the overarching kind of music you make, and once you’ve zeroed in on that, narrow it down to the most specific kind of music. Or maybe you’re a cross-genre musician, in which case, own it! At the same time, you don’t want to try and cover all ground possible, so think about what makes your music unique, or consider coming up with your own hybrid label.

And that’s why, once you’ve identified your sound, it’s time to move on to your targeted audience. That means researching the music they listen to and finding out how they discover it.

Market Research

It’s extremely important to decide in advance what the unique selling point of your label will be. The most successful indie labels have their finger firmly on the pulse of their local music scene. They know which genre they want to represent, and the bands within it that are sparking people’s interest.

You should already know a bit about your local band scene if you’re even considering setting up a label. However, there’s always room to strengthen your connections. You need to be confident that you can spot upcoming talent before other people do!

It’s a good idea for a new indie label to make a compilation release for their first artists. Whatever format this comes in, it advertises your aesthetic and showcases the bands you’re working with. It also takes the pressure off any one band to make you money. Compilations can reveal which bands and songs evoke the best reaction from the public, which is useful for your future release strategies and choices. Bands can sell their own music and the label compilation side by side at shows. If you take part in a compilation with other bands or labels outside your own, make sure you license these songs correctly.

Building a roster

The temptation with any indie label might be to sign all your friends who have been under-appreciated for so long. You can of course do this, but it probably won’t earn you much money or respect in the long run. This is a business, and you have to be fairly tough about it. That isn’t to say that you shouldn’t support the bands that you believe in, and of course, that may be the whole reason you started the label! It’s simply a matter of trying to be as realistic and as artistically consistent as possible.

BBC 6 states in their information about starting your own record label, “The ideal is to end up in a place where people can pick up one of your releases and know that they'll be guaranteed a top-quality record within their favorite genre.”

This sort of ‘branding’ will really earn you stripes in the music industry. Successful indie labels have earned the trust of their partners and their bands. It’s a snowball effect. As soon as audiences and bands have the tiniest inkling of the quality and originality of your releases, the more likely they will be to support you. Define your aesthetic, and stick to it.

Make sure your presentation and behavior are good. Indie labels can’t compete with majors in terms of advances and CD sales. To make up for this, you have to be able to offer a good reputation, good aesthetics, and plenty of opportunities for the kind of really good up-and-coming bands that you want to sign. This can be achieved by making strong connections with booking agencies, studios, producers, promoters, and music journalists, as well as even employing some people with multi-disciplinary skills to work with your label specifically.

One thing that can happen to Indie labels is that they release a band’s early work before selling the deal onto a major label. Although this may not happen that often, you need to be prepared for it. Don’t base your roster around one band that will then move on leaving you richer but irrelevant. You need to have a few bands on the go so that the cycle of your releases and trendsetting choices continues.

gavel and green circles

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 the time comes 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 favorite 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.

Build your online presence

Vintage picture of a man pointing at a radio

Have you ever heard “if it’s not online, it didn’t happen”? Social Media has become just as influential as your PR campaign and your audience will try to find you online - so why not build a compelling social presence?

First, it is important to come up with a central location: where are you best represented? This will be the entry point for your potential fans to find you. Create a hierarchy based on the online channel where you already have an audience or that you update regularly - it can be your Bandcamp, your Instagram, or even your Twitter account. From your entry point, it is important to link your other channels where fans can listen to your artists.

Spotify, Deezer, and other streaming platforms that offer the possibility to create playlists are a great way to display your work and sell merchandise. YouTube is key to boosting your SEO and displaying your artists' video clips. Instagram is great for co-sharing your content with your artists, tagging and being tagged, showing behind the scenes of your work, and so on.

Contracts with your artists

Vintage picture of a table full of papers and men working

Once you’ve chosen your bands, how do you make your work together official? Unless you have a team member who is a music lawyer or an expert in this field, you need to hire a lawyer to work out your most important contracts.

Labels often take over many of the responsibilities that independent musicians have. Most contracts put the label in charge of marketing, manufacturing, and distribution. The band often receives no payment until the label has made back the money they invested (although you have to pay out mechanical royalties to the songwriter, or agree to a split of the net profits.)

Pick a time period for your contract. Does it cover the release of one album that has already been recorded? The recording and release of a new album? Or several albums over the next few years?

Organize the details of the licensing rights – what percentage of royalties and sales will the label receive in turn for its investment in the band? How long would the arrangement last? How much would you charge to sell the band to a larger label?

The good news is that many indie labels now work with distributors like iMusician to help them out with their admin and digital releases. Although distributors do not organize record deal contracts, they can often help you to administrate royalties, copyrights, and sync deals for your label’s roster.

Collection Societies

In order to collect a band’s mechanical and publishing royalties, a label needs to license the publishing rights of their artists. This is quite common these days, and usually part of your contract with the band. You then need to register the label with whichever collection society applies in their country. In England, this would include registering with PRS and PPL, in Germany with GEMA and BIEM. In Germany, you also need a label code (LC followed by 5 numbers) that is available from the GVL (collection society), and necessary for the identification of physical music formats. Physical releases need barcodes and ISRC codes.

These codes enable artists and labels to receive payment as their music is played and sold.

Organizing this part of your label’s administration depends a lot upon where you are based, where your bands are from, and where you would like to distribute your releases. You should consult experienced advisors or music lawyers in your area in order to find out more details, but registering as a label with a collection society is a crucial step in the process.

Set your budget

Black and White coins representing and ascending graphic

So far we’ve covered the first steps into building your record label, including thinking realistically about your goals, and explaining some of the administrative tasks and careful team building you need to get started. Showing how it’s important to know your local music scene and choose the best bands for your label. In this third and final blog, it’s time to take a look at the actual record itself! How do you work with bands, studios, and producers to make the records you want to release?

You need to set a budget for how much you can invest in any release, and try to stick to it. Decisions about how the music is recorded, mixed, mastered, promoted, and released will all affect how much you spend. Talk to other local labels or bands to work out how much you can realistically afford to invest, and how much profit you expect to make. According to this article on setting up your own independent record label, “most small indie labels sell somewhere in the region of 500-1500 copies of their first few releases, if not all the time, so temper your optimism and be realistic when calculating your figures.” You can do things relatively ‘cheaply’ or not, depending upon your choices in the following areas:

Recording: Studio or DIY?

The DIY approach is very popular among musicians these days, and can often produce amazing results, especially within musical genres like folk, garage rock and punk, and experimental music. Furthermore, it can be a good way for indie labels to get started – you can offer a band exposure, help with their release, and the support of your name, without having to invest in their recording costs. However, if the band you are working with on your label wants to use homemade recordings, you also have to ensure a certain professional level has been reached, and that the recordings are mixed and mastered in a way that suits whichever format you make the release on.

Alternatively, you might want to work with a particular local studio, in order to help musicians who don’t know how to make their own recordings. It is crucial to do some research to find out where you or a producer can create the sort of sound you want to release. How much can you afford to pay for studio time or a producer’s assistance? As usual, it helps a lot if you have friends, contacts, or connections in the industry that can advise you or help you out with good deals at the start. If you work in this way you can in theory have more influence over how the album sounds. Hopefully, your views and the band’s views on this don’t differ too much! You may also invest in all or some of the recording costs and then agree within the band contract that they will not be paid until these costs are covered.

Producers

A record producer is the person who works closely with a band to record a record. They may have creative influence along with working on recording, mixing, and mastering. If you choose to work with a producer you need to make a separate contract with them. This will determine whether they get an advance or not, and what share of the artist or label royalties they will receive for the work made. The term “bedroom producer” has become popular these days due to the large number of musicians who are happy to be their own producer. However, the role of the producer has by no means become obsolete. For an example of a legendary producer whose recording techniques and philosophy have been crucial to the bands he worked with, check out our previous post about Steve Albini’s Letter to Nirvana.

Mastering

As far as budget goes, the kind of mastering you choose can have an impact, whether you do it in the studio or online. It is the final step of production and a pivotal one before you send your tracks for distribution and both options will deliver a professional, polished, and balanced sound.

At a fraction of the cost of studio mastering, Instant Mastering uses AI to analyze your tracks and make adjustments that mimic the processes studio engineers use to ensure your tracks sound pristine and release-ready in under 10 minutes. As a label, you might save some time by simply providing the music, and getting instant, high-quality results at a low cost.

Studio Mastering, on the other hand, will use analog and digital gear to guarantee a cohesive sound throughout all tracks - which are mastered individually by Studio Engineers. You can check how the process works with JP Masters, iMusician’s partner that has over 25 years of experience and is one of the most trusted names in the business today.

Distribute your artists

iMusician logo in white with green crown

Distributors are taking an evolutionary step toward commercially empowering labels. There are several choices out there and it might require a bit of research to find the best fit for you - as a label, it is important to find solutions that will save you time and help you keep everything in one place.

iMusician offers a unique plan, Pro Unlimited, that allows you to distribute unlimited music for unlimited artists without any additional costs - and all of the income and royalties go directly to you. You also have access to in-depth reporting and analytics – daily trend charts; streams, downloads, YouTube sales overview, and more.

Read everything you need to know about selling your music online here.

Before distributing, you will need to make sure that your artists give you high-quality artwork and inform you of all the contributors in each track:

Artwork

Make sure you or the artist has organized artwork for the album well in advance. This not only ensures that your production schedule is on time (as above) but also means that you can make visual links between the record’s artwork and your promotion strategies. The more people see an image, color scheme, or type of font, the more familiar they will become with the band, album, and label aesthetic. Many successful labels create a very consistent visual identity, with recurring elements. This often happens in electronic music, with examples like New Kanada and Steyoyoke, but there are examples across all genres, including Woodland Recordings’ problem folk catalog.

Metadata

Any physical product made to be sold needs to be registered correctly (with GEMA in Germany, or PPL in the UK). You should make sure during the mastering process that the tracks include the necessary metadata, like artist details, album name, etc. For more information, check out our previous blog on metadata!

Distribution

Make contact with local indie record shops and see if you can negotiate physical distribution with them. You will need to build a name for yourself, and convince them that your music is the kind of thing they want to sell in their shop. Use a digital distributor like iMusician to organize your digital sales. We will be writing more blogs in the future about this topic!

Release Strategies

Vintage picture of a scientist showing a white board

Many independent labels prefer to spend their money on promotion rather than advances. This puts both the label and artist at less risk, as there are no huge looming debts on either side. Furthermore, it increases the chance of the label and the artist becoming better known. Many independent artists and labels use a professional radio plugger or PR company to help them out, as these people can sometimes give you the extra push you need to make it into the mainstream indie radio stations and publications. If you’d rather do it yourself, check out our tips on how to get editorial coverage.

Make sure you time the release well. You need to have the product ready at least 3 months before you release it. Then you can send out a private SoundCloud link (demo CDs aren’t really used anymore) to as many press contacts as possible. These days it’s also common to pre-release a digital version of a single before the actual album release, or offer a free digital copy of a single to people who pre-order the album.

The promotion involved before a release involves some internet marketing skills these days. Make sure someone working with your label is able to set everything up for pre-orders, promotional videos, pictures, downloads, etc. so that you are not only pitching to other press agencies, but also constantly drawing fans’ attention back to your label, and creating your own hype about the release!

Promote your artists

Vintage picture of a Human Jukebox with a men inside playing a trompet and a sound wave coming from it

Where and how to promote your artists? There are lots of choices that will consume plenty of your time when it comes to promoting your artists and label brand. You can have a look at our dedicated guide on how to promote your music in 2021 and have a read below.

Website & SEO

As a label, it's important to reference your artists and releases on a website. Your website creates another avenue for music promotion, allows you to create/write your own blog news, and allows fans to signup for a newsletter where you can advertise new releases, merch, tour dates, and more to your most dedicated fans. A new website can take time to reach a reasonable number of people, therefore it's important to work on your SEO to be sure to target the right audience interested in your products and artists.

Press & Radios

A good PR campaign alongside the distribution of your upcoming release can really push your artist to the next step and help them reach new fans. A PR agent can be expensive for a new label so you can be your own agent by contacting webzines, magazines, and blogs in order to get news, reviews, and interviews for your artists. The press can be digital or physical - the not-so-old-fashion paper magazine with your artist on the cover is still very valuable.

As you go, you can contact radio producers or stations that are interested in the genres of your artists. A radio plugger can require an enormous budget for a small independent label so you can do the work by yourself. They will often request your MP3 or WAV files with all the metadata already included, which you can easily do with a free online tool such as MP3tag.

Spotify & Deezer Ads

This might be new to you but Deezer and Spotify offer any brands or companies the opportunity to advertise on their platform. As a label or artist (as long as you have a VAT number and a minimum of $250), you can run a Spotify ad to promote your brand-new release to the freemium subscriber community. Deezer offers you the ability to promote a track or a playlist the same way with lower restrictions.

Social Media Ads

Facebook, Instagram, TikTok or even Twitter are important as a label to promote your artists. You can post the new playlists they are featured on, the reviews, the new vinyl you sell, or invite people to pre-save an upcoming release. However, the organic reach can sometimes be too small, in which case you can create ads on those social media platforms in order to reach more people and boost brand awareness and sales!

YouTube Ads

A new video published on YouTube? Be sure to promote it via Google Ads. The obvious mistake is to spend lots of money on a great music video but not spend a cent on ads to promote it. You should always spend at least half of your budget on advertisements. Your video SHOULD BE SEEN!

Stickers, Flyers, Posters, Merch & Goodies

"Stickers", "Flyers", "Posters"...old-school you think? Maybe. But depending on the genre or niche in which you are releasing music, these can still be important. As a label, when you sell a CD or vinyl, you can easily put some stickers of your label and the artists you work with on the copy along with adding a nice flyer promoting your recent releases.

Merch? This is really important. People are buying lots of merch, especially in black. Need to order soon? Check out Useless Pride.

Synch & Compilations

Work on the synchronization of your artists can be well rewarded when you get the chance to have one featured on a TV Show, a Netflix series, or even as the soundtrack of a video game. You need to have your artists registered to a collective society such as BMI and be sure to have the instrumental tracks of your artists so the music supervisor can work on them according with the medium in which the song is featured.

Compilations are a great way to collaborate with other artists (if you're doing it yourself) or to collaborate with other labels (if you search for compilations for your artists).

Events & Festivals

Booking an artist on a show, event, showcase or festival can be time-consuming but is an excellent way to promote your artists. Booking agencies may offer to help you out if they see some potential in your artists or if they like what they hear but many record labels go about booking their artists in-house.

Press tape, Vinyl or CD

Grey and black records

However you decide to release music on your label you will need the following skills to make sure the final product is a success:

Organization – make sure you order any physical copies with plenty of lead time so that the record, tape, or CD is available to sell at the release party and any subsequent tours. This sounds obvious, but you’d be surprised how things like this can go wrong if you don’t leave enough time!

Pressing – don’t order too many products. It’s better to sell out your first batch of products and have to make more than to have thousands of CDs sitting around getting broken. Although many companies that offer CD production make it cheaper to produce 1000 than 500, don’t be too easily seduced. It’s better to sell less than to waste your money on unsold copies

Collect Royalties and sales

Picture of famous artist being praised by pucblic in a golden background

As a label, you might have different contracts and different splits and budgets with your different artists or bands. You may redistribute 50% of the royalties to Artist A for Release A but 30% to Artist A for release B because there’s a different deal or contract.

This is where iMusician and Google Sheets (or Excel) will be your loyal long-term friends.

On your iMusician dashboard, you can see the overview of your sales by track or by release.

However, it is a bit complicated to collect all the data to pay your contributors or partners. You’ll need to download the complete CSV file of the month you want to report on, which we recommend importing into a Google Sheet for accounting purposes.

Once you have your report, you can filter by release, artist, platform, or even by track.

Stay on top of Accounting, Taxes & VAT

Blackboard with formulas and a vintage intelectual woman

Once you have your report on a Google Sheet or Excel, you can create a pivot table to compile your data.

You can then add the percentage agreed upon per artist in another column and know exactly how much you need to redistribute.

If you’re dealing per track or per release, you can also reorganize your pivot table and have the track or release on the first column. If you have more than one contributor you can also expand the columns and have “Contributor First Name Last Name” and go on like this.

VAT & other taxes

Depending on the status you'll choose to register your record label, you can be liable to VAT or not. Which rate, when to pay, and how to declare? In this case, it's best to reach out to your local authorities qualified for government finances for businesses so you don't miss out on any important declaration.

For businesses registered in the UK subject to VAT: You need to apply the standard rate which is 20%.

Conclusion

Setting up a label and releasing albums is a complicated and difficult business. It can, however, bring you the satisfaction that you’ve been craving. You can see your visions fulfilled, for both your own music and for other bands that you support. You can become a curator for the content, recording production, and artwork that you believe in. In the digital and DIY era, there are more and more people exploring this possibility. Yes, there is more competition, but there is also more diversity, niche communities, event experiences, and opportunities for labels to get creative with promotion. Especially with less power being held by the big labels that used to decide everyone’s fate for them. Now the decision is in your hands!

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