The Essential Guide: How To Start a Record Label

There are no limits on who you must be to start your record label. You can be an indie artist who wants to release on their own or simply create a community of friends where you distribute their music. You can also be a producer who recorded and mixed a music masterpiece and wants to put it out to the world under their name. In any of these situations, here's what you've got to know and do:

Berklee University defines a label manager as “a high-level project manager who coordinates the activities of departments and individuals to guide a musical project from the early planning stage into the marketplace.”

For each release, label managers are in charge of creating and implementing an overarching schedule and budget, and ensuring that the label offers a solid, economical product that meets the needs of its targets. In other words, a label manager should always care for the big picture. In contrast, the label's specialized employees focus on their goals and tasks, such as mastering the recordings, creating the album's cover art, or planning a press or concert tour.

Although project management is the fundamental responsibility of every label manager, the scope of their day-to-day duties may differ significantly depending on the size of the label in question. Big-label managers usually have less diverse daily tasks (but often more responsibility) as they can delegate more. Meanwhile, managers for small, independent labels are commonly directly involved in almost every aspect of the label's releases, including marketing and promotion, distribution, merchandising, licensing, tour planning, and more.

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

• Do I understand the role and purpose of a record label?

• What is my motivation? What can I achieve by establishing a label?

• What types of services do I want to offer artists?

• What can I offer to artists that they cannot otherwise do themselves or get somewhere else?

• Am I financially prepared to start a label? If not, what are my funding options?

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

• Do I have experience with distribution?

• Am I prepared to engage with the administration or accounting and invest the time and money needed to commit to this project?

Answers to these questions help you determine how ready you are to start your record label immediately and/or what additional skills and knowledge may be helpful.

When starting a record label, your first step is defining what kind of music you want to make and release. This will ultimately guide you toward the type of musicians you’ll target and attract (and subsequently, fans who listen to such music). While it’s cool to defy genres and “do your own thing” (whatever that means), labeling your music will help people find and identify your company better. There are so many genres and subgenres out there, so start big and go smaller.

Being overly specific can be just as limiting as being too broad. Such a strategy could cost you valuable clients. The goal is to balance and define your specialty without becoming too niche.

Once you’ve identified your sound, it’s time to move on to your target audience. That means researching the music they listen to and how they discover it.

It’s crucial to decide in advance what the unique selling point of your label will be. The most successful indie labels have their fingers firmly on the pulse of their local music scene. They know which genre they want to represent and the bands that spark people’s interest.

If you're considering starting a label, you should know a bit about your local band scene. However, there’s always room to strengthen your connections. You must be confident that you can spot upcoming talent before others 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 helpful for your future release strategies and choices. Bands can sell their music and the label compilation at their gigs and shows. If you participate in a compilation with other bands or labels outside your own, license these songs correctly.

The temptation of any indie label founder might be to sign all their friends who have been under-appreciated for so long. You can do this, but it won’t earn you much money or respect in the long run. This is a business, and the truth is, you have to be pretty tough about it. That isn’t to say that you shouldn’t support the friend musicians 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 artistically consistent as possible.

In their booklet about how to start a record label, BBC 6 notes that “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 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, they are more likely 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 regarding advances and CD sales. You must offer a good reputation, pleasing aesthetics, and plenty of opportunities for the excellent up-and-coming bands you want to sign to make up for this. This can be achieved by connecting with booking agencies, studios, producers, promoters, and music journalists and employing skilled people with multi-disciplinary expertise.

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

Naming your label might feel like a natural part of the process, but we still want to highlight it to ensure that all bases are addressed. Surprisingly, the name of your record label is not as important as you’d like to think. Of course, your label might feel like your child to you, so you must opt for a name you love and feel connected to.

Nevertheless, the key is to ensure that your name is unique and not being used by any other label or company. Check on the availability of your chosen name using sites like GOV.UK's Company name availability checker, Namechck, and ICANN's Lookup tool, and browsing social media platforms.

If you’re feeling uninspired and need additional push, plenty of name-generator tools can help you come up with your label name. Try BrandCrowd, Namify, and Namelix to spark ideas.

The following steps are mainly practical. You need to set up your label 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 keeping track of your expenses and income so that when it’s about time to do your tax return, everything is in good order.

You will likely need some investment or another form of income to help you out, as a record label is just like any other startup — the beginnings might be humble, and you likely won’t make much profit. The amount of funding that you need depends on how ambitious you are. Many indie labels that are now famous did not start with a good business plan or a huge investment. It’s possible to print off only one batch of your favorite unknown band’s album, or just release it digitally, and see where it goes!

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 where you want to save money (by 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 deals, etc., the easier it will be for you to keep track of everything and ensure it doesn’t spiral out of control.

Have you ever heard the saying, “If it’s not online, it didn’t happen”? Social media has become just as influential as your PR campaign (if not more), and you can be 100% sure that your audience will try to find you online. So, why not build a compelling social presence?

First, it is essential to develop 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 update regularly — it can be your Bandcamp, Instagram, Facebook, or X account. From your entry point, linking your other channels where fans can listen to your artists is crucial.

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 your work behind the scenes, and so on.

Whatever platforms you choose for establishing your online presence, it’s fundamental to be selective. The reality is that you can’t excel on every platform existing — it is just not feasible. Focus on the ones that you enjoy and where your (potential) target audience is most active and develop a clear, compelling strategy that you can consistently maintain.

Want to level up your Instagram game? Check out our article about how to promote record labels on Instagram.

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.

We’re all reasonably familiar with how most of the big labels operate. They often take over many of the responsibilities that independent musicians have. Most record deals put the label in charge of marketing, manufacturing, and distribution. The band often receives no payment until the label has returned the money they invested (although you have to pay out mechanical royalties to the songwriters or agree to a split of the net profits.)

The great thing about establishing your label is playing according to your rules. Set up conditions that will allow you to grow as a company but take your artists’ interests into account, too. A 2022 research revealed that independent labels comprised 34.6% of all market share. It’s also been estimated that there are more than 100,000 small and DIY record labels worldwide. This means that the competition is quite intense.

Therefore, it’s crucial to offer artists conditions that meet their needs. Musicians interested in signing with an indie record company seek the help and support of a label but won’t compromise their freedom, artistic creativity, or ownership rights. If your label does not provide this, they’ll find one that does.

Running a DIY record label also often involves taking risks. Be prepared to follow your gut feelings fearlessly (or with fear — just follow them anyway) and put faith in the artists you believe in, without placing undue pressure on them.

When crafting record deals, ensure that you cover everything necessary. Pick a 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 more prominent label?

The good news is that many indie labels now work with distributors like iMusician to help them 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.

To collect a band’s mechanical and publishing royalties, a label needs to license the publishing rights of their artists. This is quite common and is usually part of your contract with the band. You must then register the label with whichever collection society applies in their country. This would include registering with PRS and PPL in England and Germany with GEMA and BIEM.

In Germany, you also need a label code (LC followed by 5 numbers) from the GVL (collection society), which is necessary to identify 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 significantly on 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 to learn more details, but registering as a label with a collection society is a crucial step.

So far, we’ve covered the first steps in building your record label, including thinking realistically about your goals, explaining some of the administrative tasks, and showing how important it is to know your local music scene and choose the best bands for your label. Now, it’s time to look at the recording process and all the key aspects you must consider in that area! How do you work with bands, studios, and producers to make the records you want to release?

You must 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 can expect to make.

It’s also essential to consider that many factors can affect your earnings — namely, its size, number of artists signed, the artists’ popularity, location, reputation, and overall success (that other factors can contribute to). Depending on these factors, an average independent record label makes $60,000–$500,000. The largest and most successful labels can generate up to billions of dollars in revenue, while the most minor indie labels may only bring in a few hundred thousand a year.

When managing your expenses, you can do things relatively ‘cheaply’ or straight expensive. Your total costs may largely depend on your decisions in the following areas:

As the name implies, the concept of DIY recording places the responsibility for the recording process entirely on the artist. This approach has recently gained popularity, partly due to the COVID-19 pandemic. It often delivers impressive results, especially in music genres like folk, garage rock and punk, and experimental music. For indie labels, it can also serve as a practical starting point — you offer band exposure, release support, and backing of your label’s name support of your name, without having to cover the recording expenses.

That said, when taking the DIY approach (or working with musicians who prefer it), it’s essential to ensure that a certain professional level has been reached, and that the recordings are properly mixed and mastered to sound well across all devices.

Alternatively, you might consider collaborating with a local recording studio to support musicians who don’t know how to make their recordings while also boosting nearby businesses. This can be a strategic way to ensure quality and help others in the industry. It’s crucial to research where you or a producer can create the sort of sound you want to release. Consider your budget for studio time or production assistance, and, if possible, take advantage of any industry connections or friends who might provide valuable advice or help secure favorable deals.

If you can afford studio time or access valuable industry connections, you’ll likely have more influence on the album’s sound. Just be sure that you and the artist share similar creative visions and that you’re not stifling their creativity and artistic expression. When recording expenses, you may decide to cover some or all costs. Either way, it’s essential to clearly state the recoupment terms and conditions in the record deal.

A record producer is a person who works closely with a band on a recording. They may have a creative influence alongside working on recording, mixing, and mastering. If you choose to work with a producer, you must make a separate contract with them. The contract will determine whether they get an advance and what share of the artist or label royalties they will receive for the work made.

The term “bedroom producer” has become popular in the past years due to the many musicians who are happy to be their producers. 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.

Regarding budget, the kind of mastering you choose can have an impact, whether you do it in the studio or online. Mastering is the final step in the music production process, and it is pivotal before you send your tracks for distribution. Both studio and online mastering can deliver a professional, polished, and balanced sound.

Online tools like our Instant Mastering can produce professional-quality results at a fraction of the cost of studio mastering. It uses AI to analyze your tracks and make adjustments that mimic studio engineers' processes to ensure your tracks sound pristine and release-ready in just minutes. As a label, you can save some time by providing the music and getting instant, high-quality results at a low cost.

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

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 essential to find solutions that will save you time and help you keep everything in one place.

For example, iMusician offers flexible options such as pay-per-release and three unique subscription plans: AMPLIFY, AMPLIFY+, and AMPLIFY Pro, the last of which is tailored for independent labels. With AMPLIFY Pro, you can distribute unlimited releases to over 200 streaming and download platforms with 0% commission. It also allows you to manage as many artists as you want at no additional fees, access Premium Support, including video call consultations, and use professional tools to grow your label. Such tools include in-depth reporting and analytics, Release Pages with a pre-save feature, and customizable Artist Pages for a pro-looking online presence.

Before distributing, there are essential elements to prepare, including release artwork, metadata, and a strategic release plan. Let’s explore them in more detail.

Ensure you or the artist has organized artwork for the album well in advance. This ensures that your production schedule is on time (as above), and you can make visual links between the record’s artwork and your promotion strategies. Using the same image, color scheme, or typography across various platforms helps build familiarity with the band, album, and label’s aesthetic.

Many successful labels establish a cohesive visual identity by incorporating recurring design elements. This often happens in electronic music, with examples likeNew Kanada andSteyoyoke, but there are examples across all genres, includingWoodland Recordings’ problem folk catalog.

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

Many independent labels prefer to spend their money on promotion rather than advances. This puts the label and the artist at less risk, as there are no substantial looming debts on either side. Furthermore, it increases the chance of the label and the artist becoming better known. 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 mainstream indie radio stations and publications. If you’d rather do it yourself, you can check out our tips on how to manage your reputation as an independent artist.

Generally, there are many release strategies to choose from, but managing multiple artists can make things more complicated for a label. Each artist typically requires a plan tailored to their specific needs. One key factor, however, is timing — particularly important is avoiding releasing singles from different artists on the same day.

Experimentation often plays a key role in finding the right approach(es) for your artists. You may need to test a strategy, evaluate its success, and pivot if it doesn’t deliver the desired results until you discover what works best for each artist. If you want to explore different strategies, you might find our articles on 3 proven release strategies and the waterfall strategy helpful.

Promoting new releases is also a crucial element of any effective release strategy. Numerous tools and methods are available to help you promote your artists’ work before, during, and after the release date. Pre-save pages, for instance, are particularly effective for building anticipation ahead of release day, enabling you to collect fans’ pre-saves from day one.

Equally important is running a well-planned marketing campaign. With various platforms at your disposal — such as social media channels like Instagram and TikTok, music-dedicated sites, podcasts, and more — you can tailor your promotional efforts to reach wider audiences.

Whatever campaign you design, make sure someone on your team handles the setup for pre-orders, pre-saves, promotional content like videos and pictures, and downloads. Creating engaging content keeps fans interested in your label, sustains excitement about the releases, and builds momentum for your artists.

Where and how should you promote your artists? With countless platforms available, promoting your artists and labels can become challenging and time-consuming. Check out our comprehensive guide on how to promote your music in 2024 and learn more below.

As a label, having a dedicated website to reference your artists and releases is essential. Your website creates another avenue for music promotion, allowing you to highlight relevant content, publish blog articles, and share news and updates. It can also be an excellent tool for collecting fan sign-ups in exchange for offering a newsletter to advertise new releases, merch, tour dates, and more to your most dedicated fans. To ensure your newsletter resonates, create a sense of exclusivity, making your subscribers feel they are gaining access to something truly unique and valuable.

Overall, creating a website has always been challenging. Gone are the days when you had to navigate the complex process of building a site from scratch. Nowadays, tools like iMusician Artist Pages make crafting a professional music website simple in just a few clicks. Artist Pages combine your catalog, bio, tour dates, and more. You can create a central site for your label alongside individual artist pages for your artists to showcase their work.

A good PR campaign alongside your upcoming release's distribution can push your artist to the next level and help them reach new fans. A PR agent can be expensive for a new label, so you can be your agent by contacting websites, magazines, and blogs 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 interested in your artists' genres. 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.

This might be new to you, but streaming platforms like Spotify, Deezer, or Amazon Music offer opportunities for brands or businesses to run advertisements. As a label or artist, you can use these ads to promote your artist’s brand-new release or a playlist to the platform’s subscriber base. Options typically include video ads, audio ads, or even podcast placements.

Like selected streaming platforms, social media channels like Facebook, Instagram, TikTok, and X offer robust advertisement options. Ads on these platforms present a powerful way to reach a broader audience, especially when organic reach falls short. These ads can enhance brand awareness, boost streams, and increase sales.

If your artist has a new music video on YouTube, consider using YouTube Ads to promote it. One common mistake is spending lots of money on a great music video but neglecting to allocate funds for promoting it. Ideally, half of your budget should go toward advertising. Your artists’ songs should be heard, and their videos SHOULD BE SEEN!

Stickers, flyers, posters...old-school, you think? Maybe. However, depending on the genre or niche in which you are releasing music and your location, these can still be important. For example, posters in big cities like Berlin remain a popular way to promote album releases or upcoming tours.

As with all promotional strategies, the ultimate key is to opt for methods that work for your label and your artists. Items like stickers or flyers with physical albums (CDs or vinyls) may be a hit or might not be worth the effort and cost in the long run. Experimenting with different methods is the only way to know what resonates with your audience.

Securing synchronization opportunities for your artists can be well-rewarded. Getting a song featured in a TV show, Netflix series, or video game boosts visibility and can be highly lucrative. To pursue sync deals, ensure your artists are registered to a collective society such as BMI and have instrumental versions of their tracks available for music supervisors.

Compilations are another valuable avenue. They present a great way to collaborate with other artists (if you're curating the compilation) or with different labels (if your artist contributes to a compilation). This can help broaden exposure and foster industry connections.

Booking live performances —whether concerts, events, or festivals — can be time-consuming but essential to promoting your artists. Playing live is also a natural progression for most musicians and an excellent way to build a fanbase. Likely every artist will eventually want to perform their music in front of a live audience.

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. If you’re looking for guidance, you can check out our articles on booking a tour as an independent artist and how to get booked for a festival.

As mentioned earlier, digital distribution is an absolute must for musicians today. Statistics indicate that most music consumption comes from audio streaming (32%), video streaming (31%), or radio (17%).

That said, physical records should be noticed only partially. Purchased music, which primarily includes physical formats like CDs, vinyl, cassettes, and digital downloads, still accounts for about 9% of total music consumption. While offering your artists’ releases in a physical form is not mandatory, it can be a profitable option for both your label and artists, especially for albums. There are a few factors to remember when producing physical records.

Organization – ensure you order physical copies with plenty of lead time to prepare for the release party and subsequent tours. This sounds obvious, but you’d be surprised how things like this can go wrong if you don’t leave enough time! Vinyl, in particular, requires extra attention. Vinyl records have been experiencing a resurgence in popularity in the past few years, which has led to a high demand for vinyl-pressing services. With an already limited number of pressing businesses, this surge can often result in exceptionally long wait times.

Pressing – don’t order too many products. It’s better to sell out your first batch of products and make more than to have thousands of CDs sitting around getting broken. Although many CD production companies offer discounts for larger quantities (e.g., 1000 units being cheaper per piece than 500), don’t be too easily seduced. It’s better to sell less than to waste your money on unsold copies.

As a label, you’ll likely have varying contracts, splits, and budgets across your roster of artists and releases. For instance, 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 can be an invaluable partner. With our Revenue Splits, you can efficiently allocate music earnings among collaborators, including your label, producers, and featuring artists. This ensures transparency and guarantees that everyone receives their fair share of royalties.

Using Revenue Splits is straightforward. All you have to do is set splits for a new or existing release. iMusician will then collect revenue for you and distribute it to each collaborator based on your defined splits. For more detailed guidance, check out our FAQ article on Revenue Splits.

While iMusician helps collect your revenue, it’s still your responsibility to ensure your artists get paid (though iMusician simplifies the process by generating monthly check sales statements, making it easier to track earnings for all collaborators).

Additionally, managing taxes and VAT is essential for your label’s compliance and financial health. You can be liable for VAT depending on the status with which you choose to register your record label. Which rate, when to pay, and how to declare? In this case, contacting your local authorities qualified for government finances for businesses is best so you don't miss out on any critical declaration.