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Join Date: 08 Feb 2005 Location: UK |  Starting a record label. -
26-05-2006, 06:05 PM
Starting a record label isn't as hard as you might think. You make some records, you sell them and you're a label. You don't have to register anything anywhere, get anyone's premission (other than your artists;, obviously) or anything. People have started record labels by accident on the past so it can't be that hard!
Remember that, although many some have a relaxed attitude to running a label, real money is changing hands and it is possible to get into trouble if you don't protect yourself. That means getting as much advice as you can and knowing where you stand legally.
This section outlines the basics of starting a label and gives a few hints on how to make it profitable.
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OK, it's not like starting a sweet shop but the very basics are the same as any other business.
It's hard work and if it all goes wrong it can leave you with huge debts.
However, if you're prepared to put in the hours - and some safeguards - there's no reason why it should all end in tears.
And at the end of it all, you'll have a record company. 'Nuff said.
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It's never a word that sits well with musicians. But there's a reason why most record companies aim at a very narrow area of the market.
You can build contacts with the right record shop owners and DJs as well as journalists and all the other people who can help promote your acts.
Start off with a bit of research - look at the other releases within your chosen genre and think about what you're offering that they aren't.
Are you confident that you can corner the market in the up-coming talent within your field?
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It goes without saying that most label owners are either fans or musicians themselves. Why else would you work all those hours for so little money?
It's tempting to sign up all your mates and party. And if you don't plan to take things too seriously, then why not?
If you do want to take it seriously, your ultimate aim is to end up with a name that the punters can trust.
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 favourite genre.
Your eye for talent and relentless pursuit of excellence will guarantee that people will cheerfully sell their body parts for transplant in order to own your entire catalogue.
If you're going to achieve that, you'll need to be pretty selective about what you put out. That means being seriously objective about who you sign.
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It all sounds pretty dull but if you're going to get this off the ground you need too know that you're onto a winner.
Are there enough good artists out there to keep the tunes coming
Are there enough people who want to buy them?
If you don't already have a very good knowledge of your local band scene, you're probably in the wrong job but you can always top it up by talking to local promoters, studio owners, journalists - anyone who can give you more of an insight.
That way you'll know what you're up against and have plenty of material for the business plan you'll need for fund-raising.
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Thorny issue this one. If you read the books on how to do this 'properly' you'll find that you have no chance of making your label a success without a detailed and careful business plan.
On the other hand, if you talk too many of the people who've actually started labels, they've usually just winged it from the start.
If you're looking to borrow money or get a grant to set up your label, you'll definitely need to have something to show your potential creditors that you've thought this thing through.
It's something that's done for a reason. It's there to make sure that your business is going to work, so making bits up to impress people isn't going to help...
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Selling tracks yourself
The problem with running a small label is that you have to have enough money to press things up before you can start to make any money back.
The money may take a little while to start coming back in.
To start with, you'll be taking them around the shops and trying to persuade the owners to stock them. They'll do this on sale-or-return, so they'll only pay you for the ones that they sell, and only after they've actually sold them.
Using Distributors
Later on, you may get a distributor involved. They're the key to selling large numbers of records, as they'll take your records around shops around the country and persuade shops to stock them for you.
They don't buy records off you in bulk. You press them and send them to their office or warehouse. Once they're sold, the shops pay the distributor and then they pay you.
However, your distributor's contract will usually give them 60 days to pay you, and the shops will have 60 days to pay them.
Consequently, it could be quite a long time before you start to see some cash coming in.
Ideally, you should have enough money in the bank to press up 2 or 3 tunes before you kick off.
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People like accountants and lawyers and anyone who'll lend you a lot of money will want things in writing.
Likewise any distributor worth their salt will provide you with a pretty comprehensive contract. Most of these are for mutual benefit. It will safeguard your future interests and theirs and, if you've got it right, clarify any disputes that may arise.
When it comes to your agreements with artists and the like, some people are less formal. The BPI, AIM and everyone else will tell you that you should have everything written in explicit detail so that everyone knows exactly where they stand.
Many people write to us asking for standard, form contracts they can use with their artists. It's something we've looked into but all the lawyers we approached to write them advised us that they're a bad idea. No two labels are run in exactly the same way, and often terms change from deal to deal. Plus circumstances change - a few years back no-one would have thought that MP3s and ringt-tones would be such important sources of income for labels.
So if you go down the contract route, you should really get a qualified lawyer who specialises in the music industry to draw something up for your needs. You can find a music industry lawyer using a music directory or by visiting the law society web-site.
The main reason for doing this is to guard your future. Relationships based on a mutual love of music and a handshake can go very sour if a track takes off and starts attracting lots of money. That said, it's not always that practical ...
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Depending on how you decide to run your company, you might well end up paying for some or all of the studio time.
You may also want to appoint a producer to attend the session and make sure that your money is being well spent.
You can do this yourself or you might want to send along a musician that you trust, which may create less of an 'atmosphere' in the studio.
The recording quality in the studio is up to the engineer but you must find the right studio.
Do your research and check out as many as possible.
Rates are important but you also want an engineer who's experienced in your kind of music and an owner that you can do business with.
You might find you can negotiate preferential rates if you block book time for two or three projects.
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Think about numbers of copies, formatting and packaging.
The more copies you make, the cheaper the cost per unit, so it's tempting to press up a run of 1,000 rather than 500.
But are you realistically going to sell them all?
Look at other products - you may want creative, original packaging but will retailers find your furry overlay impossible to display?
A decent distributor will be able to give you a lot of advice on this sort of thing.
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You can find music contracts in the Other Downloads section |
Starting a record label.
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