As the title might suggest, this is a simple, beginner's guide to setting up an independent record label that will hopefully answer some of the basic questions of 'How to set up a record label' for anyone thinking of getting into the business. These are some of the key points that I learned first hand as Director of A&R for Busy Boy Records.
This guide is intended purely as a guideline and in no way covers all the complexities and problems that may face a fledgling record label. The first thing you have to ask yourself is 'Am I ready for this?' Are you that committed that you should be committed? If so, you might be halfway there. If your label is going to be a success you are going to need a number of things to get started, including but not limited to: initiative, drive, communication skills, talent (A&R), money, business plan & strategy, contacts (or the ability to make them), the desire to work eighteen hours a day, and some good friends to keep you grounded during the highs and pick you up during the lows. The music industry is a business like any other business, and business people aren't always nice. The music industry is no exception, having more than its fair share of sharks. There's no such thing as a free ride. Unfortunately people who are desperate to be heard or close a deal are easy pickings; be careful what you sign and try and look like you're coming from a position of strength. Seeing through the BS and taking your time can save a lot of aggro later.
Know Your Market:
Whatever you know or think you know about the market you're about to hit is probably far less than you'd like to think. Remember the three R rule: research, research, research. Is there a market for your music? How big is it? Where is it focused? (Some music is very regional.) How did successful competition get to where they are? Find out about pressing plants, printers, distribution companies, fulfillment companies, designers, labels, publishers, mechanical copyright protection agencies, lawyers, and/or contract resources (you can find some pretty decent cheap contracts online that just need tailoring to your exact needs), etc…Check out special-interest music magazines, find out who the editors and reviewers are; these are the people that can help make or break a track. Make friends, speak to people, and forge contacts.
Depending on what formats you intend on releasing there are a few things you should know if you don't already. First off – the global music market is in decline – supposedly due illegal file sharing, but more likely due to the poor quality of material being released by the big boys. Majors are not investing in new acts like they used to; this however can play in your favour if you want to use your label as a launch pad; however, don't be fooled, the risks are high (which is why the big boys are all sitting on their hands). Secondly, although CD sales have slipped, vinyl sales are up (this however only applies to certain genres, namely dance, and to some extent, hip-hop) and of course digital sales are too – however, this tends to favour single tracks over albums or EPs.
Get Some Books:
There are a number of books, such as Music Business Made Simple: Start An Independent Record Label, explaining the ins and outs of running a successful record label. Buy at least one – you won't regret it.
Usually the first sticking point. Although it doesn't take a lot of money to put a record out it can take a lot to get it heard and to develop the artist's identity as a brand. Do you have enough money to get it to a point you're happy with? How many copies are you looking to put out? A couple of thousand, tens of thousands, or hundreds? If it's the former, you might be able to do it by smashing the piggy bank you've been saving since the age of six if not you're going to need some help. The two most common routes are a) the bank manager: 'Dear fascist bully-boy, give me some money you bastard…Love Neil'. Or b) a venture capitalist/investor. Either way you are going to need a business plan providing a complete breakdown of your business and marketing strategy, expected outgoings (running costs), potential income, what you expect to make over the next three to five years, etc…This can be quite daunting if you've never done this before but again, there are numerous online resources available depending on your territory; ask your bank manager about business angels or organizations that may be able to help. If you go for a venture capitalist/investor you will also need a good shareholders agreement; be careful what you sign, and make sure you retain the majority shareholding and control of the company.
'Ah yeah man, I've got this really groovy band, man – yeah, Swedish Potato Love Nest!' Are you objective enough about the quality of the music or the identity of the band/artist? What do other people think (and not just friends and family)? Make every effort to ensure your product is of the highest possible standard. Quite often when working with limited budgets tracks are produced at home or in small studios with limited capacities; it may be worth putting a little extra aside for mastering. Mastering in a pro studio can make something that sounded like it was spilling out of a bucket sound like it was blasting out of a church hall if you get the right engineer. That doesn't mean it can't be done at home – you just need to know your kit well; Cubase VST's spectrum analyzer can be an awesome tool in the right hands.
Are you going to press on CD or vinyl? Vinyl pressing in the States usually tends to be on flimsy cheap vinyl that one could be forgiven for mistaking as a paper plate. If you shop around you might be able to find the holy grail of 180 gram plus pure virgin vinyl. CD pressing nowadays is pretty inexpensive and if you don't mind paying a few extra pennies it might be worth looking for a facility with anti duplication technologies, i.e., ones that prevent duplication or playback of duped CDs. Shop around for quotes and make sure you are aware of all the other potentially hidden costs, such as printing, packaging, etc…If you're printing vinyl you'll also need to cut acetates and have plates made, so find out who the best cutting houses are. A sloppy cut can cripple you if you're on a small budget as anything printed from it will be unsellable. Make sure you have all relevant copyright notices, bar codes, etc., on your product and try not to print more than you realistically think you can sell at any one time. If you are not sure of your market, don't print more than one format or you'll find yourself with a lot of dead stock on your hands. If possible get the pressing plant to deliver the finished product in part to you and part to the distribution company and/or the fulfillment house.
Publishing and Copyrights:
Every recorded work (as long as you register them properly, that is) contains two copyrights. One for the song/composition itself, referred to as the 'publishing' – if you do not set up your own publishing division you will need to use a third-party publisher – dealing with the rights to re-record, i.e., cover, perform, etc…And one for the recording, known as the 'mechanical rights,' a percentage (usually between six and ten percent depending on the territory) that must be paid to the relevant agencies for each record pressed. The agencies in question will then redistribute the appropriate royalties to the artist/owner of the recording.
Here are some useful links:
ASCAP (American Society of Composers, Authors, and Publishers)
BMI (Broadcast Music Inc.)
P.R.S. (Performing Rights Society)
BPI (British Phonographic Industry)
I.F.P.I. (International Federation of Phonographic Industries)
Distribution will be your biggest headache and will need to be accompanied by some clever and not always necessarily expensive marketing. Getting product onto shelves can be a nightmare. Many distributors hide away a number of hidden charges in their contracts such as line charges and storage fees. Line charges are fees charged on a monthly basis for each title in stock – this is on top of the storage fee; fulfillment companies on the other hand usually just charge for storage and for products shipped. In addition to digital online distribution (think iTunes), some sites also offer cheap physical distribution, which can be an inexpensive and viable option but beware of companies charging for storage. Keep your options open; opt for one-year contracts where possible and use different distributors for different countries; this way if one distributor doesn't perform you are not restricted.
Marketing and Promotion:
If you did your market research in the earlier stages now's the time to capitalize on it. Your first set of test presses should be earmarked for the press, reviewers, and DJs where applicable. Get a good press pack together. Many people underestimate the power of image; the majority of press packs are sent out on cheap photocopied paper with little or no attention to design. If you have a good designer or a friend that can help you out, now is a good time to call in a favour. Get out to clubs and radio stations and try to meet up with people; putting the record in their hands yourself will leave far more of an impression than something received by post. If you have a bigger budget you might consider using an agent or ad agency, but be wary of costs and minimum commitment periods. The Internet is rapidly becoming an extremely efficient way of generating market awareness to a global audience and a means for testing new music popularity. Numerous artists have started using peer-2-peer file sharing networks to test market viability; whilst this is a good way of gauging popularity it is a double-edged sword. You find out how popular the track is but you lose potential sales in the process. Last but not least, you'll need a site, MySpace and/or Facebook page to help promote the music, yourself or your artists. If you do not have your own promotional web site Isotropic Media can help.
Licensing and Catalogue:
Sub-licensing tracks for compilations and reprint can be very lucrative if you have a decent catalogue. A good catalogue will not only attract sub-licensing deals but will also make securing good distribution contracts a lot easier too. Make the most of a work catalogue, work it, and it will work for you.
Your best friends in this industry (other than the local pizza delivery guys) will be your lawyer and accountant - I know, I know, unbelievable huh? Getting your contracts in order and keeping a tight reign on budgets and payments are two of the most crucial things you will need to do to keep yourself in business (to be applied with a little self control, buy Mumm's instead of Cristal for the first year or two).
We're in the Money:
Well, if you're lucky, you've worked hard, and taken the risks whilst being sensible, then you should make a fair bit more by yourself than signing or farming out to another label. Sit back on the couch, pop in a freshly rolled Cuban – congratulations, you are now a music industry mogul. Good luck.
Yannick Lord is a Los Angeles based Fashion, Glamour, Commercial and Lifestyle photographer with a passion for music, art, design, entertainment and technology. Please feel free to explore these pages for more news, reviews and, of course, my photography.