Starting a record label requires music business knowledge, industry contacts and marketing savvy. With the shakeup of the music business in the early 21st century due in large part to declining sales of physical music recordings and internet pirating, it is easier and cheaper than ever to start your own record label.
The primary business functions of a record label is finding artists, producing and promoting product, and getting it into online, broadcast and physical sales outlets.
Below is a list of what you need to start a record label
What Do I Need to Start a Record Label?
Running a record label is complicated, and education in the music business is vital to your success. Knowledge of contracts, publishing, copyrights, royalties, marketing, promotion, advertising, general business operations, accounting and more are necessary to navigate the complexities of the entertainment business. Music colleges offer degree and certificate programs in music business subjects, or you may work or intern at a record label before starting on your own.
Create a formal business plan for your record label. The plan will include the type of music you will specialize in, how you will record the music, how it will be manufactured into physical or digital product, marketing and advertising strategies, sales outlets, distribution plans. Many small labels partner with independent recording studios, engineers, producers, manufacturers, designers and distributors to keep costs down so the label can concentrate on artist and product development, marketing and sales.
Initial Business Paperwork
Obtain a business name registration and permit to do business at your local town hall and apply for a tax identification number by contacting the Internal Revenue Service. Apply for a state tax registration certificate from your state business regulatory office and secure a business checking account. No special license is required in any state to operate a record label. You may set up your business as a sole proprietor, limited liability company or corporation depending on your needs and the size of the business. Contact an attorney or accountant to determine the right structure for your business.
Contact an entertainment lawyer to draft contracts for you, or you may purchase stock contracts from music business suppliers. You will need to become familiar with numerous contracts and deal types, so consulting an attorney even when using stock forms for a project is recommended. Some of the more common contracts will be used between the label and artist, label and studio, label and publisher, label and producer. The contracts between the label, artist and publisher are perhaps the most complex, as they will contain detailed and complicated financial agreements regarding upfront payments and royalties.
When you are ready to release your first product, register with Nielsen’s Sound Scan service. This service tracks sales and broadcasts of music for tracking, rating and charting purposes. If you are also the publisher or songwriter of the music, register with one of the three primary performing rights organizations, Broadcast Music Inc., American Society of Composers, Authors and Publishers or Society of European Stage Authors & Composers. These organizations collect and pay royalties to publishers ,and copyright owners when music is purchased or broadcast. If you are the writer, or have purchased ownership of a musical work, contact the U.S. Copyright Office for a new copyright.