Music labels are lately catching up with the mainstream music industry. Social media and alternate channels have helped individual record labels to work and prosper in the music market equally. Things are changing again, so you will have to work on the recent trends to successfully establish a record label business.
The Internet has played a major role in transforming how music is consumed. With so many music streaming services around and a variety of music, the way record labels work has changed as well. The medium provides a sea of opportunities for independent record labels to score big in the music and entertainment industry.
Things will keep changing with time, but here’s a steady plan you can use to establish a successful record label by investing little money.
Here are the 10 Steps to Start a Record Label Business
1. Create a Record Label Business Plan
A proper plan is important. The music industry is already going through a lot of changes. You will have to make a plan which will have a way out in different situations. Remember that a good business plan helps a business to perform better financially.
Set your goals, business objectives, and targets to chalk out a perfect plan for your record label business. Some of the basic topics that must be included in your record label business plan are as follows:
- Executive Summary
- Company Details
- Industry Overview
- Target Customers
- Management Team
- Operational Plan
- Pricing Plan
- Marketing Plan
2. Legality For Record Label Business
Registering your business is important. Record label businesses often miss out on important legalities. Make sure you hire a good lawyer who will help you to register your business with the required permits and licenses. Registering as an LLC will help you stay free from any personal legal obligation.
3. Arranging Funds
Starting a record label is not a cakewalk. The business faces a number of challenges, so you have to be ready with the investment you want to make. You can finance your business with a loan, but do remember that record labels run the risk of coming across as a vanity project.
You may find some investors as well if your music idea is unique and has a clear selling proposition.
4. Naming Your Record Label Business
Picking a name for your record label business is your next step. Being a music record label, try going for something short and not much complicated. Do check the availability of the same for a website, social media handles, and trademarks.
Also, make sure you register your label under the Federal Trademark Registry. Hence no one can plagiarize any of your original work.
5. Open a Business Bank Account
As a legal business, you now have to apply for a business bank account. A good accounting system will help your business to stay free from any financial error. Maintaining proper books of accounts and separate transactional accounts will help you to easily file an annual tax by making taxes more manageable.
6. Setting Up The Music & Recording Studio
The crucial part of the whole record label business. This is something that will either make your label or break your label. You need to have some great music initially, particularly different from what others are doing. Try to pick up music that is trending in the industry, or may pick up soon in the future.
Finding the right music is very important. So, you need to invest in a good recording studio with all the latest equipment and editing software.
7. Distribution Strategy
Once you start recording music, you will have to host releases. Finding the right distribution network is important. With so many streaming apps available now, it’s no more difficult to sell music like before. Choosing the right apps and mediums will help you to promote the music and record label at the same time.
You can put your music online on Apple Music, Spotify, Amazon Prime Music, Deezer, Google Play, and more.
8. Finding Good Artists
Getting some good artists on board could be a deal-breaker for your record label. Once you know the type of music you want to produce, it’s better to set up a deal with the artists. Labels often can have any kind of deal you want with the artists. So it’s quite easy on your side to get a bunch of talented onboard for your label.
9. Promoting Your Record Label Business
Being an open medium business, promotion will play a major role in sales. As advertising has mainly turned digital, you can primarily focus on online advertising if you are planning to produce your music digitally. Investing a good amount in promotion is suggested if you are starting a new one. So do have a budget accordingly.
10. Establishing Your Record Label Brand
With everything, you could do is over now, wait for the figures. Initially, you may not see much success. But maintaining the consistency of good music will help you to establish your brand. Don’t look for profits initially. Remember that good music will bring money, but for the first few quarters, it’s all about releasing quality music.
Frequently Asked Questions on Record Label Business
How much does it cost to start a record label business?
The record label is a large industry sector across the world. The cost will largely depend on the scale of operation and production output. However, on a small scale, the cost of starting a record label business will be around $500 to $ 25,000. The investment will rise if you plan to operate on a larger scale.
How profitable is a record label?
Again, the profitability of a record label business will depend on the business planning and turnover of CD sales. On average, a record label business owner makes around $10 for each sale of a CD.
At present, independent record labels now have immense opportunities in the growing online music market across channels.
Hope this in-depth guide will help you to establish your own record label business.
About the Author: 99businessideas.com led by Rupak Chakrabarty is committed to helping beginners, entrepreneurs, and small business owners in starting, managing, and growing their businesses.