How to Start Your Own Indie Record Label in Just a Few
Simple Steps!
by Ty Cohen
Published on this site: May 4th, 2006 - See
more articles from this month
Since it is so difficult to get a contract with a big label
and the competition for jobs at the big labels is brutal,
you may be better off starting your own record label. However,
before you even begin your career in the music business, you
need to answer several questions.
It doesn't matter if you are starting a band, are wanting
to start your own label or even just setting up a recording
studio.
Define Your Business Goals
You need to sit down and write a formal business plan.
I know that sounds like total dullsville, but, believe me,
you need to do it. Without careful planning you will only
be wasting both your time and money. While the music business
is glamorous, it is also a cut-throat business and the more
experienced players will eat you alive and leave you bankrupt if you don't take the
time to properly set up and plan your business.
You need to determine what resources you already have and
what resources you are going to need to get the business off
the ground. List items such as: the people involved, equipment
owned, experience in music, experience in business, available
working capitol, a place to work from (it can be your basement
or garage, but you will need somewhere to work.), business
contacts, music gigs, available working capitol, etc.
No matter how musically talented you are, you cannot start
your own record label without working capital and some basic
business knowledge. If you don't have it, find a partner who
does if you want to be successful, or take a look at the financing
guide available along with the How to Start a Record Label
course over at www.TheUltimateRecordLabel.com
Products and Services
What are you going to produce and sell? Please don't answer
music. You need a more concrete plan then that to be successful.
Will you be making CDs of your live performances? Or will
you be writing and recording your own original compositions?
In either case, be specific. You will need enough material
to record an entire CD before you can sell it. Don't forget
that if you don't own the copyright to the lyrics and music,
you will need to get permission to use them or risk being
sued for copyright infringement. Trust me, if you are successful and
using someone else's copyrighted material, you will get sued.
So, draw up a royalty contract with the copyright owner before
you record the material.
Competition
I don't necessarily mean who is recording the same kind
of material. I assume you already know that. I mean who are
the other independent labels.
These are some of the things you need to find out:
- What is the going royalty fee?
- How much can you charge to rent out your studio? Or what
should you be willing to pay to rent someone else's studio?
- Who are the best people to distribute your CDs? What
will it cost you? Can you negotiate fees?
- What is your Unique Selling Proposition? In other words
what make you stand out from the pack? How are you better
than all of the others like you?
- Have you created a "brand" yet? By "brand"
I mean a something that makes you unique and different.
KISS and Madonna certainly have a unique brand. You need
to develop your own "Brand"
You'll learn how to do this and everything else needed to
start a record label by visiting www.TheUltimateRecordLabel.com
Promotion
Who are you going to sell your music to... who is your
target segment? Teens in general, rap fans, jazz, country,
hip hop fans, etc? How do you plan to reach your target audience?
Will you send letters to the DJs, advertise in the local media,
seek free publicity by doing free concerts, make sales calls,
use an internet website, etc?
In other words, if you aren't familiar with marketing, you
better get familiar or find someone who already is to work
with you. In the competitive music business, you must shamelessly
promote yourself every chance you get. The public has a very
short memory for artists and unless you keep your name out
there in front of them, the will completely forget about you. Think about all
of the "one hit wonders".
Establish Your Business
Decide of a legal structure. Your choices are sole proprietorship,
partnership and corporation. Because of all of the different
skills needed to operate your independent record label, partnerships
are the most common form. Unless you already have a lot of
money or property, a sole proprietorship or partnership should
be sufficient. You can always upgrade to a corporation when
you have sufficient assets to need the protection incorporating
provides.
If you choose a partnership, draw up a partnership agreement
that lists in detail what each partner brought to the company,
what their duties and responsibilities are and how they will
share profits or losses. A partnership agreement is extremely
important to avoid future problems.
Next, go register the business with the proper legal jurisdiction.
Once you are registered, you can rent space, lease equipment,
open accounts with vendors and do all of the other things
necessary to operate a business. Join the professional organizations
both in and outside the music area. It never hurts any business
to join their local chamber of commerce. In fact that can
be an excellent source of referrals.
Working Capital
Now that you are a registered business, you need to start
a business checking account and get a credit or debit card
so you have a way to pay your business bills. You will also
need to set up books to record income and expenses to use
for later tax reporting. If you aren't familiar with the tax
requirements for small businesses go to your local small business
development center. Most states have them and they provide
either free or low cost assistance, advice or classes so you
can learn what is required by law. Alternately, you can hire
an accountant to do your bookkeeping for you.
I'm sure you heard the horror stories of a performer robbed
blind by their accountant or business manager. So, even if
you can afford to hire a business manager or an account, learn
about keeping books and the legal requirements so the people
you hire can't cheat you quite so easily.
Insurance
You will need some type of business insurance. Consult
with the small business development center to see what they
recommend you should get. You can ask an insurance professional
but, unfortunately, they will tell you that you need everything
and that really isn't true when you are first getting started
in business. When you become successful, then you will need
all of that.
Conclusion
Careful planning will get your independent record label
off to a good start. If you take all of the necessary legal
precautions you will save yourself a lot of trouble in the
future.
Ty Cohen is the acclaimed author
of over a dozen best-selling music industry "How to" books
and courses. Grab a copy of Ty Cohen's latest book title
by visiting http://www.MusicBooksByTy.com and
to learn more about starting or turning your existing record
label into a world wide, profit pulling record label visit: http://www.TheUltimateRecordLabel.com/landing_page.htm
Start a Record Label Today!
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