Anyone who’s starting a label wants to achieve boss status as fast as possible. However, if you’ve never been here before, knowing what you need to achieve that status can be overwhelming. The problem is everything you need to start a record label is implemented over time and not all at once. How do you fight the anxiety and add the pieces at the right time? Because speed alone doesn’t win this race—tools, timing, and strategy must be combined.
Part 1: Initializing the Label
Company Structure
Company structure is a must when building a record company. LLCs are the weapon of choice for those who don’t need to issue stock like a corporation. Additionally, the diversification of the LLC should be determined based on capitalization and how many businesses will be invested into at the start.
Capitalization
Capital must be as cheap as you can get it. In all cases, your capital investors are looking for:
Interest on their cash invested (Lenders, Creditors, Banks, VCs, Private Person investors)
Royalty Shares for their cash invested (Fans, Small Private investors, Family and friends)
Credit for their donations invested (Grants & 501c3s, Family and friends, Crowdfunding from supporters and fans)
Credit for their labor (All production staff)
Accounting Software
You can’t get money if you can’t manage cash flow. A QuickBooks account is essential for the label that wants to succeed.
Publishing Accounts
All record labels need publishing accounts if they choose to administer publishing for their artists under their deals. However, as a new record company, choosing to do this will become quite complicated very fast if you do not have experienced staff to handle the workload. PROs and Mechanical royalty agency accounts need to be opened for your publishing wing to come alive.
Attorneys & Lawyers
Any record label is going to need a legal staff. Here are the basic lawyers that you should have on your team. When you’re starting off, begin with an entertainment lawyer and an accountant:
Entertainment
Corporate
Tax
Contracts
If you’re a label, you need to know how you want to sign people and what you want to sign them for. Contracts are the tools you use as a label to conduct business with your signers. Utilize your capabilities as a measure for what will be included in your contracts. Never use the "you never know" policy when creating your contracts because this can hurt your label and destroy the relationship between you and the artists.
Distributor
Distributors must be chosen based on the services they offer your label. They should be efficient at royalty processing and quality servicing to DSPs as well as physical stores. You must also choose a distributor that does not cut into your bottom line. Percentages may be better than a monthly or yearly payment depending on access and services beyond what’s advertised.
Part 2: Getting Down to Business
Signing Artists
Select artists that will suit your capabilities, connections, and capital. If the artist does not connect with these, do not sign them. Time is one form of capital that we cannot get back, so use it wisely every day.
Charting Software
No label should operate without knowing what the landscape looks like. Chartmetric is a great tool to check your stats as well as those of other artists related to you and the entire industry.
Part 3: Adding Bells and Whistles
CRM Software
Customer Relationship Management (CRM) software is necessary for managing all of your connections. You may think your phone is enough, but you need to make sure you stay in contact and nurture your top connections by email and text.
Royalty Administration Software
In addition to accounting software, if you plan on moving any kind of heavy royalties to multiple folks and your distributor’s royalty services are not keeping up with the pace or are costing your royalty receivers too much, you’re going to need to upgrade to a royalty administration software platform.
Part 4: Mo’ Money, Mo’ Money, Mo’ Money!
Credit Cards
Credit cards are highly expensive for new record companies. They are best used for flipping product only. However, credit cards can be used for record production after a fanbase is built and sales can be projected.
Merchandise Company
Print-on-demand companies are cool to start with, but they can take forever to deliver your merch to fans. Look for a private merch company to press your limited run orders or use them to supply your e-commerce operation as it gets up to speed when you hire packers.
Direct-to-Consumer Platform
In the age of streaming 2.0, a Direct-to-Consumer platform must be in your arsenal to receive additional funds from fans who want to spend more money with their favorite artist.
Part 5: Procrastination
Why Can’t I Sign an Artist Just Because They're Dope?
Because you’d be living life on the edge with no plan or strategy to succeed. You’ll just have an aspiration to succeed while wasting precious time and resources. Signing an artist is not the same as a music producer creating with an artist on the cusp of inspiration. Contracts are a serious obligation.
Do I Need All of This to Start?
Not all at once, but over the course of your first year, if you’re serious about winning and helping artists, you will end up with all of this.
Can You Help Me Set This Up?
The 60 Day Record Label Course can help you set up some of this, and booking a call with me will allow you to walk through the rest with more ease.
Check This Out!
If you're a music creative or executive looking to build your label or publishing company in 60 days or less, with a step-by-step foolproof process, grab the 60-Day Record Label Course and get it done today! You’ll gain the ability to get real funding, avoid contractual pitfalls, and keep the middleman out of your pockets. Click the link below to get started now! If you’re skeptical, grab the free guide, "10 Ways to Increase Your Record Label Profits," which comes with a free split sheet download.
Having the Proper Tool for the Proper Job
Using the right tools will make your label run efficiently, allowing you to skate out ahead of the pack and noise of everyone trying to do what they think is right.
Not Having the Proper Tools
Not having the proper tools will cause you to keep spinning around in circles. This ultimately causes you to waste your savings and capital and ruin relationships that you need to succeed.
Conclusion
If you were struggling with how to start a label, you now have the means to get it off the ground and become the mogul that you’ve always wanted to be. With a clear strategy and the right tools, you can navigate the complexities of building a record label and achieve the success you desire.
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