Music Business: How to Start a Record Label

Last Updated on March 13, 2023 by Josh McKenzie

Starting a record label it’s the dream, right? To be in charge of a company that not only creates fantastic music but makes you money in return – who wouldn’t enjoy that?

But setting up your own record label is by no means easy! To help, we’ve laid out the essential steps below.

When creating a record label there are a million things to consider. But never fear, we have laid out the importance of each of these factors and analysed their importance in a functioning record label.

So how do you start a record label? Firstly, you have to understand your vision enough to articulate your future record label’s sound, name and brand, and financial objectives for the initial years of operation. Then to manage your brand’s image, your social media interactions, the quality of your musical production, the contractual responsibilities you have toward the company and your employees, and the financial obligations you have (which varies depending on your geographical location).

What should I do first to set up a record label?

Creating a record label is a very difficult job. From the offset, you are in competition with larger, more established record labels. The only difference between them and you, is you. So, make that difference count. Use your individuality, and let the company embrace that:

Choose your sound – this is a fundamental decision to make when setting up your record label. You need a sound that represents you, that you are happy with, and that you can stand behind. If not, you could end up having a roster of very diverse musical artists, but you don’t necessarily believe in any of them. And remember, once your label is set up, artists will flock from all over to be signed by you. Having a clear, decided sound will help you decide which artists you like best and who you want on your label.
A financial objective – everyone wants to run a record label. A job where you are producing music with bands you truly love listening to? That’s the dream. But it costs. The production of music, both physical copies and actual recording time required to make said music, is an expensive endeavour. Therefore, before you commit to this job, make sure you know how much financial input you want to make, and what output you expect back.
A name and brand – one of the most important decisions you will ever make in your label’s entire career. You need a name which embodies your company. We suggest studying the competition first, see what names are popular, which are not so popular, and why they are popular, or not. The best tactic is to put together a number of potential names and try them out on friends and family. This honest feedback may hurt, but it will save you years of embarrassment. Once you’ve settled on a name, create a website and social media campaign around that name, then legally ensure it is your property which your local government.

Record label essentials

Now that you have done the proper planning, you are ready to lay some foundations for your record label. But what essentials do you need to start a record label? Never worry, we’ve listed them all below:

Establish a BRAND – similar to naming your company, a brand will be the first impression that your company has upon most people. Which means you have to make it a winning impression. We suggest taking some time to work on your company’s name and logo: it has to be something that is simple enough to be mass-produced cost-effectively but striking enough to hold an onlooker’s attention. Therefore, it is important to take your time and get it right. Of course, you can design it yourself but please remember that this logo may be your label’s aesthetic for decades to come, so do not be afraid to hire a professional.
Establish a WEBSITE – This will be one of your first costs upon start-up, but in the increasingly digitised world of the 21st century, it is an essential. Please note, that this online presence should not be restrained to just a website. Once your domain is live and working, begin to work on your social media presence immediately – it can drive traffic to the site and, if used properly, can be free marketing. Again, all of this can be done by yourself on sites like WordPress, but we suggest hiring a professional to create a website that showcases the brilliance of your label to its maximum potential.
Become a MASTER MASTERER – cute wordplay aside, it is of the upmost importance when beginning a label to ensure your music is as professional as possible. You don’t want to risk a potential revenue stream by sending across music made in a producer’s bedroom studio. Not that brilliance can’t come from said bedroom, but the difference between a professional mix and rendering and an amateur one is worlds apart. Remember, to make money you have to spend money – hire a master masterer if you can’t create a professional mix yourself
Promotion people – an underrated but incredibly vital aspect of starting up your record label is promotion. At its simplest, people need to know you have set up a record label. Therefore, take advantage of the modern, digital world. As soon as possible, get your website established, alongside multiple streams of social media. This will help maximise the potential reach of your label, and your subsequently released music. Again, this can be done by yourself but it may be worth hiring a professional if you can spare the cash
Contracts – as your business begins to take off, hopefully, you will start to make money. Or more specifically, the artists on your label will begin to make money. But how much of this money do you get? That is why you need agreed upon, legally binding contracts between both parties. Although this may seem like the lawyers are coming in between the musicians, it is essential that your company and the artists you represent can make a living. You should negotiate your terms and agreements and get it formalised in writing as soon as possible – if just to avoid any potential disputes about finances down the line. We strongly recommend hiring a professional for this aspect of the company’s growth.
Finances – just as important as getting your contracts properly organised is managing revenue streams. You need to know everything from how much money each band is owed per stream of their song, also known as royalties, to what is a reasonable booking fee from a venue for your band. In addition to this you need to understand your tax situation: how much you have to pay and when. Of course, this varies from region to region, so we would encourage you to speak to your local financial advice bureau.