Business Overview

Do you have a passion for music? Do you love discovering new and original bands and solo artists? Perhaps you should start your own record label and present your new finds to an equally appreciative audience. With the Internet, it can be easier than ever to start at least a tiny independent, or indie, label and generate a response.

Who is this business right for?

You must love and recognize your definition of good music. Your communications skills are equally important since you’ll need to get unsigned bands to share your enthusiasm and be able to sell your music to listeners and possibly distributors, entertainment venues and other players in the field.

What happens during a typical day at a record label?

There are many facets to this business, so each day is exciting and different. Here are a few of your key responsibilities.

  • Creating a social presence online to generate enthusiasm and give prospective fans a taste of your offerings
  • Communicating with CD and vinyl pressing companies, logo and jacket artists, and other key vendors to create a quality product at the lowest possible cost
  • Attending concerts, networking with fans and industry insiders, generating fan interest in your signed groups and and assessing unsigned bands for possible deals
  • Drawing up contracts and discussing deals with talent and lawyers
  • Monitoring unit sales, and electronic download and streaming figures

 

 

What is the target market?

Go to bars, clubs and other performance venues where your signed bands are playing and find out who your customers are in terms of age, fashion, education level, and lifestyle. This will help you determine how to target and communicate with your audience.

How does a record label make money?

Music is sold today in a variety of ways, including through both digital and physical channels. Fans buy vinyl records, compact disks, MP3 files and streams from websites such as Spotify. In addition, labels can earn money through licensing deals involving use of the music in soundtracks in film and television, and in commercials and video games and other commercial outlets. Additional income might be generated from digital and satellite transmission, such as by Sirius Radio. And finally, some indie labels sign their talent to what’s called 360 deals, in which the label takes a revenue split for booking the talent in live shows, selling t-shirts and other merchandise and generating other associated income streams.

What is the growth potential for a record label?

Today’s music market is splintered, with more channels and sub-genres than ever. The cost of entering the market is also relatively small, with online-only distribution possible. However, unit sales can be modest. According to this source, about 90 percent of released music fails to break even. So you might want to keep the day job until your music breaks.