I have owned my own record label for over a year, now, and it was very easy to get started. All it takes is a little money, a little determination, and a little research. If you’re an independent musician who is tired of searching for a record deal, or if you’re business minded individual who is looking to make money in the music industry, this is the perfect guide for you to read.
Now, before you run off and decide to start your own label, ask yourself why you want to start a record company. As I said, it is very easy to start a record label, but it is still a lot of work after you’ve got it up and running and you have bands working for you. If you just think it would be cool to say you own a record label, you are wasting your time. If you’re actually interested in owning a company that is involved in producing, marketing, and selling records, then you should continue reading this.
The first few things you will need to think about before we get into the legal stuff, is what kind of label you will want to start. Are you only interested in operating a small independent label that only focuses on one type of music? Do you only want to start a label to distribute your own music? Do you want to compete with the big labels by signing lots of artists from many different genres? How much money do you have to invest in a label? It’s a lot to think about, so I would suggest spending a few weeks contemplating these things before you jump right in.
After you’ve worked out what kind of label you’re looking to start, pick up a couple of books on music business and entertainment law. Familiarize yourself with basic principles, like copyright laws and how percentages work. Make sure you understand common terminology, like “mechanical royalties” and “master rights.” After you’ve brushed up on your lingo and some basic facts, we’ll move on to the legal stuff…
Okay, You will need file for an LLC, a DBA, or a Sole Proprietorship license. If you plan on including a partner or developing a staff at any point, I would suggest filing for an LLC. An LLC is a Limited Liability Company. It is not unlike a corporation in the sense that you can have multiple owners, managing members, and other employees. It is also a safe move for any business because if you are sued, it will protect you from being sued as an individual. An LLC can be filed for online through a government website. You may want to have an accountant do it for you, but you could also learn how to do it online by reading “how to” guides and following the instructions. The cost of an LLC will vary depending on the state you live, but it usually costs around $200. It is also important to file an LLC for tax purposes.
After you have established your LLC, it is time to move on to some other steps you will have to undergo. I suggest finding an attorney next. To be more specific, I suggest that you find an entertainment lawyer. Finding an entertainment lawyer can be tricky. There is not an abundance of them, like criminal lawyers or “ambulance chasers.” Entertainment lawyers can be very selective as to whom they work with, as well. When you get one on the phone, make sure you have a convincing sales pitch for your company. However, don’t be discouraged if it takes you a while to find one.
Next, we will move on to finding a distribution company. Distribution companies are important because they’re the people who get your music into stores. There are a lot of ways you can go about finding the distribution company that is right for your record label; you can search online; look through the yellow pages, to find one locally; or even purchase books that contain the addresses and phone numbers of distributors, wholesalers, etc. You may even consider only using a distribution company to handle your digital distribution, and do the physical yourself.
Once you have accomplished all of the above, you will have successfully established your own record label; now you just need to sign some bands.
