The music industry has undergone some transformation over the last couple of decades. Our digital landscape has been instrumental in altering the shape of how we consume tunes, how artists make music, and how the business operates. One of the positive effects is encouraging a DIY approach to all areas of the industry.
This means that there is a propensity for musicians to have direct access to audiences. They can release their music via streaming platforms such as YouTube and Spotify rather than rely upon the costly physical media that has dominated the industry This also presents openings for entrepreneurs who want to start their own indie labels.
Is it as simple as waking up and deciding that you’re going to be a successful music industry leader? Probably not. There is a wealth of knowledge out there, however, to help you on your way. We’ll take a look at some of the key areas you should focus on along with some tips to make the most of the opportunities available.
While starting your own label can be fun and rewarding, it is not something that should be entered into lightly. The potential to introduce the world to some incredible artists is a privilege, and it is also a significant responsibility. It is in the best interests of both your burgeoning new business and the artists you want to represent is to do some prep work before diving in:
Understanding your goals. What do you hope to achieve by setting up a label? There are various different models you could adopt from operating as both label and distributor to niches such as those who release music primarily on vinyl. Start building your business plan by considering what you expect the outcomes to be. What will your consumers and your artists be experiencing in the best-case scenario?
Building your relationships. Even if you’re going it alone to represent your own music, at some point, you’ll still have to work with others: artist management, PR (public relations) reps, producers, and studios. One of the key tips for starting a music-based business is to gather a team of people who are smarter and better than you. Seek out those who have talents you don’t and build relationships with them.
Tax and Financial Aspects. Are you going to be operating as a freelancer, or will you be incorporating as a Limited Liability Company (LLC) to protect your personal assets? Each has its own tax requirements and benefits associated. LLCs are often subject to lower taxes than the self-employed.
We understand that you’re getting into this for the love of music and the opportunity to be instrumental in introducing artists to wider audiences, but it’s part of your responsibility as a label owner to make certain that your business, your assets, and your artists are protected. This means you need to embrace a range of legal and technical challenges.
One important thing you need to gain is a working knowledge of copyright, and how it works in relation to the music industry. At the most basic level, copyright is undertaken in two ways. Firstly, with regard to the composition, the copyright belongs to the songwriter. A separate copyright consideration is regarding the specific recording which usually belongs to the label unless otherwise agreed with the artist. Copyright is likely to affect your business in various ways including if an artist on your roster chooses to sample another artist’s work.
If your label is going to be successful, you’ll also need to become familiar with the tracking, collection, and distribution of royalties. Bands often keep track of their royalties through organizations such as PRS and BMI, but it is the label’s responsibility to collect these and divide them per the terms of the contract you’ve agreed on with the artist. As a label owner, you’ll be busy with multiple tasks. Many labels engage an accountant to make sure certain royalties are handled correctly.
Building Your Roster and Your Profile
One of the most interesting, fun, and rewarding parts of starting an indie music label is building your roster of artists. Chances are, you already have some idea of the genre you want to operate within, or even if you want to break outside those boxes and introduce the world to a more diverse range of music. How do you attract acts to your label?
Firstly, branding is your calling card to artists, the industry, and the public. Choose a name that reflects the music scene you’re representing, and what’s important to you as a label. Do your research to make certain that your choice of business name doesn’t fall afoul of any copyright or trademark restrictions. Some research on your name can also help you avoid logistical difficulties such as registering online domain names. You want to make sure your name doesn’t limit the markets you want to explore.
Be active on social media. Set up and use company accounts to reach out to artists and the public. Produce content that supports your expertise and your enthusiasm for the music you’re representing. Collaborate with others to make videos as well as podcasts or blog posts. This cross-pollination of content can help to reinforce your priorities as a label and to make you visible to the people who are going to appreciate your work.
Many label owners get into the business because they have a fierce passion for music. One of the 15 essential tips for starting a business in the music industry is to love what you do enough to do it correctly. Put in the time to understand the challenges of the industry and how you can best approach them, become an expert in the areas that affect both your business and your artists, and build your brand to build your relationships. Perhaps, most importantly, just go out there and do it. There’s nothing holding you back!