How Can I Start a Small Record Label?

29 Sep
business loan for startup

How Can I Start a Small Record Label?

The music scene has changed significantly in the past two decades. Not only does the shift in music taste of younger generations affect the music industry but the rise of streaming services has also created significant changes that require adaptation from artists and record labels. Regardless of the changes, the industry remains exciting and full of opportunities for those who are interested in building a music business, especially here in the state of Georgia. As experts in business loans for startups in Atlanta, as well as the nation, First Liberty Building & Loan, has had a chance to meet with many entrepreneurs who have expressed a passion for starting their own record labels. If you happen to be one of them, here are a few important steps to get your started.


Steps to Start a Small Record Label 

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Step 1: Pick a Name for Your Label 

Your label’s name plays a monumental role in forming your brand’s perception and helping you stand out from other competitors. Therefore, it’s important that you do some thorough research and pick out a unique name for your business. To check for name availability, look up for your state’s database of corporations and LLCs or visit the National Business Register’s website. If you plan to build a website and create a strong online presence in the future, which is a given, make sure to visit different domain name registrars’ websites.  


Step 2: Choose a Business Structure 

Though many indie record labels often skip this step, as financial experts, we highly recommend you form a legal entity for your label due to the benefits that come with it. First of all, by having a legitimate business, you will be able to open business bank accounts and separate your business spending from personal spending. Secondly, you will be entitled to various tax benefits, especially if you register your label as an LLC. Moreover, a legal entity helps protect you and other business partners from personal liability if something goes wrong with the label. Depending on the state, the cost to file for an LLC may vary. As of 2020, the average amount of fees to form an LLC in the U.S. is $132 


Step 3: Write a Business Plan 

Did you know that companies that have a good, solid business plan grow 30 percent faster than those that don’t? The same goes for your record label – the more detailed your business plan is, the more likely you will be to overcome challenges and successfully scale your label in the future. A business plan also helps your record label look more legitimate to future investorsFor more information on how to create a good business plan, check out our previous article on this topic. 


Step 4Find the Music to Sell 

business loan for startupMusic – the bread and butter of your record label. Starting out as a small record label, we recommend you to focus on only a few genres to set the tone and set yourself apart from other labels in the market. Considering how crowded the industry is, curation is the key to success. The question now is, how can you find music to release? Reflect on the niche genres you want to pursue and start with local artists and/or musicians. Spend time on sites like ReverbNation, SoundCloud, and Bandcamp to find talents that may be in your local area. Use every social media platform (Facebook, Instagram, Twitter and YouTube are crucial!) to let your followers know that you’re seeking talents for your label. Most importantly, make sure that you conduct a thorough background check on the artists to make sure that they are worth your time and investment. 


Step 5: Sort out Distribution 

There are two different types of distribution – digital and physical. As a new small record label, you should start out with digital distribution to get your name out and ensure that your music is accessible to as many listeners as possible. The final goal is to have your music available on popular platforms like iTunes, Google Play, Spotify, etc. In order to get there, consider using music distribution services like LANDR and TuneCore. Don’t forget to research in advance and find out all the hidden fees involved in using these services. Once your brand is well-established, if budget permits, you can start thinking about physical distribution. 


Step 6: Set up Artist Deals and Recording Contracts 

Even though many young music companies are built on informal relationships, it’s still best to have deals and contracts in place to protect the rights of all parties involved. Being an indie record label, you have the chance to flexiblnegotiate the terms with each artist until you reach an agreement that satisfies both sides. Due to the complexity of music contracts, it’s best to hire a music attorney who can take care of the legal side of the business. In case you lack the budget to bring in a lawyer, make sure that your contracts include the following terms: 

  • Royalty rates 
  • Copyright ownership 
  • Number of singles over a certain period of time 
  • Expenditure on promotions 
  • Duration clause 


Step 7: Promote Your Brand 

It goes without saying – branding is a vital part of your business. In order to raise awareness and promote their first releases, many indie record labels rely heavily on social media and word of mouth. Though it is tempting to outsource the promotional jobs and have an agency handle this aspect of the business, you may not be ready financially to hire outside. Therefore, make sure that you have a strong online presence by building a mobile-friendly website and being active on different social media platforms. In addition, don’t neglect elements like print media or radio ads – they are great ways to reach the audience in your local area. 


First Liberty – Your Trusted Business Loans for Startups Experts 

Are You an Entrepreneur Who’s Looking for a Business Loan for Your Startup? We Can Help! 

At First Liberty, we are a big fan of entrepreneurs. They are essential to economic growth and local community prosperity. Considering how robust the music scene has been recently, we would love to help you jumpstart your record label by helping you find the best loan solution that you need to lead your label to success. 

In need of a creative financial solution? Contact us today at 770-253-4300 or by filling out the contact form on our website. Follow us on Facebook for updates and financial tips for your business.  

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