How To Start A Record Label: What Is Needed And How To Be Successful

Hey there,

Want to start your own record label? You’re in the right place.

In this modern digital age, learning how to start a record label business is easier than ever before. It can be done almost instantly! In this article I’m going to talk you through the key tasks to get a new shiny record label up and running quickly, efficiently and legally. Then the rest they say, is up to you….. and great music.

Firstly, What Is A Record Label?

Well, it is essentially what it says on the tin – a ‘label’ that represents the music of artists. There are two types of music record labels: major and independent (indie). There are only 3 major record labels in India and they are T-Series, Zee Music Company and Sony Music India. These major labels are so big that they have their own in-house distribution, press, promotion, and generally huge budgets for artists. 

Everyone else is considered to be an independent record label. Indies tend to outsource their promotion, press and distribution via third parties. Their budgets can be really small, or just as big as a major, depending on the success of the label. Hugely successful indie labels include the likes of Indie Music Label and Desi Music Factory.

Either way, if you are thinking of setting up a record label, then you will be part of the indie record labels.

Getting Started – Give Your Record Label A Name

Now you need to think of a name for the label. Now this might sound easy, but you’ll soon find that many of the good names are taken! You’ll need to think of something unique, that hasn’t been used by anyone else. Something you think accurately represents the type of music you want to release. For example, calling your label ‘Death Metal Records’ when you intend on releasing Bubblegum pop won’t work! You can have a look for record label name generators online, see which ones fit your music and your brand, then check if they’re available.

What Type Of Business Will Your Label Be?

You’ll need to decide pretty early on whether you want to be a sole trader, a partnership or a Limited Company. If you opt to be a Limited Company, then your label becomes a separate entity to you and you’d have to file accounts to Companies House and they will be available for the public to view. 

The pros of being a Limited Company is that your label name will be on the Companies House register, protecting your business name. It also protects your personal assets if the company were to fold. Not to mention that it adds more credibility to your label and shows prospective artists that you are a reputable company.

Or you could simply be a sole trader – that’s just you doing your thing (or with a partner) and submitting your self-assessment accounts each year. However it will mean you are personally liable for any company debts if the company were to go under. If I were starting a brand new record label, I would personally opt for a sole trader or partnership rather than a limited company. If things start to do well then I’d register the company as a Limited company further down the line.

Branding Your Record Label

Create A Brilliant Brand

Branding is crucial for any business. Firstly, you need a logo as it will go everywhere – on CD/vinyl sleeves, contracts, websites, social media. It will define your label.

The style of the logo will be down to personal taste and also the type of music you will be releasing. If you take a look at various record label logos, you’ll find that many of them are quite simple. A lot of label logos are in a square box or circle with the label’s name in text. You might want something simple, or you might want something eye-catching. Either way, you should start thinking about style and colour schemes to help your designer.

Create An Online Presence

The most logical next step is to create some social media accounts. The absolute must-haves are Instagram, Facebook and Twitter. Make sure you post once a day on these sites and use the relevant hashtags to generate more traffic to your accounts.

You will also need a website. Try searching for a domain name (there are many websites out there that can help you). ‘.com’ websites are often better for record labels as their work is often international, however these are usually more expensive.

What Is Needed To Start A Record Label?

Get a Distributor

As a label, your key function is selling records. So, you will need a distributor to deliver your artist’s records to the stores. Most new labels can start off with a digital distributor. This will ensure that your music is delivered to all the major online stores/streaming sites. 

Getting your music on shop floors as a physical product (CD/vinyl) will require a different kind of distributor. These kinds of deals are harder to get because the costs are higher and the risk is bigger. As a new label, my advice is to just focus on getting a digital distributor.


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Join The Relevant Royalty Collection Societies

You should also register with the relevant royalty collection societies. When your artists earn money from the exploitation of their records, whether that be via their songs being played on radio, in clubs, on TV or in shops, those royalties have been collected on behalf of the artist. Companies exist in which to do that on the artist’s behalf.

Eikhon Axom Hoi Bhai Media is already member of various Royalty Collection Society. They will help you and your artist earn from your contents.

Subscribe To Us

As a record label, you will need to get ahead of trends and keep up with the latest changes and policies that affect the industry. You will also need to have a good grasp of the music charts – what’s selling well, and what isn’t.

A great place to start is to subscribe to Eikhon Axom Hoi Bhai Media which is a leading trade media magazine for the Indian music industry, and is essential reading for anyone who needs to understand the business of music. 

Building An ‘Industry Experts’ Virtual Team

The next important step is to build your team! By team I don’t mean a team based in an office somewhere, I mean a virtual team of industry experts that work directly with you and your artists to deliver the best possible product.

Finding Artists To Sign To Your Label

So this is where the fun really begins! Firstly, you need to set up an A&R function at your record label. A&R stands for Artist and Repertoire and is probably something you have heard a lot! Every record label typically has A&R Scouts, and an A&R Manager. It is the job of these A&R people to hunt for suitable artists for their label. 

As a new label you might decide to bring in some young and energetic music-lovers who are willing to go and scout some talented artists for a cut of the artist’s sales. Or, you might decide to do this yourself for now.

What Type Of Artist Should You Go For?

These days, record labels tend to only sign artists who already have a growing fanbase. That is simply because of the amount of investment you need to put into an artist, and if they don’t have any fans then the likelihood of the label recouping their costs is limited. Now labels look for artists who are already selling records themselves and doing well, with the media showing an interest and their local gigs are sell outs. 

How Do Record Labels Make Money?

So you may be wondering how to make a record label profitable and a viable business? Most of your income will come from royalties. Typically labels will take around 30-40% of an artist’s gross income, and you will be able to recoup any monies you have paid out for recording, producers, touring, promotion etc, right down to the packaging of CDs and paying for their burgers on tour.

Income can come from a range of sources such as record sales/streams, video views, concerts, merchandise, publishing, sync licensing (deals to place music in film/TV/games). But it is now well established that the only way an artist or a label can earn a decent amount of money regularly is through touring and merchandise. So make sure these are key considerations for any signing you have.

As the label, all monies for the artist will be paid directly to you. And it is your responsibility to work out your cut, and then pay the artist their remaining monies. As the label, will be responsible for issuing a royalty statement to the artist detailing all the monies that have been earned for each record. So develop a royalty statement template and keep a note of the accounting dates for your artists. 

As you will see, starting an independent record label is fairly easy in terms of branding, getting a digital distributor, getting on social media and websites. It’s the scouting of brilliant artists and the major financial investment that is the biggest challenge. 

Record labels will always have to take risks, which is why so many labels look for artists who are already successful. And that would be a good place for you to start. Start by signing up only 1 or 2 artists and work with them closely and as a team to build both your label and their music careers.

If you manage to put it all off, you will find an extremely rewarding career as a label owner. Just remember that iconic labels such as Indie Music Label started from just a dream too!

We hope you found this guide on how to start a successful independent record label useful! If you did, please share it with others that it may also be able to help. We’re here to help record labels and independent artists as well as creatives so please let us know if there’s any way we can help.

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