What is an independent record label?
An independent record label is a small to medium-sized enterprise. It usually operates without funding from major labels (Wikipedia, 2021).
Like major labels, independent record labels create and promote music recordings and music videos. These products are then packaged into digital, CD ROM, DVD, and other available formats.
What is the role of an independent record label?
Independent record labels and carry out the following eight functions :
- scouting for artists
- artist development
- managing your brand
- coordinating music production
- coordinating manufacture of hard and digital copies of the music
- music distribution
- music marketing and promotion
- enforcement of copyright for your artistes’ sound recordings and music video.
Six steps to follow when starting an independent record label
1. Choose a name for the record label.
The name of your record label should reflect the image you want to portray.
2. Register your company
In the United States, you would need to register as a Limited Liability Corporation or an LLC. It is a good idea in the USA to register as a LLC in order to operate as an actual, legal business.
As a business entity, you can register for a bank account or credit card. This simplifies the matter of business loan application, for example, at the Government’s Small Business Association.
In other countries, you would go to the Office of Intellectual Properties or Copyright Office to do so. Ask questions in order to confirm exactly what you need to do. It may be possible to go ahead and register later if the funds are not available.
3. Document a simple business plan
A simple business plan will help you to define many important elements of your company.
You will need to pay attention here if your company is formed with other partners. You would need a partnership agreement that states:
the percentage of ownership each partner has.
how each partner can leave the business.
how decisions will be made in the partnership.
who will be responsible for various tasks.
Issues related to salaries.
Please consult legal experts in your territory for guidance as this contract may need to be signed and may need to adhere to existing legislation.
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5. Obtain the required contract templates for artists etc.
In some countries, you may require a lawyer.
6. Obtain the required split sheets and music contract templates for artists etc.
It might be a good idea to consult a lawyer.
Twelve important questions to consider when starting an indie record label
- Do you want musicians to deliver a master, or will you go in on recording costs?
- Will you be paying advances, and if so, how much?
- If you have a very small budget, your
best bet is to try and convince your potential signings to keep any advance small so there is money left to promote their release.
- How will any royalties from releases be divided up?
- Will your artists (copyright holders) get
- a percentage, or will you split them 50/50?
- Will the label recoup manufacturing costs and promotional costs before paying?
- Will the artists be permitted to approve promotional expenditures over a certain amount? If so, how much?
- How many promos/free copies will the artist get? Over that limit, how much will they pay for additional copies?
- What is the length of the deal?
- Is the deal for just one album or several?
- Will the musicians be entitled to audit your books? How often, and what kind of notice do they need to give. I recommend that you consult an entertainment lawyer in your State before proceeding with contracts.
One highly recommended platform on which you can quickly start an independent record label
Let me show you a practical and easy way to start your own independent record label on a platform that I use for distribution.
After performing a wide search, I found that this platform offered the best deals for labels, with a single flat yearly rate.
This platform is well respected in the music industry, even by competitors.
You can distribute music as:
- a single artist/band – unlimited song uploads – $19.99/year.
- package of two artists or band names – unlimited song uploads – $39.99/year.
- five artists and band names – unlimited song uploads – $79.99/year.
- 10 artists – unlimited song uploads – $139.99/year.
- 20 artists – unlimited song uploads – $239.99/year.
- 50 artists – unlimited song uploads – $599.99/year.
- 100 artists – unlimited song uploads – $1199.99/year.
Nine features on the platform
- Pay one low, yearly price as a single artist. The prices for record labels are very reasonable.
and staggered depending on the number of artists in your label. You can start with as low as five artists.
- Music is distributed to over 150+ locations internationally. These include major platforms like TikTok, Amazon Music, Spotify, iTunes, Google Play Music, Apple Music and more. You will experience the thrill of satisfaction, as I did, of seeing your artist’s music online.
- Keep 100% of royalties earned after store fees are debited.
- Assign royalties to yourself and copyright owners as permitted by law. The system pays out the copyright holders and label and publisher. This reduces stress and strain on the label.
- Upload your artists’ music under your own record label brand.
- Add YouTube Content ID (additional cost). I would encourage you to add this feature since it means that your artists’ music can be monetized and protected from unauthorized usage on YouTube.
- Worldwide distribution of your artist’s music to over 150 stores around the world.
- Each artist receives a beautiful webpage with links to the major stores on which their album or single is sold. This is an easy way to share your links.
- Track sales and assign royalties to each copyright owner. This eliminates the stress of
manually paying out royalties, and you can issue royalty statements provided by the system. This would increase your image as a trustworthy indie label.