Starting a Record Label – Part 1 of 5

So, you want to start a record label?

Consider this: As sexy as the music business might seem, it is called the music business for a reason – it is business. So decide now, do you simply want to start a “record label” just so you can tell people you have a “record label”? Or do you want to establish a profitable business that breaks new talent (perhaps your own talent) and operates in the big leagues of the music industry?

Too often, we speak to potential clients that have major label dreams with only a minor understanding of what it takes to start a record label. Having advised numerous artists and business people on the ins-and-outs of starting a record label, we’ve decided to let you in on many of the steps it takes to form your business and begin operating. This primer will be presented in five (5) parts:

Part One: The Introduction

Part Two: Starting a Record Label – Forming a Business Entity

Part Three: Protecting Your Name & Other Intellectual Properties – Branding

Part Four: Basic Contracts for Operating Your Record Label – Signing Talent & Other Dealmaking

Part Five: Putting It All Together

Let’s begin. Purchase two books: 1) any book about the business of the music industry (Donald Passman’s “Everything You Need to Know About the Music Business”) and 2) a book about writing business plans. Once you have your vision, and a basic understanding of the business, write a business plan. Be realistic with your goals and honest with your expectations of acheiving those goals. Set an initial budget for starting your record label – be liberal in the amount of money needed to start and conversative in your expected returns. When you have the necessary capital, contact a lawyer that specializes in entertainment law with an expertise in the music business.

Your initial start-up legal costs could range from $2,500 – $10,000 (and maybe more in certain markets – e.g. Los Angeles, New York). Be prepared. But also expect your attorney to provide you with solid advice and business development.

In Part Two of Starting a Record Label, we’ll talk about considerations for forming a business entity – type of company, selecting a name, and the issues facing a company with investors and/or co-owners…

Click Here for Part Two