The music industry is no easy gig, but it seems like everyone wants to get in it! It’s no wonder it’s saturated with all kinds of bands and artists. However, today, we also have the advantage of having more platforms than ever before to distribute our music. Have you considered starting your own record label and signing yourself to your own record label? Maybe you should!
Here in the United States, we’re lucky to have access to the basics of the record industry at our fingertips.
You no longer need to be signed to a record label to make and sell records, but you may want to record and distribute your own work as a way of keeping control of your creative output and retaining ownership of your music.
If you’re wondering about how to get your music noticed, or you’re considering setting up your own record label, we’ve set out to answer all of your burning questions in this article.
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How much does it cost to start a music label?
This is a difficult question to answer because it depends on whether you’re doing this out of your bedroom (and if you already have the recording equipment or not), or whether you’re building up a label from scratch.
On average, the cost of registering your business in the U.S. is $750.
However, you’ll need a lot more than this if you want to start a successful music label.
Around $3,300 will cover licenses and permits as well as accounting services, while quality equipment could cost you anywhere in the region of $200,000, and a studio facility, or remodeling a different venue, could cost you around $100,000.
These are just ballpark estimates, and of course, it’s possible to do these at a lower cost.
However, if you’re serious about starting a music label, there are many other expenses you need to consider, such as marketing your business, insuring yourself, workers, and the building you’re recording in, as well as creating a website, designing a brand and of course the cost of any other business start-up expenses.
Profitable Venture provides a good breakdown of the costs on their website.
Can an LLC be a record label?
Yes, a limited liability company (LLC) is ideal for most record label businesses, as it’s easy and inexpensive to set up, and has the least administrative requirements of any formal business entity.
An LLC takes the best parts of corporations, sole proprietorships, and partnerships and transforms these into one business entity. They offer owners liability protection, a flexible management structure, and certain tax advantages.
However, they can be costly to sustain, as once the LLC is formed, you’ll be required to pay annual fees and taxes to the state. The cost of these varies between states, but can be as high as $800 per year.
Can you make music without a label?
Anyone is free to make music in the comfort of their own home. When it comes to distribution, it’s also possible to do this without a label, too.
If you’re yet to be signed by a label, you can still release music on streaming sites such as iTunes, Spotify, Apple Music and other major platforms.
You can also collect royalties from sales and streams by releasing tracks through an independent music distributor – sometimes known as a music aggregator. These act as a go-between for unsigned artists and online music stores.
To distribute your music through DistroKid, all you need to do is pay a small annual fee and upload your music online. Or if you’re fortunate, you can get invited to distribute your music with more boutique distributors like The Orchard and DashGo.
Another big thing to consider is licensing music from others.
You don’t need a license if your music is 100% your own, but if you’re covering songs or remixing someone else’s track then you may need a license to be able to release this.
Some countries, such as the UK, don’t require this, however in North America, you’ll need to get a Mechanical License in order to be able to release the track.
For remixes, a Master Use License is required for worldwide distribution, and, if you’re using samples, you’ll need both – a Master Use and Mechanical License that will then enable you to release the track worldwide.
Music licenses are available from several companies such as Songfile and Easy Song Licensing. It’s a good idea to do some research, as different companies offer different services and some may be better suited to your needs than others.
Can you distribute your own music?
If you want to distribute your own music, there are several ways in which you can do this.
Like we said, you can distribute your music through an Independent Music Distributor and there are also many streaming sites out there that allow anyone to upload their music, whether they’re signed or not.
It’s also a good idea to sign up to a performing rights organization (PRO), as this will ensure that you receive royalties for your music whenever it’s played in public venues or performed.
The two main PROs in the US are BMI (Broadcast Music, Inc.) and ASCAP (American Society of Composers, Authors, and Publishers), however, there are a whole host of others out there aside from these two mainstays.
If you’d rather leave it up to a professional to manage this kind of thing, you can pay a small commissioning fee for a publishing administrator to oversee the publishing and distributive rights of your music.
This means you’ll still get your share of royalties when your music is played, even without publishing it yourself.
If you’re serious about distributing and publishing your own music, you could consider forming a legal business entity to handle fees, taxes, and transactions, which can then be kept separate from your personal finances.
This can be ideal for bands, as there’s multiple members involved and each will have different roles or levels of input. By keeping things on the books, it becomes much easier to organize the division of labor and compensation with minimal arguments.
We also highly recommend that you get your music copyrighted, to protect you in any potential legal battles. If you publish your own music, you are already the legal owner of the copyright to your songs.
Otherwise, you’ll need to register your music with the U.S. government’s copyright website and pay the fee, which is around $35.
More than anything, this is an insurance measure, as without formal copyright you lack access to certain legal remedies.
If you’re in a legal battle with an artist who has “stolen” your melody or lyrics, but they have their song copyrighted and you don’t, it’s very unlikely that you’ll win the legal battle.
I love running my BeatCurve record label. There’s so much to learn and explore in the growing and constantly innovating music industry. Now it’s time for you to launch your label!
