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How To Start Your Own Record Label: How To Set Up A Record Company - Part 1

Updated on March 2, 2013

How To Start A Record Label

Although it's clear that the music business is a highly competetive industry to be a part of, the internet has resulted in a much fairer playing field for both musicians and fans alike. Although all the musicians in the world are now in competition with each other, the internet also brings with it the potential for major success aswell as some very cool tools for musicians, viral marketing being one of the most effective.

The internet opens up a whole new world of opportunities that anybody can put to good use. In this day and age even a teenager can start a record label from the confinements of their own bedroom. However, establishing a reputation and building a customer/fan base will inevitably take some time and depends on a lot of things including your ability to pick out the best artists, your promotional skills and the image that your record label portrays.

Your record label should be of a certain niche so you need to choose your genre(s) wisely. You may want to start off with your personal favourite genre and establish that first, then you can always expand in the future.


A&R stands for Artist & Repertoire, this is the division of a record label that essentially signs and drops artists to the label. A skill for filtering out the gems from the rest of the music out there is an absolute necessity required for this role and it's not just about the music either.

You also need to be able to identify the best unsigned musicians by their songwriting skills, production talent, being able to pull off live performances and most importantly the potential ability of generating sales, whether selling music, merchandise or tickets to live gigs.

Are they reliable?

Are they dedicated?

Do they have a good following?

Do they gig regularly?

Do they take their music career seriously?

Doing your research is of the utmost importance.

Fortunately there are now plenty of filtering and analytics websites out there doing a lot of the work in digital A&R which can be of a great help to labels, broadcasters and publishers. You can check out sites like analytics and financing engine Slicethepie, fan-funding and investment website Sellaband, ReverbNation who have charts for each local area and Amazon to see which unsigned artists are rated the highest and who are doing the best online.

Instead of performing A&R yourself you could even ask your customers to vote on which artists you should sign. It ,makes sense to give your customers what they want. In fact, there are a lot of things you could ask your customers to help you with, as you will find out later in this article.

Funding / Finance

If your record label isn't offering artists anything that they can't do themselves then they're not going to be interested in getting signed. The one single most important thing that the majority of unsigned artists need is funding - the cost of recording studio time, mixing, mastering, distribution and promotion is anything but cheap and artists could do with all the help they can get.

However, this doesn't necessarily have to be finance. If you have music industry contacts then you could offer representation or promotion or both (and more) in some kind of incentive package awarded to each artist that gets signed to your roster.

You could also be flexible in offering either exclusive or non-exclusive deals, most artists would much prefer a non-exclusive deal these days, the downside being that their music will be available to buy elsewhere so you will undoubtedly need to promote your label.

In terms of the traditional methods employed by the majority of record labels, the label usually pays the artists costs for recording, mixing, mastering, production, distribution and promotion and uses their knowledge and contacts to achieve this. £100,000 towards one album is not an unusual deal for artists signed to a record label though these costs are recoupable - the label owns the rights to the music and the artist only starts earning a percentage of their royalties once the label's original investment has been recouped from music sales, live performances, merchandise, etc.

Getting signed to a record label is a lot like having a very large loan with the advantage being the knowledge and contacts within the music industry that can potentially propel the artist into the mainstream.

However, only one artist in every twenty that gets signed to a major record company actually goes on to make a profit and only the most successful artists stay on the label's roster.

On average, it takes £560,000 ($1,000,000) to break a new artist into the mainstream.

Read Part 2 - Read Part 3


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    • profile image

      Sparkster 6 years ago

      Thanks David, plenty more info to come!

    • davidmoral profile image

      davidmoral 6 years ago

      very true nice info Sparkster