How to Set Up an Independent Record Label

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The music industry is a huge business dominated by a remarkably small number of companies known collectively as the Big Five. The industry generates billions of dollars each year and the growing number of artists doing independent work want a piece of the action. The increasing availability of high quality music creation software is letting more and more artists record in their homes and the Internet has become a wonderful source for promoting and selling a product. With sites like iTunes, music can be instantly transported around the world for enjoyment.Turning an art into a business, however, is never an easy task.

Decide on a name. Search the internet to make sure the name isn't already in use by another company. Avoid controversial names and trademarked names that belong to another industry so that problems won't arise in the future. Prepare back-up names in case the name you've chosen is already taken.

File a fictitious name statement. Go to the registrar of deeds office in the state that the record label will be doing business. Fill out the form given, do a search through state's computers, and pay a small fee. The fee will vary depending on state law.

Decide what form the business will take. Choose between partnership, sole proprietorship and corporation. Weigh the strengths and weaknesses of each. Choosing a corporation will require filing more paperwork with the state.

Obtain a business license. Go to the license office, fill out the forms given, and pay a small fee. Use a home address as the business address if the area is zoned for it, otherwise rent a post office box and use that as the business address.

Print letterhead, envelopes, and business cards. Display the label name prominently.

Study standard music business contracts. Decide how contracts and deals between the label and the artists will work. Consult an entertainment lawyer, then make up standard contracts.

Study distribution, rights and royalties, production, promotions and accounting. Talk to other people in the music business, and find a mentor if possible. Learn where the best studios and musicians in the area are and network.

Get a UPC barcode. Use the barcode to track sales of individual artists.

Set up a bank account. Make sure it is a Merchant Account with credit card capabilities.

Build a website. Use the website for artist promotion, and set up a store online for distribution.

Warnings

  • Setting up an independent record label is incredibly easy; running a profitable and successful record label is difficult and time consuming. Understand the business and do as much research as possible before jumping in. Just because a record label has a name doesn't mean it will succeed. Learn from how others were successful and try to make connections in the business that can be used as a mentor and a guide.