It’s no secret that the music industry has changed drastically since its boom era of the ’90s and early 2000s. Major record labels that emerged a generation ago are still churning as they always have. However, the democratization and accessibility of music has made it easier than ever to launch your own labels.

Despite this, many antiquated assumptions and preconceived notions about a record label and what it takes to run, launch, and grow one are still being spread online.

This made me think it’s high time we revisit how to start a record label. I’ve learned a ton after managing a record label for three years and also launching one of our own through Magnetic Magazine.

We’re now a handful of releases, and I wanted to share everything I’ve learned through the process over the past decade as a professional music producer and label manager/director. So, let’s start with the biggest question of all:

Why Start A Record Label In Today’s Music Industry?

If you’re looking to start a record label today to make a quick buck, you will be sorely disappointed. But that doesn’t mean there aren’t plenty of reasons why you may want to start a label of your own. Here are some ways to find value in starting a record label outside of making money (which likely won’t happen for at least some amount of time).

As A Platform To Support Your Artist Project

If you’re an artist, there’s no better time to start a record label of your own.

Having worked in this industry and knowing many talented producers, I’ve seen many who have been grinding it out over the past decade only to become fed up with the traditional label infrastructure and ecosystems of their respective niches and genres and instead, turn to launch their own labels because:

  • They want a platform to launch music outside of the confines and restrictions of labels run by others.
  • They want to build a community instead of just being a part of another community, label family, etc.
  • They know whole new facets of the industry open up once you start running a record label.
  • They want something outside of the music itself to be building in hopes of pushing their career forward.

Fill A Need In The Industry

Another reason is to fill a need or gap in the wider music industry.

So much of the industry is driven by people trying to recreate the success of others instead of carving out their own niche and more often than not these “strategies” are given by YouTube content creators or other blogs (yes, I know we can be included just by writing this article) that may worked five years ago, but are far from relevant by today’s industry standards. However, the more forward-thinking and entrepreneurial-minded of you out there might see spaces that are not well-served or niches that are underrepresented, which you can help develop and grow through a life of their own with your label being the new-found tastemaker or pioneer.

Build Your Resume & Skillset

Running and managing a record label requires you to wear many hats, and in doing so, you can build a wide skill set from the various responsibilities you handle daily.

I’ve seen successful record labels that launched six or seven years ago by then-recent college graduates with music business degrees who want to prove themselves and start building a resume, using the record label as their initial footprint in the music industry.

I’ll talk more about this later, but you don’t need much money to start a record label, and if you’re clever with your resources and creative with marketing, promotion, and album artwork, you don’t need a massive upfront investment and it can be a great way to build your resume and skill sets in the music industry.

…And Maybe* Make Money

You can also use a record label to make money, but if you think it will be a quick cash grab, you are misguided with all the wrong assumptions.

Sure, a record label can grow to be a sizable revenue stream, and my many record label owner friends can support a team of four or five people (sometimes more), which is fantastic. There is the opportunity to make money, but it won’t happen overnight and is usually a combination of a few good signings that do well, coupled with consistent releases that build brand awareness and trust over the years.

Is Starting A Record Label Even Worth It?

All this brings us to the ultimate question: is starting a record label even worth it in this day and age?

The short answer is yes. I’m not here to take the wind out of your sails. You’re likely reading this because you’re curious about starting one of your own, and I highly encourage you to do so.

But my best advice is to go into it with the right assumptions and expectations. Please don’t rely on a new label you just launched to be single Hail Mary initiative or career move that will sustain you. Instead, consider it an auxiliary side project that will help elevate all other aspects of your career, whether as an artist or upstart music industry professional. It really opens up countless other facets of the industry for you to work with that you would never expect at the current stage you’re likely in (the “game planning” phase), so I encourage you to think outside the box when looking for intrinsic value in growing your label outside of just financial gain.

Hopefully, if you play your cards correctly and have some luck, the financial gain will come in time. But if you find value in growing a label beyond just the cash, that’s the best way to approach it. With that in mind, let’s explore how to launch one of these things.

How To Start A Record Label

Figure Out Who And What You Are

The first step is to lock in on the label’s branding.

I’m using branding here as a catch-all term for everything related to the record label’s ethos, including the art style, the name, its sound, and more.

One of the biggest ways to start looking into your label’s branding is to figure out the purpose behind the label. Touching on the point I mentioned earlier about filling a need or finding a niche that is underserved in the music industry is a great starting point.

At Magnetic Magazine Recordings, I wanted to create a community around the record label and the site overall, and I used that single mentality to guide everything else, from the artists I initially contacted to the ways we’re interfacing with other labels and artists, to the artwork of every release. Once I committed to the “community-first” ethos of the label, everything else fell right into place.

For example, artwork can be one of the biggest upfront investments on a release (unless you use ChatGPT for artwork like I see way too many labels doing these days). Instead of paying a graphic designer hundreds of dollars per release, we asked our artists to walk around their town, snap pictures of their favorite images, and use those as our artwork. This approach not only saves money but also directly injects local inspiration from our artists into the releases, further connecting the communities of our artists both through the music and the visual side of things.

Find The Right Distributor For You

Once the branding is locked in, the next step is finding a distributor. A distributor is the middleman between your label and the major online digital service providers (DSPs) like Spotify or iTunes. There are many options, each with its own pros and cons.

At Magnetic Magazine Recordings, we chose LabelWorx because they are a leading name in electronic music industry distribution and are well-connected to Spotify, Beatport and similar platforms that are the bread and butter of electronic music. They work by taking a cut of the royalties from our record sales and streams instead of charging upfront fees, which helped keep our initial overhead low as we scale up the label.

Other distributors operate under different models. For example, Manual Distribution charges a processing fee upfront but doesn’t take any royalties from the back end. If you have some upfront capital, this might be a better long-term option because successful records can easily bring in more money than the upfront fee, keeping more in your pocket in the long run.

These are just two of the hundreds of options available to you, and there is more here to show you just how wide the range of deals and structures that distributors offer is!

Every distributor has different relationships with DSPs like Spotify, so it’s crucial to do market research to understand what each distributor can offer and how they can benefit your label. Having a well-connected and responsive distributor can save you if there’s a mishap on release day, such as the wrong artists being attached to releases on the back end of Spotify (which can happen more often than you think).

While it can be tempting to use the most affordable sites possible, which offer unlimited music releases for a low annual fee, you’ll likely get what you pay for with them. They might not support you during a crisis, and I’ve heard reports (though I haven’t experienced this firsthand) of songs being removed from popular DSPs when using very cheap distributors.

[embed]https://youtube.com/watch?v=jRelYzOypss&si=nK_KJ0RnFZMDbk1y[/embed]

There is a lot at stake, but you also have many options to find the right distributor that fits the needs of your record label and your budget at different stages of your label’s career. Luckily, most have various incentives to see your label grow (like the cut of royalties that Labelworx gives my label), so they can usually be a resource for you and the middle-men.

Get Your Contracts Dialed In

Once your distributor is locked in, the final part of the back-end infrastructure is figuring out contracting and royalty splits. I’m not a lawyer, so I highly recommend seeking legal advice, but I can share what I’ve learned about industry standards and expectations. Understanding these standards can help you make informed decisions if you choose to deviate with and build your own business plan and growth strategies.

The industry standard is usually 50-50, but again, that doesn’t mean that every single label operates with these rates. Even we at Magnetic go 60% to the label and 40% to the artist. This is because one of our big X-Factors as a label is our accessibility to media and promotional campaigns which we guarantee for every release. Some more prominent labels take more significant splits, sometimes up to 75% for the label. While that cut may seem steep, it may come with hefty brand recognition, and artists often land more paying gigs from the association, justifying the larger cut of the music.

If you’re a smaller label and looking at what your splits with artists are going to be, expecting 70% of the artist’s payouts is unrealistic and can be seen negatively by artists and the artist community. The artists are doing most of the work in releasing the music, and you want to appear as a partner in the process, not just a middleman for distribution. It’s important to build a fair and collaborative relationship with your artists, the optics of which can all be hashed out in the royalty splits and followed through on in the actual release and promotion of the track.

What About Publishing?

Another point to consider in contracting is the publishing side of things. This could be a topic for an entirely different article, but it’s something artists often ask about. Smaller, entry-level artists may not care much about publishing, focusing more on streams, record sales, and direct royalty payouts. However, any artist with experience will prioritize keeping control of their publishing unless you have a specific strategy that could make money for them.

At Magnetic, we have a publishing clause that allows for control over the publishing, but only for the express purpose of launching sample packs. We plan to release sample packs based on the music we release to generate more income for the artists, so we maintain the publishing rights for this purpose.

This isn’t standard for all labels, so it’s important to be mindful and anticipate artists asking about it if you want to explore similar routes.

What About Neighboring Rights??

Another couple of things to be mindful of when drafting contracts are neighboring rights and the length of the contracts. Record labels are essentially leasing the music from the artists, and the artists will eventually regain control of their songs. This is a point that many artists will question. Contract templates often state that the contract is indefinite, but artists may want adjustments, or you as a record label may decide to limit the contract to ten years, five years, or even just a couple of years before the artist regains control of the song. It’s important to understand and address this early in the process.

What Else Should Be Included?

Defining the artists ‘ deliverables is another consideration when contracting. Are they responsible for mastering their songs, or is the label handling the mastering? What recoupable is the artist responsible for before they start receiving payouts and royalty payments?

Addressing all these small but important points is essential to being as transparent and communicative as possible with the artists. A lot can slip through the cracks in contracting, and we all know the music industry has a reputation for being filled with smoke and mirrors. Your label contract can be the best opportunity to be transparent by getting as much as possible in writing for both you and the artists.

Sign Some Music!

Once all the backend stuff is set up, it’s time to get to the fun part of finding music to sign and start releasing, but let’s not get too ahead of ourselves and just sign the first thing that comes into our demo inbox just for the sake of releasing something.

I highly recommend having 2-3 months’ worth of music signed before you start releasing music. Depending on your release cadence and how fast you want to release music, this could be as many as six releases or as little as two. Either way, you don’t want to always chase releases one by one to fill your release calendar; instead, you can focus on marketing and promotion as each song comes out.

Remixes As Quick Wins

Depending on the genre of music your label is releasing, bringing on artists for remixes can be a great way to fill out the release calendar more quickly. Remixes often don’t require as much effort from the remixer, so they can be a quick win and help you have more music in your release schedule.

If you have the capital, commissioning bigger artists to do remixes can also be great but it can be an expensive approach even if it does inject a little brand recognition by associating your label with bigger names.

When reaching out to artists to solicit demos, showing that you already have a big artist signed to the label who has done a remix on a release can be a strong selling point. It shows that you have forward momentum and can look good for all involved. This association with bigger artists can be expensive but well worth it, especially in the early stages while you’re building momentum.

Figure Out Your Release Strategy

It’s taken a lot of logistical work and many pieces connecting to get to where we are now in the process of starting a record label. With the label launched, the branding on point, and a couple of months of releases ready in the queue, it’s time to start thinking about how to get the music to the masses.

In the dance music industry, where I have most of my experience, the two most significant metrics of success a release can get are Spotify streams and DJ support. So, I usually focus on these two facets to maximize exposure when we have our releases; how can I get this music into DJs’ hands and Spotify curators’ playlists?

The first method is through paid media promo. Many sites allow you to get music on playlists and pitch it to Spotify curators. This strategy can be very successful and a great way to boost an artist’s single release.

However, some of the most successful labels use their marketing budget instead to grow their playlists (like UOAK’s Spotify playlist that he packs with his label Sekora’s releases). Once these playlists have a sizable following, they can include the label’s releases, trade playlist placements with other labels of similar genres, and even monetize the playlist by joining platforms like SubmitHub and One-Submit, supporting other artists in the same niche.

Usually, as labels grow, they combine both strategies—pitching to Spotify curators and growing their own playlists. I cannot stress enough the importance of building your own playlist, as it becomes a strong asset on the world’s largest streaming platform.

Your Network

The second method is building and leveraging relationships, which are, by definition, genre-agnostic. Building relationships with DJs over the past ten years has allowed me to get music directly into the hands of touring acts and big-time DJs who can give it significant exposure.

But let’s get creative here. Your network doesn’t have to consist solely of other music industry tastemakers and influencers.

Other ways include building relationships with local coffee shops, boutiques, and bars. These spaces often use Spotify playlists for ambiance, and building relationships with them can be a great way to get your music out there, which can drive streams as these spaces often rinse these same playlists on repeat every day (at least I know every restraint I’ve waited tables at did back in my restaurant days).

Investing In The Label Or The Artist?

Building a label is a delicate balance of pushing the artists and music your sign and growing the label’s branding.

You want to champion the music and artists you’re pushing, but making sure people know what label the music is coming from is equally as imporant. You don’t want to invest heavily in a single release only for people to love the music but not know where it comes from, so make sure your media campaigns and pitches to outlets, blogs, and others at least mention and hint about the label, and it’s story, vibe, and ethos (funny how often we come back to this, right?!)

Brand awareness is crucial because it helps more artists or potential acts recognize what your label is doing. This extends beyond just a single release push and can significantly boost the label’s trajectory in the medium and long term.

Should You Release On Vinyl?

One more word of advice as we wrap up the release plan strategy and the promo and marketing portion of this article: you’ll notice I’ve focused a lot on promoting and releasing digital music, especially on platforms like Spotify, Beatport, and iTunes. I’ve avoided discussing vinyl and tangible music products because producing vinyl, CDs, and mixtapes requires significant upfront capital and additional funds for promotion and sales. It’s an uphill battle, especially for a new label working with up-and-coming talent which don’t inherently have a big draw on their own yet.

Unless you have a big-name artist or band with an established fan base willing to pay for physical products, investing in hard goods can often result in burning cash until you build the brand up to a point where it justifies the headache and financial burden of such an investment. This might be fine if you have substantial financial backing, but most of you are likely operating on a shoestring budget.

Instead, use your resources to grow your online footprint, build brand recognition, and increase brand awareness. You can leverage a larger audience to sell hard products once you’ve grown a little more. I emphasize this because I’ve worked with vinyl runs and, even with established artists, they tend to be niche collector’s items for superfans and not a reliable way to turn a profit.

Many other online guides on launching a record label in 2024 assume that selling vinyl is essential to the monetization structure. I believe this advice is misguided, especially for smaller indie labels today. Having managed two record labels and launched one, I cannot stress this advice enough.

Where To Go From Here?

At the end of the day, this is really all it takes to start and launch a record label but it still feels like we’re far from the finish line…

So, let’s consider a five-year plan. This isn’t too complicated; it just involves consistently doing the work, rinsing, repeating, and growing and refining the systems that have already gotten us this far in the process. Every release will teach you more about what works best for you and your label team (if you’ve got one). Each release increases awareness a bit more, and as you have more quality releases, it will build your reputation as a platform that distributes and promotes dope music.

When you execute well on marketing and promotion and truly do right by the artists you sign, that word will spread. This industry, regardless of your niche or genre, really isn’t that big. Artists will want to work with you again and will recommend you to others if you’ve done your job right. This growth isn’t linear; it’s exponential as you build the foundations of quality music and a strong label reputation and you may only see small gains for the first couple years before suddenly a hit record explodes and you feel like you’ve “made it” seemingly overnight.

As we wind down this article, I will share some quick, though possibly long-winded, tips I’ve learned about running a record label, growing it, and interfacing with artists and other music industry personalities over the years. These tips will help you continue to build, grow, and manage your own record label effectively.

The 5 Best Things I Can Tell You

How To Start A Record Label

Tip Number One: Be Flexible.

Releasing music can get complex when you’re lining up release dates and promotional calendars, not just for your label but also considering other artists’ schedules. As you scale up and have more frequent releases, those artists might have other releases on different labels and collaborations with other musicians.

Flexibility is also crucial in other areas.

Artists have their own needs, wants, and desires for their music, which might lead to different requests, whether it’s adjustments in contracting or creative feedback. Artists pour their heart and soul into their music and might not always be receptive to feedback. Remember they’re people, too; flexibility and understanding can help maintain good relationships. While you don’t need to accommodate every request, being adaptable in your interactions will benefit you as you grow and build your record label.

Tip Number Two: Be Communicative.

There’s a lot of back and forth, and communication is required to ensure all release aspects are aligned and successful. You must ensure the label, artists, and collaborators are all on the same page.

One of the biggest benefits of having a wider team, even if it’s just you and a part-time assistant manager, is keeping up with the volume of emails. You must interface with the artists you’ve signed, answer their questions, and negotiate record deals and timelines. You’ve also got to be actively reaching out to artists to sign and network with people who can help promote your music.

Communication is essential, and many labels often drop the ball on this. Labels run by touring artists or massive operations can let small emails and quick questions slip through the cracks. Creating a customer service-oriented, community-driven mentality and communication are crucial. This was a mindset I learned during my restaurant days, which directly carried over into my music industry days and has been invaluable to the flow and growth of all labels I’ve worked in.

Tip Number Three: Be A Partner.

I touched on this at the beginning of the article, but the music industry is becoming so democratized that artists don’t necessarily need a record label to release their music. They can self-release or start their labels. Therefore, you need to make partnering with your label worth the revenue you take by offering some value exchange or proposition that they couldn’t have achieved on their own.

If your label plans to take well over 50% of the profits of the record some artist made, what are you giving the artist or the release in exchange for that cut? Because if all you’re doing is getting the music onto Beatport, then you’re not adding anything to the partnership, and you should rethink the entire ethos of the label.

It is crucial to view and treat the artists you work with as partners in the release and label, not just as content for your release calendar.

Tip Number Four: Be Entrepreneurial.

Think outside the box about how to generate revenue.

As creative and expressive as music is, from the label’s side of things it should still be seen, at in some regard, as a product, so consider how to sell and monetize it beyond record sales and streams. Sample packs, creative partnerships, sync placements, and more are all fairly conventional ways that labels have been able to generate revenue through the music they sign.

Another potential revenue source is label-branded live music events. Labels like Purified and Anjunadeep not only make money from music but likely generate significant revenue from their live events and parties.

The key is thinking about bringing in extra money beyond the release cycle and promoting. With music sales down, even in genres like electronic music, where DJs still actually buy their music, consider how you can monetize the brand, the music, and the community you build through the label.

Final Thoughts And Expectations

In closing, I truly believe there’s never been a better time to launch your own record label, but I hope that the biggest thing you’ve taken away from this rather lengthy piece is to manage expectations and find value in launching a label beyond financial gain. With so many tools at your disposal today, you don’t need as much money to get a record label up and running as in the past.

Artists now have more access to music production technology, so they often don’t need million-dollar studios to make hit records. However, they do need a platform and a partner to help promote their songs, and your record label can provide that as long as you offer something to the release outside of what the artist could do themselves.

It all comes down to approaching this all with more modern strategies instead of relying on outdated guides that that may lead you down the wrong path. Be smart, entrepreneurial, clever, and think outside the box. Commit to releasing amazing music and doing as much as you can for the artists who create it. If you do this, you’ll be well on your way to having a successful record label. All the best to you.

The post How To Start A Record Label In 2024: All The Modern Strategies For Success I’ve Learned Through The Years appeared first on Magnetic Magazine.