Why Start a Record Label?: The Pros and Cons of Starting Your Own Record Label

Starting a record label is an ambitious undertaking. It takes a lot of work and dedication to make it successful, but there are also many benefits that can come from owning your own recording studio.

In this article, we will talk about the pros and cons of starting your own record label, so you can decide whether or not it is the right decision for you!

Why Start a Record Label?: The Pros and Cons of Starting Your Own Record Label

Why Start a Record Label?

Pros

There are a lot of pros to starting a record label. Here are some of the most important ones:

1. You get to be in control of your own artistic destiny as you have more control over how your music is presented to the public.

2. You get to help other artists achieve their dreams by giving them a platform to share their music with the world.

3. You get to create and shape new musical genres. If successful, the music you put out can impact and change the current state of the music industry.

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4. You get to be part of the music industry establishment. As mentioned above, a successful label is amongst the movers and shakers of the music industry. Your brand can matter and offer huge contributions.

5. You get to make money from your passion for music.

6. You can sign the artists that you love and want to work with.

7. You can create a unique sound and branding for your label that separates you from the competition.

8. It can be a lucrative business if done correctly.

Cons

There are also some cons to starting a record label:

1. It's expensive to start a label and it can be difficult to make money back, especially in the early years.

2. It's hard to get good distribution for your records, so you'll likely have to do most of the promotion yourself.

3. It can be difficult to find talented artists who are willing to sign with a small label.

4. You'll need to be able to work long hours and wear many hats (marketing, A&R, PR, etc.) or you need to have a dedicated team working with you (for free) if you want your label to be successful.

5. You need to have strong business acumen and marketing skills in order to be successful.

6. If you want to do it properly, you will need to register your company and ensure that you file the correct paperwork and licenses.

Starting a record label is an exciting, wild ride with many upsides and downsides. Be sure to research what it takes before making any rash decisions! It's not easy nor cheap to start your own business (even as a hobby), but if done correctly there can be huge payoffs.

As you can see, starting your own record label is not an easy task and there are pros and cons that come along with it. It helps to be knowledgeable about the music industry if you're going into this as a business venture!

I Have Read The Pros & Cons And I Am Doing It Anyway!

If you are still reading, then you are probably planning on starting your label regardless. Good for you! Here are some final things to think about before taking the plunge:

Contracts

One of the most important things you will need when starting your label is a good contract. This will protect both you and the artists you sign, so it's important to make sure everything is in order.

You can either contract a lawyer to write you a personalized contract for the different types of record deals you will offer.

Or you can download a basic record label contract like the FREE one we have here:


Money

money

When starting your own record labels, it's always important to have a cushion of cash saved up as you will need to pay for things such as distribution, promotion, and marketing out of your own pocket.

It is not generally recommended for an individual to take out a loan or take on debt to start a label.

Keeping your overhead low and managing cash flow is also very important in order to stay afloat for the first few years while you are building up business momentum.


Studio Time/Professional Gear

Why Start a Record Label: Studio Time

If you want to make music professionally, then it's going to be best if you invest money into either renting or buying studio time. Once you find a good studio, it is important to build a good relationship with the engineer(s).

Alternatively, you can build your own home studio, but you will need to have the proper equipment in order for this to be effective.

The basics such as:

  • Microphone
  • Interface
  • Studio Monitors
  • Computer
  • Software (DAW, plugins, etc.)

You can either save up money until you are able to afford it, or look into crowdfunding platforms like Kickstarter which has helped many artists raise funds for studio time and gear.

There also exist online music production courses that help you learn how to produce and master your own music, saving money on an engineer.


Marketing & Promotion

marketing and promotion

There is no point in having a record label if you aren't going to be promoting and marketing your artists.

If you want to make money, then it's important for you (or someone on your team) to build up an audience through social media or other platforms like YouTube with engaging content that will attract listeners.

This may include producing your own music videos or hiring a virtual assistant to handle multiple social media pages. You can of course do this yourself but you need to decide where your time is best spent.

Marketing is an expensive business and it can be difficult to get things started, so this may require testing out different strategies until you find the one that works for your label.


Networking

Why Start a Record Label? Networking

When they say it is not what you know but who you know, in music; they are not lying! One of the best ways to get things going is by networking with other people in your industry and building relationships along the way.

The more connections an artist and label has when starting out, the better chance they have at being seen so it's important to build a community around your label early on!


Finding Talent

If you want to start a record label, you are going to need to find amazing artists and convince them to sign with your label. You may only be signing yourself to your label, to begin with, until you find other artists to work with.

There are many ways of finding talent, but the most common way is by networking within your community or reaching out online through social media platforms like Instagram, TikTok, Twitter and Facebook.

You will want to pay attention to artists with a decent social presence and some media displaying their skills (e.g. music videos, Youtube clips on their Instagram, Soundcloud links).

You can also attend music industry events where record labels often scout for new talent and artists can network with each other.

You may also want to consider hiring a manager who will help you find and sign new acts (for a percentage of the artist's earnings). A good way to test your chemistry with someone before signing them on is by working together.

Conclusion

If you're thinking about starting your own record label, the pros and cons should be discussed. You'll need to determine whether or not it's a good idea for your situation before taking any steps towards this endeavor.

If you do decide that starting your own record label is something you want to pursue, there are certain things that will make it more successful such as:

  • Having money saved up in order to invest in professional gear like microphones and studio time (or knowing where else you can get these items)
  • Networking with other people within the industry and building relationships along the way; having connections when beginning makes all of the difference!
  • Finding artists who share similar values/interests/goals as yourself so they feel comfortable working with you and vice versa.
  • Having your own social media presence that will attract listeners to your artists!

Whatever you decide to do, all the best – and remember to share this page if it helps you kick start your dreams of becoming a record label owner!

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