Starting an independent record company

[peteuk90]

Does anyone know how to start a record company? Distributers? Promotional? Does it cost mega bucks?
Any information would be appreciated,

Thanks alot

[grn]

yes, to start you must have some good music to release. put it in a nice package. contact your local record stores and see if they will sell it. try to promote it. there you go, you're a record label! yay!

no, but seriously, that's how every one of them started. then just expand. if you want to do what I think you want to do, it will fail (even if you have mega bucks)... you won't have learned from starting by scratch and making mistakes. start small and do what I said.

[peteuk90]

Thanks for the advice, start from the beginging is always the best eh?

[grn]

usually

[bileshake]

There's some good books out there, I'd do some serious reading first. Not that you'll run away (I don't want to see that) just find what will possible work best for you before you jump in to anything. Learn from others mistakes.
Example, theres a method of running a micro label where you sign bands, they bring you the album recorded, you have it pressed, you agree to give them X number of copies and you are free to sell the rest of the batch through your label without any more paperwork. The deal is done with one simple contract, as soon as the discs come from the dupe house and get delivered to the artist the deal is done. This is quite an attactive format for a micro label that wants to have a decent roster to start drawing attention itself.

[cvd]

This book has a pretty damn good overview of the entire start up process. Im' doing the same thing you are doing, but I'm doing it just to release my own music.

Honestly, distribution is the last thing you need to worry about, at least at first. What good will it do to have your records in Alaska if you can't play there? Start slowly.

For promotion, do it like other start up businesses do...knock on doors (well, not literaly) Print up about a thousand CD samplers (or burn them on your own) take em out, and hand em to people. Talk to people about your music and who you are as an artist. It's a slower process, but much less expensive that doing heaps of advertising

So, are you planning on releasing your own music, or others as well?

[gordone]

How do you start a business which will make me lots of money? Is it easy? Will it cost me "mega bucks" ?

Hey, if it was easy and didn't cost alot of money, we'd all be doing it and be millionaires!

I would suggest taking some business courses (an MBA would be nice!) and read all you can about starting a "small" business.

[LfO]

I'm near the end of my MBA right now. Its not that useful for this kind of thing, IMO. I will strongly endorse one particular type of course - Microeconomics. Anyone who wants to start a business should learn a lot about this subject.

And, in all fairness, no one has said anything about getting rich quick - they only asked if you had to be rich to start out.

[cvd]

Hey LFO,

Could you discuss micro economics a bit more here? I'm sure its economics on a smaller scale, but besides that I'm a bit lost I'm in school right now, so I'm up for good classes. Do you have any opinions on marketing or PR classes?

Thanks

[rivv3t]

Originally Posted by grn

...put it in a nice package. contact your local record stores and see if they will sell it. try to promote it. there you go, you're a record label! yay!

No, dude, you're basically right. What IS a record label exactly? It's a bunch of clowns (or maybe just one) with a trademark, a multiple CD presser (not a burner), a silkscreen or some other sort of graphics device to decorate their CDs and do inserts & then, finally, a shrinkwrapper.

That's a record label. Period.





(Then you need distribution.)

[LfO]

Originally Posted by cvd

Hey LFO,

Could you discuss micro economics a bit more here? I'm sure its economics on a smaller scale, but besides that I'm a bit lost I'm in school right now, so I'm up for good classes. Do you have any opinions on marketing or PR classes?

Thanks

I should probably be reluctant to sling advice around, since I haven't actually run a small label (I'm in the process of making a CD, but its more of an ego trip than a business - professionally, I'm a computer nerd), but I'm not going to. So, here we go:

As far as I've seen, the standard way that colleges present Economics is by breaking it up into Micro and Macro (if I recall, its all one class in high school, but focuses on micro). "Micro" is really kind of misleading - its basically economics in the context of any one market. Macro is more concerned with things on the national and international level (gross domestic product, etc.).

The important thing you get out of a halfway decent Micro course is a REALLY good understanding of supply and demand. I think we (musicians, artists in general...) are particularly prone to rationalizing and wandering off into our own versions of reality , and this will really help you guage reality, so you don't get too excited and press 10,000 copies of the new EP from the local Kwela band you signed (http://en.wikipedia.org/wiki/Kwela).

A good course will also introduce you to some interesting exceptions to the rules. The most interesting case I've enountered in class is Starbucks. It's basically assumed that demand is a fairly steady thing - you have to guage how many people want how much of whatever you're selling, and go from there. Starbuck's totally turned that on its head, and CREATED demand by putting themselves everywhere. That's not supposed to work. I think, though, that it's quite similar to the way a band creates demand for themselves. No one knows they want it until its all over the place...

This particular case kind of strays into marketing-land, and provides a good segue. The problem with marketing and management classes in biz school is that they're geared toward a large, corporate environment. This is really true of all the classes, but different fields are more or less scalable than others - Microeconomic principles apply similarly to the national cola market and to market for local bluegrass. Marketing, on the other hand....

For one thing, marketing is not advertising (which is more a subset of marketing). Advertising is really more of what a small label is likely to be conerned with. Marketing classes discuss topics like categorizing products as "cash cows" (large market, slow growing), "dogs" (small market, slow growing), or "stars" (I forget which size of market, fast growing). I also forget the last category. The point is, when you're just dealing with 2-5 bands (instead of 500+ products), you don't need to waste time categorizing and prioritizing like this - you can easily keep track of how the bands are doing, and make relevant marketing decisions.

Now, all of this isn't to say that I think marketing is unimportant for a small label - on the contrary, its probably the most important subject. I just don't think a college class is the place to learn it. IF you have access to a "marking for small businesses" class, that MAY be a very different story. Barring that, I think doing your own research and reading will be the most efficient way to learn what you need to know. I'm including a link to software developer's summary of a marketing book that I find very interesting - I think it provides a lot of good insight. It's also a prime example of the type of reading I think an aspiring record label owner should do.

http://software.ericsink.com/laws/Im...Marketing.html

Management. Hmmm. A course in this isn't going to teach you how to deal with a couple of employees, and that's all a small label is likely to have. I also doubt you want to worry about "360 degree reviews" every quarter. The analogue that you're going to need in this endeavour is people skills. Everyone has to take basic communication classes now, anyway (at least around here - it has integerated/replaced the old "Speech Class" requirement). Pay attention in that class, and you'll learn more about dealing with people in the small label context than you will with a degree in management.

Well, we've covered three of the four main MBA subjects - might as well hit accounting. There are two types of accounting - Financial and Managerial.
Don't worry about financial accounting - its the stuff the outside world requires (i.e., the IRS) you to document. If you're running a business, you're going to have to hire an accountant - CPAs are like mastering engineers - you aren't a mastering engineer unless you're actually a mastering engineer, and you're not a CPA unless you are acually a CPA. It demands too imitmate a knowledge of too many rules and regulations for anyone to handle "on the side."

Managerial accounting might be of some use to you - its all about analyzing things on the inside of your business to see if you're profitable. For example, putting out a CD is a mixed cost - it contains the fixed costs of recording and mastering (fixed costs don't depend on how many units are produced/sold), while the number of CDs printed is a variable cost (depends on number of units). If you want a thorough understand of this type of thing, take Managerial accounting. If you don't want to, you can probably get by just fine on common sense.

I'll conclude by reiterating that I do not, and have not run a label. All my business schooling has simply led me to understand that I'm going to lose most of the money I put into my upcoming CD (given that I'm an unknown New Age artist with no inention of playing live, and very iffy recording skills ). These are just my impressions based on my experience in the MBA program at Texas State U - San Marcos (formerly Southwest Texas State).

[Treeline]

The way people end up with a million dollars in this business is to start off with two million.