Has anyone ever started a record label?
April 17, 2006 10:58 PM   Subscribe

Has anyone ever started a record label? I would like some advice (other than "Quit while you're ahead").

A friend and I did a half-assed 7" label about 6 years ago, and there are now about 800 7"s sitting in my parents' basement. So I know how NOT to run a label, but now I need some pointers as to how to do it correctly.

I have some friends who have a solid band relationship, have played regionally to help get their name out and have a pretty sizable friend list on myspace, do their own graphic design, and just came out of the studio with enough songs for an longish EP (7) which they are getting mastered right now. They are planning some tours for the summer. They play pretty accessible power pop/punk/emo-tinged rock (not the screamy kind). I would like to put out their album, but I have only a vague notion of where to start.

Is it realistic to expect to make my money back if I were to press, say, 1000 CDs and they follow through with their tour plans or am I almost certainly going to take a bath on this? What kind of contract would I do with these guys that is fair to both of us? This site seems to have a wide and informative collection of how-to's, but some of them seem dated, some links are dead, and I don't really have a way to sort the wheat from the chaff.

(Note: I have already read Steve Albini's "The Problem With Music")
posted by lovetragedy to Media & Arts (11 answers total) 5 users marked this as a favorite
I thought the label was supposed to pay for studio time and handle distribution and promotion. You know, groveling to the Waltons and spreading payola. Manufacturing the physical discs is probably the easiest, cheapest step in the process.

But if you're interested in the logistics of stamping a small run of 1000 discs, see today's metatalk threads Metafilter Records and Phase one: call for submissions. Care to submit a track?
posted by ryanrs at 11:48 PM on April 17, 2006

Labels don't have to pay for studio time and distribution when they're starting out -- many labels simply license recordings, after all -- but promotion is the biggie. And that can be done fairly cheaply these days.

First of all, you say they're going on tour? Surely they can take a sizeable chunk of the discs on the road with them and sell them at shows? That's probably most of the pressing covered right there, if you're going to get 1000 CDs pressed.

Secondly, website: cut out the distribution middleman by selling direct. Virtually all indie labels do this, and it's been a lifesaver for some as of late, with the distributor bankruptcies that have been going on. Do it by Paypal, by cheques in the mail, whatever's best for you.

Advertising: word of mouth on the web is great, but putting ads in zines is a great way to go to get the word out. Direct the punters to your website, let them sample your wares, make them your friends.

And as for a contract? If I were to start the label that I've been threatening to start for the last 5 years, I would follow the Touch and Go Records model -- a 50/50 split of net profits after the label recoups its costs for studio time, promotion, etc. Depending on how dedicated you are, you can invest your profits right back into the label and soon enough you'll have enough cash to pay for recording sessions, signing other artists, etc.
posted by macdara at 1:51 AM on April 18, 2006

For more reading, the DC-based indie Simple Machines once published a Mechanic's Guide to putting out records, which covers most everything I've mentioned in more detail.
posted by macdara at 1:55 AM on April 18, 2006

I've started one. Because I was working with friends, my approach was to start it first and worry about the legal stuff later. That stuff really slows thing down early on, and is to be avoided for as long as possible.

I budget to sell half my stuff, and give half of it away. That usually results in break even on small runs, and a little profit on replication runs. If you're in this to make money, you're going to be sorely disappointed. If your band has a decent tour scheduled, 1000 might be about right. You're right on the cusp of when it becomes cheaper to replicate rather than duplicate there, so think carefully.

I can't recommend Fat Cat's DIY resources enough. You may find it a little UK-centric.

Oh, and put MP3s (not streams) on your website.
posted by caek at 5:28 AM on April 18, 2006

you might also contact nylon if they don't post here.
posted by andrew cooke at 5:44 AM on April 18, 2006

I did it for a lot of years. My #1 most important advice: Have a contract signed by all parties before you spend one single dollar. It doesn't necessarily have to be a 40 page jumble of legalese, but at the very least, sit down yourself and formally write out who is responsible for doing what, and how the money gets divided up, who owns the master tapes, and other things like that. Have everybody sign it, and give everybody a copy. No matter how level-headed you think the band is, and no matter how much you think you're all on the same page, you will need this document at some point in the future. You'd be suprised how later on down the road each person in the band will have a different memory of what their deal with you was. Get it in writing. Seriously. I'm not kidding. Get it in writing.

Beyond that, these days you have to realize that the real service you are providing is promotion and a coherent business structure. Costs have come down to the point where anyone with a casio and a credit card can put out a record, so the label's role is a little different now than it used to be. As you build your business, think to yourself, "why would any band want to sign with this label?" Do things that make your label stand out from the crowd, and you'll be sucessful. Maybe.

Since you've indicated that the band you want to start with is a touring band, you need to decide up front what the procedure is going to be for them to sell CDs at their shows. Do they buy them at a wholesale price from you? Do you go to the show yourself and sell them? There are two issues that will eventually come up that you need to be prepared for: One -- there's always a band member who doesn't understand why they have to pay you to buy their own record to sell at his own show. "That's my art man!" Explaining accounting principles to this person will be difficult, and involve a lot of pouting and whining and repeating yourself. And even then, they will still think you're ripping them off. Address this in your contract up front, and that will help. The other thing that will happen is, at some point, somebody in the band will take all the CD money and spend it on drugs. I guess that's just a hazard of the business. You'll figure out how to deal with it when the time comes.

Also, have a plan in place for what you're going to do if/when you release a CD that is more popular than expected. You've got the dough to press 1,000.... what are you going to do if you suddenly get orders for ten times that? It could happen, and how you handle it literally means the difference between finally making some money and going out of business.

Oh yeah -- did I mention that you need to get things in writing before you spend a single dollar?
posted by spilon at 6:54 AM on April 18, 2006

I have a label. You can contact me if you wanna ask me stuff. It's rather small. We have two releases. Some non exclusive distro deals. We get into CD BABy, so we gfet on itunes (which has been a nice source of income). I'd forget about getting into stors..Maybe just local ones in the bands immediate home area. Internet marketing...You'll be one of a million little bands and labels doing the same thing....PLaying shows is the biggest draw for a small label and band...That's where youll sell CD's...i have tons of bit advice and experience i'd be happy to discuss. always up for brainstorming.
posted by TwilightKid at 8:15 AM on April 18, 2006

Response by poster: You guys are awesome and these are all really helpful answers.

Macdara: That's kind of the idea I was thinking, but then upon reading I realized how complicated the accounting is behind selling records. Let's say I spend $2000 pressing records, sending them to 'zines and college radio, and buying ads. They're selling their cd for $8. Does that mean I take 100% of the first 250 and then $4 of the rest? If they're selling them at shows and locally that would work, but it's going to get more confusing if they're sold on CDBaby or other places online, right?

TwilightKid: Thanks! I might be sending you an email after work tonight.
posted by lovetragedy at 8:28 AM on April 18, 2006

Response by poster: Oh also, if anyone wants to hear the band, my email is in my profile. I didn't want to be accused of self-linking or Pepsi Blue or whatever.
posted by lovetragedy at 8:29 AM on April 18, 2006

Let's say I spend $2000 pressing records, sending them to 'zines and college radio, and buying ads. They're selling their cd for $8. Does that mean I take 100% of the first 250 and then $4 of the rest? If they're selling them at shows and locally that would work, but it's going to get more confusing if they're sold on CDBaby or other places online, right?

Not necessarily. Sticking to the basics, you first need to work out the cost with the band on paper, so that both they and you know where the money is going. Say you get 1,000 CDs, with artwork, pessed for $1,500. That's pretty straight-forward: a dollar fifty per-unit manufacturing cost. If they're going to sell discs themselves at shows, then you can work out a fairer split rate with them or sell the discs to them at a cost price that's fair to you. (And if you want to do a further pressing in the future, where economies of scale come into play, set out a rate for that too.)

Aside from that, you -- as the label boss -- will be doing all the legwork: placing ads, liaising with small distros, online retailers, and so on. So a 50/50 split is fair enough. It gets confusing if you feel like you need to have a sliding scale for every distinct method or channel of sale, but surely it'll be easier to draw a line with a flat rate, and reinvest your profits in the label itself (which the band will thank you for).
posted by macdara at 8:58 AM on April 18, 2006

I currently run a small label, and all the advice I've seen so far is spot on. We do the Touch & Go "100% until cost recouped, 50/50 thereafter" thing.

Definitely make MP3's available, make it easy to buy online (I never expected to sell as many records online as we do), and be liberal with the promos - it does more good in someone else's hands than in the basement.

If they are planning on touring, and they're usually pretty well recieved, I'd say you're in good shape to recoup. I've done two releases from touring bands and two from non-touring bands in the last year. The two touring bands' releases are 'already recouped' and 'damn close,' respectively, while the non-tourers are understandably much slower sellers.

The one priceless thing I've discovered in running this label is the value of a wiki. All the bands on the label have access to our wiki, and it's been essential for centralizing mundane things like contacts, venue info, show leads, etc. It's also been a great tool for planning projects, coordinating mailings, etc. I can't recommend it enough.

Feel free to email me if you have questions.
posted by adamkempa at 9:48 AM on April 18, 2006

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