35 Things To Consider When Starting Your Own Record Label

35 Things To Consider When Starting Your Own Record Label

The following guest post is an excerpt from the new 4th Edition of Music Is Your Business by Christopher Knab.

Deciding to release your own record is only a good idea if you know what you’re getting into. As you read through the following questions, mark the ones that you can’t answer and make an effort to find the answers. We answer some of these questions throughout the book. There are, however, some questions that only you can answer, and a few that are outside the scope of this book.
(Answers to any business start-up issues are widely available on the Internet and in many books devoted to that specific topic.)
35 Things to Consider When Starting Your Own Record Label

1. Why are you starting your own label? (What is your motivation?)
2. Why would anyone want to buy your music?
3. Is there currently a market for your kind of music? Prove it!
4. If you’re not releasing your own music, have you ever read a recording contract?
5. Are you aware of all the traditional clauses that are in such 75–100 page contracts?
6. Do you know anything about copyright law?
7. What is a mechanical royalty? What is a performance royalty? Internet play royalties?
8. Have you heard of the Harry Fox Agency, ASCAP, BMI, SESAC? What do they do?
9. What do you want to achieve by starting your own label?
10. What do you know about the day-to-day business of selling music?
11. Will your new company be a sole proprietorship, a partnership, or some type of corporation? (Do you know the pros and cons of each?)
12. Have you trademarked the name of your company to be sure you can use that name?
13. Will you need recording equipment, office equipment, and supplies to run your label?
14. Do you have a recording studio you can work with, or will your laptop recording really do the job?
15. Do you know any record producers and/or engineers?
16. How much money will it cost you to start your label, record your records, and market the recordings for the first year? Second year? Third year?
17. How will you raise the money you need to start and run your record label?
18. What local, state, and federal tax responsibilities will your label have?
19. How will you sell your records? (Live shows, Internet sales, mail order, catalog sales, distributors, stores?)
20. What specific distribution and retail sales plans have you arranged so that people can easily find your releases at retail stores?
21. Do you have the money, time, and determination to compete in an industry that releases over 1,000 new records a week?
22. What configurations, (CD, vinyl, MP3, etc.), based on your knowledge of your fans habits, will you need to make?
23. How much will it cost to manufacture your CDs and/or vinyl, and convert your recordings to downloadable formats?
24. How many copies of your releases do you think, realistically, you can sell?
25. What deals are offered by CD manufacturers? Will you use their barcode or buy your own?
26. Will you need to make posters or other materials for retailers? If so, how many and how much will that cost?
27. Will you be making special novelty items like t-shirts, baseball caps, etc., and how much will that cost?
28. How did you estimate the number of copies you needed to manufacture?
29. Did you count into your estimation the number of free CDs you’ll have to give away for promotions of various kinds?
30. How will you go about finding other acts to sign to your label? Are you the sole artist? Then how many new releases will you have every year or so?
31. How important do you think graphic design is in making your label’s logo and cover art work for your releases?
32. Do you know any graphic artists with record design experience?
33. What information should go on the CD cover, back-cover, spine, booklet, and label?
34. What will your website look like? What online marketing news and fan opportunities (blogs, podcasts, etc.) will there be for your fans to interact with you?
35. Do you know how to write a marketing plan, a distributor one-sheet, and other promo materials?
Plus an extra question (this may sound familiar):
36. Who are your customers? NEVER forget this important question! If you think you know them, then describe them in very specific terms. And keep in touch with them. Create an event page on Facebook and invite them to interact with you on Twitter.
And on and on it goes. Welcome to the new music business!

By Christopher Knab, Copyright 2013. All rights reserved. The new, 4th Edition of Music Is Your Business has 100 pages of more info to help musicians help themselves with the business of music.

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Music Publishers: “Pandora has gone to war against creators of music.”

Music Publishers: "Pandora has gone to war against creators of music."

Today National Music Publishers Association President and CEO David Israelite aggressivley joined the debate over Pandora's effort to lower payments to songwriters and music publishers.

"Yesterday, Pandora CEO Tim Westergren posted a blog on the Pandora website defending himself from the avalanche of artist and songwriter complaints regarding Pandora’s efforts to slash payments to the very creators that make Pandora possible. Mr. Westergren’s post could not be more wrong or misleading.

Put simply, Pandora has gone to war against creators of music.  For years, they’ve funded a well orchestrated campaign to lower the amount paid to songwriters and artists.  The facts speak for themselves.

- In 2009, Pandora entered into a settlement agreement with SoundExchange for royalties paid to artists, only to run to Congress a few years later arguing the rates it agreed to were too high. Pandora asked Congress to undo the agreement and lower its royalty rates.

- In November 2012, Pandora sued ASCAP to further lower the already paltry rate (only 4% of revenue) it pays to music publishers and songwriters.

- Pandora continues to complain that music publishers and songwriters should not be able to negotiate “free-market” rates and instead remain subject to consent decrees that keep rates below market levels.

Meanwhile, Pandora uses the artists’ and songwriters’ creative content to grow its business and pay its executives millions of dollars. That NMPA, RIAA, ASCAP, BMI along with hundreds of artists and songwriters have finally started to speak out is attributable only to Pandora’s continued actions against our industry.

With respect to songwriters, the low royalty rates Pandora pays are real.  Per stream numbers recently in the press were determined by reviewing royalty statements, Pandora filings and other documents.  None of this is referenced in Westergren’s blog post.

Last year, NMPA held a songwriter event at which we demonstrated how five hit-making, successful songwriters were paid minimally for millions of plays on Pandora.  In the first three months of 2012, five of their hits – arguably the most popular song written by each of them -- streamed 33 million times on Pandora.  Yet these songwriters received a combined total of $587.39 for those streams. Even using data provided by Westergren’s “independent blogger”, songwriter and music publisher interests received only $97 for one million streams of a song.  By any standard, this is unacceptable.

Westergren says that through Pandora he sees, “a future that allows tens of thousands of working musicians to finally reach the audiences they deserve.” But, due to low royalties paid by online music giants like Pandora, songwriters and artists can’t make a living despite reaching their audience.

While Pandora wages war on creators, other digital music services are entering into voluntary agreements with the music industry. I think we can all agree that digital music services are an increasingly important and significant part of the music industry.  However, without the payment of fair royalty rates to songwriters and artists, music services like Pandora will make it impossible for them to make a sustainable living from their creative work. "

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