How to start an independent record label

What a small label actually does

A record label is the name under which recordings are released, and the work behind that name. For a small independent electronic label the work is practical: select the tracks, arrange mastering and artwork, order the physical copies, deliver the digital files, tell people the release exists, and pay everyone what was agreed.

Independent means the label is not owned by one of the large music groups. It says nothing about size or quality. Some independent labels release one record a year, others keep a catalogue of hundreds. Many are run by one or two people who keep another job.

The first release

Most guides for newcomers give the same advice: start with one release, not a business plan. Pick a small set of tracks that belong together, usually an EP of three to five tracks, and treat it as a complete product. That means finished mixes, mastering, artwork, a title for the release and a catalogue number you will keep using.

Two kinds of identifiers come up early. An ISRC identifies one recording, and a barcode (UPC or EAN) identifies the release as a product. Distributors and pressing plants will ask for the details, so decide how you will number things before the first order.

Money, paperwork and why to ask a professional

Questions such as whether to form a company depend on where you live, so there is no single answer here. In the United States a label can be run by an individual under a business name or set up as a company such as an LLC, and the rules and fees differ by state. An accountant or a lawyer who works with music or small businesses can tell you what fits your situation, and a short consultation usually costs less than fixing a mistake later.

Keep label money apart from personal money from the first day. A separate account and a simple spreadsheet of costs and income are enough to start, and they make tax time and artist statements far easier.

Rights and agreements in plain words

Two separate rights sit in every track. The recording, called the master, belongs to whoever made or paid for it unless an agreement says otherwise. The composition, meaning the underlying music, is a different right and is usually handled through publishing and the performing rights organisations. A label that wants to release a record normally asks for a licence to the master for a set period, rather than buying it outright.

Write the agreement down, even for a friend. Useful points to cover are the term, the territory, how income is split after costs, when statements are sent, who pays for what, and what happens to the digital and physical copies if the deal ends. Splits vary widely between labels, so compare examples from several sources instead of copying one.

In the United States copyright law lets an author terminate certain transfers and licences after 35 years, which is the origin of the phrase people search as the 35 year rule. The details are technical, so it is a topic for a qualified lawyer rather than a forum thread.

Cost questions

People often ask how much it costs to start a label with no money, and the honest answer is that the label itself can cost very little while a release does not. The big items are mastering, manufacturing if you make physical copies, artwork and distribution fees. Digital-only releases keep costs low, vinyl is the expensive end, and the minimum order a pressing plant accepts sets the lowest total.

A sensible habit is to work out the cost of one release before you commit, add a margin for things that go wrong, and only then decide how many copies to make. Our guides to the vinyl process and to distribution cover the two largest decisions.