Most artists never have record labels lining up to sign them. More likely, only one label will be interested in signing an artist at any given point in his/her career. Nonetheless, an artist will want to sign only if the label is reputable, experienced, and knowledgeable about the music business. I advise artists that it’s better to remain unsigned than to get trapped in a bad deal with a record company that can’t (or won’t) help to advance their careers.
What does it mean for a label to have a good reputation, and why is it important? If the record company is not able or willing to live up to its responsibilities (i.e., produce a good record and then promote and sell it), the artist will be out of luck, and his/her music career will be stuck in neutral. This can happen even to established artists, but it can be especially damaging when an artist is just getting started. If it happens to the artists you sign, you’ll develop a bad reputation as a label that does not help to advance your artists’ careers.
This reputation will have a negative impact on the quality of artists you’re able to sign, since artists naturally are disinclined to work with labels perceived to be unhelpful or incompetent. Furthermore, a bad reputation will affect the terms of the contracts with artists you do sign. Entertainment attorneys who have concerns about your label will seek to negotiate contract terms that are more favorable than usual for their clients (artists) and give fewer rights to your label. In the end, a bad reputation will cost your business and income, which will make it very difficult for your label to succeed, or even survive. To avoid this, consider the following insights when setting up and running your label.
First, recognize the obvious: Every label must start somewhere, and most artists will not want to be the guinea pig. But like every other new label, you’ll have to sign your first artist, whose record you will need to record, promote, advertise, and sell. Being professional and working hard to achieve some success for the first artists you sign will help to build your good reputation. This will help you attract better, more developed artists in the future.
Of course, you’ll make mistakes with the first artists who sign to your label. And you probably will continue to make some mistakes as long as you’re in business. This is inevitable. However, your label will develop a good reputation if you limit your mistakes, learn from your experiences, and overcome problems in a professional, efficient manner. Most developing artists should understand that they have to start their careers early, and that they probably will sign with independent labels to make their first records. However, even a young, undeveloped artist will rightly want to know that your label can produce a quality recording. A good reputation does not mean your label can sell a million records and make the artist a pop star. Instead, it means that your label can do its job and will fulfill its responsibilities to the artist (namely, recording and releasing quality product).
The quality of records your label produces will have a big influence on its reputation, and will either encourage or discourage other artists to sign with you in the future. Therefore, every aspect of your records—right down to the artwork and packaging—should be of the highest quality you can produce. These products are your label’s “resume,” which you will present to other artists and industry professionals who are considering working with your label. The stronger your resume, the better your chance of signing the artists you want.
When your label is just getting started, you probably will have very limited financial resources. However, this doesn’t mean you can’t record and package a good record. Research and preparation can help you overcome financial limitations. The first part of your research will be to learn about the various processes involved in creating CDs, digital downloads, download cards, etc.. The second part is to find the best companies and/or people to help you with this process. I have found that it saves money to use experienced professionals—even those who may charge slightly more—because they are far more efficient and make fewer mistakes than their less experienced colleagues.
Beyond your label’s ability to make a quality recording, the artist will want to know if you have the resources and commitment to promote and market the records you produce. Indeed, regardless of your label’s size or budget, you should have a marketing and promotion plan in place before you sign a single artist. Unlike large labels, which can produce every style of music, most small labels don’t have sufficient financing to put out more than one genre. That’s okay. An independent label should strive to become proficient at producing a single style of music. The more diversified a small label is, the more diluted its resources become, and the less likely it is to gain expertise in any genre. This certainly will limit its promotion and marketing success.
It will take time, but eventually your label can develop alliances with the best producers and studios for the type of music you put out. You will learn how to find, work with, and promote artists who make that music, and how to advertise to the appropriate audience. By creating a niche for yourself, your label can maximize the impact of its limited funding (and the success of your artists). Labels like SubPop, Blue Note, Cash Money, Metal Blade and Rounder have shown how small record companies can succeed and have a huge influence on their corner of the music industry.
Be open to discussing your goals and plans for each artist so that he or she understands how you will promote and market his or her record. If you’re trying to sign an artist who already has developed a fan base and achieved some success (through previous recordings, radio airplay, regional touring, etc.), listen to the artist and be willing to work with him/her to build upon that success.
It is also critical for you and your staff (if you have any) to do your homework and operate your label with professionalism. This is a sophisticated business. If you don’t understand how it works and how record labels fit within the industry, you will appear uninformed and ill-prepared to potential artists and their representatives. Even successful label owners who know the industry can gain a reputation for being unprofessional if they appear arrogant or disorganized. Lapses such as failing to pay bills or royalties in a timely manner, or acting badly toward third parties, will inevitably hinder a label’s ability to sign artists and to grow. Conversely, being competent, knowledgeable, and professional will make your label attractive to talented artists, set a good example for your employees, and encourage third parties to work with you.
Another component that is crucial to a record label’s success is the contract presented to each artist. The contracts you use are necessary and important business tools for your company. They should reflect your label’s business practices and adhere to basic industry standards, while delineating how you plan to deal with each artist you sign. New independent labels sometimes obtain recording agreement forms from books or the Internet. This is fine, but don’t make the mistake of molding your business to the terms in those contracts, or agreeing to services you cannot provide. In other words, review and revise any contracts you’re going to use, making sure they reflect how your label is conducting business and what it can do for an artist.
Unlike independent labels, major record companies usually give the artist a lot of money up front. On the other hand, major-label contracts tend to be more restrictive than those from independent labels, as they are designed to protect the label’s investment by controlling most aspects of the record’s creation and promotion. A small label that attracts artists by offering creative freedom and less restriction should not present a major-label contract to its artists. Instead, this label should employ an entertainment attorney to create a contract that will protect the label, yet be consistent with the label’s ideals.
Finally, make sure your label can coordinate and carry out all the work required to deliver on its promises. Young, developing artists who are serious about their careers should understand that it is important to start out with independent labels, and they should not expect instant fame and fortune with their first contract. You don’t have to offer a million dollars to attract talented people; artists simply want to know that you’ll live up to your side of the deal. So it’s important not to make promises beyond the scope of the label’s capabilities.
When you start out, you may not be able to offer anything more than to produce a quality recording with quality packaging, do some basic promotion and limited advertising in local markets, try to get some radio airplay in the local market, and provide record distribution on a consignment basis in a few local record stores. This is what you can do, and you’re going to do it well. It’s nothing to be embarrassed about.
To make sure everyone is on the same page, you’ll want to discuss the artist’s goals and expectations before offering a contract. Make sure the artist understands what your label does (and does not do) so he or she will not have unrealistic expectations. Promising more than you can deliver will only cause problems with artists currently on your label and give you a bad reputation among other artists you may want to sign. It’s better to have an artist walk away because you can’t do enough than to lure someone with an offer you can’t fulfill. Focus on building a reputation as a small, but professional and competent label that produces quality records, offers reasonable contracts, and sets realistic expectations. This strategy will help your label to establish a positive standing in the local industry, sign increasingly better artists, develop good business contacts, and grow.
Things You Can Do Today To Build Your Label
1. Be professional and work hard to achieve some success for the first artists you sign, while building your good reputation.
2. Even if you have limited resources, make sure all of your records—including artwork and packaging—are of the highest quality your label can produce.
3. Be honest with artists and promise only those things you know your label can provide
This blog entry is an excerpt from the book titled Music Business Made Simple: Start An Independent Record Label that can be purchased at this link: Music Business Made Simple.