Can I Start a Record Label with No Money?

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The information contained in this article is not intended as a substitute for legal advice. Your contract and circumstances may be different. Always get legal advice before entering a binding agreement.

Can you start a record label with no money? I know those of you out there with labels are scratching your heads at the very idea, but this is a question that comes in very frequently - and maybe it is not as crazy as it seems.

Let's be clear up front - you cannot start a record label with absolutely NO cash - not if you actually want to have a functioning label. BUT - you CAN start a label for less than you may imagine. The trick is realistic expectations, and, most importantly, being willing to roll up your sleeves and get your hands dirty. In other words, be ready to make up for your lack of cash by devoting extra time to the label.

Let's not get ahead of ourselves, though. Let's consider first the basics expenses of starting a label and getting your first release out:

  • Business Start-Up Costs - Cost of filing for business name and license. This varies depending on the laws where you live. If there are to be partners in your label, you may need a lawyer's help to draw up a basic business agreement at this stage, which is an additional expense.

  • Legal Advice for Artist Agreements - Many small, indie labels write very simple contracts without consulting a lawyer, but if you're not sure where to start, a lawyer can help you draw up a standard contract. Remember, though - you're setting up a small label, so you want to keep it simple for yourself and your signings. Elaborate contracts are not necessary for your purposes here.

  • Manufacturing - If you want to have a physical product, you'll have to pay for pressing of CDs and/or vinyl. Skipping physical product for your first releases translates into significant savings but be sure to consider your audience. Are you creating a label that will release music to people who still tend to buy CDs or that want to buy records? Going all digital just to save money isn't a good formula for success if your lack of physical product is going to spell disaster for sales. Add artwork costs in here as well.

  • Promotion - How are you going to let people know about your label and your releases? You need to target media - online, press and any relevant radio. You can do a lot of promotion in-house - believe it or not, many, many indie labels do just that. It is hard, hard work, but it saves you thousands. Of course, hiring an outside PR company for at least part of your promotion offensive not only saves time but could help you land some press you wouldn't get on your own. It is important to consider the cost versus the benefits before you decide. To help you make up your mind, check out Questions to Ask before You Hire PR.

  • Label Identity - At a minimum, you'll want a label logo and a website - do you have the ability to do this stuff yourself, or do you need a designer and web designer to handle it for you?

Of course, that list is not exhaustive, and the exact price tag for these things can vary so wildly it's hard to even give a starting point. Why? Because it all comes down to decision making - and the decisions you make right here, right now will determine just how on-the-cheap your record label start-up can be. Consider these cost-managing ideas, but keep one overarching idea in mind: the point is to find a compromise that legitimately saves money, not ideas that save cash in the short term but hobble your project in the long term.

Here are just a few things you can do to keep costs down:

  • Release digital music only
  • Do your own press in-house
  • Work with graphic designers/web designers who are talented but looking for experience to establish their careers - they will work for free (or very cheap) for a chance to build up their professional portfolios.
  • Consider 50/50 deals with artists - they bring a finished master, you provide label services (apart from paying for recording costs) and you split the profits 50/50.
  • Get several quotes for every expense before you open your wallet.

Here are some expenses to avoid:

  • Vinyl - depending on your reserves - and most importantly, your audience - you may be able to swing a vinyl pressing. However, don't invest in cool but unnecessary things like colored vinyl. There will be plenty of time for that sort of thing down the line.
  • Special packaging (for instance, eight-page, full-color booklets or gatefold sleeves)

As you can see, when it comes to starting a record label with no money, it all comes down to careful cost management. You will need some money behind you to really get going, but don't write off your ability to do a lot of work in-house to save money. Fear not the learning curve. Sure, you will have to figure things out on the fly and do a lot of trial and error to find out what works for you. That was part of the process for even the most successful indie labels out there. Realistic expectations, musicians who are interested in growing with you and tons of hard work can all make up for your lack of substantial cash - and they could even help you build your goldmine.

Before you take the plunge, check out this information about starting a record label:

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