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I have a friend, initials "AM," who works in the entertainment business in LA He worked for Motown, Capitol and some others before starting a few of his own, too. People ask him all the time about starting their own record labels. Then, too, he says, he runs into people all the time with business cards that say they already have one. Over the past few months he has explained the whole "record company game" to me, and I finally get it. In fact, I get it enough that I can now tell others about it (without damaging my pal's seminar business at a few hundred bucks a head). Based on his 40+ years in the trenches, I'm going to tell you what having a record label in today's marketplace really means.
First of all, just because you have a business card that says "XYZ Records" does not mean you have a record label. It is a very, very complex thing. It requires a team of people who have expertise in the various aspects of the record industry, just like in any other business. You have to have a chief financial officer, a chief executive officer, someone to head up the marketing, someone handling promotions, then there's legal affairs, business affairs, public relations and all the rest. Each one of these people needs to be competent (or better!) In their particular job descriptions, too. If you are going to be a one-man or one-woman operation, you had better have broad skills, acquire them all or find people you can rely on who do have them. (Got money to pay 'em all? Thought not.)
Above all, to start what we recognize as a conventional record label in today's market would require a tremendous financial commitment. Sometimes people have a tendency to fool themselves into thinking that they have a record company because they trot out a song and album that they think is so good that it is going to catapult them into record label status. That is totally incorrect due to the fact that record labels are based solely on the financial ability to compete in a marketplace, and that requires a tremendous amount of financing. Internet or no Internet, not everything you do can be "virtual" and "by download only." That does not inspire confidence in anyone, consumers or investors, and will peg you as one of the 30 million wannabe's.
What happens these days is that artists, or people who have so-called record labels, think that they have a music product (an act, a track, or both) that is so good that a company like Universal or Sony or Motown is going to come along and sign them and give them millions of dollars. This dream has them becoming "a force to be reckoned with" within the music industry. Where people seem to make their biggest mistake is not understanding how people at these major labels think and work, what their mindset is, or anything else.
One of the first things that you have to understand is that record labels are staffed by accountants and lawyers, so more than anything they want to see that you have a solid team that can make them money. You have to have the right professionals in the right places, and a business / marketing plan that shows how you can make a profit. This needs to happen way before getting into the musical product. That's right: The plan, and the work, is more important at this point than the music.
Frankly, if I were going to start a record label in today's marketplace, the first thing I would forget about is manufacturing promotional CDs or printing flyers. To the real pros this makes no sense whatever. With the advent of the Internet, a technology that's available to everyone for reaching everyone else, you can reach out to people without incurring all of the expense of manufacturing CDs or producing printed throwaways. I do not understand why people run around and give away CDs and print up thousands of thousand little flyers and hand them out at music conferences.
This boggles my mind, because all they're doing is wasting tons and tons of money. Those giveaways, those CDs and flyers, can get thrown in the trash very easily. Plus, it takes 10 to 15 impressions to make a sale, and one flyer impression is not going to be enough. So you spend all that money on flyers and spend all that money giving away CDs and T-shirts, while that money could have gone into your marketing plan. It is just a tremendous waste of money but it seems people have been doing it that way so long, even big labels and artists, that they do not want to change it for some reason. It is embedded in their minds that this is the most effective marketing and promotional tool, and that you need to do all this and put up signs on telephone poles, too. I suppose this makes some people feel like they're out there working, promoting their product or project. But there are many easier and more effective ways to reach the masses than to waste all that time and money.
Your "company" is not a card, or a plan, or a goal. Your company is the sum total of all you are doing to get that music heard. Therefore, do not get talked up in building empires, or setting up offices, or printing corporate letterhead. All that will come together if and when you start building a buzz, generating interest and hearing about people asking DJs (live ones, radio ones, all kinds) to play your tracks. Take it one step at a time, and make sure the steps are mapped out as well as you can map them out. Of course there will be surprises, missteps, mistakes, unforeseen things both good and bad, but you just stay persistent.
If you start making some waves, keep on learning how to ride them, get help when you need it and never be afraid to get back on the board if you wipe out. I never knew surfing could be such an appropriate metaphor for the music business, but there it is!
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