Starting an independent record label
Starting an independent record label means setting up a small company that signs an artist, releases the music, and distributes it without the backing of one of the 4 major groups, and it is the path the small label scene on this site is built from. The practical work is a 5 step path: choose the music, set up the company, make the first release, find the distribution, and run the day to day operations. Each step has a cost and a decision, and the first release is the one that tests whether the label can survive. This page walks through the path step by step, so a person who wants to start a label knows what the setup, the release, and the operations look like.
This is the practical guide to launching a small label: it covers the setup, the first release, the distribution, and the day to day running, in the order a new label meets them.
Step 1: choose the music and the artists
Step 1, choosing the music and the artists, is the decision that shapes the whole label, because the small label lives on a niche and the niche has to be one the founder knows. A new label should start with 1 genre and 2 or 3 artists rather than a wide catalogue, because the small label scene is built on depth in one corner, not breadth across the market. The music to choose is the world, folk, jam, or singer songwriter corner the founder can sign and promote, and the artists to sign are the ones who already play shows and already have an audience, even a small one of a few hundred. The test for the first artist is whether the label can fill a room for them, because the first release is paid for by the shows and the direct sales, not by the stream. Choosing the music is the first step, and it sets the rest of the path.
Step 2: set up the company
Step 2, setting up the company, is the legal and the financial groundwork that comes before the first record is pressed. A new label registers a business name, opens a bank account, and puts together a simple business plan that names the first 2 or 3 releases, the budget for each, and the way the revenue is split with the artist. The budget for a first release is a few thousand dollars, covering the recording, the mastering, the pressing of a small run, and the distribution, and the plan should show how that is covered before the label spends it. The contract with the artist is the other part of the setup, and it should state the term, the split, and who owns the master, in plain terms that both sides can read. The company is the vehicle, and the setup is what makes the first release legal and fundable, which is the point of the step.
Step 3: make the first release
Step 3, making the first release, is where the money goes and the label is tested. A first release is usually an EP of 4 or 5 songs or an album of 10 to 12, recorded in a small studio over a week or two, then mixed and mastered, and then pressed as a run of 500 to 1,000 CDs or vinyl, or released as a digital file first. The small label scene presses in small numbers on purpose, because the first run is a test of the audience and the label can press a second run once the first sells. The release is also where the label learns its real costs, because the studio, the mastering, the pressing, and the artwork add up faster than the plan expected, and that lesson shapes the second release. Making the first release is the step that turns the company into a label, and it is the one a new founder should get right before thinking about the next.
Step 4: find the distribution
Step 4, finding the distribution, is the step that gets the finished record from the pressing plant to the listener, and it is the part a new label most often underestimates. The small label has 3 channels: the direct sales, the independent distributor, and the streaming platforms. The direct sales are the records sold at the shows and through the label's own store, and they are the highest margin of the 3. The independent distributor is the company that ships the physical record to the stores and the online shops, and the small label scene uses a handful of these distributors to reach the shelf. The streaming platforms are the digital release, and they pay a fraction of a cent per play, so they are the reach rather than the income. The distribution is how the small label releases and distributes the music, and the 3 channels together are the path the record takes to the listener.
Step 5: run the day to day operations
Step 5, running the day to day operations, is the work that keeps the label alive between releases. The operations are the 4 jobs the small label does in-house: the booking of the shows, the writing of the press and the promotion, the handling of the orders and the shipping, and the keeping of the books and the splits with the artist. A small label of 1 or 2 people does all 4, and the operations are the reason the label is a job and not a hobby. The day to day running also includes the decisions of the catalogue, which artists to sign next, which release to press, and which distributor to use, and they are made on the same small budget that paid for the first release. Running the operations is the last step of the path and the one that never ends, and it is what separates a label that lasts from one that makes a single record. The small label scene is full of labels that got through the 5 steps, and the path is the same for every one of them.