Start my own record label

....at least in the early days. Mike and I have met with several emerging artists lately, and there is a common thread among them… DON’T SIGN UP WITH A MAJOR LABEL UNTIL YOU HAVE A TRACK RECORD OF HITS. Why? Because all of the money they put out to develop your act has to be recouped before you start making any money. That includes legal & administrative costs…marketing & development costs (recording, video, pictures, “payola”, you name it)... in addition to any advance they may pay the artist.

Also, they control whether your material ever gets released and put through their channels.

Alternatively, start your own label, or sign with a smaller label that does not have the same recoup scheme (or perhaps become part owner of an existing label as part of your agreement to sign with them).

Do sign with a major label if your music has a track record of success in a market that will only get bigger if a label puts a lot of money behind it AND remain profitable.

Starting a label is basically starting a company. Your assets are the talent and your liabilities are what you do to develop the talent (performance as well as marketing wise).

If you are a good marketeer, you don’t necessarily need a bunch of money to get going, but you do need to convince the talent that you will market (or develop them) in a better way than if they did it themselves.

Money will come into the equation at some point, and the key is to have everything pre-negotiated and on paper. Having money will make developing talent tangible (therefore more easily recoupable)....there are tax incentives and other things you can do once you start making money….including getting loans or investors.

Interesting things are happening in the market now that digital downloads are driving singles more than albums and specific acts…Also live performance, publishing, and licensing are making more money than album sales for up and coming acts. A&R folks at large record companies are not spending any time looking for new talent, but rather looking for record labels that can be “acquired” to give them a potential library of established singles/artists that they can run through their channels (big radio, video, cross promotional stuff). This is were big money and opportunities are in today’s music business.

It may even make sense to make the acts you sign part owners in the label…and have them contribute to the marketing and development costs….if all goes well, and you’re label is bought by a major label…the owners are the big winners. Potentially, the artist benefit because they have more creative freedom and less liability than if they were signed by a major label to begin with…and hopefully as part owners in the label they make money in the buyout.

My collaboration buddy and I missed a West Coast Songwriters’ Association lecture on this a few months ago, but apparently it comes around fairly often. We have a great little project studio, and a rockin band & many musicians at our disposal….plus a bit of marketing smarts and a decent knowledge of the industry. We’ve been contemplating putting it to use for other artists.