Posts Tagged ‘Indie Labels’

Profit Potential in Starting an Indie Record Label

Sunday, June 7th, 2009
Kc Smith asked:

There are varying opinions about how much money (if any) a person or group can earn by starting an independent record label. The truth is that there is real money to be made, but you definitely earn it through hard work. Believe it or not, sometimes the artist ends up making more money through a small indie label than he or she would signing with one of the “big boys.” Now, that’s what we like to hear!

It’s true that the return on investment can be higher for an independently released album than for one that goes through the more traditional channels. The explanation for this revolves around the amount of money spent to get the album into circulation. Plus, indie labels are more likely to work equally for all of their artists. The bigger labels choose which artists to back with the most support. This is a bit of a catch-22, though, because the more money they spend promoting the music, the more sales have to be made to break even. The artist won’t see any money until those costs are recouped.

The independent record label is going to spend a lot less when promoting their artists, which may seem unfortunate, but they also have to sell significantly less copies before they start making a profit. If the indie label spends $1,500 producing and distributing an album, they only need to sell 100 copies at $15.00 each before they start profiting. On the other hand, if a larger label spent $30,000 promoting an album, they would need to sell 2,000 copies before breaking even. You may also be able to offer the artist a higher royalty rate, too, as the overhead expenses for your business are probably much smaller than those of a big label.

Because the small, independent labels have less funds to contribute to promotion, they often become masters at finding free and low-cost ways to do the job. Of course, one of the first orders of business is to create a web site so fans can order the music online or purchase any merchandise that may be promoting an artist or the label. Including that address on every item sold ensures that anyone who listens to someone else’s copy of a CD has the information they need to go online and buy one themselves. Live performances are also a great way to make sales. Often the band manager or even the artists themselves will set up a table at performances and sell copies of the CD. It’s even possible to set up CD signings at local music stores.

While these methods for selling albums aren’t as glamorous as cardboard cut-outs of the artist at the local music store franchise, they are necessary for the indie label. An event that leads to 20 CDs sold can add up to more money for the artist than having 1,000 sold through a huge record label. Remember that anything sold after recouping the original investment is pure profit!

Starting an Indie Label: Not As Hard As You Think

Thursday, June 4th, 2009
Ty Cohen asked:

Independent record labels have been around since the beginning of records themselves. The biggest problems in the past, when figuring out how to start an independent record label, have had to do with funding and the generation of profits. “Indie” labels more recently though have exploded on the music industry scene for many reasons. Over the next few minutes, we are going to go over how to start a record label and why it is not as hard as your think.

Learning how to start and run your own record label is not an impossible feat by any means. In fact, the whole process has become much easier with time. Up until the 1990’s recording equipment and products were gigantic and quite expensive. But now they have not only shrunk in size but the price has shrunk as well. This has made things much easier for all those out there who were trying to figure out how to start an independent record label with very little cash flow. So, that solves your equipment problem. Now, where to put it…

Once you have the equipment, you are going to need some sort of make-shift studio. Some people may have the luxury of starting this business at home. But this all depends on where you live and the set up of your home. Deciding to start an independent record label from home can cut your costs tremendously. If this is not an option for you, then a rented space can be surprisingly cheaper than you would think. If you just want to test the waters before totally committing, then renting a pre-stocked ready-to-go studio for around $100/hr. is another option to consider. Remember, you are just starting out so you don’t have to go “all out” in the beginning.

Now you can see that there are many options for those contemplating how to start a record label. The Indie record label market is on the rise, so what exactly are you waiting for? As you can see, the cost of starting up are minimal and believe me, in the long run, the profits can be great.

Starting your own label can be risky business but risk is something that every entrepreneur has to take at some point. With proper guidance and the right amount of determination, learning how to start and run an independent record label should be no problem at all.