The Benefits of Forming An Indie Record Label
Yes, there are still many Artists and Bands out there that still dream about being signed to that Big Major Label, or at least to a Large Indie.
Let’s face one fact: Most Majors won’t sign you anyway until you are able to sell a minimum of 25,000 physical or digital products on your own, or with an Indie – so why not You just being the Indie, yourself, meanwhile?
Here’s a few of the major benefits to at least starting out on your own:
1. If you do well locally and regionally, and have an established presence on the Web, you will probably get a much better contract offer with an established Record Company than you normally would have – if you could get any Contract offer.
2. You will receive and possibly retain much of your own Production Company/Recording Company royalties.
You must understand, if You paid for the Recordings, or used your own studio, or worked out a deal with a Studio, whatever with whomever – you own the Recordings! That (P) you see on a CD, stands for the owner of the “Production” [Recording]..
3. You’ll have a much better chance of keeping, or at least getting some, if not all of your Music Publishing royalties.
Please remember to separate in your mind that the Recordings are one form of Income, and the Songs, are a separate form of Income. They are considered 2 separate entities…
4. You will have, and have a better chance keep more Artistic Control, especially if you’ve proven that people like your Music by the way your product is already selling, and that people are showing up at your gigs…
5. You may even be able to become a subsidiary of a large company. [Ex.: “PP Records/Sony”]
Instead of going on and on, let me just say you’ll be in much better shape regarding having, and retaining, more Creative and Business Control and Power – plus much better Financial Control – You’re handling the Money.
For example, you’ll find out that you’ll make as much money selling 25,000 CD’s, than selling more than 250,000 with a Major. And it’s great not having to wait forever to get penny number 1!
And do remember, nowadays these Major Labels are becoming only interested in 360 deals, where they’re making money on EVERYTHING you do!
By the way, there also have been many, many Artists, [and maybe you fit in here,] who just wanted to, or had to start out on their own, or with a small Indie; a few examples being maybe…
1. Because they weren’t considered “good enough” by the labels… Or,
2. Because they were too “different”, or maybe “too old”, or “not pretty enough”, or the like… Or,
3. Still others who just wanted to keep full control, period.
To sum it up, having your own Record Company, at least at first, is an option you definitely should consider. And remember, it’s also possible, if you start out on your own, and you are happy where you are, you may decide you’d like to stay where you are – being in charge of your own musical life.
Forming an Indie Record Label: Setting Yourself Up For Business
I love it when somebody asks me, “Hey, how do I become [or start] a Record Company?” My answer is ::Poof:: You’re a Record Company! Congratulations! There is no one to stop you!
But, there are things you need to take care of to set yourself up for a safe and successful trip.
First, there are several main situations where a person, or a group of people will want to start a Record Company, so you can reap all the benefits from selling your recorded Products:
1. You’re an Artist, [or the Artist’s Manager], and you want, or need to start one for yourself as the Artist… And/or,
2. You are a Producer, who wants to start a Record Company to put out different Artists they produce… And/or,
3. Anyone else who wants to start a Record Company to put out Artists.
No matter where you fit, there are tactical steps to take, business-wise and legally, so you not only look like you have your stuff together, but you actually do. Therefore, no matter whether you want to Do It Yourself, or align with a Major Label later on, or anywhere in between, you’ll be prepared for anything, and in a good position to deal with anyone.
Today I’m going to focus on an Artist or Band who simply wants to release their own recordings…
Let’s start out with the Business steps and Legal Contracts you should keep in mind:
1. I recommend you Incorporate, to protect your personal assets and for tax reasons, etc. And remember to ask for an EIN# [tax ID number]. Most people nowadays form “LLC”s, which are less expensive and easier to deal with, and are fine for Indie Labels. You can do this yourself – you don’t need an Attorney!
2. Copyrighting your Recordings. Yes, these Copyrights are different than Copyrighting the Songs. By registering your Copyrights, it states that you own the Recordings.
Note: You must keep in mind that the Recordings [formally the “SR” form], and the Songs [the “PA” form], can have different, or the same owners – but are [should] always considered as two separate forms of income.
3. Unless you’re doing it as a single person, you will need a “Partnership Agreement” with the others involved in owning the Company. If you are a “Band”, it will [should] be covered in your “Band Agreement”. This will spell out the power and responsibilities and much more…
4. An “Artist to Record Company Agreement”. If you are the Artist, or your Band is, you should [all] sign to yourself. Why? This way, if you decide later on to be aligned with a Major or other Indie, for Distribution, or for any other reason, you will be in a better position of control, because certain parameters have been set up, and you’ll be dealing as the Record Company.
5. An “Artist to Producer Agreement”. This occurs if someone else is producing you. They will usually offer a Contract to you. Normally a Producer gets paid either:
A. Cash by the hour or song or project, etc. [“the Front End”, or…
B. Points, usually 2 – 4%, on “the Back End”, which covers Sales/Downloads/etc., of Product, or…
C. A combination of A. & B.
Note: Especially if 1 or 2 people in the Band are the Producer[s] [not the whole Band], the actual Producers should sign to their Record Company
Also, if the Artist is signed to their Record Company, the Producer will be hired by the Record Company for producing that Artist, which can solve problems down the Road.
6. “The Splits” = how the percentages of all income are going to be split up. This can become a major headache and must be solved before recording! There is no problem if you are “self contained”, that is, you don’t use any outside people for any creative process, because that is [should be!] covered in your Band Agreement. But if you use outside songwriters, publishers, producers, whomever for anything, make sure it’s all on paper, so that you don’t get “held up”, later on, fighting over monies…
Now I’m asking you to “please stay tuned for the next episode”, where I’ll discuss the way you make your money, and what you need to do so you get what you deserve, owning a Successful Indie Label…
Forming an Indie Record Label: The Ways You Make Money!
Previously I’ve covered the benefits of owning your own Indie Labels, and the Legal/Contractual ends.
Now let’s start making some Money!
And to keep things simple, I’m just going to stick to the particular situation where an Artist, and/or their Manager, owns his/her/their own Record Company, and the Artist, at least at the moment, the only Artist on the Company.
Yes, at some point in time you may wish to add other Artist[s] to your Label, and if you’re a Band, some of the members may wish to do solo projects. No matter what, this will work in those situations, also…
And, although much of this information is aimed at self-ownership, it will help Producers and other type of Indie Owners to check this info out, also. By the way, the following info is in no special order – it’s all important…
1. If you are a Record Company and/or a Performer, sign up with “Sound Exchange” [soundexchange.com]. They will pay you royalties for Artist Performances for Internet only Webcasters, Satellite Radio [Sirius/XM], digital cable and satellite television music performances. And you can sign up as both Artist & Record Company – and get paid twice!
Also, if you’ve had stuff on the Internet, etc., playing lately, do a search on Sound Exchange to see if you already have money due you…
Btw, they’re still fighting about it in Congress, but it looks more and more like there will be a settlement eventually, so that you can get paid for your Artist/Record Company Performances for AM & FM Radio. We’re one of 3 countries in the world where the Artist doesn’t get paid!
2. If you’re the Publisher, also, [You aren’t???!!! You should be!] you need to fill out your “Work Registration” form for each recording of each particular song – so they can track them and pay you! You’ll find these forms, depending on your “Performing Rights Organization” [PRO], [in the USA] at bmi.com, ascap.com or sesac.com
3. Labeling Your Products:
a. Every physical recording you put out should have the correct labeling on it. Don’t forget placing the two “copyright notices” on your Packaging and your CD.
(i) Song Ownership Copyright
Ex. All Songs © 2018 Poochstuff Publishing
and mention whether it’s BMI, ASCAP, or Sesac…
(ii) Recording Ownership Copyright
Ex. (P) 2018 SuchaPhillyPooch Records
(iii). Make sure Your Record Company name, and your LLC or whatever name, and a Mailing Address [Use a PO Box unless you have an office!]
b. Every Web Site where the product is promoted or sold should also have the above information.
Simply put, it’s been proven, the more this info stands out, and doesn’t have to be searched for, the more likely it will be tracked – so you can get paid…
4. Manufacture & Distribution:
Yes, you will need some physical copies, CD’s, DVD’s , etc., even in 2011, because that’s what some people want or need, it’s great promo, and it can make you money.
You have the Internet – now use it. Check out CDBaby and Tunecore, plus there’s Reverbnation, etc., to sell and distribute your digital and physical copies.
Of course, if you can get some stores to sell it great, plus selling at your gigs, etc.
5. Merchandising & Branding
This is a way to make a lot of money, especially nowadays, and includes selling T’s and all other kinds of products associated with Bands.
And if you can work out deals with “Sponsors”, like clothing lines, equipment companies, etc., all the better. They may help promote you and even sponsor your touring, for examples…
This has become a very important way to not only make money, but also to get known which makes you even more money. I am talking about placing your recordings in TV Shows & Films. Even if you have to make little or no money on an Independent Venture, it’s still very important exposure!
And remember, if they’re using your song[s] and your recordings, that equals two separate payments, though it may be licensed together…
Operating a Successful Indie Record Label:
Previously I’ve covered the benefits of owning your own Indie Labels, and the Legal/Contractual ends, and The Ways You Make Your Money.
Ahhhh, the Dilemma of actually hoping to run a successful Indie Label – while simultaneously being “it’s Artist”:
On one side, you’re an Artist, where you must keep in mind, without Great Songs and Great Recorded and Live Performances, you’re wasting a lot of time. Therefore, you should be working on your writing, arranging, producing, practicing, playing shows, recordings, multimedia – while, simultaneously, making, and keeping, the necessary close connection with your fans – or everyone’s wasting their time.
On the other side, someone has to take care of the day-to-day, as well as ongoing projects, etc., that is, the Business Side – that is, if you want it to be more than just a hobby – and you’re interested in at least, if not becoming a GaGa or a Bieber, still earning a living…
The following responsibilities would each take more than 1 blog to describe, so I’ll just list them here with a few comments…
1. Management duties: That is, you need someone with a Music Business Background, at the minimum, if at all possible, responsible for guiding the Artist, as well as running the operations necessary, including coordinating all of your and the business’s activities, including all of the rest of the responsibilities, but not limited to…
2. Record Company Duties: physical and digital “Manufacturing and Distribution”, as well as “Artist Development” [which the Majors don’t do anymore – but it’s still essential].
3. Music Publishing duties: A big source of your income from mechanicals, to airplay, to synch licenses – all separate from your Artist income
4. Agent-type work. For Performances/Booking, and product placements, etc…
5. Making Contacts for any and everything and everyone you need to make things happen.
6. Promotion: To let fans know you even exist… You can be the greatest and most creative performer, with great songs, and great recordings, but if no one knows you exist…
7. Public Relations: Is responsible for putting you and your products in a “good light” to your fans, business, etc. Never forget, as unglamorous as it may sound, You, the Artist, technically as well as actually, are a “Product”, and how you come across to them, is very important.
8. Legal and Contract Work: I’ll just say, ignore this, and you’ll probably get ripped off…
9. Accounting – keeping track of your finances, your money, in and out, and you don’t want the IRS on your tail…
10. Miscellaneous – but important – items and responsibilities, including: artwork, photography, videography, mailings, manufacturing of products [including merchandise]…
11. And the inevitable, “Where’s the money coming from to make this all work?”
Now normally, up until the last year or two, if you were “just an Artist”, and were going through a Major Label or a large Indie, a lot of the responsibilities I mentioned would be handled by the Label. However, Companies have been pushing many of the responsibilities onto the Manager, anyway, so having the right Manager could be a big step.
To me, the ultimate Manager who would be “running my show” would be able to advance my career by having amazing contacts, great-overall music business knowledge, and a lot of money to invest in me… I wouldn’t care of it was a known Management Company, or group of people who had all that was necessary to advance my career in a way that I was happy with.[Of course I would’ve first handled everything in my “Before You Sign With Anyone!” article in my “Free Library” to make sure I retained ownership and control of everything, so as to keep or use for leverage in making the best deal]
If you can’t find that type of person or company who would be interested in being your Manager, then the alternative would be finding the right person or people to handle the Management role. It’s a fact: SOMEONE has to make decisions – and keep everyone going in the same direction, without duplicating contacts and efforts.
No matter what, if at all possible, you want all your people, not just the manager, who fit this description : “It’s just as important to be Creative on the Business end, as You are [or your client, is] on the Creative end”. All the while Staying up-to-date on all formats and ideas, and networks, etc., and a step ahead, also!
It’s also possible, if you start out on your own, and you are happy where you are, you may decide you’d like to stay where you are – with your own company. Or, meeting the situation half way, you may be able to align your label with a larger label where they will do certain particular things for you, such as manufacturing and distribution [often called a P&D deal], for example.
Or, meeting the situation half way, you may be able to align your label with a larger label where they will do certain particular things for you, such as manufacturing and distribution [often called a P&D deal], for example.
You can find more information on what I just covered in these articles in my “Free Library”, or get totally detailed parts of everything I covered, in my Book & Courses available on my site, professorpooch.com.
Also remember, if you have any questions, or need my help in any way guiding you through your personal maze or to handle your legal or contractual end, please email me at email@example.com…
© 2019 David J. Spangenberg
Written by David J. Spangenberg [“Professor Pooch”].
Please visit www.professorpooch.com for more Music Business content like this.
Email David at: Pooch@professorpooch.com