Start Your Own Record Label?
Buzz In The Bizz by Benny White
Ever thought about starting your own label? Many people have already done so, and more are taking the plunge than ever before. The trend is now so prevalent that we decided to take a closer look at what are some of the pros, cons and essential details you need to be aware of to be a successful label owner.
FIGHT THE POWER
The indie revolution is in full swing. While major labels have been groaning about declining CD sales, indie labels have steadily increased their market share. Some reports indicate that indie labels accounted for up to 30 percent of all the records sold last year. These are not your grandfather’s or even your father’s indie labels. This is a whole new generation of indies — labels started by artists, producers, bookers and music aficionados. Today, starting and running your own label is more viable than it has ever been. The internet is one reason; the availability of independent distribution is another. However, the reason most often cited is market fragmentation. There are now so many niche markets, indie labels are having a field day.
LOOK BEFORE YOU LEAP
“You have to be absolutely convinced that starting a label is something you want to do. You need unconditional passion and drive or you’ll lose interest and lose everything.” Keith Holzman knows what he’s talking about. He has consulted many labels and even written a guide about starting your own indie (The Complete Guide to Starting a Record Company). Do it right, and Holzman maintains, “Frankly, there’s no end to what you can accomplish.”
Flowing with the zeitgeist, author/lecturer Daylle Deanna Schwartz wrote the book You Don’t Need a Record Deal. While she was a teacher, Schwartz started her own label and learned via trial and error what it takes to make it work. “You have to want it really bad,” she says. “And it helps if you know what you’re doing.”
Schwartz found the freedom of running her own label to be most rewarding. The result of her experience led to Start & Run Your Own Record Label, a book that is used as a text in quite a few music schools. She has noticed that artists who take the plunge into label ownership have similarly positive feelings. “Owning their own label removes the desperation factor, and allows artists to take charge of their careers.” Those are good reasons, to be sure, but they’re not the only ones that motivate people to form their own labels. It depends on whom you talk to, and whether or not they’re an artist or come from another walk of life.
CHARTING YOUR COURSE
Patrick Arn started Gotham Records 14 years ago and released 28 albums during that time. He has had acts picked up by major labels and garnered placements in major films. Arn is not an artist, he’s simply a music lover who had a dream.
“I got the idea while I was in college,” Arn recalls. To learn about the business, he worked at the renowned William Morris Agency, in the mailroom, until he became an executive assistant. Not long afterward, Arn found an act that took him away from those hallowed halls. “I was so determined,” he says, “that I was willing to do anything to break that band.”
Arn drove hundreds of miles to visit mom & pop stores and radio stations. He became an expert in certain regions of the country (Philly and NYC) and, eventually, his reputation spread. Other acts approached him and he did the same for them. This indie label owner was so successful that, at one point, major labels came to Gotham, asking the upstart to develop their acts.
Feudal Records’ Robert Shahnazarian Jr. started his career at a major label, as a legal assistant. What he really wanted, however, was to produce records. In his spare time he hung out in the label’s studio and learned how to use the equipment. Eventually, he got his break and began producing radio spots for the label’s roster, which led to other production gigs with acts such as Jeff Buckley, Incubus, and the All-American Rejects.
“I learned everything I could while working at a label,” Shahnazarian relates. “I researched every aspect of the business and worked in a variety of departments.” He formed Feudal Records because, as he puts it, “I wanted to work with music I really liked and I wanted more control over the final product.”
When Shahnazarian noticed that technology was changing the business model, he made his move. “I knew that many of the major acts started at the indie level, and that niche marketing had become viable. You can do a lot now with the internet, social networks, alternative radio and placements. Marketing has become more grassroots.” Emboldened, Shahnazarian launched Feudal last year and signed four acts (the Library, Orka Veer, Therese Neaime, and Dead City Sunday).
Mike Giangreco is an industry veteran with over 20 years in the industry. He’s a legendary booker /promoter on the Sunset Strip and was the in-house booker at the Whisky a Go Go for many years. Giangreco booked over 20,000 performances during his career and has seen it all. He also saw the “change” happening.
“Things are different today,” he notes. “The old ways don’t work well anymore, and I felt that someone had to give artists a voice.” Giangreco believes that artists and fans are losing their musical roots and that music itself is being displaced by large corporations. “I saw great artists with no outlets, but I could only book them so much,” he says.
As a result, Giangreco formed Meroke Sky Records to focus on singer/songwriters with a message. His first album is a compilation, The United States of Consciousness, which includes 20 artists he admires. He’s also begun signing other acts to his label, artists who share his vision. For Giangreco it’s a personal mission and a labor of love.
“If you’re really passionate about starting a label, nothing should stop you,” Shahnazarian insists. “Don’t overanalyze your feelings or think so much about it that you talk yourself out of it. Sometimes,” he asserts, “blind ambition can carry you far, as long as you know what’s involved.”
ARTISTIC MUTINY
The motivation to form a label can also be more straightforward, especially when it comes to artist-run operations. In those situations, control seems to be a big factor. Lisa Loeb has had several label deals and is signed to Rounder today. Known for her breakout song, “Stay,” from the soundtrack for Reality Bites, Loeb became famous for being the first unsigned artist to spend three weeks at No. 1 on the Billboard Hot 100 Chart. By all appearances, she has a successful career in music, film and TV.
Even so, Loeb experienced a common occurrence at her prior labels, a lack of enthusiasm in marketing and promotion. “At times,” she explains, “there was a sense of mystery. Nobody knew what was going on; and, finally, I had to hire my own publicist.” She admits, “There are tremendous upsides to being on a major, but there are also tremendous downsides.” However, that is not the reason the artist started her label, Furious Rose Productions.
Loeb wanted to release a children’s record, Camp Lisa. “This record just didn’t seem like a mainstream release to me. It’s a much smaller market and it’s very specific.” Loeb felt that she would be better off doing it on her own. “I wanted more control over the marketing and the flexibility to do what I wanted.”
Unlike some artists, though, Loeb is not only creative; she’s business minded. Starting a label was a challenge she looked forward to. “I’ve always been interested in the business,” she says.
Ryan Cabrera was a platinum-selling major-label act with several hit songs under his belt. He received accolades from Billboard and Rolling Stone. Yet, he grew restless with the star-making machinery of the major label system. Cabrera relates, “My label and I had different views regarding my direction. So when the opportunity came for me to have my own label and make the album I wanted, I jumped at the chance and formed Frolic Room.”
The singer/songwriter’s first release, Moon Under Water, is set to drop in May and it has him a little nervous. “The scariest part is that it’s MY money that’s being put into everything. Hopefully this project goes the way we hope, because if it doesn’t, I take a giant hit.”
Why risk it? According to Cabrera, “[Having my own label] been a dream of mine. I think doing the indie thing is the future. You just have to make absolutely sure that you surround yourself with smart people who complement you, and have strengths where you have weaknesses.”
David Fagin’s band, the Rosenbergs, made it a habit of turning down label deals. “We were courted by a major for a while,” he relates. “And seriously considered it until a label executive told us what he wanted from us.” That exec’s wish-list was so outrageous it stunned Fagin. The kicker was when the exec said, “I don’t listen to music with my ears, I watch it with my eyes.” Fagin’s reaction?: “I thought it would be best if we stayed away from deals that could hurt us.”
At the same time, Fagin saw the future in the internet. Napster was gaining popularity and the music business was changing. “I saw that as an opportunity,” he maintains. “We just needed some funding to get things going.” Placements and day gigs got the band the finances they required, and Fagin hired PR and marketing professionals to help them out. “Even with hired help, though,” he points out, “there are no short cuts. You still have to work your butt off.”
In fact, Fagin uses a tour story as a metaphor for the business. A few years ago, his band played a small club with a slaughterhouse nearby. “The smell of rotting flesh permeated the air,” he recalls. It was so bad that people in the audience were getting sick, and two band members quit right after the gig. “That about sums it up,” he contends. “If you want to live your dream, you have to keep carrying the ball and ignore the rotting flesh. You just have to find other people who are willing to do the same.”
Fagin, now a solo artist, has been lucky enough to do just that. And he says he doesn’t mind the work, especially when it involves supporting his album For Promotional Use Only on his own label, Noshpit Entertainment.
PERSISTENCE OF VISION
The music business is not a stroll in the park. Success will only come if everyone involved is committed to working hard. And the most important part — after talent, songs and inspired creativity –– is the ability to take care of business in good times and bad.
“Persistence is a good quality to have,” Holzman confirms. “You also need a strong business plan and a sense of your market.” By knowing your market, Holzman contends that you can predict, to a reasonable extent, how much money you’re going to need to operate properly and how many CDs you should press.
FUNDING YOUR LABEL
“When it comes to money,” Holzman advises, “you should high-ball the number just to be safe.” However, the number of CDs you press should be low-balled. “It’s always better to reorder, than to have CDs returned to you unsold,” he says.
Schwartz notes that most would-be label owners get initial funding from family and friends. “It’s difficult to get serious investors interested when you’re starting something new,” she declares. But you shouldn’t overlook sponsors if your music or artists would appeal to them. “Sponsorships can actually save you money,” she explains. “They could supply you with equipment, transportation, lodging, and even cross-promotions.”
Both authors agree that you should also prepare for sudden success. As strange as it seems, more than a few indie labels have gone bust because of an overnight sensation. “If you have a hit on your hands and get an order for 20,000 records, you have to fill it quickly,” Schwartz advises. “If you don’t, you’ll lose momentum and your label will suffer.” Schwartz suggests that you get loan pledges that you can tap into at a moment’s notice, just in case you are successful beyond your wildest dreams.
KNOWING YOUR MARKET
Holzman maintains that knowing your market cannot only save you money, it will spell better results for your growing company. Arn adds, “When you’re an indie, it’s almost impossible to break your acts nationally, or in major metropolitan areas like Los Angeles or New York. You have to look for more specific markets.”
Both agree that you should explore smaller markets where you are likely to have greater success. Once you’ve conquered that territory, you can expand to outlying areas. “Don’t try to do too much too soon, “Holzman warns. “That could be fatal, unless you are very well financed.”
If marketing principles are too complicated or confusing for you, Lisa Loeb suggests that you enlist the help of people who have the know-how.
“Sometimes, it’s better for artists to just focus on their music. Not everyone is business oriented, and no one should force them to be.”
Finally, in order to fully service a market, touring is a necessity for most genres. Indie owners should make sure that the acts they work with are prepared to do their share of roadwork. (Electronica, dance, and types of urban music are a few of the exceptions. Those genres generally require radio airplay and/or videos.)
PROMOTING YOUR MUSIC
Touring and radio are the traditional tools of promotion. But alternative radio –– satellite and net –– have opened up many opportunities for indie labels. Additionally, video-based sites have become an extremely popular way to promote your music and acts to the public. Holzman adds, “You can’t overlook the power of web-based video. If you’re lucky enough to have a video go viral, you could have a hit on your hands.”
DISTRIBUTING YOUR MUSIC
The beauty of the internet is that indie labels can distribute and promote their products without having to deal with old-school terrestrial concerns — manufacturing CDs, printing sleeves, boxing, shipping, and on and on. “Eliminating all that can cut costs significantly,” Holzman affirms. “Start-up costs can be dramatically reduced if you’re primarily selling downloads.”
Arn agrees. ”You can be a lot more creative now, because retail stores are less important. You can find different markets just by surfing the internet. It’s a big world and you’re not confined by borders anymore. The only limitation,” according to Arn, “is your imagination.”
Downloads have opened up a slew of possibilities for the independent artist. You can sell directly from your website or contact e-music sites on your own. According to our experts, most indies sign up with a rights aggregator — a company that bundles your catalog and uploads it to sites such as iTunes, Rhapsody, Amazon, eMusic, and Yahoo. Tunecore is one of the most popular companies providing this service, since it only charges a set-up fee and takes nothing off the back end. (Before signing with any service, however, it’s always advisable to read their terms carefully.) Once you’ve established a market and created a demand using these affordable digital tools, you might want to consider terrestrial distribution — finding an established CD distributor who will ship your CDs to retailers nationwide. There are plenty of independent distributors that would be happy to assist an up-and-coming indie label — especially one that has already laid the groundwork and is starting to see success.
DO IT TOGETHER
For years, DIY (Do It Yourself) was the mantra of many indie labels and artists. Today, however, DIT (Do It Together) may be a more reasonable approach. Running a label is such a multi-tasking operation that it is difficult, if not impossible, for one or two people to do it all. It might be a good idea to consider inviting other acts to join you. They could even start their own labels and, together, you can form a cooperative model. “There is strength in numbers,” Schwartz confirms. “It’s always helpful to have someone share the load.” Indeed, many indie labels are associating today, helping each other in a variety of ways.
MAKE A COMMITMENT
We’re in a new age and Mike Giangreco is looking forward to it. “The big labels don’t have a hold on music anymore,” he observes. “Their control has lessened, and they may never get it back.” That perspective gives entrepreneurial spirits hope; they see more doors opening every day.
”You don’t really do it for the money,” Arn admits. “It’s about living a dream. It’s about the excitement you feel knowing that your music has been heard by thousands (if not millions) of people worldwide.” That’s really what it’s all about when you start your own label. It’s a commitment to get your music heard and make a living doing what you love.
10 Most Common Mistakes of Indie Labels
(Note: Most of the following points come courtesy of Keith Holzman’s Solutions Unlimited)
1. Insufficient Capitalization
(Not Enough Money)
This is probably the single biggest mistake people make when starting their labels. They don’t anticipate money needs accurately, and begin operating their businesses with little cash in reserve. Remember, it takes time to build artists and your label.
2. Doing Too Much Too Soon
Indie labels that try to do too much too soon often fail. Examples: (a) Covering too many styles of music can stretch indie resources thin; (b) Initiating a national campaign when a regional approach is more reasonable; (c) Trying to act like a major label when you have limited resources. Starting small and building slow is the key to most successful indies.
3. Poor or No Budgeting
A label’s entire operations should be carefully budgeted. This is the financial road map for how you conduct business. You should create budgets, which can be modified and refined, based on how well (or not) your label is doing.
Indie labels sometimes spend too much on a recording, usually because the project was not planned well. A label’s responsibility is to see that their artists are well prepared and know what they want to do in the studio, on budget.
Don’t spend more on marketing and promotions than necessary. But do spend enough to fulfill your plan. Yes, it takes lots of planning and budgeting, but that’s the way you run a successful label.
4. Poor Planning
Every aspect of how you operate needs to be examined. You should have a grand plan that looks ahead two to five years. If you don’t have one, you’ll find that you’re reacting to events rather than making things happen.
5. Poor Marketing.
You won’t succeed if you make up your marketing as you go along. You should have a specific plan as to how you’re going to achieve success. You must design a marketing strategy tailored to each release — in advance of release dates. Don’t wait until a recording is completed to think about it.
6. Unrealistic Expectations
The marketing and selling of music begins and ends with you and your label. If you decide to enlist a CD distributor, you shouldn’t expect the distributor to market it for you. A distributor’s expertise is in placing your product in retail stores — not marketing or promotion. It is essential that YOU provide your own marketing.
7. Insufficient Exploitation (Lack of Imagination)
Don’t leave money on the table. Exploit your catalog and copyrights to the fullest. Learn about publishing and create multiple revenue streams from placements, downloads, ringtones and any other type of publishing income you can think of.
8. Overstaffing
Don’t employ more staff than you absolutely need. It’s important to imprint the style and manner of business from the top. Label owners must establish well-defined goals and set good examples for their employees.
9. Poor Staff (and Project) Supervision
Your staff must understand their responsibilities and the label’s goals. Then it’s management’s job to see that tasks are handled properly. If management has poor supervision skills, time and money will be wasted.
Outsource whenever possible. This reduces payroll, but these people need to be supervised as well. It’s not necessary to look over everyone’s shoulder all the time, but management must be sure that work is completed on schedule and on budget.
10. Weak Website
All record labels must have an internet presence. Not having a good site is nothing short of negligence. It needn’t be expensive, complex, or show how creative your designers are. Make sure everything is optimized for the web. Flash animation, though clever, can be a nuisance for people without cutting-edge computers. The same goes for too many graphics on a single page. Album covers and artist photos are a given, but they should use as little download time as possible. If a page takes too long to load, your prospective customer is likely to bail out.
Be sure your site is filled with useful information, not bling. Add artist bios, tour information and fun facts. Your entire catalog should be available for viewing.
And, it’s crucial to give your visitors sufficient opportunities to listen to song samples. There should be samples of at least three or four selections per artist. And these should be available in at least one — if not all — of the standard browser audio media: QuickTime Player (Apple), RealPlayer (RealAudio) and Windows Media Player (Microsoft).
Finally, make it easy for a customer to buy your music — either as downloadable files, purchase of CDs and DVDs, or via a link to an established online retailer.