Business Plan: Starting an Independent Record Label

Business Plan: Starting an Independent Record Label

Introduction

First of all I am setting down the employees of “Les Incompetents™”.

There are three of us: The Label manager (who is responsible for running the label), an A&R (the talent scout who mentors the artist through to final recording) and a business developer (who is responsible for the business deals). Although every one of us has a specific title, being a small independent label, we all work on every issue.

The funding of the label came from our personal funding (representing 85% of our funding). I, the head of the label brought 55% of the full funding, the two other equally brought 15% each of personal funding into the label. Three of our friends (5% each) came in for the last 15% to help us as we had trouble finding a bank which would loan us the money for an independent record label! There is no interest on this loan and we have an oral agreement that we have five (5) years to pay back the loan.

We have raised a budget of 15000Ð'Ј to start our record label!

There are no office costs as we all already own a computer and are working in my living room which has been transformed for the occasion into an office.

Our income forecast, which will be more detailed in our cashflow document, comprises:

- Record sales (worldwide and different formats: CD, Vinyl).

- Broadcast Income (income from our records being broadcasted on radio or TV, or played in public places which will be paid to us once we have joined PPL).

- Licensing (giving a license to other companies to put our tracks on compilations or for licensing the whole album on a said territory).

- Synchronisation (which would be great though we can’t directly count on it though we will be pitching as much as possible as there is some important income from this type of licence).

- Merchandising (we take care of the merchandising of our artist which is an interesting revenue stream)

- Digital sales& ring tones (this is a very new market to us, we are looking into at the moment so we cannot fully count on this revenue stream either as we haven’t yet found all the right partners to work with).

On the expense side:

- Overheads which shouldn’t be too important as rent, electricity, telephone and computers etc… are already dealt with as we do not need a new office.

- Staff cost (though we have all agreed on a percentage based payment for the moment we do have to take into account our legal costs here).

- Taxes & National Insurance.

- MCPS bills.

- Recording, mixing and mastering recordings.

- Producers fees

- Artist’s advances and expenses.

- Manufacturing costs

- Artwork & Design (including pack design, photography, websites, logos, promotional materials).

- Videos

- Radio & TV promotion for records or videos (plugging)

- Press (PR)

- Advertising & Direct marketing promotion of our product.

- Distribution fees & Sales costs.

We are trying to keep our fixed costs such as our overheads as low as possible and are taking great care of our cash flow as many costs have to be paid in advance even though the income will come in much later so we have to b very careful on this issue.

We have to of course join Collection societies; this is to say MCPS, PRS and PPL.

As a record company, we have to join PPL as they will be collecting royalties from broadcasts of our recordings. We will register our first recording with PPL through their database (CatCo). This does not need to go into our expenses as it is free to join. This is also why we need to have ownership of the copyright in the recording.

We will also join a trade association, most probably AIM; this on the other side will enter our expenses as a subscription fee is to be paid.

Most of our work will be done in-house though we will have to bring in some specialists when needed such as a lawyer and maybe a PR company.

We do not have our own publishing company for the moment but we hope to get it set up after three (3) years.

THE ARTIST

We have just signed our artist, Mondrian, for a five (5) year exclusive agreement for the release of a four (4) track EP and their debut album.

The contract can be found at the end of the document, Appendix A.

So we own the copyright in the recordings for a minimum of five (5) years.

RECORDING

The album will be recorded at Urchin Studios in London (www.urchinstudios.co.uk), new studios since 2007, price remains affordable without letting go of the quality side. They are operating with Strokes producer Gordon Raphael. As past clients they have had Emmy The Great, Skin, Jeremy Warmsley, Transgressive Records.

We will operate on a daily fee of Ð'Ј200 for a 9 hour day inclusive of all equipment and engineer; we have to look at “problems” such as overtime which will cost us Ð'Ј30 per hour or such as additional cost hours after 9pm which are at engineer's discretion.

It would be lovely to work in Pinna Studios (www.pinnaproductions.com) but much more expensive. Lately these studios have seen the likes of the Kills, Razorlight, MTV, Endemol but the costs are much higher so they will be hopefully used as future reference. Just to se the differences, their daily rate is 350Ð'Ј all services included but only for an eight hour day.

Another solution would be recording the album in Paris as the Band is French at studioras (http://studioras.free.fr/). They are a new studio and the daily costs would be 28O€ with engineer for an eight hour day which roughly