Starting a Record Label

STARTING A RECORD LABEL

By, Dan McAvinchey

Releasing your own music on CD means that, for all intents and purposes, you've become your own record label, even if you didn't go about the administrative tasks of setting up a separate company. A record label is in the business of releasing records; since you've done that or plan to do it very shortly, you are already performing the job of a record label. It makes sense to take a few simple, additional steps to formalize what you are doing under the business title of Record Label.

The advantages of doing this are:

* Giving your activities a separate name helps you establish an identity or a brand name, and gives it a professional look (plus, it just sounds better).

* When your recordings sell, you can accept checks made out to the label, instead of Joe Blow, Musician. This establishes your income as coming from recording activities.

* If you ever decide to record or release music by other musicians, their music can be produced under your label.

* As a separate business you can lease equipment (computers, recording equipment), establish a commercial bank account, and accept credit cards as payment for your records.

Many labels were started by artists with the sole purpose of putting out their own music. The classic story, often repeated, is A&M Records, which Herb Alpert allegedly started with $500 and a dream. You can begin small and just put out your own music on your own label. At some point you may decide it will be time to release other musician's work on your label. There are some benefits to doing this; a multi-artist label has an easier time getting distribution deals and when your records are not selling well, income from other artists on your label may sustain you and keep the dream alive. Just ask Madonna.

Don't think it costs a lot of money to set up a record label; the costs associated with manufacturing your cassettes or CDs will far overshadow any money spent on giving your activities an official title.

For now, let's just get a record label established to release your own music.

CHOOSE A NAME

Choosing a name for your new label can be the most fun activity in this process, and also the most time consuming. That's because in your best efforts to come up with a creative, original name that fits your music or personality perfectly, you may pick a name that's already being used -- by a record label, production company, band, or even a dry cleaner. Legally you can use the same name as a dry cleaner (example, Cyclone Records and Cyclone Cleaners), you just may prefer to avoid direct name recognition competition with established businesses in your area. You obviously can't choose a name in use by someone in the same line of business.

There have even been cases where very large companies whose products and services are available around the world have prevented businesses (through lawsuits) from using their names or trademarks in any other business For example, Apple Computer did not have to change their company name, but they were prevented from entering into business activities involving music by the Beatles' record label, Apple Corps. I suggest avoiding the following label names: McDonald's Records, IBM Music, Microsoft Records, Xerox Music, etc. You might even be advised to avoid names like Microshaft Records; corporate lawyers are so powerful they might be able to cause plenty of headaches for you just when you finally secure that national distribution contract.

Having said that, choose a name that you really would be proud to be associated with if it wasn't your own label. It can give the music buyer a sense of the type of music on the label (Shrapnel Records, Earth Beat!, Higher Octave Music, Concord Jazz, Guitar Nine Records); it can be the last names or initials of the owners (A&M Records); it can be generic to reflect a wide variety of music on the label (Electra, Critique, Capitol). This label name will be your calling card when distributors, record stores, or larger labels refuse to deal with you as an individual artist or band.

To see examples of the wide variety of names in use out there, check out some of the lists of record labels and record companies on the WWW. Use a search engine like AltaVista on the Internet to help you find this information. After your record label is established, make sure you e-mail sites like these with your label name and mailing address, so the world knows your new record label exists.

Once you've chosen a name for your label, always use the word 'we' when talking about the label, even if you're a solo artist. "We started this label to bring more industrial world acid punk music to the thousands of fans who can't find it in their record stores," or "We plan four releases over the next three years". Even if you are alone at first, more than likely you will have people helping you and the label's product is really a collective effort, even if you are personally taking all the financial risks and reaping all the financial rewards.

FILE A FICTITIOUS NAME STATEMENT

All businesses must file for a fictitious name (sometimes known as a D.B.A., Doing Business As) license with the secretary of state or registrar of deeds in their home state, giving them the right to do business under that name. A search is performed to ensure that the name is not in use by another business in the state. When I started Guitar Nine Records, I went to the Registrar of Deeds office in downtown Raleigh, North Carolina, filled out the form, looked up the name in the computer with the help of one of the workers there, and paid my fee. It can take less than fifteen minutes to do, and you don't need a lawyer.

Given the fact that you may find the name you've chosen to be unavailable, select a few names in advance, so you don't waste a trip.

CHOOSE A FORM OF BUSINESS FOR YOUR LABEL

There are three basic forms of business you need to concern yourself with at this time. One is a sole proprietorship, which is a single owner situation where profits, losses, risks and liabilities are all the responsibility of you, the owner. The second is a partnership, which is simply where two or more partners share the risks and rewards. The third form is a corporation, which is a separate legal entity, which limits the owners' (known as stockholders) liability and risk to the property and assets of the corporation.