What is a Record Label?
A record label, record company, or simply records, is a brand or trademark of music recordings and music videos, or the company that owns it.
Record Label Registration In South Africa
1. Choose your genre/sound/audience
Dr. Dre founded Death Row to pump out gangsta rap without the labels telling him what he could and couldn’t rap about. While the genre borders are becoming more and more blurry these days, most labels still work within a set sound, niche, or market that caters to a specific audience.
2. Get your brand in order
On the topic of your brand — it all starts with the name, so make sure that it’s available. Crucial first branding steps include:
- Coming up with a business name that reflects your values
- Acquiring a website domain
- Filing a trademark application
3. File your business
As we mentioned, the process of actually setting up a legal entity will differ a lot depending on the local legislation in your country. We can’t go through all of it, so we’ll focus on the US instead. If you are planning to set up a label in another country — check in with local procedures for setting up an enterprise.
In the US you can file as an LLC, Corporation, or a sole-proprietorship. This can be done through your lawyer or a service like LegalZoom. Each of these options offers different advantages.
A sole proprietorship is a solo venture that’s easy to set up and provides you with the most personal control over the label but also leaves you personally liable for the label’s financial obligations. An LLC is a group venture that limits the liability of investors (i.e.. you) — which means that, while it’s a bit trickier to set up compared to a sole proprietorship if your LLC label goes broke and can’t pay out the debts, you wouldn’t be liable for it.
A corporation is the largest and most complex venture of all, perfect for, well, corporations — with dozens and hundreds of stakeholders and investors. Corporations can have some tax advantages over LLCs, but the structure itself might be a bit too costly and complicated to maintain if you’re starting in the recording business.
4. Get an ISRC “stem” from the National ISRC agency in your country
The ISRC is the primary UPC (Universal Product Code) of the recording business. While far from perfect, ISRC is a must if you want to distribute and monetize music.
5. Consider registering with SoundExchange and Neighboring Rights Collection Societies
Brace yourself as we’re entering into the complex world of “non-primary” royalties. Without getting into too much detail, the master rights you own generate royalties apart from the primary streaming payouts. However, you’ll have to go through a couple of hoops to unlock those cash flows. Here’s a quick summary:
- Terrestrial Radio in the US doesn’t generate public performance royalties for master rights owners, compensating only composition owners (songwriters and their publishers)
- Digital and Satellite Radio (including Pandora, SiriusXM, and so on) do generate performance royalties to master rights owners. Register your music with SoundExchange to collect them
- AM/FM radio outside of the US also generates performance royalties — those are known as Neighbouring Rights. To collect them, register with PROs collecting neighboring rights royalties in the markets where your music is getting airplay: PPL in the UK; GVL in Germany; AIE in Spain, etc.
Bonus Tip: Use Soundcharts radio monitoring to keep an eye on the airplay across the globe and see where your music earns neighboring royalties. Right now, we track more than 1,700 AM/FM radio stations in 68 markets.
6. Set up a process to pay out mechanical royalties
Even though the labels own the rights to the (or license) master recording, they still have to secure the rights to mechanically reproduce the composition by paying out mechanical royalties to songwriters.
When it comes to streaming, DSPs take care of mechanical royalties themselves — but all other distribution channels channel the mechanical royalties back to record labels.
7. Establish sample contracts
There are several different agreements you’ll need in place to create a payment, royalty, and rights structure for any/all artists on your label.
8. Get artists on board
Do you have a lot of clout to your name in the music industry? Capitalize on it and bring in some of the best and brightest artists you know for your label. Make sure that your choices align with the niche/genre that you’ve chosen for your brand.
9. Look for investors
Running a label is expensive: it requires investing a significant amount in recording, promotion, touring, and more. Acquiring investors is easier if you have music artists with a proven track record of success.
10. Set up distribution channels
Playlists on the DSPs have largely replaced albums as the primary way that listeners discover new music, so robust digital distribution is the key to growing your audience.
11. Keep an eye on potential sync opportunities
Sync deals aren’t just an opportunity to generate royalties; they’re also an excellent avenue of promotion for independent artists. Many music careers have been minted on brief TV, movie, or advertisement appearances.
12. Set up a release cycle and promote
A label’s work is based on the release cycle — everything ties back to it. You’ll need to plan out release cycles with your artists, set up deadlines, and define promotional activities.
13. Divvy up royalties
When album sales come in, look back to your handy payment structure contract to see how much you owe your artists and how much goes back to the business. Try not to have a Suge Knight-type label!