In general terms you as a record label are a little bit like a bank , you are loaning the artist services, money etc, in the hope that royalties will flow and everyone gets paid – but you are also in theory the knowledge bank , using your contacts (as long as you have them in the music industry and not the fine furnishings industry if that is your background) to help carve out a career for your bands, striking deals with pluggers and PR people as well as distribution outlets to build success. At this stage we can really go into the minute detail and it could get as tedious as some of those ‘fake music advice sites for bands’ but you need to fully understand that you are dealing in a very precious commodity, the music that someone has created and it is something that can take on truly irrational proportions as many musicians feel their songs are similar to their family, children, partners etc – it is also very important to understand that the power of a record contract in the minds of many artists is similar to the holy grail but can end up like that odd plant in the botanics in Cambridge that only flowers once a generation etc and ultimately stinks the place out – soon there will be no record labels as we know them but for the moment let’s go down this road.
It has to be remembered as a budding label entrepreneur that it is only somewhere between 4 to 7 % of acts signed ever give a return on the investment. As an artist, it is also worth remembering that with this all-pervading view of everyone’s music being a free commodity you will need to embrace elements of incentives for labels to truly promote your music by giving some other aspect of your revenue stream to them. As a budding record company entrepreneur, the more you can be simple in your first stage agreements and understand how the maths will work and hence what you will and what you won’t pay for, then you will know that the artist is going to first look at (unless they are mad), the % of their return from sales ie for every £1 what they actually get back for creating the music in exchange for your funding, in some way shape or form, the career they are developing.
It is important that you explain fully to an act that if you pay for the creation of the recordings then you will own the recordings, now don’t forget that is different to owning the publishing of the songs but more of that later. There are many, many examples of artists who have huge success and end up filing for bankruptcy [ 50cent, Toni Braxton, Michael Jackson! ] and many more labels that have success with an act then make bad decisions on another one and end up hitting the rocks.
As a label do not let your heart rule your head and most of all make sure you feel you can have a strong working relationship with your artist, if you feel they are not on your wavelength maybe best to walk away – as once money comes into play you will find a lot of artists and a lot of labels start seeing things differently, so if it is not all written in stone in a simple or hugely complex agreement then there will be problems hence why as the label your new best friend will initially be your lawyer and in many cases as a start up just accept that you will have to pay them in order to sleep easy in your bed at night.
This is just a TINY insight but gives you an overlook into the world of independent record labels.
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