Start A Label :: 20/20 Vision

Hi guys, welcome back. Um, I want to talk about starting a record label, and let me start by saying that if you're an artist and you're putting out your own music, then you are an artist who is putting out his or her own music. You're not necessarily a record label. A record label implies that you've got funding and you're signing other artists and you've got um, an office, like a place where you do business. Um, it's— and maybe I'm just being too hard on you guys— it's sort of like saying that you're starting a health club but you're in the park doing pull-ups on the jungle gym. That's not starting a health club, that's working out at the park by doing pull-ups on the jungle gym. Um, I'm old school, right? I said jungle gym. So when you start a record label, you're going to make sure that you have set it up as a corporation, either an LLC or an INC, like a Subchapter S or a C Corp. Um, you're going to need contracts for the artists that you're going to sign. If you're an artist yourself signed to your own label, then you're going to need a contract even for yourself. You're going to need a corporate structure, so you want an agreement between you and whoever's funding the label. If you're self-funded, then, um, you don't necessarily need a corporate agreement, but you do need to have the corporate structure documents. If you live in a city where you need a business license to do business, um, you should have that as well. You should have funding so that you can afford to market and promote whoever you sign, and you should have some form of distribution for your label. Um, once you have more than one artist, I would, if I were you, I would outgrow TuneCore and DistroKid. They probably hate to hear me say that, but you may want to have a system of distribution that's a little bit bigger, a little bit more supportive where you can actually speak to a person and get some help if you need some help in certain areas. I love TuneCore. I love DistroKid, but they make it really hard when you've got a problem, and I understand that's not their business, model. They're not in business to help you. They are in business to make X amount of dollars every month. And I realize that the majority of their releases don't even stream 100 copies, and that's because most of you guys don't really know how to market and promote, which is one of the reasons I've been doing this 2020 series. But all that to say, if you're starting a label, you have to treat it like a real company. It's not And, and again, maybe I'm being too hard on you guys, but like, I do this for a living. So when I see people playing record label, it really pisses me off because this is what I do 20 hours a day, 7 days a week. So I take it very, very seriously. And when I hear people say that they own a record company but they have no, um, they have no funding, they have no artists, they have no releases, it just, it's just, it's very disrespectful to to those of us that really are running businesses and making a living in the music industry. Not to say that I want to take away your dream, just call it what it is. If you're putting out music independently, then you're an artist putting out your own music. If you're a do-it-yourselfer, then you're DIY. There's a lot of different terminology, but don't pretend to be something that you're not because people will look at you a certain way and then when they see that you don't have your shit together, they're going to have a negative impression of you. So if you start by calling it the right terminology, when people look at you and they look in at your company, they won't just assume that you're a nut job pretending to have a record label. They'll see that you're, you know, you're actually doing what you say you're doing. And to me, that's kind of important. Um, I just feel like you've got to go through all the steps. And there's a lot of books out here on how to start a record label. Um, I'm writing a book on how to market and promote yourself and how to build a buzz, because I just think that the majority of people out here that are making money with music aren't really trying to own a record label. Um, you guys are really just trying to, to create income for yourself and create a better life for you and your family. And that's super duper noble to me. I love that. And I love that we can still make money in music. Um, there was a while there was kind of touch and go, right? We just didn't know that we were going to be able to, um, to continue making money with music. It's way less profitable than it was when I first got into it, but it's also a little bit easier now because with the internet, it just gives us a way to reach a mass amount of people far less expensively than getting into our car and selling CDs out of the trunk of our car. So I really like the way the music industry has gone. I really like where it is today. I'm super stoked about it. My clients are making money, their music is streaming, and, um, there's not much else I can really ask for. So one of the main things about starting a label is you really need to have funding. So go back and check out the, um, videos that I put together for how to find investors. Um, once you find an investor, you're going to need some sort of an agreement between you and the investor. As to how much money they're going to put in, by what period of time, when they're going to get their money back, and what you're going to do with the money. Um, that agreement is super important because it stipulates who's going to do what and by when, so that if something goes horribly wrong, you've got something on paper where you can point to and say, but look, you agreed to do this, and then you can move on and find another investor if something goes horribly wrong. Or it just gives your investor something to go by. I know that there's a lot of companies out here today that are advancing money to artists that already have a royalty stream, so that— and what I mean by that is if you've got a stream of roughly $5,000 a year, you can go to one of these advance companies that are going to advance you money. In fact, I was quoted today in an article at Bloomberg business, Bloomberg.com, talking about exactly this. And I want to advise you that if you're going to do advances in order to market and promote or tour or, you know, whatever, whatever reason you have as an artist or a publisher to do an advance, just make sure that the contract reads in your favor. There's a lot of companies out here that do payday advance loans, and you all know what those are. They're very predatory. There's people that will advance the amount of money that an artist will make over like a 7-year period, and there's just— it's very difficult for you to pay that back unless you have a super hit record. It's sort of like borrowing money and your intention is to pay it back by winning the lottery. Like, your chances of that are just really slim, and you're setting yourself up for failure. And a lot of these advance companies will take ownership if you can't pay them back. And I just feel like it's a sleazy way for some payday advance companies to get into the music industry and scoop up some ownership of masters and publishing that they attach to advances that they make that they know the artist can't pay back. They just, they feel really sleazy to me, and I hate that. So just be really careful when you're doing advances. If you have to do them, just make sure that you're not giving up something that you can't. In this article, it was talking about, um, the deal that little Donald did with his distributor, and I'm not going to get into details because you can go to Bloomberg and read it if you care to, but just know that he's got one of the most powerful attorneys in the country looking over his paperwork. And then on top of that, I sent it to friends of mine that work Advanced Companies, at competition, so that they could look it over and tell me where this agreement might fall short. So just make sure that you've got the right eyes looking over and be really careful, especially when you're advancing money. And then the last thing I want to say about starting a label is that it's going to be as successful as the music that you have the work ethic that you put into it, and the budget that you have for marketing and promotion. So I don't want to make it seem like it's all about money, because it's not. You really can't buy success in this industry. And if you could buy success in this industry, um, the label that BMF Records started would have been the most successful in the history of urban music, and it wasn't. So that kind of proves that you can't really buy success in the music industry. You've got to really have great music. You've got to really work for it, um, have a great work ethic, put in the right amount of energy. The timing has to be right, you know, it's, it's almost like all the stars have to align. And then on top of all of that, you've got to have a little bit of luck too so that, um, you can make it happen. But it's not easy. It's very much worth it, and I hope that you guys are all successful. And that's the whole point of 2020 Vision. I want to see everybody win. Okay guys, take care.