Starting An Independent Record Label: An Overview
Jul 24, 2009
Today, music is everywhere: on radio and television, in supermarkets and elevators, on the Internet, and even on telephones. It would be difficult to go a day without hearing any music. It would be equally difficult to find someone who doesn’t like some genre of music. Why?
One explanation is that music has been proven to affect people’s emotions. Media and businesses use music to influence our moods and habits. You probably even have some or your own favorite music to suit certain situations: workout music, driving music, “mood music,” etc.
However, before music can have an impact, the artist who creates it needs an audience. For the artist to have success in the music business, his or her audience must pay to hear the music, either in recorded form or in a live performance. Enter the record label. As the head of a label, your ultimate goal will be to find a paying audience for the records you release.
But before you get started, realize that your path and goals in the music industry probably will change over time, and that simply knowing the way doesn’t guarantee you’ll reach your destination. The level of success your label achieves will be based on many factors. Some, such as desire, goals, dedication and perseverance, you can control. Others, such as musical trends, consumer buying habits, the economy, and just blind luck, are beyond your control.
Even under the best conditions, it takes years to build a successful record label. At any point along the way, outside factors might require you to change direction. This is not to say you can’t achieve your goals. You just need to be prepared to alter your course and adapt to shifting trends and circumstances.
Your first assignment is to learn about the music business. It’s not enough to know how a record label operates. You also need to understand how different aspects of the music industry affect record companies. Many people believe they know good music and can spot talent, and that therefore, they’re ready to start a record label. However, there is much more than this to the business of owning a label. To succeed, you need to know how to sell records.
Most successful independent labels are established by record executives with many years of experience in the industry. Some are started by former recording artists, and others by people who simply have a passion for music. If you’re part of this last group, you’ll have to make up for your lack of experience by learning as much as you can about the music industry.
Second, you have to learn what it takes to set up and run a record company. There are several ways to organize a business; you’ll need to determine which one is right for your label. Then, there are city, state and federal governmental requirements to meet. Also, it’s critical to acquire—very early on—the music contracts needed to operate your record label. Finally, even if you keep your label small and simple, you’ll have to address issues of funding, bookkeeping, accounting, office supplies, and employees.
Your third assignment is one of the biggest challenges for any record label. You must be able to identify marketable talent and know where to find it. As a smaller label with limited resources, you won’t be able to attract fully developed artists. Instead, you almost certainly will be working with lesser developed artists who or those with raw, unpolished talent. That’s fine. You aren’t running a major record label, and an important part of your job as an independent is to serve as a development tool for artists. You’ll have to decide how best to use your time, money and energy to develop raw talent into skilled recording and live performing artists. And of course, you have to know where and how to find talented artists.
Fourth, you must understand the primary steps involved in making your product (CDs, records, tapes, etc.): recording, manufacturing, and packaging. It’s crucial to have a good working knowledge of the recording process, which will help you to get the best recording for your money and to avoid potentially expensive pitfalls. The right studio, preferably one with experienced professionals or at least a talented producer, can help to stretch your resources and allow you to put out an excellent product, even if you don’t have a lot of money.
After the recording is completed, you have to know how to package your product. Packaging includes creating and printing the artwork to be inserted into the plastic CD/cassette case and printed onto the compact disc or cassette itself. Packaging also includes having the compact discs/cassettes manufactured to fit into their plastic cases. The final manufactured CD or cassette should look and sound good so buyers will be satisfied with it. Remember, your name will be on your product. As with any other business, if you hope to survive and grow as a record label, you’ll need to make quality products.
Finally, you’ll need to understand and master the single most important task for any record label: marketing and promotion. It does not matter how talented your label’s artists are, or how great your products look and sound. If you don’t inform the public about your products and provide an opportunity for people to buy them, your label won’t have any sales and you won’t be in business for very long. Before signing or recording your first artist, do some research about the marketing, promotion, and distribution options available to your label. I discuss this in detail in the section, Marketing and Distribution.
Successful independent label owners understand that their labels are businesses and treat them as such. They take a methodical, careful approach to the music industry and appreciate the value of building their business one step at a time. Not coincidentally, their labels also tend to be the ones that last the longest. These record companies recognize that success and longevity come not with being the biggest, but with being the best. If you seek to establish a quality and long-lasting label of your own, follow their example. The rest of this book will help to show you how.
What Does An Entertainment Attorney Do For Independent Record Labels?
Jul 24, 2009
We’ve all heard horror stories about record companies battling with their artists and distributors. I’ve seen the aftermath, and it’s not pretty. The ultimate job of your entertainment attorney is to counsel you about legal aspects of the music industry so you can avoid these kinds of disasters. Some common responsibilities of your attorney will include drafting and negotiating contracts for you as you enter into agreements with third parties (i.e., distributors, artists, and producers), preparing your copyright or trademark registrations, and advising you on issues as diverse as goal-setting, things to consider when choosing an artist, and your label’s direction.
Most important, the attorney will advise you before you sign any agreements, and do everything possible to make sure you enter into contracts that are fair and protect your interests. He or she will make sure you understand the contracts you sign, and that the contracts are up to industry standards. The attorney also can help you understand how all these legal documents affect your business on a day-to-day basis.
Just in case I haven’t been clear: before you enter into negotiations or sign any contract in the entertainment industry, always get the advice of an entertainment attorney. Simply having an attorney does not guarantee that you’ll get the best contract. However, having an attorney greatly increases the likelihood that you’ll understand the contract you are signing, and that you won’t get burned.
One thing entertainment attorneys generally do not do—despite the popular myth—is seek out and secure production and development or distribution deals—a process known as “shopping” a label. It is true that some entertainment attorneys perform this service, but very few succeed in getting their clients a deal. Those who do succeed almost always are working with a label that already has spent years building its business and has had some success selling records. A reputable, experienced entertainment attorney will explain this to you.
Many label owners want to hear that if they hire an expensive lawyer, they’ll get a deal with a distributor associated with a major label. You can try this too, but I strongly recommend that you don’t. You probably will end up with no distribution deal and a lot less money.
Unfortunately, distribution companies perpetuate this myth, telling start-up labels that entertainment attorneys can shop their materials. Why? Because these distribution companies do not accept material directly from unknown labels (like yours). Instead, they require materials to be submitted by someone—such as an entertainment attorney—who already has a relationship with the major label with whom they are associated. They give you the impression that all you have to do is hire an entertainment attorney to present your music to the distributor, but it’s not that simple. What they’re really doing is leading you to someone who can explain how the business works. I provide this explanation in the chapter entitled Finding A Distributor.
If an attorney says he or she will shop your products to distributors, be cautious. Before writing a check or entering into an agreement for the attorney to send your material around, ask a lot of questions regarding his or her experience, who he or she has represented, and how many distribution deals he or she has obtained for small labels. The fact is you can’t buy success in the music industry. You succeed through development of your label, hard work, and record sales. My goal in this book is to guide you through the process.
What Does An Entertainment Attorney Do For Artists?
Jul 24, 2009
An entertainment attorney's primary job is to advise and counsel clients (i.e., you) about legal aspects of the entertainment industry. Common responsibilities of your attorney will be to draft and negotiate contracts for you with third parties, such as record and publishing companies, managers, booking agents and producers. Your attorney also will prepare your copyright or trademark registrations, and advise you on issues as diverse as goal setting, things to consider when choosing a manager or record company, and your career direction
.
We all have heard horror stories about artists signing bad deals. I’ve seen the aftermath, and it’s not pretty. The single most important job of your entertainment attorney is to help you to avoid these kinds of disasters. The attorney will advise you and protect your interests before you sign any agreements with other industry professionals, or, ultimately record companies. He or she will make sure you understand the contract, and that the contract is up to industry standards. In other words, your attorney’s main objective is to do everything he or she can to make sure you enter into a fair agreement with a reputable record label, producer, manager, etc.
We all have heard horror stories about artists signing bad deals. I’ve seen the aftermath, and it’s not pretty. The single most important job of your entertainment attorney is to help you to avoid these kinds of disasters. The attorney will advise you and protect your interests before you sign any agreements with other industry professionals, or, ultimately record companies. He or she will make sure you understand the contract, and that the contract is up to industry standards. In other words, your attorney’s main objective is to do everything he or she can to make sure you enter into a fair agreement with a reputable record label, producer, manager, etc.
So before you sign any contract in the entertainment industry, always get the advice of an entertainment attorney. Simply having an attorney does not guarantee you’ll get the best contract (as in any other profession, some attorneys are better than others). However, it greatly increases the likelihood that you’ll understand the contract you are signing, and that you won’t get burned.
One thing all entertainment attorneys do not do—despite the popular myth—is seek out and secure record deals for artists—a process known as “shopping” an artist to record labels. It is true that some entertainment attorneys perform this service, but very few succeed in getting their clients signed to a deal. The ones who do succeed almost always are working with artists who already have spent years developing themselves and have had some success. A reputable, experienced entertainment attorney will explain this to you.
Many artists and/or their parents want to be told that if they spend a ton of money on a demo tape and hire an expensive lawyer, they’ll get a deal from a major label. You can try this too, but I strongly recommend that you don’t. You probably end up with a great-sounding demo, no record deal and a lot less money.
If you find an attorney who says he or she will shop your material to labels, be cautious. Before writing a big check, or even entering into an agreement with the attorney to send your material around, ask a lot of questions regarding his or her experience in the entertainment industry, who he or she has represented, and how many successes he or she has had getting record contracts for artists. The fact is you can’t buy your way in to the music industry. You get there through development and hard work. That’s what this book is all about.
Unfortunately, record companies perpetuate the myth, telling artists that entertainment attorneys can shop their materials. They tell artists this only because their label does not accept material directly from artists and instead wants materials submitted by someone with whom the label has a relationship. This process is best left to successful managers or producers who have a relationship with the label(s) you wish to contact and experience shopping artists.
Copyright Fair Use-The Public's Interest
Mar 20, 2009
Marsha, Marsha, Marsha!. (I always wanted a reason to write that). Recently Marsha Blackburn wrote an Op Ed piece that appeared in the March 7, 2009 issue of Billboard. Congressman Blackburn (She refers to herself as "Congressman") represents Nashville and Memphis and consequently the interests of many in the music industry. I have had the pleasure of having Congressman Blackburn sit on a legislative panel I organized for the Americana Music Conference. And while I subscribe to the politics of a different party from the Congressman, she is an intelligent, informed representative whom I respect.
In her article she took the position that copyrights are a property right guaranteed by the 5th Amendment to the Constitution and therefore as a result of a radio station playing recordings on the public radio airwaves copyright owners are being deprived of their property without just compensation.
In response or as a counter to Congressman Blackburn, David Reher, president of the National Association of Broadcasters also wrote an Op Ed story in the March 14, 2009 issue of Billboard. His position is that radio stations provide a public service apart from the playing of music, and as a protector of the public airwaves the requirement to pay a tax to record companies is unfair and an undue burden.
While I may be subject to criticism by my industry brothers (which has never stopped me before), I would like to take up the interest of the general public. I don't really have the time nor the inclination to provide constitutional lesson to either one of them, nor do I want to boar the readers of this blog. However, a quick lesson is in order to help create the premise for my article.
The right of the U.S. Congress to make laws about copyright was granted in Article 1 of the Constitution. And its purpose was to "[to] promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." By reviewing the documented discussions of the founding fathers, the reasons for addressing this concept in the Constitution, the historical legislative discussion that is documented, and the case law we see that the founding fathers did not create an absolute property right to copyright for the purpose of doing what is written in the Constitution--to promote the arts and sciences.
It is up to the Courts of this country to interpret the laws of the Congress with the Constitution's intent. As a result the, concept of "fair use" has arisen many times to balance the public's right of access to artist's creations, the ability to comment or even use the art in a limited way without being sued for infringement. Examples of this use without having to get express permission is a right to write a review about an artist's music in a newspaper and show the cover art, the right to allow the public to check out a CD or DVD in the library, the right of a business to play the radio or a CD on a very small stereo system, the right to record someone's song as long as you notify the songwriter and pay him other 9 cents for each copy distributed and of course, the right of Weird Al Yankovich to write a parody of the words to a Nirvana song, the ability of radio stations to play a recording over the public airwaves (even though broadcasters have to pay the songwriters. That's a nuance to explain in another blog).
You see the founding fathers had a much bigger vision than the limited minds of major record companies and publishers looking to squeeze every penny from the users of music. The founding fathers wanted to "promote the progress of science and useful arts". It has been long established through Supreme Court cases and legislative history that Congress is charged with balancing the rights of artist's with those of the public. This is where the idea of "fair use" originated. This is the notion that some uses of recorded music or songs (or other forms of intellectual property) is just not an infringement when it balances the rights of the public to have these creations distributed, commented upon or used in some way that does not infringe upon the rights of its owners.
When you hear Congressmen, the RIAA, major publishers or major labels arguing for "artist's rights" in this country, you can bet the statements are made with some self-interest. As an attorney I have represented enough artists and songwriters in a manner that involved a fight with a record company or record label to get paid royalties. I have read tons of case law about artist's suing publishers and record companies to get paid for past royalties and the artist losing because of statute of limitations problem or contract accounting clause that limits the artist's rights to collect. So that every time I hear a major company arguing on behalf of artist's rights, I have to immediately proceed to the nearest receptacle and empty my stomach contents.
However, this blog is not about my stomach contents. This blog is to try to shed some light on the major labels and publishers taking the position that intellectual property rights is a property right that is so strictly held by its owner that if a song or recording is used by a person in any manner without just compensation that the person should be prosecuted for copyright infringement.
I am all for artists and songwriters being compensated for their works. I make a living trying every day to make sure this occurs. But fair use is why those same artists have radio stations playing their music that disseminates it to the public. It's that same public that buys the recordings and attends concerts. It’s fair use that allows the newspaper critic to quotes from an artist's songs to write an article about the song or recording. Its fair use that allows other artist's to learn those songs, record them and sell CD-with compensation to the songwriter.
This myopic view of property rights by record companies and publishers (and their loyalty to shareholders) has really gotten in the way of their ability to promote the arts and sciences. I am not naïve. But history of the music industry clearly demonstrates hat when labels spend time developing artists and recording an album's worth of good material, instead of making decisions trying to please Wallstreet, they are more successful.
The RIAA's efforts to sue children that illegally downloaded song files (an many that they could not prove they did) is a perfect example of how major music companies cannot see the forest for the trees. I don't condone illegal file sharing, but I abhor the idea of suing a 13 year old, to make a point about "property rights" that is misplace in the first place. I don’t' think our founding fathers ever contemplated children being sued for illegal file sharing when drafting the 5th amendment.
Therefore, I believe in the spirit of promoting the arts and sciences as the founding fathers set forth in the Constitution, which has been upheld by Supreme Court rulings over and over, based on both he founding fathers vision and legislative history, Congress needs to balance the idea of promoting the arts and sciences with those who elected them instead of for those who lobby them.
Saving The Album Format
Feb 6, 2009
I think that there is still time to make changes to the marketing strategies of record labels and focus on the sale of the album format. When I say album format, I mean the sale of a collection of 10-13 songs that are sold either in a CD format or downloaded for sale as one unit and individually.
I admit I am sentimental when it comes to this format, but I am also realistic when it comes to profits in the music industry. My analysis is based on a little of both. My sentimentality is based on the idea that a great album full of 10 to 13 good songs creates a dynamic emotional experience for the music listener, which in turn creates a loyal fan and customer to both the record company's product and the artist's live performances.
Looking back at the history of the music industry yields a movement from the use of single 45s on vinyl as a configuration to be played on radio to the actual sold product. The industry realized that there was a bigger profit margin in the sale of the long playing album (LP). These profits continued to increase after 1983 when the compact disc was introduced because of both sound quality and durability. The record industry had a bump in the road with illegal downloading introduced by Napster. But for me Napster's biggest contribution to this industry, other than the introduction of digital downloading, was to expose the man behind the curtain.
For too long, major record companies had been getting away with selling an artist's CD for $15-$17 based on one good song that was played on radio. Part of the backlash against the labels was not the desire to copyright infringe, so much as it was to send a message to labels, that consumers were tired of buying 12 crappy songs for the one good song that was on the album.
I am continually amazed when I read quotes in Billboard Magazine by 20 and 30 something record executives that say they want to give consumers what they want and in the same article discuss ahow their company's profits have slipped. At no time have any of these executives ever addressed the need to improve the quality of their product. They are blindly fooled by the consumer habits of teenagers i that this is how the music industry product should be sold. They need to stop looking at pie charts and start listiening to the music they are selling.
I grew up with record labels that believed in the importance of educating fans on the ways to experience music. Most of the great artists I have loved and purchased albums by I have seen in concert (and a few I have produced concerts for)--artists like ZZ Top, Prince, U2, Stevie Ray Vaughn, Oasis, Jeff Buckley. As a result these artists gained life long fans like myself that can't wait to "experience" their next album, instead of breaking it up into small pieces, devouring it and passing it along as if it never existed.
Its really not too late to focus again on productng quality albums and the promoting their sales One suggestion for marketing is that the labels could delay the release of a CD on iTunes making consumers buy the CD during the tour of the artist. The labels could then do a full promotion on the 2nd release with digital retailers. selling only the full album. They could then wait a year before they break it up and begin selling the individual songs, and even then yuou don't have to give them the popular single. These are various ways to preserve both the format and the profits.
I admit I am sentimental when it comes to this format, but I am also realistic when it comes to profits in the music industry. My analysis is based on a little of both. My sentimentality is based on the idea that a great album full of 10 to 13 good songs creates a dynamic emotional experience for the music listener, which in turn creates a loyal fan and customer to both the record company's product and the artist's live performances.
Looking back at the history of the music industry yields a movement from the use of single 45s on vinyl as a configuration to be played on radio to the actual sold product. The industry realized that there was a bigger profit margin in the sale of the long playing album (LP). These profits continued to increase after 1983 when the compact disc was introduced because of both sound quality and durability. The record industry had a bump in the road with illegal downloading introduced by Napster. But for me Napster's biggest contribution to this industry, other than the introduction of digital downloading, was to expose the man behind the curtain.
For too long, major record companies had been getting away with selling an artist's CD for $15-$17 based on one good song that was played on radio. Part of the backlash against the labels was not the desire to copyright infringe, so much as it was to send a message to labels, that consumers were tired of buying 12 crappy songs for the one good song that was on the album.
I am continually amazed when I read quotes in Billboard Magazine by 20 and 30 something record executives that say they want to give consumers what they want and in the same article discuss ahow their company's profits have slipped. At no time have any of these executives ever addressed the need to improve the quality of their product. They are blindly fooled by the consumer habits of teenagers i that this is how the music industry product should be sold. They need to stop looking at pie charts and start listiening to the music they are selling.
I grew up with record labels that believed in the importance of educating fans on the ways to experience music. Most of the great artists I have loved and purchased albums by I have seen in concert (and a few I have produced concerts for)--artists like ZZ Top, Prince, U2, Stevie Ray Vaughn, Oasis, Jeff Buckley. As a result these artists gained life long fans like myself that can't wait to "experience" their next album, instead of breaking it up into small pieces, devouring it and passing it along as if it never existed.
Its really not too late to focus again on productng quality albums and the promoting their sales One suggestion for marketing is that the labels could delay the release of a CD on iTunes making consumers buy the CD during the tour of the artist. The labels could then do a full promotion on the 2nd release with digital retailers. selling only the full album. They could then wait a year before they break it up and begin selling the individual songs, and even then yuou don't have to give them the popular single. These are various ways to preserve both the format and the profits.
The digital revolution gave us so many good things. The labels are just not seeing the value it gives them to increase their sales of the album format through its use. iIstead they rely upon it as the only way to sell recordings.
The only reason music is becoming disposable is because the record labels are creating a product that is exactly that--disposable. Until the record labels change their philosophy and try to think about how to make money, instead of how to create a good product, they will slowly sink even further into a watery grave. I for one hope its very slow and painful. Because the good labels that produce the albums of good artists will again rise to the top. In the mean time I will be listening to my favorite Bob Dylan album, "Blood On The Tracks"--just to be sentimental.
The only reason music is becoming disposable is because the record labels are creating a product that is exactly that--disposable. Until the record labels change their philosophy and try to think about how to make money, instead of how to create a good product, they will slowly sink even further into a watery grave. I for one hope its very slow and painful. Because the good labels that produce the albums of good artists will again rise to the top. In the mean time I will be listening to my favorite Bob Dylan album, "Blood On The Tracks"--just to be sentimental.