Listen to today’s Music Business Poochcast™
Forming an Indie Record Label: Setting Yourself Up For Business
By Professor Pooch
© 2010 David J. Spangenberg
I love it when somebody asks me, “Hey, how do I become [or start] a Record Company?” My answer is ::Poof:: You’re a Record Company! Congratulations! There is no one to stop you! But, there are things you need to take care of to set yourself up for a safe and successful trip. First, there are several main situations where a person, or a group of people will want to start a Record Company, so you can reap all the benefits from selling your recorded Products:
1. You’re an Artist, [or the Artist’s Manager], and you want, or need to start one for yourself as the Artist… And/or,
2. You are a Producer, who wants to start a Record Company to put out different Artists they produce… And/or,
3. Anyone else who wants to start a Record Company to put out Artists.
No matter where you fit, there are tactical steps to take, business-wise and legally, so you not only look like you have your stuff together, but you actually do. Therefore, no matter whether you want to Do It Yourself, or align with a Major Label later on, or anywhere in between, you’ll be prepared for anything, and in a good position to deal with anyone.
Today I’m going to focus on an Artist or Band who simply wants to release their own recordings…
Let’s start out with the Business steps and Legal Contracts you should keep in mind:
1. I recommend you Incorporate, to protect your personal assets and for tax reasons, etc. And remember to ask for an EIN# [tax ID number]. Most people nowadays form “LLC”s, which are less expensive and easier to deal with, and are fine for Indie Labels. You can do this yourself – you don’t need an Attorney!
2. Copyrighting your Recordings. Yes, these Copyrights are different than Copyrighting the Songs. By registering your Copyrights, it states that you own the Recordings.
Note: You must keep in mind that the Recordings [formally the “SR” form], and the Songs [the “PA” form], can have different, or the same owners – but are [should] always considered as two separate forms of income.
3. Unless you’re doing it as a single person, you will need a “Partnership Agreement” with the others involved in owning the Company. If you are a “Band”, it will [should] be covered in your “Band Agreement”. This will spell out the power and responsibilities and much more…
4. An “Artist to Record Company Agreement”. If you are the Artist, or your Band is, you should [all] sign to yourself.
Why? This way, if you decide later on to be aligned with a Major or other Indie, for Distribution, or for any other reason, you will be in a better position of control, because certain parameters have been set up, and you’ll be dealing as the Record Company.
5. An “Artist to Producer Agreement”. This occurs if someone else is producing you. They will usually offer a Contract to you. Normally a Producer gets paid either:
A. Cash by the hour or song or project, etc. [“the Front End”, or…
B. Points, usually 2 – 4%, on “the Back End”, which covers Sales/Downloads/etc., of Product, or…
C. A combination of A. & B.
Note: Especially if 1 or 2 people in the Band are the Producer[s] [not the whole Band], the actual Producers should sign to their Record Company
Also, if the Artist is signed to their Record Company, the Producer will be hired by the Record Company for producing that Artist, which can solve problems down the Road.
6. “The Splits” = how the percentages of all income are going to be split up. This can become a major headache and must be solved before recording! There is no problem if you are “self contained”, that is, you don’t use any outside people for any creative process, because that is [should be!] covered in your Band Agreement. But if you use outside songwriters, publishers, producers, whomever for anything, make sure it’s all on paper, so that you don’t get “held up”, later on, fighting over monies…
Now I’m asking you to “please stay tuned for the next episode”, where I’ll discuss the way you make your money, and what you need to do so you get what you deserve, owning a Successful Indie Label…