How Much Does It Cost to Start an Independent Record Label?

The average startup cost of a record label is between $200 – $50,000. But for large labels, the average cost can be from $100,000 – $500,000. This cost usually varies from country to country and from state to state.
The cost of setting up a record label can vary greatly depending on the scope of the label and the resources available. Some of the costs associated with setting up a record label can include studio rental, equipment, legal fees, marketing, distribution, and personnel. Generally, it is estimated that setting up a record label can cost anywhere from $10,000 to $50,000.
Another cost you’ll need to consider is a business license for your record label company. This is required in most states and will allow you to operate your business legally. The cost of a business license varies, depending on the state you’re in, but it’s typically around $100.

When an artist gets signed to a label they get money, called an ‘advance,’ to make a record. When the record is released, the label keeps all the money until they have recouped their expenses, which includes the advance, recording costs, promotion and legal fees. Record companies make around $10.00 profit per CD.
Artist Advances and Royalties. One of the biggest expenses you’ll have as a record label is artist advances and royalties. This is money that you’ll need to pay to your artists upfront, before they’ve made any money from their music.

Independent record labels are small companies that produce and distribute records. They are not affiliated with or funded by the three major records labels.
An independent label, also known as an indie label, is a record label that is independently funded and not connected to one of the big three major labels – Universal, Sony and Warner. Indie labels range from home-based hobby labels to highly profitable, large businesses.
In the 1990s, the line between indie labels and major labels began to blur somewhat, and now some large indie labels are actually distributed by the big three major labels. Indie labels often face an uphill battle trying to get their music heard, as they typically have far fewer financial resources to promote their music than the major labels do.