Discover the costs to start a record label business. We break down everything you need to know to get your label running. Learn how to start your record label and whether it fits you.
Pricing and Revenue
You’ll charge customers for any music you create. Are you selling physical CDs or online? Do customers purchase entire albums or single tracks? Examine competitors to set prices.
Rent and Location
Rent costs vary by region and location. A New York lease could cost over $80,000 monthly, while a Florida or Tennessee lease may cost under $1,000 monthly.
Startup Costs and Investment
Startup costs range from $15,000 to $30,000, assuming a home studio setup. Essentials include equipment to record, mix and master music.
There’s room to promote music everywhere. Average startup cost is $200 to $50,000. For large labels, costs range from $100,000 to $500,000.
You can establish a label by naming and creating an online presence. Once working with artists, seek investors. Rough estimates suggest costs from $10,000 to $50,000. This covers licensing, artists, marketing, distribution, studio time and overhead.
Legal Considerations
Technically you can start without legalities or upfront costs. Simply declare you started a label, make a website and design a logo. But it helps to plan operations, marketing, branding and more.
Profitability
Is it profitable to start a record label? Record labels generally have profit margins from 15 to 20%. If your artists bring in a total of $10,000 in monthly revenue from the start, your annual revenue for the first year will be $120,000. At a 20% margin, this would mean a profit of $24,000.
Legal Business Entity
Many indie labels skip this step, at least initially, but it is a good idea to have your record label set-up as a legal business entity from the start.
Start Small
Start by signing up only 1 or 2 artists and work with them closely and as a team to build both your label and their music careers.
While a record label ultimately can become a profitable business, don’t expect to start seeing those gains immediately.