couple thousand dollars for phone lines, computers, travel, and other incidentals. These costs should average between $3,000 and $6,000 per month.
Star search: A record label is only as good as its artists, so finding true talent is key. Lurie suggests going to live shows, getting recommendations from others in the business, and soliciting demos from prospective talent by placing an advertisement in the paper or on your company Website. Once you find your “American idol,” sign the artist to a recording contract. Many contracts last five to six years, with most artists receiving about 6% to 8% of retail sales, but how the terms are outlined is strictly up to you. Brae signs his artists to two-year contracts with one-year options and gives his talent 16% to 16.5% in mechanical royalties from record sales.
Finding talent and negotiating a deal that creates a win-win for both label and artist can be tough, but promoting that artist can be even more difficult. “The average major label spends in excess of $1 million to get a new record to basic levels of consumer awareness,” says Tess Taylor, president of NARIP. “But the average independent just doesn’t have that kind of money to throw around.”
As a new label your marketing push is not likely to include MTV, BET or Vibe magazine, nor will it include commercial radio, since startup record companies don’t have the financial resources or following required to promote their songs on mainstream television or the FM dial. Still, you must find cost-effective ways to spread the word about your music so people will buy it. Some label owners rely on the word-of-mouth generated behind an artist’s live show. Others let their Websites and flyers do the talking for them.
Doing the distribution deal: Another challenge for start-up labels is obtaining distribution. Once Brae decided to form Hitman Records he headed for Los Angeles to secure a distribution deal. For an entire month, he pounded the Hollywood pavement, leaving press kits and demos at virtually every label, including A&M Records, Sony, and Capital Records. But it was to no avail. Although frustrated and ready to call it quits, he approached yet another company called SOLAR (Sounds of Los Angeles Records). The label had produced the music of big names such as The Deal, Jody Watley, The Whispers, and Howard Hewett.
Brae met with the vice president’s assistant and was promised a call back in one week. Not only did Brae receive the call, he also landed a joint venture with SOLAR. It was a 60-40 split in which the company agreed to pay for the manufacturing, distribution, and promotions of artists signed to both Hitman Records and Sounds of Soul Records in exchange for 40% of record sales. The deal gave Brae’s label national distribution with entry into stores such as Tower Records, Musicland, and 20th Century Music in Oakland.
Getting distribution can mean the difference between the success or failure of your label. But attracting distributors is not easy. It’s not enough to