This is a guide on how to start a record label in South Africa.
Starting a record label can be a daunting task, especially in a country like South Africa. There is not enough information from the outside, it also has a lot of unknown or turbulent variables. This guide will teach and guide you on how to start a successful record label.
Record labels primarily invest in artists, every business has to have a product, in this industry, the main product is the artist. Labels invest money in artists and hope to make it back over the long term. This money is made back through royalties, selling tickets to live shows, selling merchandise, streaming, radio play licenses or sponsorship.
Long term investment
Getting an artist off the ground is no easy work, there are millions of songs released each year, getting your artist to stand out is one of the most difficult things. You should aim to see returns on your label in 5 – 10 years after starting it out. Businesses in general reach a stage of profitability between 2 and 3 years but this one takes a bit longer.
This can require some serious capital investment from your side because in the short term you are not likely to be making any money but will be burning a lot of it; pushing and promoting your artists. Your money will not come back immediately when your artist breaks out, it takes a long time to start seeing returns.
Getting started
Like most businesses, you need to have a business plan and go over other formalities. You need to decide on the name of the record label, the name is not that important, it will not have any significant impact on the success of the label. Don’t spend too much time coming up with a name, you can change it at any time.
The location of the record label is not as important as it used to be. Back in the day; you had to move to big cities to be able to make it in this industry, not anymore, you can start your label just from about anywhere in the country. Big cities still offer some advantages like connections and easier access to resources. But we live in a digital world and you can setup a successful record label from any small town in South Africa.
Register your business, registering your business only costs R175 in South Africa. Get other things like Logos and other formalities out of the way.
Choosing a distributor
Music distribution is the way that the music industry makes recorded music available to consumers. It’s a core aspect of its business model, and it makes it possible to purchase most music in stores or download or stream it online.
You need to have good relations with your distributor because they are essentially the heart of the company. They help with Spotify admissions and all the admin staff and then collect royalties.
Equipment
When setting up a record label, you will need to have equipment that your artists can use to make music. Alternatively, you can rent the studio. Here is the equipment checklist for a record label.
Computer
DAW
Audio Interface
Microphones
Headphones
Studio Monitors
Cables
Microphone Stands
Pop Filter
All the above is the most basic needed to get started, this is your typical bedroom studio equipment. Here is the complete list of equipment for different kinds of studios.
Signing the artists
Labels should be super careful when signing artists, you need to have a waterproof contract that will prevent the artist from leaving your label when they blow up. The only thing artists are concerned about is making money and advancing their careers, don’t think an artist will stay with your label out of loyalty, if they get a better deal elsewhere, they will take it. They might exit before you make any returns on your investment, that will leave you with heavy losses. You can get lawyers to draw up a solid contract but they will charge a lot of money, this is an expense you can avoid, there are hundreds of solid templates that are available online and are free or charge way less.
The percentage you take off the artist’s royalties depends on you and the artist. You can be able to agree to a deal of 50% but most labels typical take between 15 and 30% of the royalties. What you are going to offer the artist should be well stipulated in the contract, including the amount of money you are going to invest in the artist and the time-frame in which you will invest. The responsibilities of the artist should be well stipulated in the contract.
Advances
Most of the time the record label will give the artists an advance (money) and help them with quality resources to record music. The label also goes on to promote this music, it takes full responsibility of the success of an artist. Invest your time in finding the right artist and don’t be fooled by their Instagram profile, most of them buy followers and likes to make themselves look bigger than they are.
Also, some artists don’t understand the role of an advance, they might think that this is free money that the label is giving them. Especially in South Africa, try to explain to the artist that this is an advance and will have to be paid back. It’s better to do that before the artist signs the contract, else your artist might go on a public rant on social media talking about how trapped he is.
Working with the artist
You should not try to dwarf the artist’s creativity, don’t pressure your artists into genres that they are not used to, this might make them uncomfortable and one hit wonders. Working with artists can be very difficult, you need to channel them into producing music that is going to sell. It doesn’t help if the artist does what he likes but the music itself doesn’t sell. Most artists know what they want, you should give them that creative freedom.
Remember, this is an investment, your main objective should be getting the best out of your artist. You can do this by setting up the right team around the artist, get the right promotion companies, social media companies and proper PR.
Conclusion
Starting a record label is not easy, this guide gave an overview of the most important aspects to consider when starting a record label in South Africa. Do you have any thoughts or questions? Comment below.
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