diy record labels guide
Post on 25-Mar-2016
224 Views
Preview:
DESCRIPTION
TRANSCRIPT
This is one of three Creative Growth Project guides focussing on the
music industry. It explores the practical considerations of setting up
and running a record label, including:
Product
Know your product, recording, release format, product image
Label
Label compatibility, the deal and deal models, distribution, label
infrastructure
Buzz
Publicity, know your market
1/40
Product Label Buzz
2/40
Areas to consider
Product Label Buzz
Distribution
Compatibility
Digital Physical
Release
format
Image
Artwork
Reputation
Own music /
other artist
Recording MCPS
The deal
Currency
Infrastructure
Artist / label
collaboration
Live
Press &
marketing
Radio
Viral
WOM
Web
3/40
Before investing time and money into establishing a label, research
your product thoroughly.
If planning to sell your own work through the label it would be wise to
canvas opinion on the artistic quality and perceived commercial
potential of your product from trusted professionals and peers.
Objective, valued opinion is key.
Know your product
4/40
If you intend to release the work of others, research:
• Artist’s track record
• How long the band has been together?
• Whether they have a manager
• Whether they are gigging regularly
• How stable does the band appear?
• Where would you position them in the current music scene?
• The band’s ambitions and work ethic.
5/40
Having fully considered whether you believe that there is a market
for the recorded works, you can begin to imagine the full package:
• Recorded work
• Associated artwork
• Band image
• Product format and packaging
• Presentation to the press
6/40
• Have you / the band already recorded the product? If not how will
this be financed?
• Will recording costs be met by the label or will external funding
be applied for?
• The budget should include;
• pre- and postproduction
• studio time with an engineer
• musician costs where applicable and
• Red Book, digitally encoded master copies of the recording
Recording
7/40
If the recorded work is your own, you should apply for an MCPS
waiver. If it is not, you will require an MCPS licence to cover
whichever formats you intend to make available for sale. Most
reputable pressing plants will not release stock until the relevant
paperwork is presented.
MCPS levies are currently 8.5% of dealer price or 6.6% of units
manufactured multiplied by number of copies shipped, which are then
passed on to the artist less an administration fee.
Mechanical copyright protection society (MCPS)
8/40
Currently the most common formats are CD, MP3 and vinyl. Other
options include mini-CD, memory sticks or cards, cassette tape and
even Gameboy cartridges. Thought should be given to the most
appropriate format for the music and its intended consumers.
Each format has pros, cons and cost implications. MP3 is by far the
cheapest mass cloning method and easiest to disseminate in that
there is no physical product. CD reproduction has become cheaper
through vigorous industry competition and currently costs around £1
per unit for basic packaging in quantities of 1000+.
Release format
9/40
Vinyl is currently around twice the price of CD production on orders of
1000+. Be aware that mastering for vinyl is significantly different to
mastering for CD and will require an additional process if releasing in
multiple formats. A poor master can render vinyl unplayable.
Other formats are generally more expensive and should only be
considered for tightly targeted promotional use or if product price can
support it.
Physical product requires physical distribution and stock control.
Digital product requires a download facility such as iTunes or the
label's own web-shop. 10/40
All products require a bar code (UPC – Universal Product Code) if
intended for third party retail. This code identifies your product as
unique and can be purchased from a variety of third party retailers
typically for around £20. The code is sent to you as a graphic which
can either be embedded in your product design or produced as a
sticker.
Each track must also be assigned a PPL ISRC code for the ease of
digital identification for Performing Rights Society / MCPS royalty
collection.
11/40
Whichever format or combination thereof is decided upon, the product
also needs a visual representation. Whether in the form of cover-art or
video, animation or still photography, arresting imagery will encourage
more people to listen to, write about and promote your music. With
the advent of digital photography and editing, visuals do not
necessarily require an enormous budget.
Choose images that are sympathetic to the band, the music and its
fan-base. If the image does not correspond, the fan will be left
confused.
Product image
12/40
Take particular care that artwork submitted for manufacturing
complies with file type and template requirements. Lack of attention to
this can turn into an expensive learning curve. Make sure that images
used have copyright clearance and are properly credited.
Innovative packaging can also boost interest and sales. Homemade
covers give fans a point of perceived contact with the artist. Limited
editions imply rarity and collectability. These approaches can also cut
manufacturing costs (but will extend assembly time!). Examples of
innovation in this area stretch to releasing an album as a tin of soup
with a download code on the label.
13/40
The next question is whether the product is compatible with the label's
identity. If the label is to be built around the product, this identity can
be tailored accordingly; but if the product is to sit side-by-side with
existing releases the question of identity holds greater importance.
Label identity can be as critical as artist identity. A label without a clear
mission statement often finds repeat custom elusive.
Customers are more likely to return and extend loyalty if they feel that
the label understands and represents their listening tastes. This can
be an extension of life-style aspirations/perceptions that are
suggested by the look and feel of the label and its merchandise.
Label compatibility
14/40
Label identity can be as critical as artist identity. A label without a clear
mission statement often finds repeat custom elusive.
Customers are more likely to return and extend loyalty if they feel that
the label understands and represents their listening tastes. This can
be an extension of life-style aspirations / perceptions that are
suggested by the look and feel of the label and its merchandise.
15/40
Once all considerations have been addressed it’s time to think about
doing the deal. Up until now most efforts have been creative and by
nature, fun. It is at this point where you could lose a lot of money,
sleep and credibility if business isn’t properly addressed.
There are as many models for a deal as there are record
companies. First consider what you will be offering the artist for a
percentage of their revenue.
The deal
16/40
• Is the label covering recording costs?
• Is the label covering design costs?
• Is the label covering pressing costs?
• Is the label responsible for press and marketing?
• Does the label hold exclusive rights to the product?
• Are you licensing limited use of the product?
• Are you offering additional services such as tour support?
• What are you charging the artist for retail / promotional stock?
17/40
Recording costs can easily extend to thousands of pounds and initial
pressing of 1000 CDs will cost around £1000.00, including glass
mastering*. Add to this artwork, MCPS, the administrative costs of
press and marketing, stock-control, shipping, accounting, website
hosting and maintenance, tax liabilities.
These costs can be covered or split between the artist and label in a
number of ways depending on the nature of the deal.
18/40
(*Glass mastering refers to the process of transferring data from a master onto a stamp
used for high quality CD pressings.)
Recording costs = £2000
Pressing (1000 units) = £1000
Artwork (design and print prep) = £ 500
Press and marketing = £ 500
Total costs = £4000
19/40
Here are four common models of deal structure which use the
following basic costs to form the basis of their comparison.
A 50/50 deal after costs on physical release only.
Assuming a unit retail price of £10, the label / artist would have to sell
400 CDs before the band started receiving royalties or the label
started to make money after initial investment.
200 units are generally held back for press and marketing, leaving
potential additional revenue of £4000 between label and artist from
the remaining stock.
20/40
Model 1
Selling all 800 units represents a high number of sales for most
fledgling bands (and even for many established acts). There are
also additional costs not accounted for in this example – legal
fees, shipping, MCPS and the tax liabilities of both parties.
To earn a basic living solely from this model a DIY label operator
would require no less than 25 successful releases per year. 25
releases would in turn require a substantial investment by the
label ahead of any returns.
21/40
The artist is responsible for delivering Red Book, mastered
product and artwork. The label finances the manufacture and
press campaign. The label starts making money after the first
150 unit sales cover the initial outlay, and the artist makes
money after recording and production costs have been met.
This model is clearly more attractive to the label in that it carries
less financial risk and a faster return on investment. The artist
takes the lion’s share of the risk and the onus is on them to sell
sufficient stock to cover expenses. This model is also currently
popular on the 50/50 basis.
Model 2
22/40
The artist delivers mastered product and artwork and pays for
pressing. The label provides access to press and industry
contacts. The deal on revenue share may be adjusted in favour
of the artist in that risk to the label has been all but eradicated.
Model 3
23/40
Download sales are not included in the above projections. These are
generally set up through an aggregator who gives the artist and label
access to providers such as iTunes, Napster, Amazon and Spotify for
a fixed fee or percentage of revenue.
Each of these providers also takes a fee, leaving the artist, if lucky,
with around 50% of the track price. In the case of streaming providers
such as Spotify the return is significantly less.
Deals with aggregators or indeed the providers themselves improve
with enhanced volumes of sales.
24/40
The '360 deal'. Artist and label divide revenue on all associated
product from the outset. The artist signs over 50% of everything,
including merchandising, MCPS, PRS and PPL in return for
label’s initial financial risk and access to press and industry
contacts.
Model 4
25/40
The four described models are all fairly common within the
industry at present. Many labels offer limited free stock in lieu of
tour support. Others sell stock, to be resold at the artist's gigs, to
the artist at reduced or cost price. Some charge a nominal sum
for units distributed to press and radio.
Digital sales can be added to any of the above models but
generally deliver a modest return at the outset. For an overview
on digital returns see on-line statistics:
www.informationisbeautiful.net/2010/how-much-do-music-artists-
earn-online/
.
All models
26/40
Having taken delivery of 1000 CDs or vinyl records, before you can
commit to a release date, you need to arrange distribution.
As physical sales are substantially down from those in previous decades,
distributors are naturally wary of taking risks and therefore drive an
increasingly hard bargain.
The wholesale price per unit on CDs is currently just under £5. This
means that any previous sales models based on a gig unit price of £10
have to be adjusted accordingly. Often the label is responsible for buying
back returns (unsold stock) and paying for shipping in both directions. On
high volume distribution this can be prohibitively expensive.
Distribution
27/40
Artists can distribute cheapest from their own web shop, incurring
only P&P costs and PayPal fee, or from a third party vendor such as
Resonance or CD Baby. Such vendors will usually ask for a modest
start up stock to be shipped and reimburse the label - having taken
commission and handling fee - as the stock sells. The benefits of
using a third party vendor are that they handle stock control, P&P
and sales accounting. As an artist, benefits from running your own
web shop include the personal touch when mailing out to customers
to encourage repeat custom.
28/40
Digital distribution can be done through an aggregator such as
Tunecore or CD Baby at a cost of around US $50. While this will
distribute your music to every corner of the web, it still doesn’t
guarantee that anyone will listen (far less buy!).
Distributing locally through independent record shops can also be
beneficial. Independents usually take around 30% of the sale price.
A benefit is that shipping and returns can be expedited on foot.
29/40
It will be clear by now that artists require a working knowledge of the
music industry, graphic design, the internet, web design, press
relations and marketing. Additionally you they have to familiarise
themselves with music law, tax liabilities and accounting.
It is inadvisable to sign any agreement with a third party without
appropriate legal advice. The Musicians' Union offers a limited service
in this respect, but to get comprehensive advice artists should find a
legal professional with music industry expertise. This advice doesn’t
come cheap but can save considerable trouble and or money at a later
date.
Label infrastructure
30/40
A standard agreement between artist and label will require moneys
owed to be paid at quarterly intervals. The artist generally has the
right to inspect label accounts annually to ensure there are no
discrepancies. Both parties must make themselves aware of their tax
liabilities to HMRC.
A label can be run with minimal hardware. A phone, a laptop
connected to the Internet, a printer and stationery will be sufficient for
most daily needs. Targeted databases for press and radio should be
compiled well ahead of contemplating a release unless an outside
agency will be employed to promote the product. 31/40
Mechanisms are now all in place to distribute and sell the product.
The artist now needs to tell the world all about it and how to buy it.
Allow plenty of lead-time and be aware of targeted publications’ print
deadlines. Most publications prefer to review ahead of release – it
gives them a sense of ‘scoop’. Some are happy to review post-
release but it can be a long wait in that their reviews are not time
sensitive and there can be a queue of considerable length.
Publicity
32/40
Compile a press release (one-page) that describes the product in a
factual and engaging manner. Post copies physically or electronically
to carefully researched databases. There is, for example, little point in
sending a jazz release to Kerrang for review.
Make contact with the press in as many ways as possible – preferably
in person or over the phone. Emails and unsolicited post often get
ignored. Don’t be a snob. Metro and The Sun have huge readerships
that specialist, favourite, independent publications can't hope to
achieve.
33/40
Electronic press kits work well for printed press – keep in mind
journalists are often equally interested in what the band looks like and
any human-interest angle, as in the music itself.
Encourage artists to do interviews on local radio and record messages
for stations further afield that can be sent along with an electronic
press kit (EPK). Many reviewers and stations require two copies of the
CD and many are still unwilling to accept non-physical formats.
Invite local journalist contacts to gigs. Show them hospitality and they'll
be more disposed to writing kindly.
34/40
Labels should encourage their artists to post videos and blogs on as
many platforms as possible and to play every gig that is offered. Word
of mouth is also a powerful medium for creating a buzz and amongst
fans and industry.
Viral marketing is an additional tool for raising awareness of product.
Notable examples of viral campaigns include efforts by Sandi Thom
(YouTube 'phenomenon'), Arctic Monkeys (MySpace 'phenomenon'),
Lily Allen (flash-game), Weezer (composite YouTube video ‘Pork and
Beans’), Greg Pattillo and OK Go.
35/40
For the label and product to succeed both should have currency
relative to the marketplace. Even if the product sits in a niche,
subgroups within the listening public are constantly redefining
themselves through choice and allegiance.
The Internet presents an unparalleled window into shifting trends by
affording access to blogs, user-groups and ‘imagined communities’.
This has widened and enhanced research possibilities into target
markets and the competition far beyond the local arena.
Know your market
36/40
The music industry has become increasingly 'long-tailed‘, (i.e. sales
volume stretched over a longer period of time). It is almost inevitable
that label owners will have to exercise considerable patience before
recouping investments, let alone seeing profit. Running a label for
profit has never been harder. Operating within this challenging
environment demands an ever-watchful eye on digital and creative
marketplaces and the ability to adapt to changes as they happen
(preferably before!).
In conclusion
37/40
Despite obvious risks and possible lack of remuneration, there are still
many benefits to setting up a label. Above all, they enable useful
contacts right across the industry. If the label represents part of a
portfolio of activities within the music industry, these contacts are
invaluably transferable. If the owner is also the artist, there are added
bonuses of control and personal accountability. If releasing other
artists’ music, the label is helping to create a ‘scene’ that the owner
can release their own product into. Ever since the internet’s
democratisation of music, which has lead to more releases than ever
before, there is truly safety in numbers and benefit by association.
38/40
A selection of CD manufacturers:
www.testa-rossa.com
www.birnamcd.com
www.discwizards.com
Barcodes:
www.cdbaby.com
Useful links
39/40
A selection of digital distributors:
www.tunecore.com
www.cdbaby.com
www.theorchard.com
A selection of physical distributors:
www.properdistribution.com
www.shellshock.co.uk
40/40
Please refer to the two other music guides from the Interreg ICV
Creative Growth Project:
Making Live Music Pay
Making Music: Managing Rights
and the following relevant Cultural Enterprise Office resource:
How to Contact the Press & Media
Next steps
Cultural Enterprise Office would like to thank Haftor Medboe,
Edinburgh Napier University and the Interreg ICV Creative Growth
Project for use of this content.
Disclaimer: Cultural Enterprise Office is not responsible for any advice or information
provided by any external organisation referenced in this document.
top related