Do you want to know exactly how much it cost to start an independent record label? If YES, here is a detailed cost analysis for starting a record label and raising finance.

The role of the record label industry is to nurture, promote and distribute music all around the world. The term “record label” originated from the circular label in the centre of a vinyl record which prominently displays the manufacturer’s name, along with other key information. Having provided you with a:

  1. Record Label Industry Overview
  2. Market Research and Feasibility
  3. Record Label Business Plan
  4. Record Label Marketing Plan
  5. Record Label Name ideas
  6. Record Label Licenses and Permits
  7. Cost of Starting a Record Label
  8. Record Label Marketing ideas

We will consider how much it cost to start a record label from scratch including the operating costs.

  • Industry Overview

A record label can be defined as a brand or trademark that is established with the major aim of marketing music recordings and music videos. In most cases, a record label is also a publishing company that manages music brands and music trademarks as well as coordinates the music production process. They manufacture, distribute, market, promote and enforce copyright for sound recordings and music videos. Record label companies also conduct talent scouting and development of new and upcoming music artistes; and they maintain contracts with musicians as well as their managers.

In recent times in the music industry, a large percentage of recording artistes have become increasingly dependent on record labels to promote them and increase their consumer base. It is easier for a record label to attract influx of upcoming artistes if the record label is well established and recognized.

Record labels that are just starting out would have to go out there to search for music talents that can help launch them out. The truth is that it is a win – win situation when a record label discovers a good music talent. The music label will help promote the recording artiste and the recording artiste will also give publicity to the record label.

With the advent of the internet, it is now much easier for music labels to increase their range of operations. A music label with a large followership on social media platforms can easily promote artistes under their label. All they need to do is to release free downloads on their website. If the music is good it won’t be too long before it starts trending on the global stage. A good example is the famous 2012 dance pop single – the ‘PSY -gangnam style’ from far away South Korea.

One good thing about starting a record label is that even if you decide to start it in the United States of America, your market will not be restricted to artistes in the U.S.; the world will be your target market. Many thanks to the internet that has made the world a global village. All you need to do is to strategically position your record label brand on the internet.

Basically, it is not expensive starting a record label company in the United States of America. The amount required to start a record label company may vary slightly from country to country and from states to states. Part of the factors that can influence the start – up cost of a record label is the amount needed to rent or lease a facility, the cost of the equipment you would need and the money needed to brand your business et al.

How Much Does It Cost to Start a Record Label?

The cost of setting up a record label company to a large extent has reduced from what it used to be; many thanks to the advancement of technology and perhaps the internet. These days it is now common to see people set up recording studios in their homes. All they need to do is register a recording label and pronto! they are in business.

If you are considering starting your own record label, you might not start making profits immediately, but if continue in the business; it won’t be too long before you gain fame and fortune. All it takes to gain recognition in the music industry is to nurture a world-class music artiste under your label.

Basically, it is not expensive starting a record label company in the United States of America, Canada, Australia and the United Kingdom. The amount required to start a record label company may vary slightly from country to country and from state to state. Part of the factors that can influence the start–up cost of a record label is the amount needed to rent or lease a facility, the cost of the equipment you would need and the money needed to brand your business.

On a more serious note, starting your own record label is to a large extent dependent on your preference and budget. You could budget and spend millions of dollars, or you could choose to spend moderately; far below a million dollars.

  • For the purchasing of microphones and head phones, you can go for Neumann u87; it will cost you about $2000 or more.
  • For mixers, you can go with Euphonix or any other brand of your choice. But Euphonix seems   great (especially with is sweet sounding preamp and on board compressors). It will cost you about $30,000 or more.
  • On the alternative, you can choose to go for purely digital and skip the mixers altogether. This means you will need a good audio inter face with multiple inputs. 12 stereo pairs minimum. The emu 1820m is a good one.
  • The cables (nothing else but mogami cables), are the best audio cable in the market for now; you can explore other options.
  • You would need to create budget for pre amp. Avalon are perhaps your best bet and you can get it for about $2500 or less.
  • You should also prepare a good budget for monitor; monitor is one of the most important gadgets you would need in starting your own record label / record studio. You can go for a Yamaha monitor; it is simply one of the best you can get in the market.
  • When it comes to acquiring a computer, you just have to budget for a high end computer designed for such purpose. Your computer should of very large memory, high end graphic card, and 2.6 GHz quad core processor and you can search for a good software to work with.

Other factors that may be slightly different in terms of costing when it comes to starting a standard record label in any of the countries listed above are cost of labor, cost of transportation and logistics, local tax, business incorporation fee, rent/leasing amongst other factors.

Over and above, when it comes to starting a medium scale record label company, you should be prepared to either rent or lease a standard and centralized facility in a business district; this is going to be one of the areas where you are expected to spend the bulk of your start–up capital.

How Much Does It Cost to Start a Record Label in the United States?

These are the key expenses you are expected to make when starting a medium scale but standard record label company in the United States of America;

  • The total fee for registering the business in the United States of America – $750.
  • The amount required for obtaining licenses and permits as well as accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of the music label company in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • The cost for leasing a standard facility for the studio and administrative office – $150,000
  • The cost for remodeling the facility and construction of studio – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility deposits ($2,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory (CDs supply, notice board, printing papers, printing ink/cartridges, pen and stencil et al) – $2,500
  • The cost for cash register, security, ventilation, signage – $3,750
  • The cost for the purchase of studio equipment (Headphones, Mixing console, Multi-track recorder, Microphones, Reference monitors, which are loudspeakers with a flat frequency response, Keyboard, Acoustic drum kit, Digital audio workstation, Music workstation, On Air or Recording Light, Outboard effects, such as compressors, reverbs, or equalizers, DE-essers, Cables, Pre-amps, Computers, Audio interfaces, Monitors, Software, Effects racks, CD duplicator, and CD printer) – $200,000.
  • The cost for the purchase of furniture and gadgets (Telephone, printing machines, computers, tables and chairs, book/CD shelves, cabins, standard library, photocopier, fax machine, amongst others) – $4,000.
  • The cost for building and hosting a website – $600.
  • The cost for opening party – $2,000.
  • Miscellaneous – $5,000.

You will need an estimate of three hundred and fifty thousand dollars ($350,000) to successfully set up a medium scale but standard record label company in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and it applies to a record label with standard recording studio.

Starting a small scale but standard record label company that can only carry out basic recording services/studio works in the United States of America will cost about twenty thousand dollars to fifty thousand dollars ($20,000 to $50,000). Please note that with this budget, you will be expected to settle for fairly used studio equipment and the studio will be built in your home so as to enable you cut cost and overhead drastically.

When it comes to starting a standard and large-scale record label with several studios in key cities in the United States of America, a record label company that offer services in various niche areas in the music industry and a record label company that has the intention of selling franchise, then you should look towards budgeting well over two million, five hundred thousand dollars ($2.5 million).

How Much Does It Cost to Start a Record Label in the UK?

These are the key expenses you are expected to make when starting a medium scale but standard record label company in the United Kingdom;

  • In the United Kingdom, Online applications are usually registered within 24 hours and cost £12 (paid by debit or credit card or PayPal). Postal applications take 8 to 10 days and cost £40 (paid by check made out to ‘Companies House’). There’s a same day service costing £100.
  • Legal expenses for obtaining licenses and permits as well as accounting services (software, P.O.S machines and other software) – £700.
  • Marketing promotion expenses for the grand opening of the law firm in the amount of £3,500 and as well as flyer printing (2,000 flyers at £0.04 per copy) for the total amount of £3,580.
  • The cost for hiring business consultant (including writing business plan) – £2,500.
  • The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – £2,400.
  • The cost for leasing a standard facility for the studio and administrative office – £135,000.
  • The cost for remodeling the facility and construction of studio – £86,500.
  • Other start-up expenses including stationery (£300) and phone and utility deposits (£1,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – £60,000.
  • The cost for start-up inventory (printing papers, printing ink/cartridges, pen and stencil et al) – £2,000
  • The cost for cash register, security, ventilation, signage – £2,500.
  • The cost of purchase and installation of CCTVs: £4,500.
  • The cost for the purchase of studio equipment (Headphones, Mixing console, Multi – track recorder, Microphones, Reference monitors, which are loudspeakers with a flat frequency response, Keyboard, Acoustic drum kit, Digital audio workstation, Music workstation, On Air or Recording Light, Outboard effects, such as compressors, reverbs, or equalizers, DE-essers, Cables, Pre-amps, Computers, Audio interfaces, Monitors, Software, Effects racks, CD duplicator, and CD printer) – £180,000.
  • The cost for the purchase of furniture and gadgets (Telephone, printing machines, computers, tables and chairs, book / CD shelves, cabins, standard library, photocopier, and fax machine, amongst others) – £2,500.
  • The cost for building and hosting a website – £600.
  • The cost for opening party – £2,000.
  • Miscellaneous – £5,000.

You will need an estimate of three hundred and twenty thousand Pounds Sterling (£320,000) to successfully set up a medium scale but standard record label company in the United Kingdom. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and it applies to a record label with a standard recording studio.

Starting a small scale but standard record label company that can only carry out basic recording services/studio works in the United Kingdom will cost about eighteen thousand Pounds to forty eight thousand Pounds Sterling (£18,000 to £48,000). Please note that with this budget, you will be expected to settle for fairly used studio equipment and the studio will be built in your home so as to enable you cut cost and overhead drastically.

When it comes to starting a standard and large scale record label with several studios in key cities in the United Kingdom, a record label company that offers services in various niche areas in the music industry and a record label company that has the intention of selling franchise, then you should look towards budgeting well over two million, two hundred thousand Pounds Sterling (£2.2 million).

How Much Does It Cost to Start a Record Label in Canada?

These are the key expenses you are expected to make when starting a medium scale but standard record label company in Canada;

  • For federal incorporation of business in Canada, the cost to incorporate is $200 if filed online through Corporations Canada’s online Filing Centre ($250 if filed through other means).
  • The amount required for obtaining licenses and permits as well as accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of the music label company in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • The cost for leasing a standard facility for the studio and administrative office – $150,000.
  • The cost for remodeling the facility and construction of studio – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility deposits ($2,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory (CDs supply, notice board, printing papers, printing ink/cartridges, pen and stencil et al) – $2,500
  • The cost for cash register, security, ventilation, signage – $3,750
  • The cost for the purchase of studio equipment (Headphones, Mixing console, Multi – track recorder, Microphones, Reference monitors, which are loudspeakers with a flat frequency response, Keyboard, Acoustic drum kit, Digital audio workstation, Music workstation, On Air or Recording Light, Outboard effects, such as compressors, reverbs, or equalizers, DE-essers, Cables, Pre-amps, Computers, Audio interfaces, Monitors, Software, Effects racks, CD duplicator, and CD printer) – $200,000
  • The cost for the purchase of furniture and gadgets (Telephone, printing machines, computers, tables and chairs, book / CD shelves, cabins, standard library, photocopier, and fax machine, amongst others) – $4,000.
  • The cost for building and hosting a website – $600.
  • The cost for opening party – $2,000.
  • Miscellaneous – $5,000.

You will need an estimate of three hundred and fifty thousand dollars ($350,000CAD) to successfully set up a medium scale but standard record label company in Canada. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and it applies to a record label with standard recording studio.

Starting a small scale but standard record label company that can only carry out basic recording services/studio works in Canada will cost from twenty thousand dollars to fifty thousand dollars ($20,000CAD to $50,000CAD). Please note that with this budget, you will be expected to settle for fairly used studio equipment and the studio will be built in your home so as to enable you cut cost and overhead drastically.

When it comes to starting a standard and large scale record label with several studios in key cities in Canada, a record label company that offers services in various niche areas in the music industry and a record label company that has the intention of selling franchise, then you should look towards budgeting well over two million five hundred thousand dollars ($2.5 millionCAD).

How Much Does It Cost to Start a Record Label in Australia?

These are the key expenses you are expected to make when starting a medium scale but standard record label company in Australia;

  • In Australia, the fees to register your business name with ASIC include: $34 for 1 year. $80 for 3 years.
  • The amount required for obtaining licenses and permits as well as accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of the music label company in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • The cost for leasing a standard facility for the studio and administrative office – $150,000
  • The cost for remodeling the facility and construction of studio – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility deposits ($2,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory (CDs supply, notice board, printing papers, printing ink/cartridges, pen and stencil et al) – $2,500.
  • The cost for cash register, security, ventilation, signage – $3,750.
  • The cost for the purchase of studio equipment (Headphones, Mixing console, Multi – track recorder, Microphones, Reference monitors, which are loudspeakers with a flat frequency response, Keyboard, Acoustic drum kit, Digital audio workstation, Music workstation, On Air or Recording Light, Outboard effects, such as compressors, reverbs, or equalizers, DE-essers, Cables, Pre-amps, Computers, Audio interfaces, Monitors, Software, Effects racks, CD duplicator, and CD printer) – $200,000.
  • The cost for the purchase of furniture and gadgets (Telephone, printing machines, computers, tables and chairs, book/CD shelves, cabins, standard library, photocopier, and fax machine, amongst others) – $4,000.
  • The cost for building and hosting a website – $600.
  • The cost for opening party – $2,000.
  • Miscellaneous – $5,000.

You will need an estimate of three hundred and fifty thousand dollars (AUD$350,000) to successfully set up a medium scale but standard record label company in Australia. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and it applies to a record label with standard recording studio.

Starting a small scale but standard record label company that can only carry out basic recording services/studio works in Australia will cost about twenty thousand dollars to fifty thousand dollars (AUD$20,000 to AUD$50,000). Please note that with this budget, you will be expected to settle for fairly used studio equipment and the studio will be built in your home so as to enable you cut cost and overhead drastically.

When it comes to starting a standard and large scale record label with several studios in key cities in Australia, a record label company that offers services in various niche areas in the music industry and a record label company that has the intention of selling franchise, then you should look towards budgeting well over two million, five hundred thousand dollars (AUD$2.5 million).

Estimating Start–Up Cost for Record Label Company Based on the following factors;

  • Specific Location

Record label company and most service-based type of businesses require that you see physically with your clients hence it must be located in a good location; a location that is prone to both human and vehicular traffic if indeed you want to attend to loads of clients and maximize profit from the business.

It cannot be overemphasized that the location you chose to open your record label company is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the required purchasing power and lifestyle (social life and music inclined).

  • Staff/Manpower

When it comes to starting a standard record label company on a large scale, you would need the services of the following professionals;

  • A manager that can double as administrator
  • Promotion manager and tour manager
  • Talent manager
  • Sales and marketing executive
  • A music producer/beat maker
  • Music writer
  • Sound engineer cum maintenance engineer
  • Other roles can be contracted; roles like company’s lawyer (entertainment lawyer), graphic artist and brand manager.

Can a Record Label be Bootstrapped on a Lean Budget Right from Home?

If you are looking for a small scale business that you can successfully bootstrap on a lean budget right from your home, then you should consider starting a record label company. One good thing about a record label company is that you can successfully run the business from your home especially if you choose to operate on a small scale.

As a matter of fact, you can start a record label company with as low as twenty thousand dollars or even less depending on how small you want the business to be. All you need to do is to register the business, purchase the basic needed studio gadgets (fairly used), print your business card and market your services.

The challenge here is that you must be ready to take on more than half of the available roles in the business. You should be able to serve as the manager, accountant, human resource and admin officer, sales and marketing officer sound engineer, music producer et al.

How Much Does It Cost to Buy a Record Label Franchise?

In the United States of America, the Average Cost of Purchasing a Record Label Franchise is $30,000. Examples of 3 Well – Known Record Label Franchising Companies in the United States of America are;

  • Sony Records
  • Universal Records
  • Warner Bros Music

In the United Kingdom, the Average Cost of Purchasing a Record Label Franchise is £25,000. Examples of 3 Well – Known Record Label Franchising Companies in the United Kingdom are;

  • Virgin Records
  • Sonny Records
  • Universal Records

In Canada, the Average Cost of Purchasing a Record Label Franchise is $35,000 (Canadian Dollar). Examples of 3 Well – Known Record Label Franchising Companies in Canada are;

  • Sony Records
  • Diamond Dash Music Group
  • Street Record Corporation

In Australia, the Average Cost of Purchasing a Record Label Franchise is AUD$35,000. Examples of 3 Well – Known Record Label Franchising Companies in Australia are;

  • Zomba Label Group
  • Universal Records
  • Sonny Urban Music

Financing your Record Label

When it comes to generating start – up capital for a business, entrepreneurs usually exploit all the avenues available to them. No doubt raising start – up capital for a new business might not be as easy as it sounds, but the truth is that if your business idea is highly workable and promising, you won’t struggle to raise the needed start – up capital.

The first thing to put in place before sourcing for start – up capital for your business is to draft a detailed business plan. With a good business plan, you can easily convince investors to invest in your business. The truth is that no bank gets to give you a loan if you don’t have a good and workable business plan in place. There are several options when it comes to raising money to finance a start – up business. Some of the options are;

  • Raising money from personal savings and sale of personal stocks
  • Raising money from investors and business partners
  • Applying for loan from bank
  • Applying for business grants and seed funding from donor organizations
  • Sourcing for soft loans from family members and friends.