Do you want to start a music management company? If YES, here is a complete guide to starting a music management business with NO money and no experience.
Okay, so we have provided you an in-depth sample music management business plan template. We also took it further by analyzing and drafting a sample music management marketing plan backed up by actionable guerrilla marketing ideas for music management businesses. In this article, we will be considering all the requirements for starting a music management business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Music Management Business?
A Music Management Company is simply defined as a company that takes care of the affairs of music artistes. The company is in charge of planning and executing all the steps needed for an artiste to succeed and grow. It is indeed the music management company that decides how far an artiste can go in his or her career.
Music Management Companies are known to earn 15% to 25% of the royalties their artistes make, so they will do everything possible to ensure that their music artistes succeed for them to generate income. Music Management Companies are also called record labels.
Before starting a Music Management Business, you should note that the duties of your company will include recording and production, licensing, crowd funding, as well as sealing endorsement deals. Your music management company can be said to be successful if you can do all these things for your artistes. This industry is indeed very lucrative and as you read on, you will understand why starting a Music Management Business is the best option for you.
Starting a Music Management Business – A Complete Guide
- Industry Overview
It is not a hidden fact that music is an integral part of the daily lives of many people in this modern age. We all know that the demand for music has created a billion-dollar global music industry, which is made up of music production and distribution, major record companies, live concerts, along with other music-related activities. Just in the U.S. alone, this huge industry was analysed to generate about 15.5 billion U.S. dollars in 2016.
Analysis also showed a slight growth in coming years; by 2020, the industry revenue is expected to rise to 18 billion U.S. dollars. It is also important to note that in the last few years, LP/vinyl albums saw an unimaginable increase in popularity in the U.S., as sales of LPs grew about 30 percent from 2014 to 2015. Also sales of other music formats – albums, digital albums, CD and digital track sales – have been constantly reduced since 2012 in the U.S.
It is also important to note that music consumption has changed in the United States. The advent of technology has affected single and album downloads, which were the preferred types of digital music in the U.S. up until 2012. These are being overruled by subscription and streaming services by individuals. Just in the year 2015, subscription and streaming services were able to raise about double the revenue of sale of single downloads in the industry.
Estimates in the industry has shown that streaming is analysed to take over the market, as digital music revenue from streaming in the U.S. is expected to rise from about 2.4 billion U.S. dollars in 2016 to more than 5.1 billion U.S. dollars by 2021. It is believed that during the same period, digital music revenue from downloads will reduce from 1.8 billion U.S. dollars to 1.2 billion U.S. dollars.
With streaming services, online radio is gaining popularity in the U.S., as Americans spent an average of 728 hours weekly listening to online radio in 2016. Apart from listening to music on streaming services, many Americans also enjoy live performances by their favourite artistes.
It has been estimated that about 51 percent of Americans attended live music events in 2015, while 23 percent of them said they watched a live concert with a main headliner during 2015. Within 2015, between sponsorship and ticket sales, the live music industry in the U.S. generated a massive 9.30 billion U.S. dollars in revenue. Analysis has shown that this market is very lucrative, as revenue from both sources is projected to increase in coming years.
Starting a Music Management Business – Market Research and Feasibility Studies
- Demographics and Psychographics
It is important to note that your basic role as a music management company is to put together projects which meet the goals of your artiste. This goal of your artiste could be anything from making a top 10 hit to getting a gig at a Grammy event. All you need to understand is that you have to make sure that all your projects run smoothly, that deadlines are met and campaigns come together. You should take care of your artistes and make them your utmost priority.
We all know that when it comes to music, there are no boundaries to who you can sell to or where you can sell them. Diverse genres of music appeals to diverse groups of people at their own diverse time and mood. That is explicitly how the market is segmented.
When it comes to looking for artistes to sign onto your music management company, you will probably get a good catch from the 16 – 35 age brackets. Estimate has shown that these people are the group who are ready to take the music career really seriously.
List of Niche Ideas within the Music Management Industry
It cannot be denied that the music industry is very lucrative and also challenging. If you plan on venturing into the music industry just to make some quick bucks as a music manager, then you should have a rethink because tons of people go into the music business yearly with the same intention but only few ever make it big.
You need to understand the industry in and out even before you venture into it. You also need to understand and choose a niche market in the vast music management business. These niches may include;
- Starting your own independent music management
- Band manager
- Music Event planner
- Subordinate music label
- Talent manager
- Music promoter
- Vanity music label
- Music video Director
The Level of Competition in the Music Management Industry
There is no denial that the rate of competition in the music management business is getting intense with each coming year. This is because in the 1970s and 1980s, there were consolidations in the music management industry which led to almost all major labels being owned by very few multinational companies.
This consolidation or rather development led to CDs production to flow through a handful of sources, with the majority of the sales going through the very industry leaders. But now, we have so many music management businesses in all the nooks and crannies of the United States.
The industry is getting tougher and smarter as most companies in the industry now make use of the internet to spread their tentacles and increase their revenues. We believe that this is because they know that it pays a great deal not to concentrate only in the U.S. market, but to go beyond the borders.
List of Well Known Music Management Brands
- Konvict music management
- 4star Entertainment
- 3sixty music group
- Big Noise
- Columbia Records
- MAAD Management
- Countdown Entertainment
- OAG Management
- Mad Decent
- CSP Management
- Macklemore LLC
- Empire Artist Management
- Headline talent
- BBA management and booking
The music industry is made up of a variety of businesses, companies and independents. The music industry over the years has adjusted and adapted well to the many changes and trends. According to analysis, the utmost concern in the music industry is profits gained from companies that partake in tasks like publication, distribution and production of music around the world. It is believed that the creation and distribution of music happens in separate places.
Example is that the retailing, manufacturing and wholesaling occurs in one place, while the production of the music happens in another place. It is a known fact that the publication of music sometimes requires the leasing of music as intellectual property, so that it can be used in live performances and beyond. There are a variety of sub-industries in the music field which include live music, recording and then there are the behind the scenes professionals and staff that offer assistance and representation.
Compositions are easily sold to publishing companies in the music industry. It is believed that these publishing entities collaborate with recording artistes and studios in order to build a music media. Then the retailers in turn sell this media to the general public as the final costumers.
Then to actually complete the cycle, when these costumers buy the music, the retailers pay the recording company, who then pays the artiste and publishing company, who then pays the composer. A promoter also is another professional in the industry who is hired to assist with live music performances of artistes. These experts work with the record labels and the owner of venues where the artiste is billed to perform, and helps to negotiate a contract between them. It is very normal for a music management business to hire multiple people to help with the career of their artiste.
Starting your music Management Business from Scratch Vs Buying a Franchise
Without doubt the music industry is a multi-billion dollar industry. It’s no longer a surprising fact that some people earn millions of dollars from the industry and they are not even artistes or singers. It’s worthwhile to note that the music industry generally has many facets that work hand in hand to make it successful, and this provides multiple opportunities for any career focused entrepreneur willing to leverage on the industry.
Meanwhile if you decide to own a Music Management Business; it is advised that you start from the scratch. Presently in the industry, you will hardly find any music management franchise being sold. Creating you own business is a great way to break into the industry, and it will gain you some real experience. It may feel like you are at the bottom of a mountain, but it won’t be long until you find yourself half way to the top. The competition in the industry has made it a die hard industry where everyone struggles to surpass the other.
Possible Challenges and Threats You Will Face When Starting a Music Management Business
By now we all must have known that the music business is a great industry to work in, and being a music manager requires drive and determination which should be moved by love and passion for songs. Indeed the music industry is fiercely competitive but once you’ve made it, it can be one of the most fulfilling and often financially rewarding industries in the world. The possible challenges you might face may include;
- Writing a business plan
- Registering your company
- Getting a good location and registering focused workers
- Auditioning and promoting your artiste
- Establishing a brand look
Starting a Music Management Business – Legal Matters
- Best legal entity for a Music Management Business
Just like we stated, the job of a music management company includes signing deals and agreements with big companies, but you are also required to register your company as a legal entity.
The best legal entity for you to choose might differ according to the place you intend to start this business in the world. But for the sake of this article, the best legal entity to use in the United States is perhaps a Limited Liability Company (LLC). You can also consider starting a corporation; it all depends on your business vision and mission.
Catchy Business Names ideas Suitable for a Music Management Company
- 721 Music Management
- Crescent Music
- Platinum Theatre
- Neolite Music Centre
- Winter Music Group Inc.
- Broken Records
- Royal Theatre
- Copycats Media
- KMP Music Group
- Dark Sea Musicals
- Award Lane
- Exquisite Productions
- Zeus management Group
- Alfred Music Company
- Illegal All Starts
- Tiller Outdoor Management
- Mixed Blood Management
- Otis Theatre
- Peak Promotions Inc.
- Warrior Entertainment
- Lion Multimedia Group
- Phantasm Sound Production
- Source Interlink Co Inc.
It is very important to note that music and insurance to a very unique extent work together. It is very crucial for you as a focused entrepreneur to stay insured at all times because of some unforeseen circumstances. Here below, are some of the insurance covers that an average music management company should have;
- General insurance
- Health insurance
- Liability insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
Intellectual Property Protection
You should be prepared to secure your intellectual property if you plan on venturing into the music management business. It is a known fact that if the music released by your artiste is not protected by the law, then you should be ready to see your artiste’s songs pirated in the market.
Songs tend to be pirated just almost immediately they drop, but when pirates know that songs under your music management business are protected by the law, they will be wary of getting themselves into trouble, which on its own is the benefit of having your intellectual property protected.
You should also make sure that the logo of your music management company is well secured and legally recognized as part of your company’s property by the law. It’s important that you trademark your company logo as well as get the copyright protection for each new song that is being produced by your artiste.
Is Professional Certificate Needed to Run a Music Management Company?
To be sincere, you do not need professional certification to open or mange a music management company. The industry is that plain and simple, which means that any entrepreneur who has an interest in music can launch his or her music management company without acquiring any special certificate.
As long as you have the passion and experience to start a Music Management Business, you can kick it off. But be warned that getting certifications in other fields like human resources development might help your business stand out.
The List of Legal Documents You Need to Run a Music Management Company
These are some of the basic legal documents that you would need to successfully run a music management company in the United States of America:
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Operating Agreement
- Insurance Policy
- Employees Handbook
- Contract Document
- Trademark registration for your logo
- Tax Payer’s ID number
Financing a Music Management Business
It’s a normal for entrepreneurs to source for start-up capital when it comes to starting up new businesses, but the truth is that if your business idea is highly workable and promising, you don’t need to fight to raise the needed start-up capital.
When you want to raise funds, the first thing to do is to draft a detailed business plan for the business. When you have a good business plan, you can easily convince investors to invest in your business. There are several options when it comes to raising money to finance your music management 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 the bank
- Applying for business grants and seed funding from donor organizations
- Sourcing for soft loans from family members and friends.
Choosing a Suitable Location for your Music Management Business
Location is a very crucial issue when starting a Music Management Business. A Music Management Business can flow in any location as long as there are youths or pool of aspiring musicians there. Some of the factors that you should put in place when considering a location for a Music Management company are;
- The location should have an appreciable number of youths and aspiring musical artistes.
- The location should be close to the hub of music in your city or state.
- The location should be easily accessible and secure.
- The location should be notable for producing some of the finest musical artistes in your city or state.
- The location should be free from noise; noise can frustrate your effort.
Starting a Music Management Business – Technical and Manpower requirements
You can start and manage your music management business with little or no stress if you actually understand the industry. If you just want to start the business from the scratch and not to run it like a corporation, then you don’t have to break the bank to create a budget for a large number of employees in your company.
This business can also be run from the comfort of your home; this is to show how little your manpower can be in this line of business. You can also run most of your employees as contract staff. You will surely need an administrator, promotion manager, tour manager, talent manager/sales and marketing executive, a music producer/beat maker, music writer and sound engineer cum maintenance engineer that’s if you plan to inculcate music recording into the things you do. You will also need a lawyer, an entertainment accountant and a brand manager.
You just need very few office equipment if you are starting a Music Management Business, unless you still plan to inculcate music recording into your business, then you will have to buy most of the electronic gadgets needed to set up your record label brand new or as fairly used. Some of the equipment that you would need to set up a recording studio in your music Management Company may include:
- Mixing console
- Multi – track recorder
- Reference monitors, which are loudspeakers with a flat frequency response
- Acoustic drum kit
- Digital audio workstation
- Music workstation
- On Air or Recording Light
- Outboard effects, such as compressors, reverbs or equalizers
- Pre amps
- Audio interfaces
- Effect racks
- CD duplicator
- CD printer
- Supply of CD
The Production Process Involved in Running a Music Management Business
Your basic role as a music management company is to put together projects which meet the goals of your artiste. The goal of your artiste could be anything from making a top 10 hit or getting a gig at a Grammy event. You have to make sure that all your projects run smoothly, deadlines are met and campaigns come together. If your artiste is signed to a record label, you have to understand the aim of the label towards your client. If your client is an unsigned artiste, you have to focus on making him popular and notable.
But be wary that if you’re managing unknown musicians or major record labels, you should be able to understand the field of music in which they are into so as to serve them better. You should also research the music business and understand the key figures, from the big promoters and broadcasters, to record companies in that particular field.
You also need to understand the structure of the companies you’re dealing with too – be clear about how business is conducted, who is responsible for what and who the decision-makers are, this would enable you make fast and adequate judgement and decisions. It is important to note that having an influential network helps in the industry.
Starting a Music Management Business – The Marketing Plan
- Marketing strategies and tactics for a Music Management Business
It’s important to note that the music management business is similar to other businesses in some ways. They all require a strategic marketing plan to sell and gain opportunities for their clients. It’s worthwhile to note that the success of your music management business and your client is dependent on the number of units of music sold.
Funds and fame also come from tickets sold at events, and also note that the more events an artiste does, the more likely fans or new fans purchase the artiste’s music, thereby maximizing profits. When marketing your clients and your business as well, try leveraging the following platforms.
- Leveraging Live Events and Concerts
Anyone who understands the industry will surely tell you how important live events and concerts are for artistes. Live events and concerts are moments that allow music lovers to connect and engage with the artistes and their music. It is important to note that these events promote the sale of music.
- Making use of your Website
Also you should note that one of your major marketing strategies should be a website. We all know that on a website, you can promote your client’s music by using various forms of content such as press releases, web content, an event calendar, music videos, audio downloads, artiste’s professional pictures and blog posts from the artistes. For your website to be unique, it should have a well-written bio and media kit of the artiste, which is useful for media features.
- Leveraging on Social Media platforms
It has been proven that social media profiles connect artistes with their fan base and equally allows fans to share content about the artiste in the same platform. You have to make use of the social media to share your client’s videos and images on location and behind the scenes.
It is also possible for you to create online events by creating real time chats with your clients where their fan base can engage with them, because the closer the artistes can get to their fans the more engaged they become, which helps to create viral promotion opportunities that will in turn bring in profits.
- Understanding how important Online Videos are
In the music management industry, videos have always been an effective marketing strategy for selling music since the 1980’s. It’s well known that online videos are a great way to promote and sell any product or service because they can articulate an artiste’s brand, message and the meaning behind their music in an intimate and engaging way that keeps people captivated.
Strategies to Boost Your Music Management Brand Awareness and Create a Corporate Identity
The best way to achieve brand awareness is to make yourself visible to your target market, which is why it is important to create a substantial marketing plan to reach them. In promoting your brand and corporate identity, you should leverage on the various print and electronic media.
It’s well known in the business world that it is better and more cost effective to use the internet and social media platforms to promote your company, and besides it is pretty much effective and wide reaching. Also you need promote your brand and corporate identity by sponsoring community musical shows or even organize your own musical talent hunt reality show to enable you discover new talents. Above all, you need to make your clients trust you and believe in you. Listed below are the few qualities you need to leverage on;
- People skills
- Business and Financial Management Skills
- Work drive and ethics
- Dedication to your clients
- Creative Problem Solving and Fast Decision Making skills
- Patience and knowledge