I think you guys are misunderstanding - or I'm misunderstanding.
Anyway, the costs to start a record label can be anywhere from a few thousand dollars to $10,000,000. Not to be glib, but it depends on hundreds of factors that basically boil down to two areas - your goals and aspirations and your in-house talent (how much of the required skills/jobs can you and/or your partners do yourselves). It’s several full-time jobs, and reqiures the faith of a religious zealot.
- What kind of artists do you want to sign? How many to start?
- What kind of music does that entail? Country or Rock means real musicians (mostly) with typically involved and arduous recording (for albums). Hip-Hop will mean lots of samples (licensing fees), programmers, vocal tracks, and, probably, lots of 'posse' hangers-on. (Although that's a bit of unfair generalization - my own musical bias.) Individual Male or Female singers will be the most expensive - lots of music associated costs for musicians, background singers (unless the singer does that him/herself), arrangers, finding songs.
- Will the artists write the songs themselves (publishing revenue for the label, maybe - assuming any type of success), or will you have to find material? (That means developing contacts with publishers, sorting through thousands of bad songs, not having a whiff of the “A” list songs saved for major-label artists, etc....)
- How about recording? Do you have a studio, or access to a studio? Typically, recording and promotion are the two most expensive costs.
- If you’re recording solo folk guitar/singer-songwriters, that’s a lot less than a full-blown Celine Dion, Faith Hill or Motley Crüe record.
- Are you doing singles or 3-4 song EPs (extended play 45s from the 60’s)? Or entire albums? More songs, more time, higher costs?
- How are the artists going to support themselves while they’re recording? Work a day job? What happens when they have to tour? What’s the level of commitment from both the artists and the label? What’s the level of financial support or need that you will or will not provide? (They will ask.)
- How about distribution? How are you going to even get the records into an environment where a potential customer can buy them? Are you going to distribute just via the Internet? Or through the standard Independent Distribution network? Out of the trunk of your car? All? For the Internet, you need a website – again, there are all kinds of websites, from cheap, unprofessional and uninformative ones to professional, sharp-looking, information-rich ones.
- Independent distribution means developing contacts in that world, shipping the product without getting money upfront, waiting for your money from sales (if there are any), chasing your money….
- How about promotion? Are you going to chase down, call, contact, beg radio stations, magazines, college radio, trade shows, and local papers? Or pay for someone to do that? How are you going to generate press and exposure?
- How about touring? That means a booking agency for the artists – or doing it yourself, with endless phone calls, faxes, developing contacts, traveling, supporting the artist or artists on the road, phone calls – an incredible drain on your time. Who is going to develop those contacts with small clubs, the college network, etc.?
- How about the back-end business aspects? Rent and/or physical space? Accounting, tracking, shipping, returns, defective discs? Phone bills, gas bills, travel expenses, fax machines, email, computers and computer software, laptops, cellphones, PO boxes, UPS or FedEx….?
- All these things are part of developing artist careers. They are all of paramount importance. They all take 24 hours a day. They are all intertwined together. They all cost money and time, and time equals money.
Back in 1977, the Police spend $5000 to record their first album (Roxanne), after establishing themselves as a band good enough to indicate they might have success as both a live act and recording act. The Copeland brothers managed and booked them - one owned IRS records (an Indie label), the other owned FBI booking. After getting IRS a distribution deal with a major label (A&M) in America (which most Indie labels do not have) and recording that album on a shoestring budget, they flew them to America where Ian Copeland had them booked into dozens of dive punk clubs. They toured across America coast-to-coast in an Econoline van, with the band members, and a roadie or two. Suicide motels, fast food (not likely to be three square meals a day), terrible hours, etc. – but they rocked and kept getting invited back to those same clubs a few months later. The point is, when they did hit it big with their second record (more expensive producer/Hugh Padgham, better studios, bigger recording budget), they weren’t in debt to the major label up to their eyeballs. They started making money pretty much right away – relatively speaking.
It’s not all doom and gloom, but it’s an unbelievable amount of hard work, that no sane person will ever do unless they are a ‘true believer’ in their cause. The record business is much like baseball, where success for a hitter is defined by failing 7 out of 10 times. Virtually 95% or more of records released FAIL to make their costs back. Indie artists have a much better chance of survival because the stakes and context are defined by a much smaller playing field – then again, so are the rewards. With talent, hard work, smarts and lots of luck, small indie artists can achieve a goal of making a living and survival. But it takes a special breed and unbelievable perseverance.
That’s a rambling, short-story that looks at huge generalizations, touches only a few of the main issues, and doesn’t really get into the detail and craft. The money will vary depending on hundreds of individual factors. The time is a given – it takes ALL your time.
BTW: To start a recording studio today, you can create a great studio space with top-notch equipment for 50K - depending on the size, building materials and location (rent is much higher in NYC than Manhattan, KS).
Decades ago, it would cost $250K to over a million dollars just for the equipment, but computerization has reduced that cost exponentially. Of course, that doesn't operate the equipment or build the recording space. But many very successful records are recorded in living rooms today, and then mixed in professional studios.
Oops... amongst the many things I'm sure I've forgotten, LEGAL, Licensing and Accounting.
There will be many issues about contracts (artists, distributors, etc.) and there will be legal fees. (Having said that, most of this stuff is Legal 101 - if you can find yourself a sharp law student or rookie lawyer, you will probably be covered - at least for the small stuff. When the stakes get bigger, you can graduate to first-level legal talent.)
Not to mention Videos and..... and.... aaaaaahhhhgggggg.
There's also the school that just does it and learns as they go. IF you're a gambler and you can afford to lose everything you invest - in other words, a hobby, to start - then find an artist you believe in that other people seem to like, make some recordings and start selling and promoting. It ain't rocket science, and, other than the music stuff, it's easy enough to learn by instinct and experience.
It's a hard way to learn, but pretty much every record biz entreprenuer - from Sam Phillips/Elvis to Miles Copeland/Police to Ani DeFranco to the Ertegun Brothers/Atlantic Records - started out close to that.
[This message has been edited by BC/Studio Manager (edited April 28, 2005).]