How Do Record Labels Work?

How much does it cost to start a record label?

I suppose it’s possible to say that it can cost “nothing” but that would probably limit your marketing abilities and your distribution reach. A digital-only label releasing exclusively on Bandcamp can start a label for almost zero dollars assuming you have a logo. On the other end of the spectrum, if you had an endless budget you could give your artist a $10,000 advance, register your trademark for $2000, hire a music attorney for $1000 to draw up a contract, press a vinyl run of 300 records for $2500, and hire a publicist for another $2500. Somewhere in between is entirely up to you and your available budget.

How much does a label take from the artist?

Major labels have been known to take upwards of 90% of net sales. Mid-size independents royalty rates average between 50-75%. The most common royalty share amongst small indie labels is 50/50. You can even offer a more lopsided royalty in favor of your artist, something like 35% for the label and 65% for the artist. Check this out for some help with managing your record label’s royalties…

How do I get my music on Spotify, AppleMusic, etc?

At the time of writing this, there isn’t any way to upload directly to one of these services. Instead, you have to use an aggregator like CDBaby, DistroKid, Ditto, Tunecore, etc. There are plenty of blogs online that will break down the pros and cons of those services. You can expect to pay a one-time fee per album/single or an annual fee to keep your music up online. The good thing about these services is that they will upload to all of the many DSPs (Digital Service Providers) across the globe, including any future DSPs that come to market.