Starting a Record Label: Music Business Models, Marketing and Management

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What if I told you I started a label?

You’d think I was crazy, right? But then if you read my blog you know I always have crazy ideas, and that I’m totally cool with that because lots of ideas, including the failed new music marketing forum idea (one idea that revealed itself most recently to be a failure) are amazing experiences to get a grip on whats going to work and what’s not.

A lot of dreams in the music industry, and believe me, big dreams are not always your friend.

But diligent experience and experimentation – now that’s why I decided to start a record label – well actually it’s my second now, I actually have run a label back when I was young and stupid – but this time I’m doing it completely my way.

Which you know is going to be different. I mean seriously, what is the point of a label these days? Blog posts have asked this stuff before, and it has to be stated that somebody has to perform the business end of the music industry equation. Nothing is more obvious at this time than that new music business models are required to keep musicians in business.

So it doesn’t matter what it does, as long as it makes money as a business. That’s the point of a label.

So my new label is designed to make money.

How the hell am I going to pull that off?

Well it comes down to the Brand and the Business Model.

The brand is going to be related to the niche – in this case, Chill out music.

That’s why I’ve branded it “Channel Chill Out” and www.channelchillout.com.

That’s pretty straightforward. but once you isolate the niche in this way – like any collective or group would do when planning such a strategy to network and partner in building a brand platfrom – you have opportunities to build a business model.

Initially, I don’t see how or why we would go about trying to sell recorded music. Although that is the traditional role of a label, that’s now been updated to providing the brand platform from which to launch new artists, which is nothing new in underground music – that a label will represent a high quality brand.

So basically we’re affiliating with artist who want to provide high quality content through our site or our “channel” in this case. They aggregation of relevant and high quality content is the basis of the labels launch, and obviously we want to be able to provide free mp3’s that are quality.

In this way, the concept of being “signed” comes down to simply providing an mp3 that we can make available free in perpetuity. This structure exists simply to build the brand that we provide free chill out downloads.

But how will it make money? Well in seeking to provide a brand platform for artists to make content available, you actually provide a promotion service. In fact it just so happens that I provide a range of music marketing and promotions services, so in this way, the brand is able to monetize because it provides a platform for me to offer a niche marketing service just for chill out artists – just for certain high value customer.

That way the platform build by a community of musicians can be utilised by providing access to a ready made fanbase who are already using the site to collect free material.

Then the third stage of monetization happens at a more mature level for the brand – and again is niche related, given that the genre of music lends itself to soundtrack work, as well as making products available to fans, we would directly target a more lucrative market for our products – mainly licensing and publishing opportunities that would net acts significant pay outs, as well as providing a platform for us to distribute products specifically for this market.

For example – royalty free CD’s that are sold with limited licensing and publishing rights for broadcasters and media developers. I believe such products can sell for $99 a CD, but of course on the internetthe competition in marketing such a product id strong so you would definitely be relying on the brand power behind the label to create attention for alternative products and offers that could be leveraged off the brand and it’s audience.

I often talked about affiliate marketing as a basis for monetizing artist and entertainment brands. Now, I get to experiment with how these offers could actually work.

If a fan is willing to purchase a $40 product knowing that $30 income goes back to the artist as a commission AND that this continues to allow the artist to provide new content, this could be offered as a conditional proposition – buy this product, get all this band stuff free . . .

My only job is to find affiliate products that are high value for money that the chill out niche would be engaged by. Instantly I’m making brand connections to high value concepts like environmentally friendly products and lifestyle products.

But we’re now dangerously into dreamland territory. I’m doing this my way, which means right now, we’ve got perhaps years of hard graft ahead adding content to build the brand.

Luckily I already have 2 artists on my roster Ganga and Daniel Masson who do chill out stuff, and I also put out a chill out compilation myself back in 2006, which also taught me a lot – and means I already have a product to promote and sell. So from my experience I know that this product has a market – restaurants, cafes, other commercial spaces, also need a product like this. So by targeting that market – focusing on that niche that we know already exists means we already know specific things about why these people are going to purchase this music and what they’re looking for.

So from putting out that CD and my own local connections including NSU & Beat Dungeon, Stray Theories, JR Kong and Bluevibe Studio there is a little bit of depth I can draw on if I need to sure up more content.

This is what a sound business model should have.

Let’s just go over some major points:

- Clear niche, not being clever – it’s chill out music

- Initially, artists are invested in a give/take relationship with the brand. Free music builds the brand, the brand builds exposure for the artists. This means most of the commitment up front is for a long “gestation” period where I use my skills to slowly build some equity in the brand.

- The brand provides a payback for my work by promoting and providing a niche platform for other artist services I offer. In the niche of Chill Out, I am already building an audience and a platform for artists in this genre to participate and benefit from the commitment already established.

- I already have a flagship product to promote and monetize – my compilation album – though I’m not dependent on this in anyway, it’s just a manner in which to develop and experiment with profitable propositions and sales.

- only LATER once the brand has solid support – built of course by the advantage of tapping multiple content sources through our artists – that we consider the next stage of monetization by identifying niches for our products and targeting them with products developoed especially for their needs.

Do you need music marketing services? I offer a comprehensive service covering all your online needs. it will only cost you $600 but in most cases it will take us AT LEAST 3 months to put a platform together and begin a campaign. If you want a personalised and comprehensive service that is affordable . . .