Everyone loves to make money from the musical content that there record label has created. This section of the web site will identify sources of income for your record label as well as a few tasks that need to be completed before selling any content.
Contracts need to be fair, accurate, and legal. I recommend that a record label should sign a contract with the parties that are involved in the production of musical or musically related content that entitles both parties to receive profit that is representative to their overall contribution to the content. The record label should only sign a contract with a party after the artist has proven themselves through evaluation by the record label. All of the contributions should be agreed upon by all parties that contributed to the creation of the content, and stated in the contract. The amount that each party receives should be represented by percentages. For example, Composer “Jon Doe” will receive 20% of all sales of the album “Crazy Face”. As the owner of a record label, you can structure the contracts to your discretion with respect to the law. You can develop recording contracts for your record label online by clicking the following link https://www.rocketlawyer.com/document/recording-agreement.rl#/. There are other contracts that you will need for performances, marketing, licensing, copyrighting, and other business that your company will conduct. Majority of these agreements can be generated by visiting the same web site. Record labels may resort to only working with artists that have a signed contract with their company. This practice is common because it assures that all of the available time and resources are focused on the company’s investments in their artists. There are occasions where companies do work without contracts with talent that has no contractual obligation to the record label on occasions. Copyright designations should also be stated in the contract as well.
There are a few places that the record label will need to be registered to receive all of the royalties associated with the content developed by artists or the record label. The first organization that the record label needs to register with needs to be ASCAP or BMI. Both organizations will chase down royalties and publishing owed to the record label. You cannot be a member of both organizations, so you will need to choose one to join. Your record label will need to post musical content online before the application can be completed. These two companies will ask for content to verify that the record label is generating musical content. The only significant difference between the two companies is in the payee structures. ASCAP pays 50% to the publisher(s) and 50% to the writer(s). This means that you will need to join ASCAP as a writer and as a publisher to collect 100% of the money for the label. BMI just pays 100% to writers and 100% to publishers. The amount is still the same however, ASCAP splits up the money before distribution and BMI after. It will cost 50$ to join as a writer for ASCAP and another $50 to register as a publisher. Membership to BMI for writers is free, while the publisher’s application will cost $150.00. These two companies will collect on behalf of your label for performances, licensing, placements and other instances. The next organization that your record label will need to be registered with is the SoundExchange. SoundExchange collects digital royalties, and other money owed to your record label. These income sources include satellite radio stations, mix shows, streaming services, and other sources. It is advised that all of the parties that participate in the development of your record label’s content be associated with these organizations. Each of these organizations has more information on their web sites that describes all of the additional benefits that are offered. Visit the links section of this web site for links to each of the organization’s homepages.
Be sure to obtain ISRC codes for your record labels recordings by visiting the International Standard Recording Council home page at https://www.usisrc.org. These codes will be generated by your record label using a unique prefix that represents your company. Each piece of content that is released by the record label will contain one of these codes that will serve as an exclusive identifier in tracking systems, royalty collection systems, sales systems, and other databases. The cost is $95 to register your company and receive your code prefix.
When it is time to release your record label’s products and music, you may need to acquire barcodes. Barcodes serve as digital finger prints for items that will be sold. These barcodes are utilized in sales system globally, may be used to track sales, and manage inventory. Barcodes can also be acquired during the manufacturing processing process, however there will be a risk that your record label doesn’t receive the proper credit for the number of items sold. This happens because the barcode that you will receive from the manufacturer will show up in majority of these global systems as property of the manufacturer instead of your record label. Instead of risking losing credit for the sales of products, you can supply your own barcodes to your manufacturer of choice. This will assure your record label receives the proper credit for the sales of its products. You will need to secure a licensed GS1 company prefix from GS1 US. Visit their website http://www.gs1us.org to setup your account, and apply for your GS1 company prefix. The cost for prefixes will vary depending on how many barcodes your company will need to utilize over a certain period of time. There is also an annual renewal fee that must be paid every year. The cost for one barcode was $150 with an annual renewal fee of $50.
Performances, music sales, merchandise sales, and content placements will all yield proceeds for your record label. There is also licensing for film, advertising, videogames, ringtones, software, and just about anything that will require the use of sound or sound effects. Your record label can also setup a website where content can be sold or licensed without a publishing administrator. A publishing administrator will collect money for your record label from YouTube, online sales, and even mechanical royalties. These companies usually offer options for distribution also. I personally utilize Tunecore for these reasons. Tunecore provides all of these services under one roof for a reasonable cost. Tunecore allows your record label to purchase content release credits for music, ringtones, and other items. Tunecore also provides other services as well, such as mastering. Credits can be purchased in bulk or individually. The pricing on credits can vary, but a full album release into all of the main digital stores will cost around $30 plus an annual renewal fee. You will also need to setup a publishing account for $75 to ensure that your record label takes advantages of the publishing services, that are very useful.
Decide how you would like to release your record label’s content and products during the early stages of development. This will determine the cost to release your products and content. Think about the audience that your products and content will be aimed at. Think about what the audience will use to listen to your content on. These factors will help you make the decision to release only digital content, or physical content, or a combination of both. Knowing how you will release your content ahead of time can allow your record label to setup the proper promotion, budget, staff, and organization needed to successfully release your products and content.
Your record label will receive payments electronically, by cash, by check, and by credit or debit cards. The business bank account will need to be managed according to the company’s accepted forms of payment. If the record label takes debit or credit cards for purchases, then a PayPal account will need to be setup and linked to the business bank account. The PayPal account is a necessity for the online sales of your record label’s content. There are alternatives to PayPal, but those alternatives lack support from online retailers like iTunes and Amazon Music. PayPal also allows customers to purchase physical products from mobile devices using card readers and other technology that works with cell phones and tablets. You can find more information about PayPal Business by visiting the web site https://www.paypal.com/webapps/mpp/merchant?nav=2. The record label will need to have a way to track cash payments received as well. The record label will need to document all sales for accounting purposes. The company will also need to distribute payments in certain situations. The company should only make payments from the business bank account by check, credit card, or electronic transaction. The record label should only use these methods for a couple of reasons. All three of the previously mentioned forms of payment are traceable and easily accountable. These forms of payment also allow your business bank account to take note of money that is leaving your company’s account.