JPF Home Page Forums General Messages General Message Forum Questions about record label and start up capital

I am in the process of reading Donnald Passman's book about the business of the music industry and I have a few questions that I hope some of you might be able to answer.

Assuming that you decide to start your own record label and you are only promoting one band (in the beginning), how much start up capital would you need to be able to compete with some of the larger labels and get the band on the charts?

How would this money need to be spent?

If you are successful with the first band, how easy is it to get venture capital in order to expand? Most of the venture capitalists I know about tend to shy away from entertainment oriented businesses.

Anyone know of any good venture capital sources?

Assuming that you decide to start your own record label and you are only promoting one band (in the beginning), how much start up capital would you need to be able to compete with some of the larger labels and get the band on the charts?

a couple million dollars and a major distributor


But you can put out a CD for whatever budget you have and go from there...

[This message has been edited by yod (edited 11-02-2005).]

I'm not sure on how much $$$ it would take, guess it depend upon what the labels plans are.

I don't think an indie can compete with major labels on a dollar basis, indies, bands and artists have to be stealthy.

I don't believe a VC firm would invest in a label deal.

Your best bet is LOVE MONEY, money from those who love you. But it is smart for a band to create and follow a business plan.

Feel free to prove me wrong.

ande

Here's my take...

I've written a business plan. It's a work in progress. Things change. However, at least it gives me a map.

I did a ton of research attempting to get the right numbers to know what kind of money it takes to compete on the major field for one band. It's not cheap. I have found though that if you can make the right connections with other people you can circumvent a lot of the gross spending.

In terms of touring, you need capital. That's the big step I'm taking right now. Here's what I've discerned from other artists in regards to travel. Van tours might be great for people who can tolerate small spaces and being close to others for long periods of time. I opted to go a step further as I know from experience and other bands that arriving to a gig refreshed beats the hell out of being tired as hell. Van touring will wear you out. So I purchased a bus. Some will tell you an RV, but even with an RV you'll need to buy a trailer. With a bus if it's set up smartly you won't need anything but the bus.

The bus I just bought has 9 beds that are spacious enough to sit up in. I have a bathroom with a shower and a kitchen. The cost of driving, a bus might be slightly more expensive than a Van or RV, but the savings on hotel costs and food will be enormous. Buying the right bus isn't easy. I spent two and half months looking until I found one that suited my needs and was in my budget.

Now in terms of promotion, you need a plan. Radio cost big bucks, unless you have connected friends. Connected friends are hard to come by and can save you enormous costs. Hire someone to be your label radio promotions person and you might save the millions that labels spend, but that person had better be able to befriend a lot of PD's and keep on top of it.

Getting distribution isn't insurmountable, but the reputable companies want to make sure that band is either doing radio or touring or both. Otherwise its a waste of their resources, their money, their time, and your money too.

The biggest hurdle is touring. Make sure that your band, or the band you're signing had better be ready to spend a lot of time on the road thats where most of your promotion money should go on the non-signed level.

Don't forget to budget the duplication of your discs and posters and other things like t-shirts and stickers. All those costs add up.

Jody

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Music That Makes Your Soul Happy!
www.jodywhitesides.com

Jesus K-rist, Jody! You must be workin' with some deep pockets. Wish I had your pockets...

You missed the part where it says it was in my budget.

I have killer credit and was able to get a loan to purchase the bus. Its hella different owning it instead of leasing or renting. I have to pay for the repairs, but it should be worth it.

Jody

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Music That Makes Your Soul Happy!
www.jodywhitesides.com

I started my own label a few years ago and am promoting myself for now. I don't think you can compete with a major label just starting out. I think you should focus on building great relationships and outstanding product. These things will open doors for you.
Longtime fans of other artists will not run to you because you pop on the scene. You DO need fans to support you. Major labels have artists that have histories of making music for fans. Money can't but you a fanbase. You have to generate that. Major labels have relationships with major media outlets as well. Money won't buy these relationships for a new indie label. Trust must be established first.
Again, focus on growing your fan base through touring, publicity,networking, creating great music. Any entrepreneur starting a new business should not expect quick returns. In my opinion it's not realistic.

Especially to be able to pay for that 8 piece band while on the road!