Lacking large budgets for project production and marketing, independent record companies have had to be more resourceful over the years.
Creating a record business plan
Furthermore, independents cannot rely on the occasional "big hit" record, but rather have established and grown music catalogs to provide streams of revenue. In growing a music catalog it is imperative to compile a reliable group of artists, who are dedicated to producing quality music. This enables the company to steadily increase the number of unit sales for a particular artist over a two to three album process. Major recording companies frequently invest in independent labels when confidence in the company's roster and management exists.
In these strategic alliances and joint ventures, the larger company may invest money to: a assist in completing album projects, b manufacture compact discs and tapes and c assist with marketing and promotion plans. Although independent distribution channels Johnson, Wallace and Cordoba exist, many independent labels choose to utilize the independent distribution services offered by major labels. This is an attractive choice for independents, due to the breadth and reach of the distribution in addition to the clout which the majors possess with retailers.
In these situations, independents can "piggy back" on the reputation of the major. Several UK companies that started as independent firms and joined forces with a major include Clover, Maid and Roots. Similar success stories are documented with U. From the outset, these companies demonstrated creative leadership, quality product and determination. The U. Sales fell sharply over the course of the next six years, mainly due to the declining American economy and the popularity of home cassette taping.
It wasn't until , when unit volumes reached million, that the industry exceeded the pinnacle reached ten years ago. Recent calculations of industry figures indicate more than 10 billion dollars in sales and a volume of more than million units. Reed has formulated a simple but successful approach to market its products.
A Sample Record Label Business Plan Template
The chief marketing objective for REC's pre-recorded music, video and programming products centers around the design and implementation of a strategy that will cost-effectively deliver that product to the intended target market. The financial success of an album can be guaranteed through the establishment of proper marketing and promotion budgets. However, without the dollars necessary "to win" success is a "crap shoot.
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The marketing and promotion budget will be divided into twelve to fifteen-month campaigns, each consisting of three phases. Phase 1 begins with the creation of music videos for approximately three songs from the new album project. Once these have been shot and edited, the first "single" and its video counterpart will be released to the public. At this point independent promoters will canvas radio stations, video networks and dance clubs depending on the genre of the release to ensure proper air play for the first single. Within the next six weeks, a second "single" release will be promoted to the public.
Phase 2 concentrates on the publicist, print advertisements and media exposure. Riding the momentum of the "single" releases, the market will be printed to hear and learn more about the artist s through articles in both trade and non-trade magazines, as well as radio, television and Internet interviews.
This will be accompanied by intense in-store and retailer co-op advertising. Additionally, the third and fourth "singles" will be released during this phase. The systematic release of "singles" will sustain the artists popularity while increasing and prolonging sales of the full-length album. Furthermore, during Phase 3, the artists will make promotional appearances at clubs, retailers, radio stations and charity events in conjunction with scheduled concerts.
Despite the fact that radio no longer possesses the sole influence on record sales, sharing the spotlight now with video resources, it is still a heavyweight medium for record promotion. Promoters are now more concerned about the facts and figures rather than simply trying to impress program directors with the great new song they have to offer. Major record labels utilize both in-house and independent promoters to assist in the effort to maximize the airplay of a new song or album.
An in-house radio promotion staff makes financial sense assuming the company maintains a steady and consistent release schedule to a specific genre or radio format. Personal relationships with radio station format directors is the name of the game in this arena. Bombarded by new song and album releases each month, program directors are inclined to assist those with who they are familiar and friendly. Reed Music will utilize the services of outside radio promoters. Known as independents, these promoters have established networks and relationships with radio station program directors.
Most independents position themselves and focus within a specific music genre. Reed Music has created a network of independents who will be hired to interface with radio stations. Specifically, Reed Music will create and design goal oriented and incentive based contracts with independent promoters. Measurable criteria will include some of the following: peak chart position obtained, number of weeks on the charts on which a specified position was obtained.
Reed Music's independent promoters will focus their efforts and attention on reporting stations. This information is gathered and tabulated from all around the world. It is presented to the public in the form of a chart which shows such information as current chart position, previous chart position, artist, record label, etc. The promotion of pre-recorded music is inextricably bound to TV related transmissions of music, including conventional TV, cable, pay-cable and direct satellites.
Sales are increased immediately when music is linked to visual entertainment, whether the medium is a movie musical, a TV broadcast or a music video. Broadcasts and cable companies now transmit dozens of video shows, and their impact on record sales is clear; videos not only increase record sales, they break new acts, and prolong the chart life of new recordings. In addition to canvassing radio stations, independent record promoters will also devote substantial time securing airplay for music videos. Boundary TV and similar outlets guarantee huge national exposure, just as with radio. Reed Music will place heavy importance on music videos, considering the national and international reach of these networks.
Music videos will offer exposure to those markets presently unexploited. The genre of music dictates the approximate marketing and promotional budget amount. For instance, due to the breadth of the mainstream market, a project released through Ocean will require twice the amount of a Wave project. Perhaps one of the most effective marketing tools, concerts and promotional appearances are instrumental in "breaking" a new act and creating a loyal fan base.
Public relations personnel in conjunction with the artist's management will create and plan these promotional tours which will be directed toward the particular target market. For instance, the artist may make an appearance at a local record store, provide an interview for a radio station, and perform in a concert the same evening.
In addition to the long-term benefit of creating a loyal customer base, REC will utilize these opportunities to immediately sell copies of the artist's project, as compact discs and cassettes will be available at merchandise tables at concerts and appearances. Dance clubs are effective mediums to test market new recordings. Prior to the commercial release of mainstream singles, the songs will be distributed to clubs to test public response.
Reed will work closely with its independent promoters to establish networks of clubs throughout the country which will be utilized to test new releases. Results from these activities will provide crucial information in a timely fashion, allowing the company to tweek re-mix a recording if necessary. Furthermore, Reed Music expects to increase sales by promoting music videos of new releases to be played in the clubs. Dancers who become surrounded by the club's multiple screens and overpowering sound systems may be stimulated to later walk into a store and purchase a copy of the product audio or video to continue enjoying the music at home.
A key piece in the promotion of new product releases is the "creation of mass interest" in the marketplace. The coordination of these activities is the responsibility of the publicist s. REC will utilize publicists to create the buzz in the marketplace about new projects and artists. Initially, this important function will be outsourced to credible public relations firms, until such time that it is feasible to internalize this position at Reed.
Publicists will arrange and promote appearances and interviews talk shows, industry publications, mainstream magazines and create written materials and ad copy about the artist to catch public attention. Combined with concentrated airplay and print advertisements, the impact created from the publicist's strategy creates the most powerful advertisement, word of mouth. Music buyers who hear the "talk" and hear the music on the radio are more inclined to enter a music store to make a purchase.
Advertising campaigns will concentrate on the types of exposure that fashion designers have mastered in the realm of advertising. A variety of media will be used including print, broadcast, point-of-sale and direct mail. With a mass consumer product such as music, it is feasible to reach specified target segments by placing advertisements in mass print media-magazines and newspapers.
Some advertising will be cooperative with the store and Reed sharing costs. For example, a print page or media buy that promotes a REC product in conjunction with the retailer.
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Co-op advertising may be paid all or in part by the retailer, who is reimbursed by Reed from a co-op budget determined by the retailer's volume of purchases from the label. To justify the high expense, several Reed Music releases will be pushed in one ad, thus pulling down the "cost-per-thousand" expense per release. From time to time, record stores may request that Reed finance a print media campaign in their area. Reed will initiate print ads when trying to coordinate advertising with the promotion of concert appearances by a Reed artist. As a pillar of the company, community outreach will play an integral role in both the company and artist positioning.
To this end each Reed artist will be aligned with a specific charity or community organization. Supporting the company's philanthropic desires, artist participation will enhance public image while generating exposure and revenue for chosen charities. More specifically, a page inside each compact disc will be devoted to a charity or non-profit organization.
Additionally, space on each artist's World Wide Web page will be reserved for a non-profit organization. Furthermore, Reed Entertainment will lend additional support to these charities through corporate fundraising opportunities and donations from company revenues. Also a crucial function, proper art direction can greatly enhance the image of a product, lending added power to the promotion and marketing strategies. Responsible for artistic layouts, print advertisements, compact disc design, j-card design, merchandise design and the creation and maintenance of the corporate identity; the creativity displayed by this department plays a key role in positioning and packaging the project to the consumer.
Within the first few months of operations, this function will be overseen internally, with many of the specific projects being completed by independent graphic artists. This will minimize REC overhead expenses while maintaining the highest level of creativity. Traditional distribution channels into music related retail establishments enable REC the opportunity to reach retail outlets throughout the world. REC will closely coordinate product launches and utilize the distributor's clout with retailers to design specific strategies for enhancing advertising and marketing presence within retail establishments.
These strategies will focus on point-of-sale advertisements, in-store advertising opportunities, print, radio and television co-op opportunities. One such strategy to be implemented once the company has several artists on the market, will be presenting retailers with the opportunity to place an attractive Reed aisle end-cap display in the establishment. The display is intended to promote four to five REC artists' compact discs simultaneously. REC will also design other in-store advertisements such as counter-top point-of-sale advertisements, window posters and banners.
In addition to listening posts product displays which allow a potential buyer the opportunity to sample the product prior to purchase , REC artists and products will also be advertised in retailer newsletters and bulk promotional mailings to the public. Additionally, REC is examining the prospect of distributing products through network marketing channels.
The recent explosion of network marketing concepts has produced millions of distributors and consumers worldwide, providing an effective means to reach the public. The distribution breadth of individual companies will be evaluated to determine if access can be gained to selected target markets.
An established national network, this channel provides an excellent vehicle for the distribution of Gospel and Inspirational products. Reed will submit songs to motion picture studios as an additional means to provide promotional support for company projects. The promotional mileage created from being included on a soundtrack for a major motion picture is enough to assist in moving several hundred-thousand copies of the album.
In response to the growing popularity and necessity for a presence on the Internet, REC will create and design a web presence for itself. Utilizing the latest web site technology, REC's web site will be intended to advertise the company, announce and advertise new releases, sell company products and merchandise and offer e-mail communication.
Furthermore, utilizing the latest technology, visitors to the web site will be able to sample music clips from REC's artists. Management has secured a domain name for the site. Furthermore, REC will create space on its web site for each artist signed to the company. Allowing for increased public exposure, the public will be able to learn more about the artist or group.
Additionally, space will be provided to promote chosen non-profit organizations and charities through this electronic medium. REC's independent promoters will mail promotional copies of the product to a large number of radio, cable and TV outlets. Independent promoters have the experience and the established networks to use select mailing lists, ones that include mostly influential stations or stations where the promoters possess person contacts. Mail campaigns will be followed by telephone calls. The promotion and marketing facets of the record business are vital to REC's overall success.
A quality product is only the first step in the equation for hit records, videos and programming. Reed will ensure its financial success through consistent and balanced marketing strategies designed to reach desired target markets. The strength of REC's management team is derived from the blend of experience, creativity, savvy and energy. The following individuals who occupy key positions within REC are dedicated and prepared to ensure REC's success and profitability.
A renowned producer, and recording artist, and employee with such major companies and labels as Rexmark Ultimate, Connor, Emblem and Regal, Mr. Beyond the creative side of the business, Mr. Rama has developed the business and interpersonal skills necessary to lead REC. He maintains close personal relationships with many executives and personnel within the music industry. These affiliations and contacts will provide REC with the proper positioning to navigate within the industry.
Having earned a Doctorate in Social Education in , Mr. Rama has placed great emphasis on teaching and mentoring youth. Rama the forum to positively impact youth. Throughout the past several years, Mr. Lever has honed his general business skills as a business consultant. He has worked with over businesses in Arizona, assisting with accounting and financial analysis as well as the creation of marketing and business plans. Furthermore, as a representative of the Applewood Corporation, Mr. Working closely with the management of several Russian service and manufacturing companies, Mr.
Lever assisted in creating marketing plans for companies which previously operated under the Communist regime. Furthermore, Mr. Lever has honed and developed many of his business skills as the General Manager for a multi-location dry-cleaning franchise. Specifically, his duties included company-wide operations management, financial services and franchise development.
Lever was also invited to participate in the Moot Corp Competition. In fact, Mr. Lever was the first undergraduate student to be chosen to participate in this worldwide competition. Clayton Gorman provides an impressive blend of entertainment and general business which will be instrumental in leading Ocean. Most recently, Mr. In this capacity, Mr. Gorman was responsible for artist development, artist negotiation and music production.
Throughout his career, Mr. Gorman has worked extensively in the music industry.
Specifically, he has worked with Carville Records. Gorman has also devoted several years of his professional life to community and youth organizations. Gorman has assisted youth of all ages. Each of these programs currently serves over 1, youth, providing guidance and education in the areas of life skills, reading, math and general counseling. As a result of his dedication and commitment in this area, Mr. Gorman was nominated and received the prestigious Community Excellence Award. A graduate of Harvard University, Mr. Todd Richard has developed a multi-faceted background with experience in finance and banking, in addition to comprehensive experience in the entertainment industry.
Richard received his first "taste" of the industry. While with this company, he had the opportunity to work with many Gospel legends. Richard honed and developed his management and production skills. It was with this experience that Todd founded the Salt Group, a company which produces audio and theatrical productions.
The company also manages artistic clientele in the genre of Christian music. Working in the realm of Christian music, Todd has developed a cadre of affiliations. Relationships with artists, concert promoters, program directors radio stations and ministries across the United States will be beneficial to his role as the Senior Vice President of Light Records. Cont has developed a varied background of experience in the industry. Most recently, he has concentrated on his solo career which has produced four Jazz albums for Emblem. His album projects have collectively sold over , units within the past five years.
After graduation from SCOM, Manley honed his musical skills while touring worldwide and recording with various Jazz groups. In addition to his own projects, Manley has participated in the recording of over fifty albums. Cont has taught several high school music classes utilizing his proficiency with woodwind instruments to promote music to youth. Due to his experience in the Jazz niche of the music market, Manley has developed a solid network of personal contacts with radio promoters, musicians, producers, and executives. These affiliations are invaluable to REC and will allow the company to make an instant impact in the marketplace.
The following is a description of the key roles and responsibilities attached to the daily operations of Reed Music. Each of the label Vice Presidents will be directly responsible for all of the functions within their particular label. Label Vice Presidents will solely handle the majority of these functions for their particular label with the assistance of shared administrative staff. As each label grows in terms of sales revenue and the number of recording artists, additional staff will be added to provide necessary support.
Wherever possible and feasible, staff will be shared between labels in an effort to minimize unnecessary overhead. Responsible for selling the company's product to wholesalers and retailers. It develops sales campaigns, determines policies for discounts, special deals and returns, takes orders for product and oversees sales activities on local levels, provides financial assistance to accounts for advertising and oversees billing. The sales department consists of members of a national sales team - senior executives, salespersons and other employees of the branch distribution system.
This work is done in-house by small labels or contracts with regional concerns to handle these functions in different parts of the country. This department may also be referred to as "Artist Development". Found in most medium to large record companies, product managers coordinate and oversee all aspects of a current release, including packaging, advertising, tours, publicity, promotion and sales activities.
This entails close liaison with personnel from other departments within the label. The function of the publicity department is to bring press and other media attention to the artist which will, either directly or indirectly, aid in the sale of records. Inherent in this goal is the continued visibility of the artist in newspapers, magazines, trade publications, on radio and television programs and special industry award shows. Reed labels will employ an outside promotional staff to seek the greatest possible exposure for artists and products through radio and video air play.
Representatives deliver new products to radio stations and closely monitor their play lists to see if their song is being played. The same approach is taken with regard to video outlets. A large part of the success of a record is predicated upon the amount of radio air play it receives.
A Sample Record Label Business Plan Template
The competition is fierce. As such, a record should not be randomly promoted to radio stations. This department has broad responsibilities, which include talent search, contract negotiation, interim artist management and development unless the artist has other management , tour support and publicity.
These responsibilities include planning and monitoring budgets, examining studio bills, preparing studio reports, ordering references and parts, collecting information for label copy and packaging, monitoring and reporting on contractual options, copyrighting works for a single or album and obtaining mechanical licenses.
This department is primarily responsible for creating and supervising marketing campaigns, including developing marketing concepts, creating and executing graphic art, creating editorial copy and designing "point-of-sales" stimuli posters, banners and window displays, etc.
Reed has developed a sound, conservative financial plan which provides the founders, investors and employees the opportunity to financially capitalize. Even in the creative industries a business plan is an essential tool to help you focus on achieving your growth ambitions in the first few years.
The first thing you need to do is decide what kind of label you want to be. The music industry is a wildly varied beast with many arms and genres. Some of the most successful labels are famed for representing artists from one particular genre, allowing them to specialise in producing a particular sound and creating a strong brand identity. Indie label Alcopop! Most likely you will be an independent record label or indie record label — one that operates without the funding or support of a major record label. Many musical artists get their big break by being signed to an independent record label.
Major record labels will often be part of a large international media group or under the control of a corporate umbrella organisation. Treat your label like any business, music is your product. Work out how you are going to generate income from your business, factoring in your digital strategy and work out a budget for marketing and promotion — remember labels no longer expect to make most of their revenue from sales alone. Your plan should cover at least the first three years as well as a cashflow forecast for the first 12 months. It should also include business bank accounts, office location, insurance, rates and tax.
They provide training, publish research and bring music business related issues to the attention of government. Of course recording contracts are the legal cornerstone of any record label. A recording contract is a legal agreement between artist and label that the artist will exclusively produce one or a number of records for the label to sell and promote. Other kinds of contracts include licensing deals — where an artist retains the copyright but allows the label to sell on their behalf. Especially if you have a hit, film and television studios, advertisers or video games will be clamouring to exploit its success.
If you have neither the time nor resources a bigger publisher can manage the administration for commission. It should deal with how royalties and advances are to be split, who will own the band name in the event of a break up and how the label and individual members may use the name for promotional purposes. They kept their rights and I kept the mechanical rights, it was just a case of what percentage of what was going to be distributed between us. You should also ensure you obtain consents to use art work, photographs, logos as well as the rights to use the recordings of session musicians and samples you may use.
Finally, there are countless numbers of record labels, bands and artists trying to make an impact in this huge global industry, all looking for a unique and eye catching name. Before you start recording and releasing anything make sure you have the trademark on your name. The Music Week Directory is a good place to start, although you will need to subscribe. The MCPS licenses the use of songs for its writer and publisher members whenever their music is copied and distributed to the public.
The PPL collects and distributes airplay and public performance royalties on behalf of the owner of the recording. Any public space that plays music — Radio, clubs, restaurants — must pay a licence fee which is shared out to registered labels. Thanks to the advancement of digital technology record labels can and have been started from a bedroom or garage. Basic sound recording hardware can be bought for relatively low prices or second hand and many computers come with free recording software.
Costs again are dependent on what you are seeking to achieve with your label. Remember if you are planning on being a sole trader it is your responsibility to keep a record of sales and expenses and dealing with your tax return. Clothier — who started Alcopop! Websites such as mJQ and Rightbiz have a range of options of fully functioning recording spaces across the UK. Keep a record of all your spending and any documents or legally binding contracts that might be relevant. This could mean paying someone to do album artwork and create promotional posters.
Distributors can sometimes be unwilling to take on new labels with no track record, which is where your business plan could come in handy again.