Digital music distribution and how to set up a record label
27 October 2018
The advent of digital music distribution has levelled the playing field for those wanting to set up their own record label.
With lower costs than running a physical imprint, digital labels offer a less risky opportunity for aspiring curators – but with so many labels releasing music, owners have to work harder than ever to get their music heard and sold.MN2S' label distribution manager Chris James, who is responsible for coordinating and helping run a slew of different labels, explains the essential knowledge you need to know if you are thinking of setting up a digital record label and sheds more light on the ins and outs of digital distribution.
Take your time
If you are passionate about the idea of setting up a label, it's worth taking your time over getting things in place before you launch. The more prepared you are, the smoother things will work and the more impact your label will have. “It’s important to have a clear idea of the label’s musical identity, combined with a few releases in the pipeline and visually engaging artwork. Getting an artist or remixer with a large and developed following on board for the first release can be used as a springboard too, as this adds weight at retail and also via social media. Label owners often run or DJ at events, so integrating label promotion here is recommended. We saw this work very well for Lost Records (Leftwing & Kody) and Art of Dark on their respective launches.Chris says that the most common mistake people make when setting up a digital label is being unrealistic about timeframes. “Time is needed for DJs/bloggers/radio to listen to and feed back on releases, and it’s worth allowing more time if need be to get the most from a paid-for promo campaign.”
The costs of running a digital record label
Although the costs of running a digital label are undoubtedly lower than pressing and distributing vinyl, a little investment is still necessary to make it a success. “The four areas that a digital label would normally spend money on are mastering, artwork, promotion and in some cases advances, although through friends and contacts some of these costs can be minimalised or even eliminated.”A degree of flexibility is another advantage that digital labels can enjoy “A digital label can operate more quickly and with less financial outlay on signing a release, as there are no manufacturing times or costs involved. A digital label is also inherently more flexible, as a release can be easily reconfigured for retail following promo according to feedback received even at very close to release date, and obviously there are no warehousing requirements or physical distribution stock clearances.”It's not just money that needs to be invested, but also time. The more you invest into your label, the more it will pay off. Networking and relationship building are important when you are trying to launch any kind of brand, and they both take dedication and effort.
Maintaining a release schedule
While digital labels can act in a more flexible manner than physical ones, it's important that they maintain a consistent output – both in terms of musical quality but also in terms of frequency. With so much competition out there, you need to be well organised if you want to get the most out of your releases. “We recommend a frequent and regular release schedule as this keeps the label in the minds of retailers and music-buying public whilst also driving revenue. Labels invest a lot of time, money and effort in raising their profile and so it’s important to consistently hit deadlines in order to maintain it. For this reason we advise on and assist with scheduling wherever possible.”It's also vital to ensure deadlines and dates are stuck to as much as possible when you are working with other parties who your release dates affect – such as PRs, promo services and retailers. The more professional and timely you can be with your schedule, the more people will like working with you and the better service you will receive.
Building a core of artists
Many of the most successful record labels build and define their sound around a core of regular artists, which can help to establish a distinctive niche within their chosen genre. Fostering these relationships can have mutual benefits, helping the label to grow as the artists' profiles grow and vice versa. “This comes back to identity. We have worked with several very successful labels with a core artist base that forms the ‘sound’ of the label, and in my opinion this really is the point of a ‘label’: to denote or embody. Establishing a label team of artists and producers can be a very effective way of achieving this.”
Getting a remix for your release from a high-profile or up-and-coming artist can amplify your label in a big way and help to increase exposure outside of your existing fanbase. It can be an expensive business, but it's always worth talking to remixers and their team to see if you can figure out a deal of some sort. “The most important aspect is to speak to the right person. Emerging remixers may agree deals directly themselves, whilst bigger names will have management, so they should be approached instead.” “We regularly put labels in touch with artists or their representatives via label group connections, as well as MN2S Agency. Lesser-known artists may agree to remix for your label with no advance, just taking a percentage of sales, and as touched on above, remix swaps can be a great way of bringing in a big talent/name to your label at no cost – this is of course provided the other side wants a remix in return! If a straight swap is not an option and there isn’t much of an advance budget, another option could be to up the percentage split offered to the remixer.” Such mutually beneficial exchanges or variations on standard deals can often apply in other areas when dealing with external artists and companies – so it's worth remembering that few things are set in stone. If you don't ask, you don't get.
PR for labels
Social media may have democratised the promotional playing field, but the value of a good PR should not be overlooked. It's not just their contacts and time that you pay for, but also the trust they have built up over the years with different publications, websites and radio stations and their skill in knowing who to approach, when to approach them and what to approach them with.“A well-connected, established artist/DJ/promoter starting a label may have a contact list in place they can use to get their release played in clubs or on radio, but for those that don’t, an external PR company can help a lot in getting a release the coverage it deserves. As DJs receive so many promos these days, using a PR company maximises the chances of a DJ listening to, reacting to and ultimately supporting a release.”Few have the time to listen to everything they get set, so PRs act as a filter and source of recommendation to help them choose what to prioritise.
How to get front page banners on Beatport and other retailers
Getting front page or genre page coverage for your releases on download stores can boost sales in a big way, but your label is unlikely to get a look-in if you haven't put in the legwork to generate some hype and support around it already. Retailers want to see some signs of popularity and acclaim before putting their extra support behind releases as they only want to highlight tracks that are going to sell good volumes.“Several factors play a part in achieving good retail exposure, including key DJ reactions, social media support, press/blog/radio coverage and ensuring this is correctly formatted and successfully delivered to the decision-makers at the right time. We have a proven track record on all the major retail stores, including Beatport, iTunes and Traxsource, with an average of one front page banner per week in 2013 on Beatport, as one example. Exclusive streams and giveaways can also be used as part of a co-ordinated promotional strategy, and also in some instances as a bonus at retail. Another option we recommend is a store-exclusive track, which will incentivise retailers to promote your release.”
Working with other labels
Dance music is built around community, so forging links and relationships with other labels can be useful and have benefits for all involved. “This can be beneficial in terms of artist/remix swaps and reaching different audiences, plus pooling ideas and effort on innovative promotional plans is often also a win-win.” Some labels curate joint compilations or team up for parties to help share the effort as well as the benefit. Most labels will only put out one release a month at most, so you may be able to use the gaps in between to help promote each other's releases. The more allies your label has, the better. You never know when you might need to call in a favour. REGISTERING WITH ROYALTY COLLECTION SOCIETIESIf you want to make sure that your label and artists get paid whenever your tracks get played in public places like clubs or on the radio, you need to make sure that all your releases are registered with the relevant royalty collection societies in your country and around the world, like the PRS and the PPL in the UK.This can be a real minefield, full of jargon and difficult to use websites – so it's best to get an expert like a label management company or publisher to handle this for you. “It can be difficult trying to understand the terminology at first, and so this can put off new label owners from finding out more. We look after labels’ interests with respect to PPL registration, which collects royalties on behalf of labels and performers for public performances.”With new technologies like KUVO making it easier than ever for DJs and clubs to report what music they're playing, it looks like independent dance labels will get increasingly accurate royalty payments as time goes on. If your works aren't registered, you'll never know what you're missing.
What do label services companies do?
If you want to focus on the music that your label is signing, releasing and promoting but don't have the expertise in other areas, a label services and management company like MN2S could be exactly what you need. Handling all the fine details and important behind-the-scenes work, they ensure that all bases are covered when it comes to the business side of things. “We provide a core distribution platform delivering direct to all the major retailers, and offer additional services to suit labels’ needs - for example contracts, third-party license negotiation, compilation licensing, rights management, art and design services, mastering and more. Each label has unique requirements and we tailor our approach individually to be most effective.” To find out more about our label services get in touch today.