7 Tips for Record Label Business Partners | Running Your Record Label Like A Pro
When starting a record label, you may be thinking about bringing on potential partners. Maybe you have questions on how to address some of your concerns about the partner, and what can potentially happen if you bring this person into your label, including how a record label works amongst partners. If you’re looking to run your record label like a pro, here are 7 record label tips for business partners.
1. Get An Entertainment Attorney. Make sure that you’re protecting yourself and your ownership by first getting an entertainment attorney. When you get to the point where you are getting your record label contracts, doing deals with the artists, submitting music to be in TV or film − all the things you do as a label have to be done right, and that means you must always have an entertainment attorney on your side.
2. Get Contracts With Your Artists. The most important contract you’re ever going to get is your record label agreement. It sets the relationship with the artist of how it’s all going to work. The agreement addresses who is going to own the music, if you’re going to give any advances, or pay any expenses.
Most importantly, it’s very common that a record label will own the music that the artist makes. However, under copyright law, if there is not a written contract with the artist, then technically you don’t own the music. If there is no contract, there is no ownership, so always get contracts with your artists
3. Don’t Take Investment Money Too Early. Be patient with outside investments. Don’t give away too much too soon. During the beginning stages of a company, a huge investment may sound appealing, however, when your company starts to succeed and make money, the value of your company is going to be worth a lot more than what you sell it for early on.
When it comes to investors, there are usually strings attached. Be aware that investors can cause headaches. They have expectations and they commonly want to be involved in your business, and sometimes they cross lines. They may want to make decisions and to tell you how to run your company. Remember to really consider who you are partnering with, if you do decide to take investment dollars.
4. Discuss Branding. Talk about how you’re going to represent the company. As you’re building your company, be clear about the branding. Be clear about what the slogan is, what the logo is, and other aspects of your brand. As a starting point, have discussions with your business partner about what you’re trying to do, and what name/brand you’re pushing as a company.
5. Get A Contract With Your Partner. There are two ways to dothis. One of those ways is to sign a collaboration agreement. If you’re having questions and concerns, a collaboration agreement allows for both parties to work casually at first, and if things don’t work out, it allows more flexibility and gives you the ability to go your separate ways.
The second path is officially making that person a member of your company and setting up a Limited Liability Company (“LLC”). Once you set up an LLC, and you decide to bring in a partner, that person is now a member of the company. The agreement that you have is called an Operating Agreement. And what the Operating Agreement sets forth are the rules to the road on how the company is going to operate, how you and your partner are going to make decisions, and who does the day-to-day stuff. It makes the relationship clear so there won’t be any confusion. If a problem does come up, you can go back and review the Operating Agreement.
6. Get To Know Your Partner Before Signing The Deal. During the beginning stages of the record label, you may want to bring in friends and family to help with the company. But the thing that happens a lot is that you don’t know them on a business level, so sometimes they end up not being the best fit your company. Take the time to work casually first. Are they going to be a good partner? When it comes down to who you decide to build with, you need to look at qualities like work ethic, communication, and problem solving.
7. Don’t Give Away Ownership Too Soon. When you start a company, it doesn’t feel bad giving away portions of the company, because you don’t have money in the bank or you don’t own anything. Be careful to not be so eager to give away portions of the ownership in your business in exchange for services. Until you feel what you’re getting in exchange is worth what you’re giving, hold fast and be patient. Make sure you have the right partner before you make that decision to give away any portion of your company.
If you want to run your new company like a pro, remember that these 7 tips for record label business partners will help when it comes to bringing in potential business partners, and how a record label works amongst partners.