When speculating how much independent record labels make, it is crucial to note that not all indie record labels are in the same league. An independent record label can be anything from a band creating an indie label and selling their own records. They can also be as culture-defining and significant as Sub Pop, Creation, Domino Records and Stones Throw.
Some indie record labels are not-for-profit endeavours, which means that every penny earned selling records, and accruing royalties go back into promoting the music and facilitating the creation of more music. However, by signing the right artists and getting the promotion right, record labels can become profitable – both for the artist and the label.
How Much Do Independent Record Labels Make?
Given the number of variables on the income of independent record labels, it is all but impossible to provide a ballpark figure. Yet, by looking at some of the key trends in the industry, you can get an idea of how much cash is on the table for independent labels.
Independent labels now rake in over 40% of the music industry revenue. The competition may be tough for new record labels, but there will always be space in the industry for musos with a golden ear. In fact, there has never been a better time to get established.
Before starting an independent label, establish where the revenue will come in as the first step. Possible income streams include physical and digital sales of albums, EPs and LPs, streaming royalties from Spotify and other platforms, publishing and licencing, performance royalties, radio play and merchandising.
Once label owners have figured out their projected income, the next stage is deciding how to re-invest it in the label. It also pays to be realistic about the hitches that may happen along the way.
As this is 2022, the age of cutting-edge technology, there are now freely available independent record label templates that label owners can use to predict their income, such as the one available via Ditto’s website.
Some of the expenses incurred by a record label include promotional costs, music videos, touring, production of physical music and merchandise, distribution costs, and cash advances.
It is important to note that different record labels operate under different terms and conditions. The increasingly popular 360 method gives record labels a specified cut of all the artist’s profits – even if the record label wasn’t directly involved in the revenue stream. So, if a signed artist plays a major festival, they will get a cut of the royalty, which is usually around £1,500. Or, if an artist’s song plays on BBC Radio 2, they could get their slice of the £82 royalty.
The success of an independent record label exists on the coattails of successful artists, which is why it is crucial to develop a stellar roster of bands. To find the freshest talent, you will want to head down to live gigs and keep up to date with new music blogs UK to discover artists before anyone else does.