This is Celia Hirschman with On the Beat for KCRW.
As the corporate music business continues to recede in size, the independent record sector grows. Within that very diverse group of entrepreneurs, many artists in are seizing the day and building their own record companies.
Starting a label certainly sounds exciting enough. With CD production costs now under a buck, the question is, can someone earn a living selling 10,000 CDs on their own label?
The truth is, it's possible, but CD sales in record stores alone will really not make it. An artist needs to consider all income streams in that equation. Unless expectations are based in reality, the artist will likely find the process of running a record label very expensive and highly frustrating. If however, you are not deterred by that warning, then I suggest you arm yourself, with the well worn experiences of those who've walked before you.
Here's what you can expect. I've made a few assumptions, appropriate for an artist run label. First that you've paid for the recording of your album. That you have a small national base of fans who pay to come see you live and you are self-supporting on the touring side. Also, that you've got a friend to handle the photo shoot, and another one will design the cover. Indy bands are the kings of getting it done on the cheap. Finally, that you've made a deal with a national distributor, which will help you get your CD into the chains and mom-and-pop record stores.
Let's call your 4 piece band The Flip Tops. Your distributor thinks they can initially ship about 5,000 copies of your new CD. That means you'll generated about $53,000 in income. Don't go buy new gear just yet. The distributor will want their cut plus a discount to get all the retailers to stock the CD at the same time. On top of that, you'll need a low cost college radio promoter, and a national publicist to help get the visibility you'll need to move these records, and announce your upcoming tours. The new album will need to be visible in some cool record stores, like Amoeba and Arons, so you'll also need to shell out some bucks for retail positioning. Finally, more than likely, you'll want to hire someone to quarterback the process. All these investments will bring your $53,000 down to about $11,000, and you'll spend that paying royalties to the songwriter, publisher and the other band members involved.
It looks grim, doesn't it? But actually, once you get past the initial expense of marketing, the rest is easier. Consider if you pressed up another 5000 CDs, you could sell those CDs on the road for $15 each. Minus venue fees, and production costs, your net zero will look more like $43,000 profit. Get your song on a TV show or in an ad campaign and add synch licensing income to your bottom line. License your album to labels outside America and watch more opportunities come in.
And if the process feels overwhelming, consider aligning yourself with a credible and reliable independent record label and let them handle the process of building your career. But remember, there are thousands of bands who sell more than 10,000 CD's so with the right circumstances, sweat equity and good luck, it's not outrageous to consider doing it on your own.. If you're interested, you can check out some relevant links on the text version of this show at kcrw.com --- Keyword 'On the Beat.'
This is Celia Hirschman for On the Beat for KCRW.