Independent Record Labels: The Essential Steps to Successful Entrepreneurialism (4)

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The Music Telegraph
Text 2020-02-03


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Independent Record Labels: The Essential Steps to Successful Entrepreneurialism (4)


© 2001 Music Business Journal (by JoJo Gould)



The Following then is a summary overview of some of the key elements to be considered by those who wish to pursue the setting up of their own independent record label:


(Continued from previous article) 

A record label, like any other small business, must also consider the basic legalities of formal company structure. The manner in which the company is structured has important implications for its relationship with the government authorities and other third parties, such as banks. The main structure options available are usually: sole trader, partnership or limited company. The  limited company route provides the label with greater protection in the event of e.g. a possible copyright dispute, as it limits liability to the amount due on the company's shares. It also creates a share ownership structure; thus allowing others to invest in the label in return for a vested interest in performance. Limited companies must be registered with the government's Companies House (UK market), and must lodge official documents (such as the Memorandum and Articles of Association) in accordance with the Companies Acts. This task can be undertaken by use of Company Registration Agents, who can be found in the phonebook. It is advisable however to speak to a lawyer regarding company formation as they can provide advice on an appropriate constitution for the new business. Limited companies also require a Company Secretary -  and are strongly advised to engage a lawyer to undertake this formal administrative activity on behalf of the company.



Sole traders have more operational freedom, are very simple to set up and have less regulation  to deal with; however they are susceptible to potential unlimited liability. Likewise, partnerships generally have unlimited liability also. Those who follow the partnership route should take the time to draw up a Partnership Agreement with their business colleagues. Again, it is advisable to engage a lawyer to do this. Such a document will contain clarification of the exact business relationship between the partners - such as capital invested, banking arrangements and even working hours and acceptable holiday entitlements.



An independent label should consider product specifications just like any other business. With regard to the physical product, the label's releases should have a barcode, a catalogue number;  the proper copyright protection notices and a credits section - including relevant contact details. Some genres, such as dance music, may purposefully minimise the packaging information for a product; as this is an acceptable element of their marketing mix - e.g. for white labels. However, those who wish to be eligible for the charts will require barcodes. Full chart eligibility information can be obtained from the relevant body - such CIN (Chart Information Network) in the UK market. There are many precise rules for chart eligibility, and labels are advised to contact CIN (or the relevant body in their territory) to clarify this before sending a product to the manufacturers.






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