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To
sign or not to sign is the question on every artist's mind in
this climate where labels are merging, downsizing or folding.
If you are contemplating starting your own record label check
out the following tips from Keith Holzman, a management
consultant with Solutions Unlimited. As former President of ROM
Records, Managing Director of Discovery Records, Senior Vice President
of Elektra Records, and Director of Nonesuch Records, Holtzman
is a seasoned executive with four decades of experience in all
aspects of running a label. His new book "The Complete Guide
to Starting a Record Company," supplies an extensive overview
of what you'll need to get started. Holtzman opens the pages for
WOMANROCK readers in this special interview for Gig Bag.
WOMANROCK:
For
those who are considering starting their own labels, can you offer
a comparison between what an artist should expect from an independent
label versus a major?
KEITH
HOLZMAN:
In
this era of multi-national major label contraction, and an attendant
reduction in staff, I don't see many reasons for an artist to
sign with a major unless an offer is so financially advantageous
that the money can't be refused.
Majors
have two big advantages - lots of capital, and an occasional willingness
to spend it on a significant marketing effort. That said, if there's
not a lot of buzz happening for a new artist's project in the
first few months of release, it's likely that the major will drop
the project and put their effort into the next act in line.
Independent
labels on the other hand generally don't commit themselves to
too many artists at a time. Therefore they have more at stake
in each signing, and are likely to spend a lot more time and energy
in trying to make a new release "happen." It's also
a lot easier to access and work closely with an indie label's
key staff. And it's frequently a lot more pleasant experience.
In
short, there may be less initial financial advantage, but the
likelihood of really building a career is greater with a well-chosen
independent label.
WOMANROCK:
What
questions should an artist ask herself before jumping into her
own label?
HOLZMAN:
First,
do you have the zeal and energy to fully commit yourself to it?
Do
you have the time to be fully involved?
Do
you have sufficient capital resources to keep the label alive
through the first few critical years?
Do
you have a broad knowledge of the music industry, and business
in general, so you've got a reasonable chance to succeed?
Do
you have the stick-to-it-iveness and tenacity to survive the inevitable
ups and downs of daily activity?
WOMANROCK:
Why
is a business plan important and what basic items should you include?
HOLZMAN:
There
are two major reasons to draft a carefully thought-out document.
Primary, for most companies, is that a business plan is the first
thing a potential investor will ask for when you're seeking funding.
More important however, in my mind, is that a good business plan
requires you to think thoroughly about almost every conceivable
aspect of a new venture, and in fact, it should become your road
map or procedures manual for your first few years of operation.
The
plan should start with an executive summary. This is a distillation
of the salient facts in just a page or two. Someone reading the
summary should be able to come away with a pretty good idea of
what your company will be about.
Next,
it should contain a product or mission statement-what the music
is about, and what makes it special.
You
might want to include a timeline for the first couple of years
of releases, and a statement of what you're trying to achieve,
and your long-range goals for the label.
Include
something about your proposed legal structure, such as a sole
proprietorship, partnership, LLC, S-Corp, etc. Discuss staff size
(whether you'll have a single assistant or a number of people),
office infrastructure and space requirements, printing and manufacturing,
and if you're planning to build an affiliated music publishing
venture.
There
should be a section devoted to a market analysis for your music,
what the competition might be, and who your customers are likely
to be. Another section should deal with marketing and sales strategy,
and should include a discussion of pricing.
Discuss
the management team, even if it's only going to be you. Let the
reader know about your experience and background. The same applies
if you're planning to include other key people.
Most
important, there must be a comprehensive financial plan. This
should include all the financial aspects of the label projected
out for at least two or three years, but in a simple and easily
scanned spreadsheet. You needn't show all the underlying tables
and details, but they should be available to any potential investor
who asks for it.
In
another section mention any potential risks and opportunities.
Some business plans include the specific dollar amount you need
to raise, while others leave this out to avoid scaring off possible
investors.
You
might also include an exit plan if your desire is to get rich
quickly by selling the company, although this isn't something
I recommend. The likelihood of hitting a vein of gold is extremely
rare, and I prefer to think you're doing this because you love
music.
WOMANROCK:
Before
anything happens, there needs to be money in place. Do you have
advice on raising start-up capital and what kinds of numbers are
realistic?
HOLZMAN:
It's
extremely unlikely that you'll find someone rich who wants to
hand you a pile of dough for you to spend. Don't even consider
banks, and unless you're seeking "big bucks" - upward
of two million dollars - forget going to venture capitalists.
The
most likely investors are family and friends - people who know
you and who want to help you succeed. If your budget is modest,
but conservative and well thought out, you'll have a better chance
of raising capital from those close to you.
WOMANROCK:
Say
your CD is all ready to be released to the world, what do you
look for in a distributor?
HOLZMAN:
A
distributor's job is to get "product" into the marketplace.
Some are a lot better at this than others. Check with your colleagues
to see who they recommend. In particular, look for a distributor
who's had a lot of experience with the genre of music you'll be
releasing, who appears to do a good job getting product into a
wide variety of accounts, who pays on time, and who has good people
to work with. Bear in mind that it's very difficult to make a
deal with a good distributor until you've got a few releases for
them to work with. What they'll want from you is a continuous
and regular flow of releases, and a solid marketing effort on
your part. In the meantime, you might consider distributing through
CD Baby.
WOMANROCK:
Any
tips for creating a marketing plan on a tight budget?
HOLZMAN:
You
don't have to spend a fortune to market your music, although that
could certainly help! A lot of what you'll do will depend on the
kind of music you release. Some genres, such as folk, Americana,
or jazz for example, are fairly easy to get airplay for on community
radio and NPR affiliates. Others, such as commercial rock, can
be very expensive to promote to radio, and require professional
promotion people. And they don't come cheap.
Publicity
can be a big help but it takes months of effort, and consistent
follow-through. It's best to create a detailed and thorough marketing
plan, perhaps with different phases of effort based on results.
Start locally and see how the music is received. Then slowly build
to a national level if you're getting positive feedback.
Be
sure to include a budget in the marketing plan and keep track
of financial commitments in an up-to-date spreadsheet. You won't
want any nasty surprises when a bill comes in that you forgot
about and can't pay.
WOMANROCK:
The
process doesn't stop once the CD's out the door. What needs to
be considered post release?
HOLZMAN:
There
are a number of things you should be doing:
Are
you thinking about, or better still, working on, one or more follow-up
releases - either by you or another artist?
Are
you being persistent at marketing already released product?
Are
you looking into, and perhaps reaping the benefit of, ancillary
forms of income from existing music, such as licensing to TV,
films, etc.
Is
your web site - you do have a web site, I hope- up to date and
filled with as much useful information as you can provide?
Are
you selling your music online?
WOMANROCK:
In
addition to your new book, are there some resources out there
that you recommend to entrepreneurs?
HOLZMAN:
There
are lots of web sites devoted to music, such as www.mi2n.com,
www.musicdish.com
and www.recordlabelresource.com.
There are also many more devoted to general business. One such
excellent resource is the Small Business Administration www.sba.gov/index.html.
Information on copyrights, and the necessary forms, are available
at www.copyright.gov.
There's
also my own free monthly newsletter, "Manage for Success,"
that discusses common issues indie labels have to deal with. Go
to www.holzmansolutions.com
and click on the "Subscribe" button. Previous newsletter
are available on the "Articles" page.
And
don't forget such daily newspapers as the New York Times, Los
Angeles Times, and Wall Street Journal, and music publications
such as Billboard.
"The
Complete Guide to Starting a Record Company," is available
as a 235-page downloadable eBook (in Adobe Acrobat® PDF form)
or as a printed, spiral-bound book. Both are available at www.RecordCompanyStartup.com.
Tina
Whelski is a NY-based freelance writer/photographer who has
written for the Village Voice and currently contributes a regular
music column to the Aquarian Weekly/East Coast Rocker. She's also
a drummer.
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