How Do Record Labels

Break Even?

Essential Strategies for Record Labels to Break Even and Thrive in the Music Industry

Story time…

My wife won’t let our kids say that they can’t do anything, unless they put the word “yet” at the end of the sentence. For example, “I can’t speak French… YET” or “I don’t know how to play baseball… yet.”

So what does this have to do with your record label? You may not be profitable, and you may struggle to break even on your releases. That’s okay! That’s part of the growing process.

Your record label just isn’t breaking even… yet!

It is important that we set high growth expectations for ourselves, our artists, and our record label! We are all guilty of perpetuating the belief that it's impossible for musicians and passionate individuals in the music industry to make a living doing what they love. This mindset ends up becoming a self-fulfilling prophecy.

Instead, I want to challenge this mindset. Setting low expectations is risky and doesn't protect you—it endangers you. As an entrepreneur, you shouldn't start a business with the expectation of failure or struggling to make ends meet.

Do your artists not deserve to get paid? Do your releases not deserve to break even? Of course they do!

Your artists have expectations and goals for their career… they believe in their music, and they deserve to be compensated. When I started my record label with my friends, it started as a joke, but I now realize it was a disservice to the artists and their music. That mindset limited our potential and hindered their growth.

There's a deeply ingrained belief that we can't have both work and fulfillment. We think we must choose between playing in a band or pursuing a "real" job.

Fear can manifest as imposter syndrome or self-deprecating jokes. It is time to shed these beliefs and approach our record labels with confidence and the expectation of success.

5 Tips to Help Your

Record Label

Break Even

Number 1

Create Multiple Revenue Streams

Diversify your income by exploring various revenue sources, such as streaming, merchandise sales, licensing, live performances, and collaborations.

Keep track of these streams to ensure nothing goes unnoticed and to motivate yourself to seek out new opportunities.

multiple revenue streams for record labels

Number 2

Keep Your Expenses Low

Make sacrifices and prioritize spending to keep costs under control. This may involve forgoing expensive services like high-end mastering or large-scale physical production.

Remember, saving money is as good as earning it!

Number 3

Amortize Your Expenses

Understand that certain expenses, such as recording, mixing, and artwork, are one-time costs that can generate income repeatedly.

Make the most out of these expenses by exploring avenues like sync licensing or releasing alternative versions of your releases.

Number 4

Learn and Iterate

Play the long game by continually learning and adapting your label's operations for increased profitability. Identify what works well and double down on those strategies while eliminating what doesn't contribute significantly to your success.

Regularly analyze and manage your record label’s performance using data.

Number 5

Get Creative

Break away from traditional record label models and find unique approaches that align with your passion and strengths. Consider avenues like YouTube releases, vinyl compilations, artist services, community events, or collaborations with visual artists.

Don't be afraid to create a new path if the traditional route isn't yielding desired results.

Breaking even and thriving as a record label in the music industry requires a strategic approach and a willingness to adapt.

By implementing these essential strategies, such as creating multiple revenue streams, keeping expenses low, amortizing expenses, learning and iterating label operations, and embracing creative approaches, you can pave the way for profitability and success. Pay close attention to your label’s data, stay agile, and keep exploring new opportunities.