Record Label Business Plan Template

Record Label Business Plan

You’ve come to the right place to create your record label business plan.

We have helped over 100,000 entrepreneurs and business owners create business plans and many have used them to start or grow their record label companies.

Below is a template to help you create each section of your Record Label business plan.

 

Executive Summary

Business Overview

Broadbase Records is a startup record label located in Nashville, Tennessee. Broadbase Record’s mission is to sign and promote local aspiring musicians and talent to establish or further their career in the music industry. Based in Nashville, Broadbase Records will work with various country musicians because of the proximity to its local talent, but will also be open to working with various artists across a range of music genres. Broadbase Records will sign, promote album sales, and book their signed artists to various concerts and festivals around the country. Broadbase Records is made up of a team of two seasoned music executives, Marty Cole and Sasha Gray, with decades of experience in the music industry.

Service Offering

The following are the services that Broadbase Records will provide:

  • Artist Recruitment & Development (A&R)
  • Record Contract
  • Marketing & Promotion
  • Collecting & Distributing Royalties
  • Music Distribution
  • Licensing Deals

Customer Focus

Broadbase Records will target new and existing musicians in Nashville, Tennessee that are looking to either establish or expand their music presence in the industry as potential clients. They will also target music venues to partner with, music distribution channels such as Google Music, YouTube Music, Apple Music, Spotify, etc. The other target market are recording studios that have produced local talent and need a record label to represent them.

Management Team

Marty and Sasha will be in charge of scouting talent and working one-one-one with music venues, concert promoters, and music distribution channels. While Marty and Sasha will be operating the business at the higher level, they will also employ a CFO to handle all financial, tax, and licensing obligations of running a profitable record label. A CMO will also be hired to manage and promote not only each signed talent, but the marketing of Broadbase Records as well.

Success Factors

Broadbase Records will be able to achieve success by offering the following competitive advantages:

  • Friendly, knowledgeable, and highly qualified team of music producers and executives that come with a long list of industry contacts.
  • Dedicated team that will be able to provide its full attention and focus to its signed artists.
  • Broadbase Records already come with a long list of partners for artists to choose how they want their music to be distributed and which music venues they want to perform at.
  • Clients before profit – Broadbase Records will ensure the artists’ satisfaction with every aspect of the process before taking account profitability. Broadbase Records is about supporting the success of its artists, not just about making money.

Financial Highlights

Broadbase Records is seeking $500,000 in debt financing to begin operations of the business. The funding will be dedicated towards securing the office space and the office build-out. Capital will be required for the upfront costs needed for the first three music artists Broadbase Records signs. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and working capital. The breakout of the funding is below:

  • Securing record label office space, build-out, and design: $100,000
  • Three months of overhead expenses (payroll, rent, utilities): $75,000
  • Marketing & advertising: $25,000
  • Capital required in order to promote new signed artists: $300,000

The following graph below outlines the pro forma financial projections for Broadbase Records.

Company Overview

Who is Broadbase Records?

Broadbase Records is a startup record label located in Nashville, Tennessee. Broadbase Record’s mission is to sign and promote local aspiring musicians and talent to establish or further their career in the music industry. Based in Nashville, Broadbase Records will work with various country musicians because of the proximity to its local talent, but will also be open to working with various artists across a range of music genres. Broadbase Records will sign, promote album sales, and book their signed artists to various concerts and festivals around the country. Broadbase Records is made up of a team of seasoned music executives with decades of experience in the music industry. Owners Marty Cole and Sasha Gray have had immense success in the music industry working with other large record labels in the United States. They both have represented numerous Grammy award-winning musicians and have lifted their success due to their industry knowledge and relationships. Marty and Sasha have been wanting to begin their own record label so they can operate based on their own values and have the chance to sign emerging talent that would otherwise be overlooked by larger-scale record labels.

Broadbase Records History

Broadbase Records is owned by Marty Cole and Sasha Gray, both seasoned music executives that have worked for two major record labels in the United States. Through their tenure, Marty and Sasha have compiled numerous contacts and networks to further musicians’ careers and sustainability. Both Marty and Sasha have signed, promoted, and achieved success in the millions for various artists they have signed over the years.

Recently, Marty and Sasha have found that there are not enough record labels that exist to promote untapped talent in the market. Through their extensive research, they have learned that hundreds and even thousands of musicians with promising potential are not receiving any attention because there are not enough record labels to give them the opportunity. Usually, record label companies concentrate on only a handful of clients in order to focus on their success, and it is very difficult to get a foot in the door. With Nashville being the country music capital of the world, Marty and Sasha found that thousands of aspiring artists and musicians flock to the city at the chance of one day being signed by a record label. There are just not enough record labels in Nashville that can accommodate or even have the time and energy into seeking out new, fresh talent.

Since incorporation, Broadbase Records has achieved the following milestones:

  • Found office space for lease that is located in Nashville, Tennessee.
  • Registered Broadbase Records, LLC to do business in the State of Tennessee.
  • Began networking with local music venues and recording studios in hopes of finding local talent.
  • Began the branding image, logo, website, and social media accounts for the record label.

Broadbase Records Services

The following will be the services Broadbase Records will provide:

  • Artist Recruitment & Development (A&R)
  • Record Contract
  • Marketing & Promotion
  • Collecting & Distributing Royalties
  • Music Distribution
  • Licensing Deals

Industry Analysis

The Record Label industry is expected to grow over the next five years to over $11 billion. The industry’s performance will be bolstered by the following factors:

Number of broadband connections- Keeping abreast of new systems and technology can provide producers with stronger distribution models and revenue streams while reducing costs of production. Online music has fundamentally changed how consumers enjoy their favorite artists.

Per capita disposable income- An increase in disposable income is likely to increase consumers’ purchases of new music, whether via digital or physical outlets. Although physical album sales have continually dropped for over a decade, sales of streaming music subscriptions increase as consumer purchasing power rises, benefiting the industry as a whole.

Median age of population- All age demographics consume different types of music and discover music through different platforms. Conversely, older individuals are more likely to reduce their total spending on new music. As labels shift toward online distribution, the industry benefits most from a lower median age of the US population.

Regulation- Industry players rely on the protection of their intellectual property. Copyrights legally protect artists and record companies from unlicensed distribution of artistic works. Stronger copyright laws create a protected distribution process through which new material can be created, promoted and licensed using a range of media outlets in exchange for royalty payments.

Customer Analysis

Demographic Profile of Target Market

Broadbase Records will target new and existing musicians in Nashville, Tennessee that are looking to either establish or expand their music presence in the industry as potential clients. They will also target music venues to partner with, music distribution channels such as Google Music, YouTube Music, Apple Music, Spotify, etc. The other target market are recording studios that have produced local talent and need a record label to represent them.

The precise demographics for Nashville, Tennessee are:

 TotalPercent
    Total population1,680,988100%
        Male838,67549.9%
        Female842,31350.1%
        20 to 24 years114,8726.8%
        25 to 34 years273,58816.3%
        35 to 44 years235,94614.0%
        45 to 54 years210,25612.5%
        55 to 59 years105,0576.2%
        60 to 64 years87,4845.2%
        65 to 74 years116,8787.0%
        75 to 84 years52,5243.1%

Customer Segmentation

Broadbase Records will primarily target the following customer profiles:

  • Aspiring and existing musicians
  • Local music venues who showcase new and emerging talent
  • Music distribution channels
  • Recording studios

Competitive Analysis

Direct and Indirect Competitors

Broadbase Records will face competition from other companies with similar business profiles. A description of each competitor company is below.

Capitol Records Nashville

Capitol Records Nashville is a major United States-based record label located in Nashville, Tennessee operating as part of the Capitol Music Group. Capitol Nashville was formerly known as Liberty Records from 1991 until 1995 when it was changed back to Capitol. In 1993, Liberty opened a sister label, Patriot Records, but it was closed in 1995. In 1999, EMI launched Virgin Records Nashville but by 2001 Capitol absorbed the short-lived label. Capitol Nashville remained a stand-alone label until 2010 when it launched EMI Nashville.

Capitol Nashville is also home to several successful comedy artist’s who remain on their roster today. In 2011, Alan Jackson signed with Capitol’s EMI Nashville division in conjunction with his own ACR Records label. In late 2012, Capitol Records Nashville became part of the Universal Music Group after a merger between EMI and UMG.

Thirty Tigers

Thirty Tigers is a Nashville-based entertainment company, founded in 2001 by Grammy Award-winning producer David Macias and Deb Markland. In just over a decade, Thirty Tigers has gone from two employees working out of David’s guest bedroom to thirty employees, most of whom now work out of their Wedgewood-Houston office in Nashville, Tennessee. Thirty Tigers also has offices in Los Angeles, New York, North Carolina, and London. Their collective experience in the music industry ranges from record retail to the film industry to major labels.

Some of their notable artists include Alanis Morrissette, Big & Rich, Bruce Hornsby, CeCe Winans, David Ramirez, Joan Osborne, John Oates, Keuning, LeAnn Rimes, Lucero, Lupe Fiasco, Parachute, Shotgun Rider, Sweet Lizzy Project, The Black Lillies, and Toby Keith.

Third Man Records

Third Man Records is an independent record label founded by Jack White in Detroit, Michigan in 2001. Third Man established its first physical location – a combination of a record store, performance venue, and headquarters for the label in Nashville, Tennessee in 2009. The label opened a Detroit branch location in 2015, which added a pressing plant (Third Man Pressing) in 2017.

The label’s name incorporates several elements of personal significance to White. His fondness for the number three is well documented. All six studio albums of The White Stripes appear with the Third Man logo. Other artists who have released LP’s on Third Man Records include Kelley Stoltz, Seasick Steve, and Pokey LaFarge. The label also released and pressed a 7-inch vinyl of Conan O’Brien’s 2010 comedy single “And They Call Me Mad?”, which featured an interview of O’Brien by Jack White on its reverse.

Competitive Advantage

Broadbase Records will be able to offer the following advantages over their competition:

  • Friendly, knowledgeable, and highly qualified team of music producers and executives that come with a long list of industry contacts.
  • Dedicated team that will be able to provide its full attention and focus to its signed artists.
  • Broadbase Records already come with a long list of partners for artists to choose how they want their music to be distributed and which music venues they want to perform at.
  • Clients before profit – Broadbase Records will ensure the artists’ satisfaction with every aspect of the process before taking account profitability. Broadbase Records is about supporting the success of its artists, not just about making money.

Marketing Plan

Brand & Value Proposition

Broadbase Records will offer the unique value proposition to its clientele:

  • Experienced team of music professionals that come with a long list of contacts and connections.
  • Focused and individualized attention to each client it signs.
  • Broadbase Records doesn’t need to knock on any doors. The doors are already open due to their reputation and industry knowledge.
  • They put their artists’ satisfaction before profitability.

Promotions Strategy

The promotions strategy for Broadbase Records is as follows:

Social Media

Broadbase Records will invest in advertising their record label on social media platforms Facebook, Instagram, Snapchat, TikTok, and Twitter. By using targeted social media marketing, Broadbase Records will be able to reach the local music talent of Nashville.

Music Venues & Networking

Marty and Sasha will frequent music venues around Nashville that hold amateur nights where local aspiring musicians get a chance to take the stage. By scoping out the talent, they will approach those musicians that they see potential in and let them know their record label might be interested in working with them. By networking around the local scene, people will also recommend Broadbase Records to their associates.

Website/SEO Marketing

Broadbase Records will invest in a strong SEO presence so that when someone enters “Nashville record label” or “record label near me” in their Google or Bing search bar, Broadbase Records is at the top of the list. Their website will list all of Marty and Sasha’s accomplishments with the clients they have worked with in the past to showcase all of their experience and ability to take musical artists to the next level.

Pricing

The pricing of Broadbase Records will be moderate and on par with competitors so customers feel they receive value when purchasing their services.

Operations Plan

The following will be the operations plan for Broadbase Records.

Operation Functions:

  • Marty and Sasha will jointly own and manage the record label. They will be in charge of scouting local talent, networking with recording studios, music venues, concert promoters and music distributors, and be the point of contact for all signed musicians.
  • Chief Financial Officer to handle all financial aspects of the business to include but not limited to accounts payable and receivable, billing, royalty payouts, tax obligations, licensing and permitting, budgeting, and cash forecasting. As the record label grows and profits are stabilized, more accountants will be added to support the CFO.
  • Chief Marketing Officer will be in charge of all marketing and promoting of each signed music artist or band. The CMO will be responsible for increasing the awareness and popularity of each artist. The CMO will also handle the social media and website for Broadbase Records as well.
  • Administrative Assistant will be employed to manage all administrative assistant tasks of the record label on an everyday basis. This will include being the personal assistant for Marty and Sasha.

Milestones:

Broadbase Records will have the following milestones completed in the next six months.

7/1/202X – Finalize contract to lease record label office space.

7/15/202X – Begin build-out and design of record label office.

8/1/202X – Begin reaching out to their list of contacts in the industry to inform them of the new Broadbase Records.

8/15/202X – Begin social media and website advertising campaign.

8/30/202X – Start scouting out local music venues for local aspiring talent.

9/1/202X – Final walk through of completed record label office space.

9/5/202X – Hire CFO, CMO, and Assistant.

10/1/202X – Grand Opening of Broadbase Records.

Management Team

Broadbase Records will be jointly owned by Marty Cole and Sasha Gray.

Marty Cole is a former Capitol Music executive with over 15 years of experience. He helped find, produce, and book dozens of music artists and bands that have amassed huge success due to his diligence and industry knowledge. Marty has a strong reputation in the industry as he has always been known to put his clients first without sacrificing their happiness for record label profit. Many artists respect and recommend Marty to other emerging talent due to his impressive resume and respect for the artist.

Sasha Gray has worked at Virgin Records and Capitol Music over her 10 year career as a music industry executive. She has traveled all over the world and her client list encompasses not only the United States, but five other countries as well. Sasha is known for her creativity and diligence when working with her clients. She usually has creative solutions for marketing and promotions and is not afraid to step outside the box when representing a client. Sasha’s reputation has garnered her a long list of successful clients and she is known as the record label executive that is willing to do anything to ensure the happiness and success of her clients.

Marty and Sasha will be in charge of scouting talent and working one-one-one with music venues, concert promoters, and music distribution channels. While Marty and Sasha will be operating the business at the higher level, they will also employ a CFO to handle all financial, tax, and licensing obligations of running a profitable record label. A CMO will also be hired to manage and promote not only each signed talent, but the marketing of Broadbase Records as well.

Financial Plan

Key Revenue & Costs

The revenue drivers for Broadbase Records are the royalty fees and commissions earned when booking one of their signed musicians. Broadbase Records will earn a commission as a percentage of total ticket sales for live music shows and concerts. They will also earn royalties for music that is streamed on music streaming services and albums sold.

The cost drivers will be the capital required upfront to support the artist, such as upfront marketing and promotion and costs for getting their album produced. Broadbase Records will be reimbursed for all expenses made upfront by the commissions and royalties earned once the album begins selling and people pay for their live music appearances. Other cost drivers are the payroll for the staff, rent and utilities for the office space and working capital.

Funding Requirements and Use of Funds

Broadbase Records is seeking $500,000 in debt financing to begin operations of the business. The funding will be dedicated towards securing the office space and the office build-out. Capital will be required for the upfront costs needed for the first three music artists Broadbase Records signs. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and working capital. The breakout of the funding is below:

  • Securing record label office space, build-out, and design: $100,000
  • Three months of overhead expenses (payroll, rent, utilities): $75,000
  • Marketing & advertising: $25,000
  • Capital required in order to promote new signed artists: $300,000

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

  • Initial Number of Clients per Month: 5
  • Annual Lease: $150,000

Financial Projections

Income Statement
  FY 1FY 2FY 3FY 4FY 5
Revenues
Total Revenues$360,000$793,728$875,006$964,606$1,063,382
Expenses & Costs
Cost of goods sold$64,800$142,871$157,501$173,629$191,409
Lease$50,000$51,250$52,531$53,845$55,191
Marketing$10,000$8,000$8,000$8,000$8,000
Salaries$157,015$214,030$235,968$247,766$260,155
Initial expenditure$10,000$0$0$0$0
Total Expenses & Costs$291,815$416,151$454,000$483,240$514,754
EBITDA$68,185 $377,577 $421,005 $481,366 $548,628
Depreciation$27,160$27,160 $27,160 $27,160 $27,160
EBIT$41,025 $350,417 $393,845$454,206$521,468
Interest$23,462$20,529 $17,596 $14,664 $11,731
PRETAX INCOME$17,563 $329,888 $376,249 $439,543 $509,737
Net Operating Loss$0$0$0$0$0
Use of Net Operating Loss$0$0$0$0$0
Taxable Income$17,563$329,888$376,249$439,543$509,737
Income Tax Expense$6,147$115,461$131,687$153,840$178,408
NET INCOME$11,416 $214,427 $244,562 $285,703 $331,329
Balance Sheet
  FY 1FY 2FY 3FY 4FY 5
ASSETS
Cash$154,257$348,760$573,195$838,550$1,149,286
Accounts receivable$0$0$0$0$0
Inventory$30,000$33,072$36,459$40,192$44,308
Total Current Assets$184,257$381,832$609,654$878,742$1,193,594
Fixed assets$180,950$180,950$180,950$180,950$180,950
Depreciation$27,160$54,320$81,480$108,640 $135,800
Net fixed assets$153,790 $126,630 $99,470 $72,310 $45,150
TOTAL ASSETS$338,047$508,462$709,124$951,052$1,238,744
LIABILITIES & EQUITY
Debt$315,831$270,713$225,594$180,475 $135,356
Accounts payable$10,800$11,906$13,125$14,469 $15,951
Total Liability$326,631 $282,618 $238,719 $194,944 $151,307
Share Capital$0$0$0$0$0
Retained earnings$11,416 $225,843 $470,405 $756,108$1,087,437
Total Equity$11,416$225,843$470,405$756,108$1,087,437
TOTAL LIABILITIES & EQUITY$338,047$508,462$709,124$951,052$1,238,744
Cash Flow Statement
  FY 1FY 2FY 3FY 4FY 5
CASH FLOW FROM OPERATIONS
Net Income (Loss)$11,416 $214,427 $244,562 $285,703$331,329
Change in working capital($19,200)($1,966)($2,167)($2,389)($2,634)
Depreciation$27,160 $27,160 $27,160 $27,160 $27,160
Net Cash Flow from Operations$19,376 $239,621 $269,554 $310,473 $355,855
CASH FLOW FROM INVESTMENTS
Investment($180,950)$0$0$0$0
Net Cash Flow from Investments($180,950)$0$0$0$0
CASH FLOW FROM FINANCING
Cash from equity$0$0$0$0$0
Cash from debt$315,831 ($45,119)($45,119)($45,119)($45,119)
Net Cash Flow from Financing$315,831 ($45,119)($45,119)($45,119)($45,119)
Net Cash Flow$154,257$194,502 $224,436 $265,355$310,736
Cash at Beginning of Period$0$154,257$348,760$573,195$838,550
Cash at End of Period$154,257$348,760$573,195$838,550$1,149,286

Record Label Business Plan FAQs

A record label business plan is a plan to start and/or grow your record label business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

There are many types of record label companies. Most of the time, record label companies concentrate on a particular music genre. There are also three major types of record label companies - major record labels, major label subsidiaries, and independent labels. There are also some record labels that have a recording studio subsidiary attached to it. 

The primary source of revenue for record label companies are the royalties and commissions they earn when booking a client for a concert or live performance. They also earn royalties based on album sales their client produces.

The key expenses for a record label business are the costs of upfront marketing and promotion of their client before they earn album sales or perform live music events. Other costs associated with a record label business are leasing an office space, employee costs and marketing/advertising costs.

Record label businesses are most likely to receive funding from banks. Typically you will find a local bank and present your business plan to them. Angel investors and other types of capital-raising such as crowdfunding, credit cards and personal savings  are other common funding sources.