Record Label Feels Like a Hobby? Trust Me, It Is. Here’s the Fix.

Just because you’ve got an LLC and a logo doesn’t mean you’re running a real label. If it still feels like a hustle, a guess, or a side project, it’s because it is. And until you fix the foundation, no amount of passion will turn it into a business. So if your label still feels like a hobby… trust me, it is.

Nearly everybody is watching this video — this is gonna be your first time around the block. You probably never heard this stuff before, and I've never heard anybody spew this info in the music business guru world. However, if you're going to survive, you're gonna need this information. Any personally run record label that does not have this is going to fail in the first one or two years, even if your music is dope. You may run into a lot of convoluted information out there because you have to dig into other realms of business to find it, but it's OK 'cause I'm gonna simplify it for you today.

This episode is for those who have already gone through my 60-day record label system and for those who are looking to level up their record label before they go through my 60-day record label system. This will give you more insight into what you have to do as a record label owner and operator.

The key to the money you seek from the music business is rooted in running your record label properly and efficiently. Unfortunately, we cannot record all day, and if you are to succeed, you've got to get this because streams make you a creator. Systems make you a label.

When I first started, there were a lot of things I did not understand about business, though I learned from a lot of OGs in the game. Many of them did not teach me anything about how to operate a business, so I had to go and do the studying on my own. I'll be the first to tell you I learned from Donald Miller, Myron Golden, Russell Brunson, Colin Campbell, Michael Gerber, Alex Hormozi, Michael Michalowicz, and Daniel Priestley.

All of them share blueprints as to how a general business is operated.

The problem is, I had to parallel this stuff back to the music industry, as we have no one who explains how the music industry works, because the major record labels don't want you to know how to operate your own record label.

So once I figured out that there were three departments — accounts receivable and payable, distribution management, and marketing it was off to the races for me. So let's get started.

Accounts Receivable & Payable (Contract management)

Most artists will wait on their DistroKid, Symphonic, or United Masters accounts to drop the money in; however, this isn't your only money source. If you rely on DSPs your entire career, your label will begin to crumble. In addition to that, if you don't know how much money is supposed to be paid out from your record label, you will have legal troubles. Therefore, you need to collect from all sources properly — something even SongTrust can't do for you — and you need to know how much to pay your creators, writers, and producers, especially in the rise of the D2C world, if you are going to be a self-sufficient artist-run record label or general record label at that.

Back in the early days of TuneCore, we had to pay our own mechanical royalties because the MLC didn't exist. In addition, we had to negotiate our sync deals because there weren't as many sync agents as there are now, and many music supervisors were open to you sending them music, whether it was pre-cleared or not. On top of this, we had other royalties that needed to be paid to producers, executive/record producers, and other participants in royalty distribution on master recordings and from physical sales, which is an ongoing problem in the D2C world. This is why this part is also known as contract management, because you're managing the income and payables of the contracts and split sheets that were signed to create your projects and albums.

So gather your contracts and take note of your payable sources that you distributed to, and take note of the royalties that you are directly responsible for paying out: Producer & Writer Points, Mechanical Royalties, Taxes, Work for Hire invoices. You might say this is where a manager comes into play, and you would be right, but they had better know what I’m about to talk about today. If not, they will be learning it on the fly, which can make or break your progress.

Taking charge of this duty will lead you into a deeper realm of this department called cash flow management, but that's another conversation for another day — one that keeps your record label from going under.

When I started my first record label, TuneCore put us in charge of everything. I had no idea how to handle payments, and it would take me years of studying to figure out that I was mispaying my royalties the whole time. If I had known how to do this stuff, I probably would've flourished a lot more. However, I put more of this into action after I started this content company, Music Money Makeover. Everything in this step and everything else you will hear me talk about in this video, I already do — including cash flow management. Once I implemented these things, my operation has never gone under, and I've always had profit every year.

Record Label Distribution Management

For distribution, you may think all you need to do is drop your music and you'll be good. However, that's just one form of distribution — digital music distribution. There are several types of distribution. You will need physical distribution for physical music, merch distribution for getting your merch into consumers' mailboxes, in hand at shows, and getting your merch into retail stores if you're on that level. You'll also need D2C music distribution, getting your music into the hands of DJs, DJ pools, and getting your music into synchronization libraries and agencies. The reality of stopping directly at your digital distributor means that you fall short of all of the additional income that your label can bring in and needs to survive.

The only reason why you're thinking this way is because it's the first form of distribution every artist or new manager hears about. I don't fault you for that, but you've also got to see the bigger picture if you want to grow bigger.

If you only focus on digital music distribution, your record label will not grow, and you will stay stuck in the circle of artists who only focus on streams.

I've worked with clients who had to level up their game from digital distribution to physical distribution. It turns the beginner into the advanced label owner/operator. This stuff is not taught in any music book I've ever seen. You have to be in the game to know this.

But once you figure out the products you're selling and you develop the distribution system to go around them, then you'll begin to see a lot more revenue from the effort that you're putting in.

Just like you, I always want to automate everything, but there are certain things that you just can't automate, especially when it comes to merchandise: T-shirts, hoodies, hats, vinyl records, and physical music. Automating physical things costs you increased shipping time and frustration with your customers, plus it also dips into your profit margin.

Make a list of everything that you want to sell and everywhere you want your music to be. You will then see that you need distribution for each product you sell and each place you want your music to be in. They don't all use the same systems. This is where you really begin to hire management and other businesses that offer workload efficiency.

So far, we've covered contract management and distribution management, but now we gotta cover the one thing that most artists want to attack first without understanding the two underlying systems that I just gave you all. However, to make sure that you're getting the right products to the right customers with those two categories, we've gotta talk about marketing management. And if you don't have the foundation to build these systems on, grab my 60-Day record label system below to help you get it done super fast!

Record Label Marketing Management

When most artists start out, they seek marketing to market, one product and one product only, music streams on the DSPs. However, to Ace marketing management, you need to think about the customer on the other end of the product you want to sell.

The only reason why most don't get this step right is that they don't understand the three main customer types that come along with music artists.

It would take me quite some time to figure this out, but I learned it because I realized that CDs got replaced with streaming, and everybody went to streaming. But during the streaming era, people began to want more — those people became known as super fans. However, everybody's not a diehard super fan, but they still like artists and want to support them, so those people became supporters. The rest, who couldn't care less, were the browsers.

So, if you take the products that you wrote down that require a distribution management system and you write down which customer group those products will be used to target, you will slowly start to see your marketing management system come to life.

Once I tiered my products out, I saw the same system come into play. The same exact three customer types appeared, and I'm not even making music with this content business.

You don't need a lot of products — you just need great products that attract those three customer types. Then you develop the marketing around those products for those three customer types, rinse and repeat.

Here’s what you can do!

Here's the final thing I want you to write down: 1 product, the money you have to pay out from its proceeds, and its income source, the distribution systems it will flow through (money and product), and the customer base you will market to. This will put you far, far ahead of the game if you're just starting and if you've already been in it. It will change your game. The real question isn’t ‘should you do this?’—it’s ‘how much longer can you afford NOT to?

If you need help understanding this system, let’s discuss it Monday night at 7 pm EST on the Music Money Makers weekly strategy call.

Be real with yourself

Maybe you've tried running a label before and got burned like me. Or perhaps you've watched others struggle with distribution and marketing, making you hesitate to even start. You might even be thinking, "I don't have enough industry connections" or "the market is too saturated."

The truth is the system does work because when you dig under the hood of the music business, you find that everything else that you will come up with falls right in line with these three systems. So now that you've got the systems, the question isn't whether you need these systems—it's how quickly you can implement them to stop leaving money on the table. You don't need perfect conditions. You just need to start with what you've got — and watch how far that can take you.

What’s it going to cost to keep doing it your way

Think about this: running a record label like a hobby isn't just costing you money—it's costing you opportunities. Every day you operate without proper systems for contract management, distribution, and marketing is another day of leaving money on the table. Frustrations, confusion, and finally running out of money is what happened to me, so I bowed out to start understanding what plays I did wrong because it's difficult to do that when you're in the game. When I was out of money, once I saw what happened, I couldn't unsee it, and then I started teaching it to others. Don't bow out—fix your game now or before you start.

At the End of the Day

Don’t confuse movement with progress. Because at the end of the day, A real label moves with structure. If you were struggling with how to run your self-operated record label the right way with managing payments, distribution, and marketing, you now have the principles to build a self-sufficient self-run record label that will last your entire career.

Music Money Makers: if you make music, you should always make money. Log on to musicmoneymakeover.com, grab the 60-Day Record Label System complete with funding, join the Music Money Makers Community, grab the free stuff, and watch this next video right here! Peace!