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The Triad of Trouble: How to Overcome the 3 Key Reasons Behind Every Record Label's Downfall

Becoming a record label owner has always been a dream for many music enthusiasts. The allure of discovering new talent, influencing the music scene, and making a living out of something you’re truly passionate about is irresistible. However, the reality is far from the dreamy success we all envision when we first step into the world of the music business. Struggling to keep your record label above water can be a sobering experience.

As a new label owner, you’re hit with multiple challenges from every direction. The competition is intense, the artists are unpredictable, the business model is shifting beneath your feet, and the pressure from the financial aspects can be overwhelming. You’re in the deep end, trying to keep your head above water, while the waves of uncertainty and instability crash over you relentlessly.

And let’s not forget the villain of this story: the tricky beast that is the music streaming business model. This ever-evolving facet of the industry is one of the most challenging aspects of running a label. Your artists rely on it for exposure, and your fans use it to listen to their favorite tracks, yet the revenue it provides is rarely enough to keep the lights on.

In this blog post, we’re going to take a hard look at the most common reasons why many record labels fail to succeed. More importantly, we’ll discuss how you can overcome these obstacles and turn your struggling label into a thriving, successful, artist-friendly enterprise. Let’s dive in!

Navigating the Troubled Waters: Key Elements of Success


Every successful journey begins with a destination in mind, and running a record label is no different. The pressures of the music industry can feel less daunting when you have a clear, realistic business goal to guide your decisions. This goal acts as a compass, directing all efforts from the artist’s team and the label’s team toward a shared vision. Not only does it provide a roadmap for the label, but it also instills confidence in your ability to steer the ship. This belief that talent, when backed by well-executed plans, can pave the path to success, is what can align your business, bolster your confidence, and ultimately support your notion that talent is vital to success.

Simple Goal Formula

You may ask, “How do I define these goals?” Consider using our simple formula: Achieve X by Y for Z because A. This easy-to-understand framework can help structure your goals and make them more achievable.


Once you have your goals in place, the next step is to build a cohesive and committed team. Sure, many start on their own, but this journey isn’t one you can walk alone. Each team member, by playing to their strengths and working together, can push your label towards its goals. Moreover, a united team signifies your label’s commitment to its artists and their artistry, showing that they can coexist with the artist’s team, talent, and creativity.

Financial Health & Cash Flow Management

Running a record label isn’t just about music; it’s a business venture. Maintaining a healthy financial state is crucial for any business, and a record label is no exception. As a label owner, you must develop and maintain a robust financial plan that carefully manages expenditures while strategizing diverse income sources. Acquiring financial literacy skills is not just about understanding numbers; it’s about reducing stress and increasing confidence in decision-making. Sound financial management doesn’t have to compromise artistic integrity as long as a budget is made for it.

Simple Cash Flow Formula for New Labels Under $150,000 in Revenue

So, how do you manage your cash flow effectively? Try this simple formula: Income — Operating Expenses — 30% Tax = Business Profit. This basic framework can provide valuable insights into your label’s financial health.

Fans, Listeners, & Customers

Last, but by no means least, a successful record label is nothing without its audience. Your label must implement effective marketing strategies to reach, engage, and grow its fan base. However, this isn’t just about seeing people as consumers. As a label owner, you must learn to view and treat the artist’s audience as part of your label’s community, which will strengthen your relationship with your fans. This approach validates your belief that a loyal fan base grows from quality music and genuine artist-fan relationships, not just clever marketing gimmicks. It’s about more than just sales; it’s about building a community that loves and supports the music your label produces.

Are You Ready to Set Up Your Record Label Properly?

It’s a harsh reality that many record label owners unintentionally set themselves up for failure from the get-go, all due to improper company set-up. But don’t worry, we’re here to ensure you don’t fall into the same trap.

With the “60 Day Record Label” program, you’ll have all the guidance you need to establish a solid foundation for your record label. It’s designed to help you build a functioning backend for your business, so you can make money efficiently, without any major setbacks.

The setup process is a breeze with our step-by-step guidance:

  1. Establish Your Business Entity: We’ll start by helping you set up your Limited Liability Company (LLC) and bank account.

  2. Create Records & Publishing Division: We’ll guide you on how to build your records and publishing division. This way, you can collect domestic and international publishing royalties without the middleman taking a hefty 15% cut.

  3. Use Contract Templates: Lastly, we provide you with contract templates to streamline your business operations and get you in the game ASAP!

Why spend an entire year figuring things out when you can have everything up and running in just two months? By following our guided process, you can open up revenue channels that will direct cash flow to you more safely and faster, avoiding a year of guesswork and uncertainties.

What are you waiting for? It’s time to make the leap and set up your record label for success. Jump right into the “60 Day Record Label” program now!

Don’t forget to grab our free guides here for even more tips and insights into running a successful record label. Together, let’s transform your passion for music into a successful, thriving record label. You’ve got this!

Embracing the Journey: Anticipating Success and Failure

To navigate your path to success, it’s essential to know what success and failure looks like. So, let’s explore some key indicators that can either signify your label is on the right track or warn you of potential pitfalls.

Signs of Success:

  1. Clear Goal Setting: You’ve established well-defined, realistic business goals that lead to a focused effort towards shared vision and success.

  2. Effective Team Building: You’ve built a committed, cohesive team that brings a variety of skills and talents to the table, pushing your label towards its goals.

  3. Financial Literacy: You understand and manage your label’s finances, ensuring its stability, reducing stress, and building decision-making confidence.

  4. Healthy Cash Flow Management: You manage income and expenditures effectively, maintaining the label’s financial health and sustainability.

  5. Engaged Audience: You implement effective strategies to reach, engage, and grow your fan base, resulting in a loyal community supporting your label’s music.

  6. Strong Artist-Fan Relationships: You view your audience as part of your label’s community, cultivating genuine artist-fan relationships that lead to a strong, supportive fan base.

Signs of Failure:

  1. Lack of Clear Goals: Without clear goals, your efforts can become misdirected, leading to confusion, waste of resources, and ultimately, failure.

  2. Poor Team Dynamics: If your team is not united or lacks the necessary skills, it can impede your label’s progress toward its goals.

  3. Neglected Financial Management: Failure to manage your label’s finances can lead to financial instability, poor decision-making, and possible bankruptcy.

At the beginning of this journey, you might feel overwhelmed and struggle to navigate the choppy waters of the music industry. However, by following the strategies outlined in this blog post, you can become a confident, financially aware, and effective leader. In the process, you can transform your struggling record label into a thriving, artist-friendly beacon in the music industry. Here’s to your success!


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