How to Start a Record Label in 2025: Complete Guide

Starting a record label in 2025 is easier than ever—and also easier than ever to do wrong.

The barrier to entry is low: you can create a name, a logo, and a social page in an afternoon. But a real label isn’t a brand page. A real label is infrastructure: legal structure, rights control, distribution pipelines, accounting, and a repeatable release system. If you build those pieces first, your label can scale. If you skip them, you’ll eventually hit a wall—usually right when momentum shows up.

This guide breaks down how to start a record label step-by-step, from idea to your first artist signing, with FOF Records as a practical case study of an ownership-first indie model.

What a Record Label Actually Does in 2025

Before you file anything, you need the correct mental model.

A record label’s job is to:

Acquire or license master recordings

Distribute releases to DSPs (Spotify, Apple Music, etc.)

Market and position music for discovery

Collect revenue and pay out splits

Build catalog value over time

A label is not “a group of artists.” It’s a business that manages rights and turns those rights into revenue and leverage.

If your label can’t clearly answer:

Who owns the masters?

Who controls distribution?

How does money flow and when?

What does the label provide that the artist can’t easily do alone?

…then it’s still an idea, not a company.

Step 1: Choose Your Label Model Before You Choose Your Logo

Most new labels start with branding. The smart ones start with the business model.

Here are the three most common label models in 2025:

Traditional ownership model

The label owns the masters (often permanently) and pays the artist a royalty.

Pros: label controls assets, easier to monetize

Cons: artists avoid it unless you bring major resources

Licensing model (common for modern indie labels)

The label licenses the masters for a limited term (example: 3–7 years) and splits profits.

Pros: artist-friendly, flexible, easier to sign good talent

Cons: requires clean accounting and clear contract terms

Label services model

The label doesn’t own masters; it provides marketing, distribution help, and strategy for a fee or percentage.

Pros: fastest to start, lower legal complexity

Cons: less leverage from catalog ownership

FOF Records case study: FOF Records is positioned as an ownership-first ecosystem that emphasizes structure, brand building, and long-term leverage. That naturally fits best with licensing and joint-venture style deals, especially early, because you can support artists without taking their future.

Step 2: Make It Legal (LLC + Banking + Basics)

If you’re serious about how to start a record label, form the business before you sign anyone.

Minimum setup:

Form an LLC (common choice) or other entity in your state

Get an EIN from the IRS

Open a business bank account

Set up basic bookkeeping (even a simple system is better than chaos)

This protects you and signals professionalism to artists. It also makes it possible to:

sign agreements under the label name

collect revenue properly

separate label finances from personal spending

Step 3: Build Your “Rights & Revenue” Foundation

This step is where labels become real.

Your label must be able to manage:

Master ownership or licensing terms

ISRC codes (recording identifiers)

Metadata (credits, splits, contributors)

Royalty reporting and payouts

Takedown and catalog control

Your first goal isn’t signing artists. It’s building a system that can handle artists without confusion later.

FOF Records case study: Ownership and control are central to the brand. That means metadata cleanliness and clear splits aren’t “nice to have.” They’re core identity.

Step 4: Pick Distribution Like an Infrastructure Decision

Distribution is your pipeline to Spotify, Apple Music, and every other DSP. The wrong distributor can slow releases, complicate catalog transfers, or make accounting messy.

When comparing distributors, ask:

Who controls takedowns?

Can the label manage multiple artist profiles cleanly?

How transparent are statements?

Can you transfer releases easily if needed?

How fast do updates go live?

If your label will control releases, the distributor account should usually be owned by the label—especially if you’re licensing masters or operating as a joint venture.

Step 5: Create a Repeatable Release System

Labels don’t win by dropping music randomly. They win by being able to repeat success.

A simple release system includes:

Release calendar (6–12 weeks planning per drop)

Pre-save + pre-release assets

Short-form content plan (15–50 pieces per release)

Playlist pitching plan

Post-release analytics review

A defined “push window” (usually 2–6 weeks)

This is what separates a label from “people who upload songs.”

FOF Records case study: The brand is built around discipline and consistency. A repeatable release system is exactly what turns that philosophy into results.

Step 6: Build the Label Brand Around a Promise

Your label brand isn’t your aesthetics. It’s what artists and fans can expect.

Your promise might be:

“We build independent artists into brands.”

“We focus on catalog value and long-term ownership.”

“We specialize in aggressive content distribution.”

Make it specific. “We help artists” is too vague.

FOF Records case study: The promise is rooted in “Faith Over Fear” — steady execution, ownership-first thinking, and long-term positioning rather than hype chasing.

Step 7: Set Up Clear Artist Agreements (Before You Need Them)

You don’t need a 60-page major label deal, but you do need clarity.

At minimum, your artist agreement should define:

Who owns the masters (or whether it’s licensed)

Term length (start and end date)

Territory (worldwide or specific regions)

Revenue split and payout schedule

Recoupable expenses (what the label can recoup)

Marketing obligations (what each party must do)

Audit rights and reporting frequency

Exit terms and what happens after the term ends

Even if you’re signing your first artist who’s your friend, treat it professionally. Friendship doesn’t prevent misunderstandings—contracts do.

Step 8: Sign Your First Artist the Smart Way

The first artist you sign will shape your label reputation.

Your first signing criteria should prioritize:

Consistency and work ethic

Clear identity and sound direction

Willingness to create content

Coachability and communication

Realistic expectations

Avoid signing people because they’re “talented but lazy.” Labels don’t have magic. They have systems. If the artist won’t run the system, your label becomes a babysitting service.

FOF Records case study: Because the brand is philosophy-driven, the first artists should reflect that—disciplined, ownership-minded, willing to build patiently.

Step 9: Run the First Release Like a Proof of Concept

Your first release as a label should be treated like a product launch, not a casual drop.

Focus on:

Tight branding (cover art, visuals, messaging)

A strong hook for short-form content

A clean pre-release plan

30 days of consistent promotion

Data review at the end: saves, retention, traffic sources

If the first release is executed well, you gain:

a case study to attract future artists

credibility

a repeatable workflow

That proof is more valuable than an announcement.

Common Mistakes New Labels Make in 2025

If you want to learn how to start a record label without stepping on landmines, avoid these:

Signing artists before you have systems

Vague agreements that create future disputes

Messy accounting and unclear payout schedules

Trying to do everything at once (branding, merch, management, publishing, events)

Chasing trends instead of building identity and catalog

The industry is full of labels that look active but aren’t structured. Structure wins.

Final Takeaway: How to Start a Record Label That Lasts

Starting a label in 2025 is not about acting like a major label. It’s about building a lean system that protects ownership, runs consistent releases, and compounds catalog value over time.

If you want the simplest summary of how to start a record label, it’s this:

Choose a clear label model

Form the business legally

Build rights + revenue infrastructure

Pick distribution intentionally

Create a repeatable release system

Sign the first artist carefully

Run the first release as a proof of concept

That’s the path from idea to your first real label win.

And that’s how labels like FOF Records are built—not by noise, but by disciplined execution.