Last step (but not least) to transform your label into a real musical war machine: financial management . Because yes, for your label to hold up, your accounts need to be in order. But don't panic, we're not going to turn you into a stuck accountant! Managing finances is mostly about learning a few basics to know where your money is going, how to make smart choices, and maximize your impact without breaking the bank.
💶 6.1 – Controlling your label’s revenue: where does the cash come from?
The first step to managing your label's finances is to understand where the money comes from. In the music industry, there are many sources of income, and some are sometimes well hidden. So where do you look for money?
Here are the main sources of income for a label:
- Streaming platforms : every time one of your tracks is streamed on Spotify, Apple Music, etc., you get a small commission. It's not huge, but with a good volume of listens, it can quickly add up.
- Physical and digital sales : if you offer vinyl, CDs or downloads, this is a stable and more significant source of income than streams (especially for fans of slightly “vintage” music).
- Neighboring rights : For authors and composers, there is SACEM, for phonographic producers, there is SPPF or SCPP. These two companies pay out royalties collected in particular during radio/TV broadcasts but also on the "private copy" tax (tax on USB sticks, blank CDs, etc.) and others. Beyond the royalties paid out, SPPF and SCPP can also provide assistance for production and promotion, but of course, you have to be a member.
- Merch : t-shirts, caps, stickers… If your label has a strong identity, merch can be a fun and profitable way to generate income while promoting.
- Live shows and events : Organizing concerts or parties can be profitable, especially if your label has a real following. It's also a great way to unite your community!
- Grants : Several organizations can provide financial assistance for the production of an album: the CNM, the SPPF or the SCPP, the ADAMI, the SPEDIDAM, not to mention the FONPEPS and the phono tax credit. From the moment the label receives grants, it is obliged to pay the artists and what's more at the conventional rate so the payroll will be high. You have to have strong financial backing, it's not magic money and very often the grants cannot exceed 50% of the total budget, so you have to have the capacity to invest.
🧠 6.2 – Manage expenses without tying yourself in a knot
A label's expenses can quickly go off in all directions if you're not careful. Between studio costs, videos, merch, PR... the list can seem endless! But don't panic, you just have to prioritize.
Some tips to better manage your expenses:
- Plan a budget per project : before you start producing an EP or pressing 500 vinyls, set a realistic budget for each project. This will prevent you from burning everything from the beginning.
- Avoid unnecessary expenses : luxury extras are tempting, but not always necessary (like a video with crazy special effects for a first single by an unknown artist). Keep the expenses that are really useful to make yourself known and prioritize the quality of the music.
- Think DIY when possible : for example, if you have some equipment, you can organize photo or video sessions yourself, or work with friends who have creative talents. This helps to limit costs while keeping an authentic touch.
🧭 6.3 – Stay up to date on inflows and outflows: your accounts are your compass
To stay zen about your finances, there's nothing like knowing exactly where you stand. It may seem basic, but keeping a regular track of money coming in and going out will make your life easier. A few simple (and free) tools are enough to not miss anything and avoid unpleasant surprises.
Some methods to easily manage your label's finances:
- Create a tracking file : a spreadsheet with income (streams, sales, merch, etc.) on one side and expenses (studio, marketing, etc.) on the other. This gives you a clear view and avoids “Oops, I spent it all.”
- Use a budgeting app : There are apps (like Wave or QuickBooks) that are handy for managing small businesses like an independent label. You can connect your accounts and keep track of everything without stress.
- Set aside for the unexpected : In the music business, things don’t always go as planned. Keep a small financial cushion for the unexpected (late payment, additional cost for a campaign, etc.).
📈 6.4 – Making the right investment choices: where every euro counts
As a small label, every euro invested must be strategic. Prioritize what has the most impact for your project . This is the time to be creative and think in terms of "return on investment". Investing does not mean just throwing cash, but rather boosting the visibility of your label intelligently.
Some examples of good investments:
- Quality production : investing in good mixing and mastering is essential to ensure your tracks sound professional and can compete with other releases.
- Targeted promotional campaigns : a small, well-targeted promotional campaign (such as a partnership with an influential blog in your musical genre) is better than an advertising budget diluted across many different channels.
- Visuals and branding : a striking album cover, a cool logo, a visual identity that hits the mark… These elements reinforce your label’s identity and attract attention.
🩷 6.5 – Think about artists’ remuneration: be fair, without breaking the bank
Running a label also means knowing how to pay the artists you work with. It's important to find a balance between fair compensation and the resources the label has at its disposal. Clearly defining the terms from the start avoids frustrations.
Some tips for paying artists with peace of mind:
- Be transparent from the start : discuss project income and expenses openly with the artist, and establish clear distribution percentages.
- Royalties, the flexible model : often, a percentage on streams (from 20 to 50%, depending on the deal) is the norm for an indie label. This allows you to share the profits while supporting the development of the label. For physical, everything has been turned upside down by the huge drop in sales. So everything depends on the quantities and the distribution.
- Think in terms of projects : For a first single, artists often accept simpler deals. But as soon as there is an album or a big EP at stake, think about a more structured remuneration system.
🤔 6.6 – Review finances regularly: adjust, optimize, repeat
Managing the finances of a label is a continuous job. Every month, do a little review to see if everything is going well. It helps you anticipate, optimize, and above all, avoid stress at the end of the month.
Checklist for effective regular monitoring:
- Do a monthly review : look at income, expenses, and adjust your budget if necessary. Maybe a promotion is working better than expected and deserves more investment!
- Review your contracts and collaborations : sometimes, a partnership or contract can be adjusted to better fit the reality of your label.
- Think long term : keep your label's growth in mind. Every euro well spent now is an investment for even crazier projects in the future.
With these basics in financial management, you have all the cards to stay cool, focused and make your label prosper without any hassle! So, even if the administrative side is not always the funkiest part of the adventure, it is the one that allows you to guarantee a solid future.