In the year 2020, the recorded music industry in the United States grew by 9.2% and reached $12.15 billion. With an increase in music consumption, the demand will surely continue to increase.
We created a guide with everything you need to know about starting a music production company. First, you have to create a business plan, find financing, and get insurance for your company.
You will also need various pieces of equipment before you can start recording. Finally, you need to build a website, establish a brand, and start marketing your music production company.
Are you interested in starting your own music production company? Keep reading and check out our frequently asked questions at the end.
What Services Does a Music Production Company Provide?
A music production company provides a wide range of services, ranging from album recordings to song mixing. Here’s a glance at some of the most popular services:
- Album and song recording
- Song mixing
- Post-production mastering
- Music production courses
- Voiceover recording
1.Hire Skilled Labor
Depending on the size of your business and if you have room in the budget, you should hire an audio engineer, marketing professional, and a business manager. We recommend that you hire an audio engineer with a degree in audio recording or several years of professional experience.
Both the marketing professional and the business manager should have strong networking skills, customer service experience, and prior experience maintaining business relationships in the music production industry. The best websites to find recording industry professionals include Indeed, Monster, and LinkedIn.
2.Hire Music Production Freelancers
Instead of hiring full-time or part-time employees, many music production companies hire freelancers to help them with the production process. One of the most popular freelancer websites in the industry is SoundBetter – home to thousands of music artists, mixing and mastering engineers, songwriters, and producers.
The advantage of using SoundBetter is that you have access to a lot of talent, much more than you will find in your local area. For example, how many professional dobro and bassoon players do you know? You can find a little bit of everything on freelance websites.
Pros and Cons of Hiring Freelancers
- Access to more talent
- No long-term commitments
- Perfect for one-time projects
- Freelancers can be more expensive than employees on payroll
- Freelance websites often charge fees on top of what you pay the freelancer
3.Create a Business Plan
No matter the size of your music production company, you need a solid business plan. The beginning of your business plan should include an executive summary – and overview of the business, its goals, and an outline of your organization. After the executive summary, there should be a section that covers the scope of the business in more depth.
Other important pieces of the business plan include an analysis of the market, a summary of your competition, an overview of the market, and a description of the company’s management structure. You should also include details that cover what services you plan to offer and how much you will charge.
If you can project the demand for your services, you should be able to include a financial projection in your business plan.
Make sure to identify your revenue streams and expense items. You also need to describe how you plan to fund the production company – with your funds, an SBA loan, or crowdfunding? Potential investors will read your business plan and wand to ensure that there is potential for the production company to earn a profit.
4.Get a Business License
In most cities, you do not need a special license or permit to run a music production company. You should still form a business entity in your state, such as an LLC or a corporation.
A limited liability company (LLC) is a popular choice for business owners because it separates business liability from personal liability and is relatively cheap to start. And depending on where you live, you may need to have your recording studio space pass an inspection.
Entrepreneurs who open music production companies typically resort to the following sources of financing: self-funded (their own personal money), SBA loans, conventional loans, and venture capital. If you have a knack for recording and can show off your talent, we recommend using a crowdfunding website such as Kickstarter or Wefunder.
One of the second-best alternatives to crowdfunding is a Small Business Administration (SBA) loan from an SBA-approved lender. With a 7(a) loan, you can get up to $5 million in funding with a maximum maturity of ten years.
The SBA also caps the amount of interest and fees, such as application or origination fees. To qualify for an SBA loan, you must invest a “reasonable” amount in the business using your funds. So, you can not rely on an SBA loan to fund your entire music production company.
6.Identify Your Target Market
The first step to identify your target market for a music production company is to analyze your local area.
In a smaller city, your potential customer base is often limited to independent artists. If you live in a larger city, such as NYC or Los Angeles, you could form a partnership with record labels and help them record music.
We recommend attending live music venues, networking events, and researching the local competition. You also need to consider your studios’ capabilities and your expertise – if you are skilled in country music, you may have a difficult time recording songs for an EDM artist.
7.Open the Necessary Insurance Policies
There’s an insurance package designed exclusively for music production companies – studio liability insurance. The cost of this liability coverage is fairly cheap, with average premiums ranging from $300 to $600 annually.
Insuring your recording studio is imperative because there are various risks involved in this type of business. Someone could steal your expensive recording equipment, a fire could break out and destroy your studio, or an employee or performer could get injured while in the studio. A music production company needs a few different types of insurance policies:
- Workers’ Compensation: The purpose of workers’ compensation insurance is to cover the costs associated with employee medical expenses or lost wages. If you plan to hire employees, workers’ compensation coverage is a must-have.
- General Liability: This type of coverage protects your business from claims made by third parties. For example, imagine a technician visits your studio to fix your stereos. He trips over a chord, fracturing his ankle. If he sues you, a general liability policy will cover the cost of the damages.
- Professional Liability: Also called E&O insurance, professional liability protects you from lawsuits made by clients. If you record an album for an artist and she claims that the contract was breached, a professional liability policy can cover the cost of legal expenses.
- Commercial Property: Because owning a music production company requires a large space with expensive equipment, a commercial property policy is critical. This type of insurance coverage reimburses you for the cost of stolen or damaged equipment.
8.Buy the Equipment
One of the biggest expenses of setting up a music production company is buying the equipment. The cost of a recording studio can range from $20,000 to $1 million, depending on the quality of your equipment. Here is a list of the most important items you need to start a music production company:
- A computer (Windows or Mac)
- Multiple studio monitors
- Microphone and microphone stand
- Pop shield
- Digital auto workstation (DAW)
- Mixing board
- Studio speakers
- MIDI keyboard
Note: this list is not inclusive. You may need to purchase various other types of equipment depending on the services that your music production company offers.
9.Make a Website
If you want to start a music production company, you need a professional and sleek-looking website. You can buy templates designed for recording studios on Themeforest but we recommend hiring a professional web designer. With a tacky or unprofessional-looking website, you will drive away potential clients.
Most importantly, look at your competitor’s websites and see what type of content the sites have. Do not copy their websites, but be sure to include similar information. You should include the following on your website:
- An about page: This is your chance to show potential clients why they should choose your music production company. Include important details such as who founded the company, your experience in the music industry, and a summary of the services that you offer.
- Services: You will want to include detailed information about the services that your company offers. Displaying a price is optional; oftentimes each customer has unique needs, so prices will vary.
- Your Location: On the website’s footer, you should display your location. A page solely dedicated to the location is optional, but make sure that it is visible on every page.
- Staff: Potential clients want to see that you have experienced staff members. Use this page as a way to show off their talent.
- Recording samples: Including recording samples on your website is a must. Many recording studios also put videos of live recording sessions on their website.
- A booking page: Your website should include a contact form or a booking page where customers can sign up for a session.
- Equipment information: Lastly, advertising the equipment you use is a great way to showcase your production company’s capabilities. You should devote an entire page to your equipment and include pictures.
10.Market Your Services
Effective marketing is key to being successful in the music production industry. Owning a recording studio is not like running a restaurant; you can not attract customers from street and foot traffic.
We recommend that do you most of your marketing after you have setup up your studio and space. However, you can still get your name out there and make artists and other industry professionals aware of your plans. The below strategies are effective ways to get customers for your music production company.
Building relationships and networking with artists and record label executives is a great way to get talent into your studio. This is not an expensive marketing venture; you can start by attending open mic nights at local venues and eventually start attending music festivals and conferences. Another way to build your brand by networking is to host a party the day your studio opens.
Search Engine Optimization
Before starting search engine optimization (SEO) techniques, you need a finished website. For the recording niche, the first step is to make sure you have an SEO-friendly website (meaning it will rank on Google and other search engines).
Then, you can write blog articles on your website with long-tail keywords that will drive organic to your website. An example of a long-tail keyword is “local recording studios in Santa Fe, New Mexico.”
When you buy leads, specifically “warm” leads, you are buying the contact details of people who have expressed interest in music production. In most cases, these leads will be small artists who are looking for a place to record their music.
How you contact your leads is up to you. You could add them to your mailing list or take a more upfront approach and call them. Buying leads can be expensive but it takes time to find your own leads.
Costs to Start a Music Production Company
As previously mentioned, starting a music production company has many upfront costs. The below list includes most of the costs.
|$20,000 to $1 million
|Leasing a space (monthly)
Note: these costs will vary depending on the size of your studio, the complexity of your equipment, and your locale.
Frequently Asked Questions
In case you are still not sure about starting a music production company, take a look at the most frequently asked questions:
How Much Does it Cost to Start a Music Production Company?
The cost of starting a professional music production company ranges from $40,000 to $1 million and upwards. Refer to the section “costs to start a music production company” for details on the exact costs.
Do I Need Experience Before Starting a Music Production Company?
Technically, you do not need the experience to start a music production company. Anyone can do it. However, for the best results, you should at least hire an experienced sound engineer.
How Do I Find Musical Artists?
You can find musical artists through various channels – attending open mic events, social media, and using SEO techniques to drive traffic to your website.
Can I Run a Music Production Company From My Home?
Yes, you run a music production company from your home. Building a studio in your home will drastically cut the startup costs because you do not need to rent a commercial space. However, there are some downsides.
With a home studio, your business will lose a sense of professionalism and you may have limited space.
Pros and Cons of Starting a Music Production Company
- Potential for high-profit margins depending on your price points
- Scalable and promising growth potential
- Be your boss and set your schedule
- Opportunities to partner with record labels
- Easy to gain repeat clients
- Large upfront investment
- Hard to compete with larger music production companies
- High recurring costs (electricity, advertising, and maintenance)
Is Starting a Music Production Company Worth it?
Starting a music production company is worth it if you can afford the initial upfront investment and if there is a demand for it in your local area. A successful recording studio can make over $100,000 per year.
Even though it is a lot of work, most entrepreneurs who start a music production company have a strong passion for the industry. If you enjoy making music and running a business, starting a music production company might be your calling.
Ruben has been doing online marketing for the last 4 years. Prior to that, he spent 15 years managing different brick-and-mortar businesses, in the home improvement and logistics industries. Overall, he has 20 years of business experience under his belt. Recently, he added SEO, affiliate marketing, and link building to his business skills.