The music industry has substantially transformed in the early 21st century, marked too by a decline in physical music sales and the coming up of internet piracy all over. However, the contemporary era period provides more accessible and cost-effective avenues for establishing your own record label. Crucial business functions of a record label encompass artist discovery, production, promotion, and distribution through diverse channels, including online platforms, broadcasting, and physical sales outlets. In this blog, we shall overview what are the legal requirements for starting a record label in India.
What are the Legal Requirements for Starting a Record Label in India?
Mentioned below are the basic legal requirements for starting a record label in India:
· Choosing a Brand Name and Logo
The initial phase of legal requirements for starting a record label in India involves selecting a suitable brand name and designing an impactful logo. This is essential to create a distinctive identity for the label and to attract artists to join the venture.
· Launching a Website and Social Media Presence
Following the selection of a brand name, the next step of legal requirements for starting a record label in India is to launch a dedicated website under the registered record label’s name. Additionally, initiating the sharing of music albums through social media platforms is crucial for reaching a wider audience.
· Promotion through Marketing Channels
A critical aspect of the legal requirements for starting a record label in India is promoting the record label. This can be achieved through strategic use of social media as well as other commercial advertising channels. It is vital to prioritise and execute effective promotional strategies.
· Meeting Legal requirements for starting a record label in India
Above all, before progressing further, it is essential to ensure compliance with all legal requirements for starting a record label in India. This foundational step lays the groundwork for a legitimate and successful venture.
Role of Record Labels
Record labels function as essential partners in an artist’s career, comparable to investors who provide financial support based on perceived potential or demonstrated effectiveness. Mentioned here are some of the basic roles and responsibilities of record labels:
· Financial Investment and Strategic Decision-Making
Record labels acts as if financial backers, investing in artists either based on recognised potential, similarly like to angel investors, or as a result of proven success. In return, the label assumes a role in making strategic decisions that can significantly impact the artist’s career trajectory.
· Management of Marketing, Promotion, and Tour Activities
One of the primary responsibility of record labels is for handle various aspects of an artist’s career, including marketing, promotion, and tour management. The label often bears the majority of the associated costs or secures sponsorships to support these endeavours.
· Music Production Commitments and Licencing Agreements
Record labels typically expect artists to produce new music and commit to delivering a specified number of albums within a predetermined timeframe. In exchange for these commitments, artists grant the label music licencing rights for a set number of years.
· Negotiation Dynamics in Record Deals
The negotiations tasks in record deals vary depending on the artist’s career stage. In the initial phases, artists might have limited bargaining power, but as their audience and popularity increase, they gain the ability to negotiate more favourable terms.
· Royalties and Contractual Arrangements
While Indian law dictates that record labels are entitled to 50% of royalties from sound recording ownership, there is no universal rule or formula governing the proportion a record company should receive. The details of royalty distribution and other financial arrangements are typically outlined and negotiated in the contractual agreement between the artist and the record label.
List of legal compliances or Legal Requirements for Starting a Record Label in India
Mentioned here is the detailed list of legal requirements for starting of a record label in India:
1. Contracts:
Contracts form a crucial aspect of legal compliance in record labels. These written agreements solidify the relationship between the record label owner and the artist, outlining details such as profit sharing, royalties, etc. Both parties must explicitly agree to the terms and conditions specified in the contract.
2. Music Licence and Distributing Licence
To protect music albums from duplication and copyright infringement by competitors, record labels must obtain a music licence. This licence is a prerequisite for selling music in the market, ensuring legal protection for the record label’s intellectual property.
Also, Record labels must secure a distribution licence to sell music records in outlets. This licence covers both physical and digital distribution, enabling the label to reach a wider audience through various channels.
3. Sample Clearance Certificate
When utilising sample music, record label owners must obtain a sample clearance certificate from the publisher or composer. This certificate signifies legal authorisation to record and use samples, and it is essential to adhere to the terms outlined in the agreement with the music publisher or composer.
4. Producers Agreement
In cases where the label outsources production, a formal agreement between the record label owner and the producer is necessary. This agreement should detail the cost of the recording session, advances made, royalty arrangements, and specify how producer credits will be acknowledged in the album.
5. Permission Forms
Record label owners need to obtain liability release forms or permission letters from individuals or entities whose images, works, logos, or slogans are used. This is crucial to avoid legal issues related to the portrayal of individuals or the use of copyrighted materials from registered owners.
6. Copyright and Trademark Certificates
Before distributing music, record labels must file for copyrights for both original and cover songs. This includes obtaining copyright notices for each song. Additionally, trademark registration for the record label’s name, logo, and slogan ensures a distinct identity and legal rights for the owner.
7. Insurance
Record label owners should secure various types of insurance to address unforeseen situations. This includes general insurance for the company, health insurance for employees, liability insurance to protect against creditors, coverage for overhead expenses, and business owner’s policy group insurance. These insurance policies provide comprehensive protection for the record label and its stakeholders.
Final Thoughts
A thorough adherence to legal requirements for starting a record label in India is needed ensuring a solid foundation for success. Key elements include drafting comprehensive contracts that delineate profit-sharing, royalties, and promotional commitments between label owners and artists. Obtaining essential licences, such as music and distribution licences, safeguards against copyright infringement and facilitates broader market reach. Clearing samples and formalising producer agreements are crucial steps in respecting intellectual property rights. Permission forms and copyright/trademark certificates secure authorisation for external content and protect the label’s identity. Additionally, acquiring diverse insurance coverage mitigates unforeseen challenges.
