How to Start an Independent Music Production Company

Important elements to think about when starting your music production company:

1. Studio location — Choose a suitable location for your studio. Consider factors such as accessibility, noise levels, and space requirements. Invest in proper acoustic treatment to ensure high-quality sound recording and mixing. This includes soundproofing and installing acoustic panels.
2. Equipment — Purchase essential studio equipment, such as microphones, audio interfaces, studio monitors, mixing consoles, and digital audio workstations (DAWs).
3. Find talent — Hire skilled producers, engineers, and session musicians to work with your clients. Building a talented team is crucial for delivering high-quality productions. 
4. Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
5. Legal business aspects — Register for taxes, open a business bank account, and get an EIN.
6. Music licensing — Get necessary music licenses to legally use and distribute copyrighted music. This includes performance rights, mechanical licenses, and synchronization licenses.
7. Contracts — Draft clear and comprehensive contracts for all your projects that outline the terms of service, payment, and intellectual property rights.

You May Also Wonder:

How does a music production company make money?

A music production company can make money for recording time, mixing and mastering, and royalties. You can also expand your services and offer consulting on how to get music noticed or even connected with a record label.

How can I learn to be a music producer?

You can take courses on music production on sites like Udemy, generally for under $20. You can also get a music and recording certificate or degree from places like Full Sail University. If you go with the self-study route, you may have to study and practice for years to be good enough to make money.

Is music producer profitable business?

Music production can be a profitable business, but success and profitability depend on various factors, such as the producer’s skills, industry connections, reputation, demand for their services, and the ability to adapt to changing market trends.

What is a ghost producer?

A ghost producer is a music producer who creates and produces tracks for other artists or clients without receiving official credit for their work. They often work behind the scenes, allowing the artist or client to present the music as their own.

How much money does a producer make on a song?

The amount of money a producer makes on a song can vary widely and depends on factors such as the producer’s level of experience, reputation, the artist’s budget, and the terms of the agreement. Producers may receive a flat fee, a percentage of sales or royalties, or negotiate a custom payment arrangement.

How can I differentiate my music production company from competitors in the market?

Differentiate your music production company by creating a unique sound or style, offering exceptional production quality, building relationships with talented artists and songwriters, providing comprehensive services like mixing and mastering, maintaining strong communication and professionalism, delivering projects on time, and engaging with the music community through networking and collaborations.

How do I become a successful music producer?

To become a successful music producer, hone your production skills and musical knowledge, stay updated with industry trends and technology, build a strong network, develop your unique style, consistently produce high-quality work, seek collaboration opportunities, and continuously learn and evolve with new production techniques.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a music production company has pros and cons to consider before deciding if it’s right for you.

Music production industry trends

Industry size and growth

• Industry size and past growth – The global music production and distribution industry is worth $34 billion in 2022 after five years of 5% annual growth.((https://www.ibisworld.com/global/market-size/global-music-production-distribution/)) 
• Growth forecast – The global music production and distribution industry is projected to grow 3.6% in 2022. 

Trends and challenges

Trends in the music production industry include:

• Digital manipulation of audio is becoming more advanced, allowing music producers to alter and improve recordings.
• The explosion of TikTok is creating huge opportunities for music producers and artists to go viral and gain fans, boosting revenue. 

Challenges in the music production industry include:

• Advancing technologies also present a challenge for music producers, as they have to update their equipment to keep up with technology.
• The widespread availability of digital audio production software has made it easier for artists to record themselves, rather than going to a music producer. 

Demand hotspots

• Most popular states – The most popular states for music producers are New York, Connecticut, and California.((https://www.zippia.com/music-producer-jobs/best-states/))
• Least popular states – The least popular states for music producers are Montana, Kansas, and Idaho.

What kind of people work in music production?

• Gender – 10.1% of music producers are female, while 81.8% are male.((https://www.zippia.com/music-producer-jobs/demographics/))
• Average level of education – The average music producer has a bachelor’s degree.
• Average age – The average music producer in the US is 40.1 years old.

How much does it cost to start a music production business?

Startup costs for a music production company range from $4,000 to $9,500 for a home studio space. Costs include all the equipment, a computer and insulation pads for your walls. 

You’ll need a handful of items to successfully launch your music production business, including: 

• Computer
• Digital audio workstation
• Audio interface
• DAW software
• Studio monitors and stands
• Headphones
• Microphones and stands
• Amps
• Pop filter

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$150 - $200	$175
Business licenses and permits	$100 - $300	$200
Insurance	$100-$300	$200
Business cards and brochures	$200 - $300	$250
Website setup	$1,000 - $3,000	$2,000
Wall insulation pads for studio	$300 - $500	$400
Recording equipment including microphones and software	$1,500 - $3,000	$2,250
Computer	$800 - $2,000	$1,400
Total	$4,150 - $9,600	$6,875

How much can you earn from a music production business?

A home music production studio can bring in $50 to $100 per hour of recording, and the same for mixing and mastering. You can also make money from royalties. Your profit margin should be about 80%.

In your first year or two, you could average 25 hours of recording per week at $75 an hour, bringing in $97,500 in annual revenue. This would mean $78,000 in profit, assuming that 80% margin. As your brand gains recognition and you get referrals, you could work 40 hours a week. With annual revenue of $156,000, you’d make a tidy profit of $124,800. You may also be bringing in revenue from royalties at this point. 

What barriers to entry are there?

There are a few barriers to entry for a music production company. Your biggest challenges will be:

• The skills required to make great music 
• The startup costs of a home studio

Step 2: Hone Your Idea

Now that you know what’s involved in starting a music production company, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research music production companies in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a hip-hop music producer or a pop music producer.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your services

Your services will depend on your skills. You can do recording, sound manipulation, mixing and mastering, provide your own original beats, and even marketing and promotional services for your clients.

How much should you charge for music production?

You can charge different prices for various services, usually between $50 and $100 per hour. Your profit margin after things like software costs should be about 80%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will probably be a younger demographic of artists, which you might find on TikTok or Instagram. It’s also a good idea to just get out and talk to people, at cafes, clubs, and bars, as many aspiring artists might be interested in your music production services. Once you start doing good work, you’re likely to get a lot of referrals because local music communities tend to be very connected.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a studio space. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Music Production Company Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “music producer” or “music production”, boosts SEO
• Name should allow for expansion, for ex: “RhythmRoom” over “HipHop Hitmakers”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Music Production Business Plan

Here are the key components of a business plan:

• Executive Summary: A brief summary of the entire business plan, highlighting key points and objectives.
• Business Overview: An overview of the music production company’s mission, vision, and its place in the industry.
• Product and Services: Description of the music production services and products offered, such as recording, mixing, and mastering.
• Market Analysis: Examination of the music industry, target market, and trends, providing insights into the demand for your services.
• Competitive Analysis: Evaluation of competitors in the music production field, identifying strengths, weaknesses, and opportunities.
• Sales and Marketing: Strategies for promoting your music production services and reaching your target audience.
• Management Team: Introduction to the key team members and their roles within the company.
• Operations Plan: Details on the day-to-day operations of the music production business, from studio management to equipment maintenance.
• Financial Plan: Projections for revenue, expenses, and profitability, including startup costs and financial forecasts.
• Appendix: Supporting documents, such as resumes, contracts, and additional information that complements the business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to music production companies. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your music production company will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a music production business. You might also try crowdfunding if you have an innovative concept. If you get to a point where your company is poised for high growth, you might be able to attract angel investors or venture capital.

Step 8: Apply for Licenses and Permits

Starting a music production business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your music production business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as Studio Director, Sonido, or Skedda, to manage your bookings, schedule, invoicing, and payments.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

• Collaborate with Local Artists and Events: Partner with local musicians, bands, and event organizers to offer your services, showcasing your expertise in live productions and studio work, while tapping into existing fan bases.
• Social Media Challenges and Campaigns: Engage your audience on platforms like Instagram and TikTok by creating music-related challenges or campaigns that encourage user-generated content, fostering a sense of community around your brand.
• Exclusive Content and Behind-the-Scenes Access: Share behind-the-scenes glimpses of your studio sessions, equipment, and collaborations, providing followers with exclusive content that builds intrigue and positions your company as an industry insider.
• Online Tutorials and Educational Content: Establish your authority in the industry by creating and sharing online tutorials, tips, and educational content about music production on platforms like YouTube. This not only attracts aspiring musicians but also showcases your expertise.
• Strategic Sponsorships and Partnerships: Sponsor local music events, festivals, or even collaborate with music schools to gain exposure and build relationships within the music community, enhancing the credibility of your production company.
• Client Testimonials and Success Stories: Highlight client success stories through case studies and testimonials on your social media channels and website, demonstrating the value and quality of your music production services.
• Email Marketing with Personalized Offers: Build an email list and regularly communicate with your audience through newsletters. Include personalized offers, discounts, or exclusive deals to incentivize repeat business and referrals.
• Podcast Hosting and Guest Appearances: Host a podcast related to music production or become a guest on existing podcasts, showcasing your knowledge and simultaneously reaching a wider audience interested in the music industry.
• Interactive Virtual Events and Webinars: Host virtual events, webinars, or Q&A sessions that allow your audience to interact with you directly, fostering a sense of connection and providing value beyond your core services.
• Consistent Branding Across Platforms: Ensure consistent branding across all your online and offline platforms to create a strong, recognizable identity, helping to establish trust and credibility in the competitive music production landscape.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your music production company meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your music production business could be: 

• Our full-service music production will make you a star
• You bring the beats; we’ll make your hip hop great
• Wanna hit the charts? We’ll take your music to the next level

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a music production business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in music for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in music production. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a music production business include:

• Sound Engineers – assist with music production
• General Manager – scheduling, accounting
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Music Production Business – Start Making Money!

Imagine helping up-and-coming artists bring their music to life, then seeing that music embraced by legions of fans — how rewarding! And this is in addition to the financial rewards you’ll reap from a large and growing industry. Starting a music production business is fairly easy, and you can set up your studio in your home for a small investment. If you just get a few clients and do excellent work, you’re bound to get referrals and start building your music empire. 

Now that you understand the business, get that studio set up and running and live out your entrepreneurial dream of being the next major music mogul.