Assemble a roster of artists. For an independent label, this may only include one artist or it may include several, depending on the resources available. Legalize all your dealings in contract form. Contracts delineate financial responsibilities between label and artist. These responsibilities include recording costs and budgets, recoupable money, distribution of royalties and ownership of publishing rights and profits.
Be sure to have the resources available to produce and manufacture your artists' music. There are many plants that cater to smaller record labels and offer pressing deals that include packaging and artwork at reasonable rates. Digital downloading is a common format for selling recorded music that bypasses the CD-manufacturing phase.
Distribution is the key to profitability for a label. For tangible products like CDs, it is important to be able to get them into retail chains and into the hands of consumers. For downloadable music, it is important to make your products available to the websites (such as iTunes) that will sell the files online. Direct merchandising is another profitable way for a label to sell its music.
Promotion is another essential element to driving sales. The label uses media outlets like music magazines, websites, radio promotions, concert tours and personal appearances. It is important to realize the demographics you are targeting and then market accordingly. A strong marketing strategy can boost music sales.