Develop business practices to attract musicians. Attracting a good artist depends on the type of contract you offer the artist. Artists who have been producing their own music for a while will usually want to control the creative side of their music while the label deals with the publishing and distribution end. For new artists, you will probably have to provide for the producers and recording studio or at least hire or rent out these services.
Visit artists' social networking pages to read about and listen to their catalog of work. This will give you an idea of the type of music an artist makes and how long they have been making the music for. These pages will also have an artist's contact information.
Listen to the radio, watch television and keep your eyes and ears open for up-and-coming artists. Local radio stations are usually good at discovering and showcasing local talent. Attend as many concerts and musical shows as possible, to expose yourself to talented artists.
Find a recording studio. If you do not own a recording studio, you will have to rent one for your artists and producers to record music in. Most studios charge hourly or daily rates depending on the type of studio and its location.
Edit and master the recording. Once a song or an album is recorded, it will have to be edited and mastered by a music engineer to improve the quality of the sound.
Determine how you will release your music. There a different formats in which you can release music through your record label. You can either release digital audio files through the Internet, ring tones or radio, or you can release it on music CDs.
If you wish to release music through CDs, you will have to incur manufacturing costs which include purchasing the blank CDs, cases and paper to create CD covers and artwork (graphics).
Determine the most favorable contract between your label and an artist. There are two deals you can sign with your artist(s): publishing deal or a distribution deal. A publishing deal gives the label control of the music process to the record label. This includes production, promotion and the payment of royalties. A distribution deal allows artists to control the production of their music but allows a label to distribute and promote their music. This type of deal is more favorable to artists.
Attract new artists with a publishing deal that will include them owning a certain percentage of the revenue generated from the commercial use of their music -- a publishing contract. The bigger the responsibility placed on the record label, the higher the percentage of ownership a label can claim from an artist.
Negotiate for a distribution deals with established artists. To generate more revenue from this type of deal, distribute the artist's music to as many outlets as possible (i.e. stores, radio, online, ring tones).