Running a small record label to me is similar to people who are into running, cycling, quilting. It's my hobby. It is something I do for fun, and I entirely enjoy it. Just like those who spend their money on running suits, bicycles, or fabric, they usually do not search out the money they want back in return... they just get this warm fuzzy feeling of accomplishment, or fulfillment, of whatever reason they are doing said activity. My record label seems to stay in the red, but has small accomplishments. Those small accomplishments are the reason I keep the label going.
When dealing with distribution companies, who sell my CDs to retailers, there are these nasty little things called returns. In case you do not know how this all works here is the simple explanation: Distributors send CDs to stores and get paid for them, and then pay the label (that's me). I get this little bit of money and put it in my bank account and feel this sense of accomplishment... my release is selling. A few months pass and this CD is sitting in a store and they realize it is not selling (just taking up space) so they return it to the distributor and get their money back. So what does that mean? Yep, I then in turn have to give that paid money back to the distributor. So hopefully I did not spend all of the money they already gave me.
I've been running my little non-profit (because it has never made a profit) label for four years and I understand how this system works... so I never spend too much of the money coming in from distributors. My last release seemed to be doing really well. It was selling a good amount, receiving good reviews in magazines, and I was actually breaking even on the release (this was a first). And then WHAM! This morning I get the dreaded report from my main distributor that all of my profits had been returned... plus some. A major disappointment for me.
I know I do this label for fun. I do not expect to make tons of money... actually losing money each year just means I don't have to deal with taxes. But those dreaded returns took my enjoyment of success away. Returns are no fun.
