I've been studying the economics of the music industry for some work I've been doing, and I've recently come to the exact same conclusion as Jimmy Guterman. Even though the economy sucks right now, and the music industry is having problems, now is probably the best time to start a music label. If you make use of new technologies for both recording and distribution, the barriers to entry have dropped incredibly low, and you can better target niche markets for much lower out of pocket expenses. The big music labels, with all their worrying about their old (increasingly obsolete) business model don't realize the bigger threat is from new, independent labels that take advantage of new technologies to offer a better product at a lower price.