A record label’s sole function is to create and sell records. The term “phonorecords” is defined in the copyright law and was originally created to refer to all recording configurations created and eventually was used by the music industry to refer to physical configurations such as vinyl records, cassettes and compact discs. Though it is perfectly acceptable to refer to all configurations, including digital downloads as "records", since its likely that physical configurations eventually will become obsolete, the industry has been transitioning to the term “audio products” or just "product" to refer to generally refer to all formats.
Music Business Made Simple (Record Label Advice): First Steps to Setting Up a Label
You may be starting a label because you love music, but remember, it’s still a business. And as with any business, one goal of a label is to make a profit. Therefore, you should establish good habits and a professional approach from the start. This will make your life much easier and help your label to grow more quickly. It isn’t difficult to set up a label, and you can do some things on your own. However, I recommend hiring an experienced attorney to help. This is a good investment, because even the simple stuff can be confusing if you don’t know how to do it, and any mistakes you make in the beginning will cost more money to correct later.