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The phrase "a smaller label" is correct and usable in written English.
You can use it when referring to a label that is physically smaller in size compared to another label.
Example: "For this product, we decided to use a smaller label to fit the packaging design better."
Alternatives: "a reduced label" or "a compact label".
Exact(9)
Its second set drew heavily from "Shaman," an album out in Europe on Universal Spain, and due soon on a smaller label in the United States.
Finally, in July, the rapper escaped: "free at last", she declared, opening the prospect of a new deal with a smaller label.
Although he has recorded for the largest labels, he made the CD with Mr. Carpentieri, he said, because he liked the personal treatment possible with a smaller label.
He thought recording on a smaller label would give him more freedom, but he found himself saddled with yet another bad contract, so he turned to the internet.
Badu disbanded Erykah Free when Massenburg offered her a contract; she thought that she would receive more individual attention as a solo artist at a smaller label.
Fashion firms seem to think that women are more likely to spend if they can happily squeeze into a smaller label size.
Similar(51)
A small label opposite reads: "9538".
For a small label those are big numbers.
But what if you're an indie band signed to a small label?
DreamWorks is a small label, but its name resonates because its owners are high profile: Steven Spielberg, Jeffrey Katzenberg and David Geffen.
"I didn't know such a small label would grow so big".
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Since I tried Ludwig back in 2017, I have been constantly using it in both editing and translation. Ever since, I suggest it to my translators at ProSciEditing.

Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com