Start by creating the basic shape of your label. This shape can be created by using the rounded rectangle tool and adding an extra point at the top and moving it up above the rectangle.
Choose the colour of your label and apply it to your shape. Add an inner glow which is a colour slightly darker than the label colour, keep the glow small so it just covers the edges (this example has a size of four).
To add the string hole create a circle and give it a gradient stroke. The gradient used in this example is a white-grey gradient with the style set to ‘shape burst’. Also add an outer glow of a colour slightly darker than the background.
Rotate the label (and string hole) and add an outer glow. To make the string use to Pen tool to draw a straight line into the string hole. To create the knot draw a circle and draw another circle over the top of the first (change the draw setting to “Subtract from shape area (-)”). Select both circles (with the Path selection tool, and hold Shift) and click the ‘Combine’ button to create the crescent shape. Select a colour for the string and add an inner glow that is a slightly darker colour.
To add a worn effect select the label shape and create a new (empty) layer above it and merge the two layers (do the same with the string hole layer). Using the Burn tool on a medium exposure and a soft brush and gently draw around the edges of the label. Do this several times to increase the exposure on some parts of the label. Now change the brush to a ‘spatter’ brush and increase the exposure and ‘scratch’ the edges. Again using the Burn tool draw around the edges of the string hole. You can also darken areas of the string hole to make it look ‘worn’.
Finally you can add some text to your label. The text in this example has a white outer glow, has been smudged (using the Smudge tool) and using the eraser on a low opacity, the edges has been faded.