Let's Talk Money, Shall We?

[dtobocman]

Not to sound flip, but, since most records don't get past the point where the expenses are recouped (and start paying actual royalties), it's almost a moot point as to what is "fair". Arguments over points are all the more silly when you consider that most of this arguing comes to naught. I've shared in the points on a number of projects I've engineered and co-produced; none has paid me any royalties.

Big problem. Points are paid out of the net, not the gross. This is why I am much more concerned, career-wise, with songwriting than producing (although producing is fun). Composing royalties are not figured against expenses; they are paid directly to the writer and "off the top", not after expenses (assuming that some performance royalties are generated by airplay, radio, TV, etc.).

As far as which parties receive which percentage of points, think of it this way -- if the combined artist and prodeucer points are 10, then the record company is keeping 90% of profits -- after expenses, which are paid solely by the artist and producer. How's that for unfair? You'd think that for 90% of the profits, they'd pay at least some of the expenses, if not 90% of them ...

... and that's just the beginning....

[matucha]

The shop/distributor gets 50%.

The TAX is 22% here in the Czech Republic. But ~16% all over EU.

If you are extremly lucky, you get 50% PPD from a Label (you must be a really good friend ;-).

Then you can split it to your band.

... and then everyone has to pay taxes again (if they don't buy enough gear to bring down the tax - root or how to say it fuuck )

[JohnnyTooLoud]

Here is a link to Albini's article / break down on how a band gets screwed. Several years old now but still holds true (scroll down the page to see the 'numbers')

http://www.negativland.com/albini.html

--JTL

[Jason Poulin]

It's never a bad time to start my own record company!

Sheesh

I don't think I'd sign with a label even if the contract was handed to me on a silver platter!

Jason

[doug_hti]

i may write more detailed later, but basically.
An artist or group is given a certain amount of points(percentage) in their record contract. Many times is esculates as the number sold does. (i.e. first 100,000, you receive 12points, 100,000-500,000, you receive 13points, 500,000 on up you receive 14points.

Producer points are usually deducted from artist/group points, which can be unfair.

As far as recoupment, typically, you just want a big advance, unless you plan on selling into the multiplatinum numbers.
Most contracts will roll the previous unrecouped amount into the next record. So if you recoup your first record, and one week later you take an advance and start making your next record, the profit will typically roll into recouping the next record, another year later, once again, same thing....

Money from CD sale broken down....

usually about $.80 (based on 10 songs, so $.08/per song) for writer/publisher royalties. Most record contracts have this capped out at 10 songs, so if the singer/songwriter 8songs, another writer writes 5 songs (for a total of 13songs), then the singer/songwriter may only get 5songs worth of publishing...from the record label. They can't shaft the actual outside party songwriter at all, but they can to their own artist.

Probably a $1.00 for pressing cd and artwork.

Label probably sell to distributor for about $5-$7. Distributor sells to retailer for about $9-$12

For a major label to put out a major artist for the first time, it's about a minimum of $1.5 million today.

I know it doesn't sound fair and all and that labels are screwing over people, and they have and probably always will, but labels aren't running away with as much money as you would think and they are taking huge risks.

And it's also pretty cool, how when you are signed and distributed through a major label, that on average you can like show up into a town rollin in on your 3-10 tour busses a few tractor trailers and set up shop in 35 cities as 3k-30k people show up at the arena or civic auditorium, or hall....and walk away with $50k-$500k + in one night net. Oh yeah, there is merch, that is pretty cool to. Maybe another $4k-$40k on top.

[smoothmoniker]

Originally posted by doug_hti
And it's also pretty cool, how when you are signed and distributed through a major label, that on average you can like show up into a town rollin in on your 3-10 tour busses a few tractor trailers and set up shop in 35 cities as 3k-30k people show up at the arena or civic auditorium, or hall....and walk away with $50k-$500k + in one night net. Oh yeah, there is merch, that is pretty cool to. Maybe another $4k-$40k on top.

Less and Less. I've run up against a lot of artists who are on major labels, have songs in the top ten CHR, are pushing close to metal on their sales, and still not getting any kind of tour support. They're trying to assemble players for $800/week, splitting rooms, sharing one tech for the whole band, etc. and they can't understand why the players that take the gig can't remember songs, don't have road ready gear, play wrong notes during shows. Anyone see the Nelly Furtado live show?


Hard to stomach the idea of losing money as a player by taking a tour. Used to be hit the road for 9 months, come back to town, buy a house. Not anymore.

-sm

[doug_hti]

Originally posted by smoothmoniker
Less and Less. I've run up against a lot of artists who are on major labels, have songs in the top ten CHR, are pushing close to metal on their sales, and still not getting any kind of tour support. They're trying to assemble players for $800/week, splitting rooms, sharing one tech for the whole band, etc. and they can't understand why the players that take the gig can't remember songs, don't have road ready gear, play wrong notes during shows. Anyone see the Nelly Furtado live show?
-sm

Urrrggh SM, you know you LA players are spoiled. Almost kidding. It cost twice as much to get half as good of a player in LA compared to Nashville (not dissin some of the triple scale LA guys, cause they are untouchable) with twice as much attitude and demands...and the flights and bussess are twice as expensive...

that being said, I hear ya.
And sure labels, are DEFINATELY clamping down on tour support, cause they don't want to give up the cash. But if artists signed to major labels were smart, they would get outside tour support (like some are and have) and fund/underwrite the tour themselves and eliminate excess costs (individual player/production rooms , individual techs , 2003 model year $800k prevosts, and not take out excess (yet adequate) production. $800 a week though, that's a bit harsh even for only a 4 date week...

And look, they got to put in the time on tour and can't think that they can always sell out big halls and arenas after one single. That's been proven that one single doesn't speak enough on concert numbers or for promoters to buy shows confidently. Gotta pound the pavement and have the right team behind ya.

blalh blah blah sorry

[tunesmith]

Doug,

You know SM works for smack right? And you know Vinnie The Quantizer right? The way I see it, Vinnie can hook you up with about about 6 weeks some seriously primo shit for a lot less then what it costs to get SM and his guys.

So you get them all hooked up to the teets and you're good to go. Just make sure they're not using in the Church parking lot.

Just a thought. Glad to help.

Tunes.

P.S. This post is a joke. We all know SM is NOT a heroin addict. Any and all drug use is bad bad bad and should not be done by anyone. This public service message has been brought to you by Phizer.

[smoothmoniker]

doug

LA players cost more 'cause we still gots all our teefs

-sm

[ozraves]

everytime i think about money in the music business i think about a demo session of mine. a friend of mine who was a drummer in a notable alternative band was helping out. i had booked time in a small studio with a two-inch 16-track mci machine, decent board, good room, decent rack, passable mics. the engineer was good and the rate i was getting was $20 per hour. he kept grabbing me and saying, "we can make money on this project." he was a man possessed but i realized he'd made two cds and not seen a penny.

anyhow, my feeling is that your business model needs to be geared toward making cash off of something else but using recording as the entree. it might be something as simple as getting your songwriting royalties. it might be licensing. it might be live performance.

[doug_hti]

Originally posted by smoothmoniker
doug

LA players cost more 'cause we still gots all our teefs

-sm

ummmmm









touche

[jlotto]

Been working w alot of indy rap labels from down south and labels who were once indy but got picked up by majors for a hefty 7 figures because they were scanning 40k units of each of their artists (ala David Banner). Most also get BDS spins. Some don't want a major deal. They clear $8-$9 a record and move 40k plus as an indy. Lil Jon's BME distr by TVT gets $6 a record and his current album is certified platinum- this led to his spin off label deal w/ WEA for that big 7 figures. A few more of them labels r on the horizon. Just w Indy you have to promote, promote, promote on ur own. City to city, grease a few major DJs & PDs, etc. Those who have the financial backing to do indy should- at least in the rap game.

[Bob Olhsson]

Originally posted by doug_hti
As far as recoupment, typically, you just want a big advance, unless you plan on selling into the multiplatinum numbers.

Typically, this common but flawed notion is precisely why so many artists have never seen any back-end income at all.

I realize that every lawyer and manager who gets paid a percentage of the advance will tell people this but the fact is that artists can make a lot of money from a record deal when they only take a modest advance and lease their master to the label. A bit more up front ALWAYS means a LOT LESS in back.

[C.Lambrechts]

Belgium speaking here :


everything is based on the SRLP (Suggested Retail List Price) for the record (distributors price) and not on what the end user pays in the store ... I've seen this mistake / misconception over and over.

A point is a percentage of this retail price .... as simple as that : 10 points = 10 %

now the math is MUCHO more complicated then that of course.



here's a few averages in points / deals over here in Belgium :


in an artist deal :

- artist / bands usually start at like 6 - 8 points. I've heard of less and more but averages are that. If they're lucky they get sliding scales ... meaning they're points go up with sales.

- producer gets 3 or 4 points.


License deal : the master is licensed to the rec company / usually by the management / producers who pay / invest in the redoring process.

- average license deal is 18 - 22 points but I've had one myself for 26 points with sliding scale to 30 points. those points are to be divided amongst the including parties : artists / management / producer ... whoever is in the deal. License deals in general leave a lot more room for discussion with the rec company. A common way to bring up license deal points is for example take active financial part in the promotional process ... or contribute financially in a video clip etc etc ....


distribution deal (my personal favourite) : basically you try to play rec company yourself. construct a solid team of management / promotional people / legal people / publishing etc etc ... and do it all yourself. IMVHO in a small country like belgium and in these days the only way to make money of the record industry. All you need is decent distribution (LOL ... that makes it sound simple). I give 18 points to the distributor on the SRLP.


Reality it is realy much more complicated then that.

Questions one should ask themselves are :

- Points on what exactly ? I've heard people bragging about a 16 point royalty where in reality they never saw a penny because the deal's break even was put way to high. Be carefull with those break even deals .... when is a record break even .... usually when the record company decides it is ... not you .... so 16 points of what ??? Record companies will subtract up to 25 % for packaging for example before they let you have something .... stuff like promotion is rather abstract and hard to put your finger on.


anyhow .... running out of time here .... have to run .... just some random thoughts .... definately incomplete but then again one should write a book to do that ....

Interesting topic .... discuss further ... maybe I'll chime in again later.

[Dot]

Courtney Love Does the Math <--- link to great article

[Ruphus]

I used to estimate that she was silly, but that´s indeed a great article and position.
One more to make understandable that those who defend the majors politics and amongst the gagging factors adapt the distorted argument against mp3s are thoughtless parrots and if not belong to the gangsters side.

Ruphus

[Jason Poulin]

Courtney Love can do what now? No way!!!

sorry sorry... bad joke.

Anyhow, it's no wonder alot of recording artists are moving to the movie industry to make some real money.

7-11 ahh it aint so bad!!! I worked at subway once and got fired. Subway sucks and so does that fatso who eats there!

Jason

[hammer]

Hey guys! this thread is awesome! There truly is some gold to be found within the threads of this forum. Anyone else got links to any more articles on record companies?
I'm really looking for a few articles from the labels side of the story too.

[filterdude]

very interesting tread indeed!

read the albini and courtney stories. small remark : they both talk about major labels. now folks don't get your hopes up that signing with a smaller independent label would be any different...

i've dealt with several major and independent labels. the only difference is that you'll have a better chance of getting your money with a major...it might take them a while but they usually pay their invoices...

bert