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Artists: Labels need YOU --- NOT the other way around Modular Synthesizers
Old 5th April 2010
  #31
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Quote:
Originally Posted by Bob Olhsson View Post
I find Steve's take somewhat naive. It sounds to me like a classic case of a band getting ripped off by their own manager and possibly their producer who then blame the record label.
Well, I see all of these players as being part of the same interconnected showbusiness industry. You draw an arbitrary line between the bands' manager and their label, or possibly between the lawyer and the label, while I draw that line between the band and everybody else.

Quote:
The economics of this stuff is painfully simple. More money up front always means less money later on and a LOT of money up front, generally with the manager and lawyer grabbing a third off the top, means no royalties unless by some chance it's a monster hit.
Which is essentially what I said. You may quibble with the specifics, but the figures used were conservative when they were written. I knew of many bands who were offered basically this deal or worse, and most took it. Literally no bands have volunteered to me that they had better deals than this during the period the article was contemporary (1990s), and you'd think they'd brag about it if they could.

My essay was a cautionary explanation for other bands about why such deals, common as they might be, would not be in their best interest.

For contrast, my bands and most of my friends' bands in the independent scene were on labels using a profit share model, which is inherently more fair and encourages thrift on the part of the label. Major labels didn't operate that way because with a recouping model the people spending the money were buying influence within the industry with it, but it was ultimately the bands' money they were spending. Letting the band keep it was seen as a waste.

Quote:
Plenty of artists have owned their masters and have very profitable arrangements with the labels who distribute their recordings. It's just you don't hear these artists whining on the internet about their record labels.
I'd agree If by "plenty" you mean either the 0.5 - 1% of major label artists of superstar caliber able to negotiate from a position of strength, or bands with independent means licensing their occasional records. Mature artists sometimes fall into this category after decades of sharecropper-style conventional relationships with labels. People like Jimmy Buffett, for example.

I heard of literally no major label deals offering ownership of masters during the period of the article. None. I think Metallica went to court with Elektra and negotiated a fractional vestment in their masters after their entire contract was invalidated, but other than that and maybe Madonna's label deal I can't think of any major label artists maintaining any ownership during that period.

If you want to point us to these "plenty of artists" who own their masters (in a contemporary setting, not Stevie Wonder or other sage old masters), then I'd love to hear about them. Seems like they could offer some solid business advice and it would be interesting to hear from them.

It's all water under the bridge now, since bands are better off on their own than ever and fewer bands are seeing any advantage at all to getting involved in the dying mainstream music business.
Old 5th April 2010
  #32
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Quote:
Originally Posted by wwittman View Post
and I think it's mostly self-promoting spin
Glad to hear what you think, guy who did a Hooters record. Feel free to quote a passage where I promote myself.
Old 5th April 2010
  #33
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Quote:
Originally Posted by joeq View Post
I think he is:



it only takes few centuries to get you back to the 1700's

in any age before the industrial revolution, the only opportunity to be a full time musician was to work for a church or a king and play and write music to please your patrons.

when records and radio were invented, the businesses designed to make money off of it and lock it up very quickly followed.


so we went from patronage to the king and church... to electricity and records

blimey - foolish of me to think any thread here could last 5 minutes before someone tries to start an argument over nothing.

so youre just willing to blank the entire history of live music up to 1970-something?

cool
Old 5th April 2010
  #34
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narcoman's Avatar
 

Quote:
Originally Posted by scud133 View Post
As I've become more and more aware of the 'business' side of music over the last few years, one thing that's always shocked me has been the horrible shake that artists get in the whole scheme:

Minimal to almost non-existent income, unfair (at best) to nearly unconscionable contracts with labels, and an unsympathetic public that is less and less inclined to actually pay for their entertainment.

So the more I've been thinking about this, the more I'm convinced:

The music industry NEEDS artists to create content to keep the machine going. Artists DO NOT need the industry.

For centuries, musicians got by just fine without a formal system of record labels, radio, publishing companies, etc. Sure, they didn't live a life of luxury but they also weren't enslaved to some corporation or mountains of debt.

If all the labels vanished tomorrow, artists would still be creating music and performing it. They would get by. But all the bean counters at the labels would be up **** creek.

So where does this lead? I haven't really fleshed the idea out much but I think it's really interesting to think this way.

Why *should* an artist agree to a 360 deal? Why should they submit to the demands of the big companies? If all the artists decided one day to just say, "screw you guys, i'm going home" then the labels would be toast.

Why don't artists man up and demand the recognition they deserve for their talent and hard work??

Oh come ON!. I've earned on both sides of this business...... the relationship between what an artist earns and what a label earns is roughly 2:1 in favour of the label. You cannot put all the fees in sales and other income sources as profit. As for HARd WORK? The amount of work involved in being an artist is NOTHING compared to selling the ruddy thing!! I've seen both sides of it ..... trust me!

Yes - art (as in ART) will not suffer at all. But any promotion of such art suffers hugely. Like any business when you sell a stake in what you do you give up your majority stake hold. No investment company on earth would put a six or 7 figure sum of money into a high risk stock without some appropriate %age offset.

Yes label make more money than any act they sign - but not in a ratio of 1:10 like some suggest. An artist typically (if they write the material) takes about 22% of cash inputs into a deal. A label margins about 35%. The rest is tax, dealer markup and costs. The risk is STILL all with the label - and I can say that as one who signed several deals, with recoup clauses , many years ago. Management are the areas that artists get ripped off, not labels.


The other thing - any industry is an intricate network of thousands of people with jobs all feeding into the greater national economy. Remove the labels (and hence thousands of employed people) and any other areas of the business and you remove the livelihoods of families and individuals. Piracy and the deocratisation are the real bastards here - not labels or any other fiscal sector. If artists don't want to be part of the label sector then just don't . No one forces them. The oft cited "yeah the labels are bastards" is taking the side of a few rogue bands against thousands of people with jobs. I'm afraid I'm a supporter of PEOPLE and not the freeform extensions of a few idealists who want their own ethic of "fairness" at the expense of thousands of others...... kind of "fu.ck em as long as I win".
Old 5th April 2010
  #35
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narcoman's Avatar
 

Quote:
Originally Posted by Steve Albini View Post
Well, I see all of these players as being part of the same interconnected showbusiness industry. You draw an arbitrary line between the bands' manager and their label, or possibly between the lawyer and the label, while I draw that line between the band and everybody else.


Which is essentially what I said. You may quibble with the specifics, but the figures used were conservative when they were written. I knew of many bands who were offered basically this deal or worse, and most took it. Literally no bands have volunteered to me that they had better deals than this during the period the article was contemporary (1990s), and you'd think they'd brag about it if they could.

My essay was a cautionary explanation for other bands about why such deals, common as they might be, would not be in their best interest.

For contrast, my bands and most of my friends' bands in the independent scene were on labels using a profit share model, which is inherently more fair and encourages thrift on the part of the label. Major labels didn't operate that way because with a recouping model the people spending the money were buying influence within the industry with it, but it was ultimately the bands' money they were spending. Letting the band keep it was seen as a waste.


I'd agree If by "plenty" you mean either the 0.5 - 1% of major label artists of superstar caliber able to negotiate from a position of strength, or bands with independent means licensing their occasional records. Mature artists sometimes fall into this category after decades of sharecropper-style conventional relationships with labels. People like Jimmy Buffett, for example.

I heard of literally no major label deals offering ownership of masters during the period of the article. None. I think Metallica went to court with Elektra and negotiated a fractional vestment in their masters after their entire contract was invalidated, but other than that and maybe Madonna's label deal I can't think of any major label artists maintaining any ownership during that period.

If you want to point us to these "plenty of artists" who own their masters (in a contemporary setting, not Stevie Wonder or other sage old masters), then I'd love to hear about them. Seems like they could offer some solid business advice and it would be interesting to hear from them.

It's all water under the bridge now, since bands are better off on their own than ever and fewer bands are seeing any advantage at all to getting involved in the dying mainstream music business.
Much respect on making some of the best records ever !!! but.....

I remember that essay. I understand it's well meaning state but there were several inaccuracies when you wrote it. Good example - adding the video as an artist recoup cost. I had two deals at roughly the time you wrote that article - one with EMI and the second later with MCA. Videos were negotiated as a marketing expense - as most deals do. The tough areas labels pushed on me were breakages and discounts. Plus our subsequent Sony license paying only on 90% of sales. THOSE were the bad parts.

Some of the expenses mentioned in your article were very wide of the mark, certainly for my act and others I know. I know it was a well meaning article but it bore very little resemblance of the kinds of deals flying around at the time, now or at any other time. The classical rip offs have generally been with bad management or rogue dealings within labels.

I was definitely NOT a superstar act on any of the labels I signed too - I've calculated that we netted about 20% against the labels 35% over the years. Your figures were roughly what we sold, the advances we got were smaller and the kind of %ages we dealt with were the same. I can assure you we didn't double deal (which is what your numbers say - $150,000 recording budget but there quite a few duplicate cash stream for the same thing!!) and I can also assure you I didn't walk home with $5000 !!! I bought my ruddy house in the end. We got extra income for airplay, performance, touring income (we made a big profit on that front) , didn't sign a merchandising deal (I don't know many who did!!) and several high profile sync licenses..... all of which would have been impossible without the label putting up a high six figure marketing sum...... Yes - i didn't like some of the restrictions within the label biz, but I also recognise the hugely important part they played in our income streams. Oh and what's this "buyout from existing deal" nonsense!! Didn't cost us anything to get dropped!!

I agree with the stand point of not needing labels anymore - but any act wishing to "go for it" will need some other capital partner.
Old 5th April 2010
  #36
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Quote:
Originally Posted by 7161 View Post
so we went from patronage to the king and church... to electricity and records

blimey - foolish of me to think any thread here could last 5 minutes before someone tries to start an argument over nothing.

so youre just willing to blank the entire history of live music up to 1970-something?

cool

Of course not - but in a business sense. YES. The survival of economics isn't based on art. Art is great, art is cool. But it isn't the supporter of improving the economics of a whole sector of the earning public. NEVER forget that. What are the industry people gonna do when the jobs go? Cus I can assure you - the thing I WILL do is take the job of some high ranking Apple software dev team. Is that what people want? Throw us out of jobs so we can take yours....
Old 5th April 2010
  #37
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Quote:
Originally Posted by scud133 View Post
The music industry NEEDS artists to create content to keep the machine going. Artists DO NOT need the industry.
This is nonsense. Just ask the 300 million on myspace/reverbnation/soundclick/etc who are stuck on the net playing their tunes for their friends and family only. They do that because they don't need the industry and prefer to be a hobby artist with a day job at starbucks? Sounds like something one of them said to make themselves feel better.
Old 5th April 2010
  #38
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narcoman's Avatar
 

Quote:
Originally Posted by konkaos View Post
This is nonsense. Just ask the 300 million on myspace/reverbnation/soundclick/etc who are stuck on the net playing their tunes for their friends and family only. They do that because they don't need the industry and prefer to be a hobby artist with a day job at starbucks? Sounds like something one of them said to make themselves feel better.
bloody hell. You said it so much better than I !!
Old 5th April 2010
  #39
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Record company deals have always been skewed to the labels due to one simple fact:

The label earns money from record one, while artist earns from the point of recoupment. This essentially puts all the risk onto the artist.

When the label is complaining that the record didn't recoup, they have already in fact been taking in money not credited to recoupment.

Both parties are in the business of making money in music, why should the artist assume the liability. Whenever I do anything with an artist recoupment starts with record one. IMHOP thats the fair way to do it.

Of course, with artists and management funding their own projects, this to a certain extent happens in many cases. Labels these days are often picking up projects that have already been paid for by someone else.
Old 5th April 2010
  #40
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narcoman's Avatar
 

Quote:
Originally Posted by Steffmo View Post
Record company deals have always been skewed to the labels due to one simple fact:

The label earns money from record one, while artist earns from the point of recoupment. This essentially puts all the risk onto the artist.

When the label is complaining that the record didn't recoup, they have already in fact been taking in money not credited to recoupment.

Both parties are in the business of making money in music, why should the artist assume the liability. Whenever I do anything with an artist recoupment starts with record one. IMHOP thats the fair way to do it.

Of course, with artists and management funding their own projects, this to a certain extent happens in many cases. Labels these days are often picking up projects that have already been paid for by someone else.
Common misconception. The label does not earn from record one at all - in fact there is generally a marketing deficit in the high 6 or 7 figures!! In other investments it is quite normal for the major investor to require it's investment to have preferential repayment.... such is the power of holding the purse.
Old 5th April 2010
  #41
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I would speculate that it takes a group of musicians and a manager or someone who can negotiate ticket sells, bookings, etc. themselves to really make a mark and take a business risk. The manager is the last member of the band, simply they are a production and business team tyring to do something, trying to be successful on their own.

They don't go through a label, they don't have day jobs, there is no back up plan, they live and breath music and tour so much that they make a splash and eventually get fairly well known. Maybe one day get on tour with a big band, and do it themselves.... t-shirts, cd's, records, whatever.

Sometimes no food, housing, money.... But if they strike it big, it's huge for them because they're no middle men or labels.

But with the net and Youtube, artist now can create what they want in their own homes..... music with videos and a web based identity to sell music and t-shirts or whatever. Throw in the occasional small tour and it sounds quite nice for a lowkey way to make a living. Fame and the hustle seems so over rated when you really just want to make a living being a musician and enjoying life without a bunch of serpents around.

Who knows? Hell, I got a day job so I don't get headaches thinking about all this stuff.
Old 5th April 2010
  #42
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Quote:
Originally Posted by jonnymac View Post
if all the artists leave the labels, the labels will just make new ones out of gullible kids.
They already did.

Old 5th April 2010
  #43
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Quote:
Originally Posted by steelyfan View Post
But with the net and Youtube, artist now can create what they want in their own homes..... music with videos and a web based identity to sell music and t-shirts or whatever. Throw in the occasional small tour and it sounds quite nice for a lowkey way to make a living.
How would you get people to sift thru the pile of 200 million (not 300 million as earlier stated) online wannabe artists doing the same thing to bring them to your page and be interested in you?

The net is used as publicity for famous already artists (or artists that have a fan base from previously being on a major label and being marketed traditionally) who have fans that are looking for them already. No one is gonna sift thru 200 million, mostly terrible unknown sounding artists, to find something new.
Old 5th April 2010
  #44
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scud133's Avatar
 

Quote:
Originally Posted by konkaos View Post
This is nonsense. Just ask the 300 million on myspace/reverbnation/soundclick/etc who are stuck on the net playing their tunes for their friends and family only. They do that because they don't need the industry and prefer to be a hobby artist with a day job at starbucks? Sounds like something one of them said to make themselves feel better.
i disagree, see the following:

Quote:
Originally Posted by steelyfan View Post
I would speculate that it takes a group of musicians and a manager or someone who can negotiate ticket sells, bookings, etc. themselves to really make a mark and take a business risk. The manager is the last member of the band, simply they are a production and business team tyring to do something, trying to be successful on their own.

They don't go through a label, they don't have day jobs, there is no back up plan, they live and breath music and tour so much that they make a splash and eventually get fairly well known. Maybe one day get on tour with a big band, and do it themselves.... t-shirts, cd's, records, whatever.

Sometimes no food, housing, money.... But if they strike it big, it's huge for them because they're no middle men or labels.

But with the net and Youtube, artist now can create what they want in their own homes..... music with videos and a web based identity to sell music and t-shirts or whatever. Throw in the occasional small tour and it sounds quite nice for a lowkey way to make a living. Fame and the hustle seems so over rated when you really just want to make a living being a musician and enjoying life without a bunch of serpents around.

Who knows? Hell, I got a day job so I don't get headaches thinking about all this stuff.
Old 5th April 2010
  #45
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Quote:
Originally Posted by scud133 View Post
i disagree, see the following:
I disagree- see the following

Quote:
Originally Posted by populardemand View Post
How would you get people to sift thru the pile of 200 million (not 300 million as earlier stated) online wannabe artists doing the same thing to bring them to your page and be interested in you?

The net is used as publicity for famous already artists (or artists that have a fan base from previously being on a major label and being marketed traditionally) who have fans that are looking for them already. No one is gonna sift thru 200 million, mostly terrible unknown sounding artists, to find something new.
Old 5th April 2010
  #46
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Old 5th April 2010
  #47
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ironbelly's Avatar
 

First off, Steve Albini, hello! Great to have you here.
Second, labels need artists? Ha! Ever been on a major label?
Labels will eat artists for second breakfast and spit them and their lifelong dreams out before lunchtime and not skip a beat while all the other artists line up for the next meal. They don't need artists. Heck, they don't even want artists anymore, they want bland celebrity puppets from American Idol. (ouch, did that come off a bit too strong?)
Old 5th April 2010
  #48
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Quote:
Originally Posted by narcoman View Post
Common misconception. The label does not earn from record one at all - in fact there is generally a marketing deficit in the high 6 or 7 figures!! In other investments it is quite normal for the major investor to require it's investment to have preferential repayment.... such is the power of holding the purse.
Ummm....I respectfully disagree. I think that all the expenses of the project should be pooled and recouped from record one. I understand your point about the purse strings. I simple think the TALENT strings are due equal consideration.
Old 5th April 2010
  #49
Quote:
Originally Posted by Steve Albini View Post
Well, I see all of these players as being part of the same interconnected showbusiness industry. You draw an arbitrary line between the bands' manager and their label, or possibly between the lawyer and the label, while I draw that line between the band and everybody else.
That's a pretty unreasonable position. The artist's management is their own choice (unless they let the label assign it or something, which no sane person would do.) If the management rips off the artist, that has nothing to do with the 'music business'.

Having watched an awful lot of documentaries about bands over the decades, it's interesting how often it's actually the management that screwed the band, not the label. In many cases, what people call the label screwing the band is really that the artist signed a contract that clearly laid out exactly what the deal was, then they claim they are being ripped off after the fact. That's not being ripped off. If you sign a contract that clearly states the terms, unless that contract breaks some sort of law, that's your responsibility.
Old 5th April 2010
  #50
Quote:
Originally Posted by Steffmo View Post
Ummm....I respectfully disagree. I think that all the expenses of the project should be pooled and recouped from record one. I understand your point about the purse strings. I simple think the TALENT strings are due equal consideration.
That's easy to say, but you wouldn't be in business long (in an industry where 85% of artists don't ever make enough to even cover costs.) If would imagine that, if you had managed to accumulate a million bucks, and I came to you asking you to finance my band, you would quickly figure out what it's like to be on the other side of the fence. You would be weighing the options. I have a million, I could just keep it and live nicely. Or, I could risk half of it on something that has probably a 1 in 10 chance of doing much more than breaking even.

I'm doubting very seriously you'd tell me, cool man, here's a $500K budget, I'll put in all the money to make the album, set you up for touring, provide you an allowance to keep you going, provide all the marketing and making some videos, etc... And, if you only ever manage to sell $500K of albums, I'll give you $250K of that.

I would imagine that you would start thinking about the realities and come up with something more along the lines of, I'll do all those things, I'll get my money back first out of the sales, and then if you do well, you can start getting your cut. If I balked at that, you'd probably say, well, OK, I'll have to decline.

But, let's say you did it. And I (against the odds) actually sold $500K and we split it. Now another artist comes to you, and you have $750K now. What are you going to do this time?
Old 5th April 2010
  #51
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Quote:
Originally Posted by Steffmo View Post
Ummm....I respectfully disagree. I think that all the expenses of the project should be pooled and recouped from record one. I understand your point about the purse strings. I simple think the TALENT strings are due equal consideration.
It's totally lopsided. Because expenses are recouped solely from the artist's 9-10% of sales (if they're lucky). I personally know bands who sold well over 100K copies on majors, (which means the label has netted well over 1 million dollars), and were still sitting on 6 digit debt.

Recoupable is the dirtiest word in the english language.
Old 5th April 2010
  #52
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As one who has been as high as VP at 2 majors, and currently co-owner of a major distributed label, it's a whole lot of myths being perpetrated in this thread. All business is slanted towards the one who puts up all the money in any business venture.
Old 5th April 2010
  #53
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Quote:
Originally Posted by populardemand View Post
As one who has been as high as VP at 2 majors, and currently co-owner of a major distributed label, it's a whole lot of myths being perpetrated in this thread. All business is slanted towards the one who puts up all the money in any business venture.
I agree. I have had at least one major distro deal since 2000. No one makes money from sale "one", especially when we have dug ourselves a 6 figure hole (used to be a 7 figure hole back in the 90's) w/ radio, video, publicity/marketing, recording fund, producer fees, song fees & clearances, travel, wardrobe, artist advance, etc.
Old 5th April 2010
  #54
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Quote:
Originally Posted by Geoff Firebaugh View Post
It's totally lopsided. Because expenses are recouped solely from the artist's 9-10% of sales (if they're lucky). I personally know bands who sold well over 100K copies on majors, (which means the label has netted well over 1 million dollars), and were still sitting on 6 digit debt.

Recoupable is the dirtiest word in the english language.
But it doesn't stop the same band from getting a bigger advance on next album while still being in recoupement. They still get the 6 figure knot of marketing, publicity, producer/song fees, tour support, recording fund, etc. for the next album. Most artists never care about repaying the label. They live off of their advances, publishing, and show money- which can be very substantial.
Old 5th April 2010
  #55
Gear Nut
 

write,record,mix,release your own records!

DIY!
IF you sell more records with a label how much of that will you see? If you do it yourself and sell a few less ALL the money is still yours! everyone else is just gonna steal it off the internet anyway.
Old 5th April 2010
  #56
Lives for gear
First off, I never suggested anyone make money at record one.

What I did suggest was that all expensed be recouped from record one.

I think the whole thing is needlessly complicated by mechanicals, contolled composition clauses, packaging allowances, arcane breakage nonsense.

It would be simpler and fairer if all expenses went on one side, all income went on the other. And split by a PC of what is made after that.

If the money gets a bigger PC, so be it. That has more to do with the relative clout of the parties than anything else.

If you want to spend 500k on the whole thing, and its a 12.99 title at brick and morter nets 6 and change at distro and 5 and change for downloads. The record is even at 80k units.

Unfortunately its not nearly that simple, especially if the act does not write the songs. I am merely suggesting it as a basis that would simplify everyones dealing.
Old 5th April 2010
  #57
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Quote:
Originally Posted by Geoff Firebaugh View Post
It's totally lopsided. Because expenses are recouped solely from the artist's 9-10% of sales (if they're lucky). I personally know bands who sold well over 100K copies on majors, (which means the label has netted well over 1 million dollars), and were still sitting on 6 digit debt.

Recoupable is the dirtiest word in the english language.
Trying to be fair to all sides, 100k sales does not net 1 million dollars. Depending on the retail of the record it would it might be more like 720k, a significant difference.
Old 5th April 2010
  #58
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Quote:
Originally Posted by Steffmo View Post
Trying to be fair to all sides, 100k sales does not net 1 million dollars. Depending on the retail of the record it would it might be more like 720k, a significant difference.
In reality, every 20k in non-discounted album sales makes $100k. That is the current model given today's retail album prices. So, 100k in non-discounted album sales will make $500k.
Old 5th April 2010
  #59
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Quote:
Originally Posted by populardemand View Post
In reality, every 20k in non-discounted album sales makes $100k. That is the current model given today's retail album prices. So, 100k in non-discounted album sales will make $500k.
thumbsup
Old 5th April 2010
  #60
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Mike Douaire's Avatar
 

I like this thread. It's very interesting. Plus I might get some ideas for my band heh

I mean honestly I dont see us getting signed by a major anytime soon, so I pretty much do everything to keep us moving along.

I figure setting up the band as a small business and running it as such could eventually (assuming we get enough people to like us) turn into a self sufficient way to make a living. We all have day jobs for now to keep funding the business, play out as often as we can, and for recording we've taken the cheapest route possible - track at my house in my studio, send it out to get mixed by a good friend with real outboard gear. In the process of it all now, hopefully this all turns out well! We have a mastering guy lined up too.

Keep all the posts coming. I find this immensely interesting. I dont have much real experience with labels, just what I've read in various books (ie Donald Passman), so this is great!
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