clicktrack
November 10th, 2006, 10:51 PM
Alan Cross is a very educated and well researched broadcaster in the Toronto area who has been doing a radio show called "The Ongoing History of New Music" for years. This series goes deeper and gives insight into bands, music, labels, etc.
I happened to be listening to the archives and came across this one: Why Performers Hate Their Record Labels.
Links to transcripts are posted below. The actual show can be heard by clicking Here (http://www.edge102.com/station/ongoing_history_of_new_music.cfm?recID=51&ell=8943&pge=1#) and selecting "Why Performers Hate Their Record Labels".
Part 1 (http://www.edge102.com/station/ongoing_history_of_new_music.cfm?rem=9274&pge=1&arc=2)
Part 2 (http://www.edge102.com/station/ongoing_history_of_new_music.cfm?rem=9275&pge=1&arc=2)
Part 3 (http://www.edge102.com/station/ongoing_history_of_new_music.cfm?rem=9276&pge=1&arc=2)
The section I wanted to draw attention to is his analysis of the math that labels provide for you. Very interesting.
Let's say you have a hot young four-piece band that becomes the subject of a bidding war. In the end, you sign with a label that gives them a 20% royalty rate and a million-dollar advance. You're thrilled and you go get drunk at a big party. Why not? You've just been handed a cheque for one million dollars. Think about that: after years of sleeping on couches and playing in crappy bars, you've just been given a million dollars. You're rich!. Or are you? Actually, that million dollars is just a loan from the record company. They expect to be repaid, and to recoup their money, they essentially garnishee your wages. That million bucks is pulled out of any royalties you may earn in the future. In other words, you start your major label recording career one million dollars in debt.
But you're a starving band. You don't know much about business. All you know is that you wanna rock and that you need the money, so you sign the contract. So where does that million dollars go? Half a million goes to recording your debut album. That leaves $500,000. Then you gotta pay your manager who gets between 15 and 20%. Plus you have to pay your lawyer and your business manager around 25 grand apiece. We're now down to $350,000. But now there's taxes, which could be as high as 50%. That leaves $175,000 for four band members to split. That equals about $44,000 per member. That's what everyone has to live on until the record is released.
Okay. 44 grand. But out of that, you have to pay your rent, clothes, food and any new equipment you might need. And there's no more money coming until the album is released. When will that be? Well, that's at the discretion of the record label. It might be right away, or they have the right to sit on it for a year, or two.
So the record finally comes out. It's a big hit and sells a million copies. Two singles are taken from the album, and each single is accompanied by a video. The cost of making the videos is $500,000 each. The label only pays for 50% of that, so you're in debt another $500,000. Then you have to go on tour to promote your album. That costs money, so the label fronts you another $200,000. And wait! The label also spent 300 grand on promotion.
That million-dollar deal has quickly turned into a two million dollar debt. And we're not done yet.
Remember: you sold one million copies of your debut album, and your royalty rate is 20%. If we say that means 2 bucks per CD, you've just earned $2 million. But 2 million minus 2 million equals zero. All that work and you've made exactly nothing.
And that's if you're lucky. It's estimated that up to 90% of all bands never make back their advance. They become indentured to the label, forced to go back to ask for one advance after another, just so they can keep making records and keep working. But what about the record company? Ah, that's another story
The label advanced your band $1 million. They then spent $500,000 to manufacture the CDs. They also spend a million bucks on videos, $300,000 in promotion and $200,000 in tour support. Plus they paid out about $750,000 in music publishing royalties. The total investment? About $4.2 million. Meanwhile, your album sold a million copies. That's a good for a gross return of $11 million. Deduct that $4.2 million in expenses and the record label made $6.2 million.
And how much did your platinum-selling band make? Oh, yeah. Zero. What's wrong with that picture?
And then there's the issue of ownership:
Not that we've discovered how a hypothetical platinum-selling band can end up making zero money under the terms of a standard recording industry contract, it can't possibly get any worse, can it? Oh yes it can. If you look at the fine print on any CD, you'll find the copyright symbol. This identifies who owns that music.
You may be the person who wrote all the words and music on that CD, but if you're in The States, you don't own it. Recorded music is considered to be something called a work for hire. In other words, you're under contract to produce something for the record label. Once you produce it, it becomes the property of the label. It's no different if you were working in a sweatshop churning out running shoes. You may be the person who made those shoes, but once the shoes are finished, they belong to the company. It used to be that a recording artist would automatically own the copyright to their songs after 35 years. But in November 1999, there was a change in U.S. copyright law. With the support of The Recording Industry Association of America (the lobby group that works Washington Politicians on behalf of the major labels) helped push through an amendment to the copyright laws. A work for hire, such as all the song you and your band wrote under your major label recording contract, is now the property of the record label in perpetuity.
In other words, you'll never own those songs. They belong to the record label forever. Even when you die and hope to pass on a financial legacy to your family, a legacy derived from a lifetime of pursuing your art, you can't. That music stays with the record label until the end of time. All this means zero money for performers and billions more for the labels. Disillusioned yet? Hang on. I'm not done. There's still lots more to talk about.
Thoughts?
Discuss.
I happened to be listening to the archives and came across this one: Why Performers Hate Their Record Labels.
Links to transcripts are posted below. The actual show can be heard by clicking Here (http://www.edge102.com/station/ongoing_history_of_new_music.cfm?recID=51&ell=8943&pge=1#) and selecting "Why Performers Hate Their Record Labels".
Part 1 (http://www.edge102.com/station/ongoing_history_of_new_music.cfm?rem=9274&pge=1&arc=2)
Part 2 (http://www.edge102.com/station/ongoing_history_of_new_music.cfm?rem=9275&pge=1&arc=2)
Part 3 (http://www.edge102.com/station/ongoing_history_of_new_music.cfm?rem=9276&pge=1&arc=2)
The section I wanted to draw attention to is his analysis of the math that labels provide for you. Very interesting.
Let's say you have a hot young four-piece band that becomes the subject of a bidding war. In the end, you sign with a label that gives them a 20% royalty rate and a million-dollar advance. You're thrilled and you go get drunk at a big party. Why not? You've just been handed a cheque for one million dollars. Think about that: after years of sleeping on couches and playing in crappy bars, you've just been given a million dollars. You're rich!. Or are you? Actually, that million dollars is just a loan from the record company. They expect to be repaid, and to recoup their money, they essentially garnishee your wages. That million bucks is pulled out of any royalties you may earn in the future. In other words, you start your major label recording career one million dollars in debt.
But you're a starving band. You don't know much about business. All you know is that you wanna rock and that you need the money, so you sign the contract. So where does that million dollars go? Half a million goes to recording your debut album. That leaves $500,000. Then you gotta pay your manager who gets between 15 and 20%. Plus you have to pay your lawyer and your business manager around 25 grand apiece. We're now down to $350,000. But now there's taxes, which could be as high as 50%. That leaves $175,000 for four band members to split. That equals about $44,000 per member. That's what everyone has to live on until the record is released.
Okay. 44 grand. But out of that, you have to pay your rent, clothes, food and any new equipment you might need. And there's no more money coming until the album is released. When will that be? Well, that's at the discretion of the record label. It might be right away, or they have the right to sit on it for a year, or two.
So the record finally comes out. It's a big hit and sells a million copies. Two singles are taken from the album, and each single is accompanied by a video. The cost of making the videos is $500,000 each. The label only pays for 50% of that, so you're in debt another $500,000. Then you have to go on tour to promote your album. That costs money, so the label fronts you another $200,000. And wait! The label also spent 300 grand on promotion.
That million-dollar deal has quickly turned into a two million dollar debt. And we're not done yet.
Remember: you sold one million copies of your debut album, and your royalty rate is 20%. If we say that means 2 bucks per CD, you've just earned $2 million. But 2 million minus 2 million equals zero. All that work and you've made exactly nothing.
And that's if you're lucky. It's estimated that up to 90% of all bands never make back their advance. They become indentured to the label, forced to go back to ask for one advance after another, just so they can keep making records and keep working. But what about the record company? Ah, that's another story
The label advanced your band $1 million. They then spent $500,000 to manufacture the CDs. They also spend a million bucks on videos, $300,000 in promotion and $200,000 in tour support. Plus they paid out about $750,000 in music publishing royalties. The total investment? About $4.2 million. Meanwhile, your album sold a million copies. That's a good for a gross return of $11 million. Deduct that $4.2 million in expenses and the record label made $6.2 million.
And how much did your platinum-selling band make? Oh, yeah. Zero. What's wrong with that picture?
And then there's the issue of ownership:
Not that we've discovered how a hypothetical platinum-selling band can end up making zero money under the terms of a standard recording industry contract, it can't possibly get any worse, can it? Oh yes it can. If you look at the fine print on any CD, you'll find the copyright symbol. This identifies who owns that music.
You may be the person who wrote all the words and music on that CD, but if you're in The States, you don't own it. Recorded music is considered to be something called a work for hire. In other words, you're under contract to produce something for the record label. Once you produce it, it becomes the property of the label. It's no different if you were working in a sweatshop churning out running shoes. You may be the person who made those shoes, but once the shoes are finished, they belong to the company. It used to be that a recording artist would automatically own the copyright to their songs after 35 years. But in November 1999, there was a change in U.S. copyright law. With the support of The Recording Industry Association of America (the lobby group that works Washington Politicians on behalf of the major labels) helped push through an amendment to the copyright laws. A work for hire, such as all the song you and your band wrote under your major label recording contract, is now the property of the record label in perpetuity.
In other words, you'll never own those songs. They belong to the record label forever. Even when you die and hope to pass on a financial legacy to your family, a legacy derived from a lifetime of pursuing your art, you can't. That music stays with the record label until the end of time. All this means zero money for performers and billions more for the labels. Disillusioned yet? Hang on. I'm not done. There's still lots more to talk about.
Thoughts?
Discuss.