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wcerto
Ahonui
USA
5052 Posts |
 Posted - 04/10/2007 : 06:43:51 AM
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Please do not think I am niele ....well, OK...I am. I just have been wondering...
I am not wanting to know how much you make, but rather HOW you make it...the actual mechanics of it.
For you folks who have recordings, how do you get paid from that? Do you get paid when each one sells, or when some wholesaler sells them to distributors, who sells them to little stores, etc.? Do you sign for a flat fee? Do you get so much per CD? Who all else gets a piece of your pie? Do you pay for the recording studio or does the record company? Is it an actual money making proposition? How much of your own blood, sweat and tears go into it? Do you do your own publicizing and promotion and booking? What are the mechanics of becoming a profit making business by selling your recordings and playing professional gigs? Do you incorporate and draw a salary?
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Me ke aloha
Malama pono,
Wanda |
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RJS
Ha`aha`a
1635 Posts |
Posted - 04/10/2007 : 11:33:36 AM
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| Like George K said, don't give up your day job |
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wcerto
Ahonui
USA
5052 Posts |
Posted - 04/10/2007 : 11:53:02 AM
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Please read this very interesting article written by Janis Ian (remember...Society's Child). It is bound to spark great debate. Please share your thoughts on what she has written. Her point of view is that internet down loading does not harm the musician/artist. It was very informative and eye-opening to learn the way record companies control the artists. I had no idea!
http://janisian.com/article-internet_debacle.html |
Me ke aloha
Malama pono,
Wanda |
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Russell Letson
`Olu`olu
USA
504 Posts |
Posted - 04/10/2007 : 7:19:46 PM
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Just the topic is a straight line that I can't resist--
Inadequately. (rimshot)
Intermittently. (baddaboom)
On threat of lawsuit. (ironic laughter--what musician can afford to hire a lawyer?)
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Mark
Ha`aha`a
USA
1628 Posts |
Posted - 04/11/2007 : 08:25:04 AM
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"Why did the (insert butt of ethnic joke here) go into music?"
"For the money!"
(insert downloaded illegal rim shot here.)
Mark, who has always wondered how non-musicians make their money, and why they seem to have so much more of it... |
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Retro
Ahonui
USA
2368 Posts |
Posted - 04/11/2007 : 09:09:40 AM
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| I would just remove the first word from the thread title... |
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Darin
Lokahi
USA
294 Posts |
Posted - 04/11/2007 : 10:56:59 AM
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I think one approach that seems to work for some, is to have many small streams of income, including:
Live performance
Teaching
Publishing written materials
Recordings (royalties from physical sales, digital sales)
Licensing
Session work
Producing
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Darin
http://www.hawaiiguitar.com/ |
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wcerto
Ahonui
USA
5052 Posts |
Posted - 04/11/2007 : 11:04:31 AM
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I just found a most interesting web site http://www.music-law.com/contractbasics.html
Here is an article on recording contracts:
Record contracts come in many forms. This stems from the fact that there are hundreds of different record companies. From the so-called "major labels" (EMI, Sony, Warner, PolyGram, BMG or one of their related corporations) to "mini-majors" (A&M, Island and Virgin, in the days of their independence, were the most obvious examples) to the "independents", the contract depends largely on the type of record company offering it.
When you first see your contract, if you are like most bands, you immediately sit down and read it. However, you soon realize that it is written in a manner which defies grammatical english. Sentences run on for 14 lines, with little if any punctuation. There are terms and words which you have never encountered. Finally, the sentences constantly make reference to each other ("pursuant to 1(A)3(c)(ii)"). Where do you begin? The first place is with someone familiar with record contracts. This is usually an entertainment attorney, though not all of the time.
Often, a band will be aware of and have already negotiated the "deal points" prior to retaining independent counsel on their behalf. Deal points are the basics of the contract: the advance, number of albums and royalty rate. However, the devil is in the details.
In all record contracts, you will be signing an exclusive agreement. This means that you will not be able to record for anyone else other than the record company during the "term" of your contract. The term is how long the contract lasts. Contrary to popular belief, record companies do not sign you and guarantee you seven albums. It may be a seven album deal, but nothing obligates the label to record seven albums. The seven albums means that the record label has the option to record seven albums. Typically, a record company will record one album and see how it does. If it sells well, they will exercise their option to record a second album. If the first album does not do well, the label usually drops you. Record companies require long term option contracts because if the band does do well, the label wants to make sure that the band stays with their company. Since they invested so much and signed the band in the first place, they want to be able to share the success of the band over a long period of time. For example, REM recently finished out the last of their options with their record company. REM's new contract guarantees a $10 million advance per album in the future. Try getting that advance for your first contract! Finally, the "territory" of most contracts is world-wide meaning that the record company has exclusive rights to your services as a band throughout the world.
I find that almost all bands initially form to make music, as opposed to make money. Think back to when you began, it was for the love of music and not money that was the motivating factor. However, when it comes to a record contract, it is about money. A record company puts a record out to make money. Creativity and integrity play a part, but it is a financial relationship.
In many contracts, the financial terms will run over 15 pages. The rule in record contracts is what the record company gives you with one hand, it takes away with the other. The fundamental touchstone of record contracts are "points." Points refer to how many percentage points a band will receive as their royalty rate. On a major label, this will run between 10 and 15 percent and typically 9 to 12 percent on a smaller label. The percent royalty rate is just the beginning however. The first question you should ask is, "a percentage of what?"
Generally, the royalty rate is based on a percentage of the standard retail selling price. You will get your full royalty rate for each full price CD or tape you sell through normal retail channels. Normal retail channels are usually record stores like Tower Records or Sam Goody. What about other places you sell your CD's? Record companies will pay you a fraction of your royalty rate for sales not through normal retail channels. For example, you may receive 75% of your royalty rate for sales outside the United States, 60% of your royalty rate for CD's sold below standard retail price (i.e. albums sold at a discount) and 50% of your royalty rate for sales through record clubs. In fact, most of your CD's will not be sold through normal retail channels. Although you may have a 12% royalty rate, you will only get a 6% royalty rate on record club sales. Confused yet?
Record companies try to make the royalty rate paid to artists as attractive as possible. They may give you a generous royalty rate. However, in addition to the reduced royalty rate on CD's sold outside normal retail channels, there are also many reductions in your royalty rate. I said that the financial terms are often 15 pages or more. Well, your royalty rate is on the first page and the remaining pages are all the reductions. It is impossible to determine how much a band will get for selling a CD without a calculator. When I represent a band negotiating a record contract, I sit down with them and show them the calculations to determine how much (or little) they will receive for each CD and tape sold.
There are entire chapters in books written about all the various deductions. I will mention but a few here. First, you get no royalties on records given away free for promotional purposes. A large deduction is the so-called "packaging" deduction. The theory behind this deduction is that the band pays for the packaging of the CD and tape. Typically, these deductions range from 15 to 30 percent of your royalty rate. In effect, a 12% royalty rate and a 25% packaging deduction lowers your rate to 9%. In addition, your royalty rate is often an "all-in" royalty rate which means that you must pay the producer out of your royalties. Typically, a producer will take 3 points (3%) which lowers your royalty rate even further. Your royalty rate is meaningless unless it is viewed in the context of all the deductions. A band can expect an average of $1.00 in royalties for each full-priced ($16.98) CD sold through normal retail channels.
Did I say the band was going to actually receive royalties? Not so fast. The other major concept involved in record contracts is the term "recoupment". Recoupment is a fancy word for pay back. Record companies expend a lot of money on bands. They pay for all the studio time, give the band an advance, promote the band, etc. All of this money is a loan to the band which the band must pay back. This is recoupment. The band pays back the record label out of their royalties. For example, if a major label spends $250,000 to record an album, the band must make over $250,000 in royalties until they receive their first royalty check. Once a band sells enough records to pay back the amount to the record label, the band has recouped and will receive royalties on future record sales. Approximately 80% of albums never reach this point which means that most bands NEVER receive any royalty checks. Do the math yourself, if you owe the record company $250,000 and you make $1.00 per CD, that is a quarter of a million CD's you must sell before you collect royalties. The one redeeming feature is if the band does not sell enough CD's to recoup, they don't have to pay the record company back. It does not come out of the band's personal pocketbook.
There are other places a band can make money when they have a record out other than royalties. In past articles, I have discussed publishing. There is also money from live personal performances (concerts). This is money that the band gets to keep-most of the time that is. Some record company contracts, particularly small independent labels who cannot afford to lose as much money as the major labels, allow the label to recoup money from other sources, such as publishing. Although this should be called robbery, the practice actually has a name and is called "cross-collateralization". This term means the band will not receive ANY money until the label gets paid back, i.e. the band is recouped. Of course, you don't need to sell as many albums to become recouped on an independent label, but this can come as quite a shock.
Now for the topic everyone asks about: "How much is my advance?" Not surprisingly, this question is also not as simple as it seems. In the past, record labels would sign a band and write a check to the band as a signing bonus and then pay and record an album. Some bands abused this and went over-budget on recording, much to the record company's dissatisfaction. To remedy this abuse, record companies developed the "recording fund." The recording fund is the recording budget AND the advance rolled into one. The contract states that you have one lump sum to record your album, and if you are under-budget, anything left over is your advance. If you want to stay at the Ritz and waste time in the studio, that means less money for you for your advance. This has proved a marvelous incentive for bands to be efficient in the studio.
How much of an advance is good? Once again, this depends on the label and the circumstances of your signing. Generally speaking, the larger the label, the more of an advance you should expect. In addition, the more interest in the band, the higher the price becomes. However, is a large advance always the best? There is much disagreement on this issue. Keep in mind, the more money you get as an advance, the more money you have to pay back (remember recoupment?) before you receive royalties. If you take a huge advance and your album does not live up to expectations, a label may be quicker to drop you and cut its losses. On the other hand, most bands who sign record contracts never reach recoupment so the advance may be the only money they ever get from the label so why not take as much as possible? There is no right or wrong answer to the size of the advance and I try to get a sense from my clients as to their feelings. Some have a "show me the money" attitude and others think about longevity within the industry.
These are a few of the main points in record contracts. Often, a contract will be over 40 pages long. Needless to say, there is a lot more in there than I have had a chance to get into. However, I hope this column has given you a better sense of how record contracts operate. Don't think that you have finally "made it" simply because you get offered a record contract. Often, it is a deal with the devil. There are many attendant drawbacks to signing a record contract. Most importantly, however, is to have someone knowledgeable about record contracts negotiate the agreement on your behalf. Record contracts are routinely negotiated. A slight change in wording here and there can have a huge financial impact for a band.
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Me ke aloha
Malama pono,
Wanda |
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rendesvous1840
Ha`aha`a
USA
1055 Posts |
Posted - 04/11/2007 : 12:09:59 PM
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| Retro, Ithink you are right. And when you add in the tricks that are played with the publishing end of the game, it looks like the devil isn't just in the details, he's in the musician's wallet.I recall when I was a teenager, learning Leadbelly songs from music books. The songwriters credits said H.Ledbetter& J.Lomax. John Lomax played the game way back, as Leadbelly died in 1949. I recall hearing that Al Jolson insisted on songwriters royalties when he recorded songs by new composers who didn't realise what they were signing away.And John Fogarty got sued by his former agent for plagerizing his own songs.If you go into this without a lawyer, you'll lose your shirt. If you use a lawyer, he'll take your shirt. I guess you're damned either way. Maybe the lawyer lets you keep your pants? It sounds like the record companies take it all. |
"A master banjo player isn't the person who can pick the most notes.It's the person who can touch the most hearts." Patrick Costello |
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Darin
Lokahi
USA
294 Posts |
Posted - 04/11/2007 : 4:01:47 PM
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quote:
If you use a lawyer, he'll take your shirt.
I respectfully beg to differ. 
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Darin
http://www.hawaiiguitar.com/ |
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Russell Letson
`Olu`olu
USA
504 Posts |
Posted - 04/11/2007 : 6:52:56 PM
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Right--he'll want your pants as well.
(Sorry, sorry--just can't pass up a good straight line. "'O pun the door,' he said, and died happy.")
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RWD
`Olu`olu
USA
850 Posts |
Posted - 04/12/2007 : 01:48:53 AM
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| This is an old one, but most musicians play baroque. |
Bob |
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thumbstruck
Ahonui
USA
2169 Posts |
Posted - 04/12/2007 : 03:28:30 AM
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How do we get paid? Either in cash or by check from a trusted individual that is cashed ASAP.
Nothing can compensate for the hours of practice, frustration, angst, and misunderstanding on the part of nonmusicians. Why do we do it? Like Slipry1 says, "Why do we breathe?" |
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Mark
Ha`aha`a
USA
1628 Posts |
Posted - 04/12/2007 : 08:39:48 AM
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OK Wanda, since you asked a serious question, and since I'm procrastinating finishing my taxes (thereby answering one unasked question...) I'll give you a real answer.
The article you posted about recording contracts is dead on -- and I'm talking from personal experience. But let's back up a bit -- of the millions of working musicans in the world, very very few ever get near a recording deal.
Here are the main revenue streams:
Performances: including everything from passing the hat on the street corner to full-fledged concert hall tours. You get paid a percentage of the take, less expenses (which can include fees for your agent, hall rental, ticket printing, the janitor, sound lights, etc etc etc...).
Teaching: privates, schools, workshops, music camps, artist-in-the schools, etc. Ditto how you get paid.
Studio Work: as a musician or singer. Work for hire stuff like voice overs, playing on somebody's CD, commercial, whatever. Fee based on what you can negotiate.
Songwriting-again, can be work for hire (commercials) or what most people think of: "I write the songs that get the whole world singing..." (For extra credit: compare Barry Manilow to Don Ho...). Revenue can come from publishing and/or airplay, TV play, etc.
Recordings: Which was really what you asked. The article you posted more or less covers working with a record label -- though it's actually far grimmer.
For an indy artist who owns the label, income derives from the sales, either wholesale (distributers, stores, internet sites like CDBaby and iTunes) or retail (artist websites or face to face.) Most wholesale, distributers etc. pay a small percentage of the retail price... if they actually sell a CD. Its a consignment business, so you can get nailed by shipping tons of units which then all come back to you at your expense. iTunes etc doesn't actually carry an inventory, but there can be costs associated. Streaming sites pay a fractional amount. Podcasts, net radio etc have been getting off scot free, but that's another topic.
There are also music services like Muzak -- Retro can fill you in here.
No matter whether you do it yourself or sign to a label, you pay for everything: recording costs, artist costs, beer, artwork, CD manufacturing & shipping, coffee, promotion, advertising costs, touring support, gas for the van... etc etc. The only difference is when you pay it. Indys pay it out of pocket. Sign to a label and they lend you your money -- against future sales and royalties -- to pay for it. Which is why most one-hit wonders end up in debt to the record companies.
The good news is pros can deduct things like instruments, strings, travel... the bad news is we still have to pay for 'em.
Which brings us to royalties. They come in two flavors: the ones you get when someone uses your song on their recording, in a film or TV; and the ones you get when your song is played on radio (and, in Canada, in concert. Hooray for Canada.)
Mechanicals (the first kind) should be straight ahead, but rarely are. As you noted, the rates change for all kinds of arcane reasons (my favorite being the old "10% of 1/2 of 60% of the net price on Foriegn sales made in months without an 'R')
Airplay is another thing altogether. If you are lucky enough to get on commercial radio, the odds of receiveing royalities are miniscule at best unless you are played everywhere, all the time.
And don't forget that much of the music we like only gets played on non-commercial public radio -- who have a lower royalty rate. When it is collected at all. (In 27 years I have never received a penny in airplay royalties from public radio, in spite of being playlisted on "Echoes," "The Thistle and Shamrock," "Morning Becomes Eclectic" and other nationally syndicated shows. My experience is not unique -- I don't know anyone who makes more than a few dollars a year.)
Note, too, that all royalties are split between the author and the publisher -- and it's almost impossible to keep your publishing royalties if you sign to a record label.
That being said, royalties can be a significant fact in your survival.
Books are another source of royalty income, by the way. As well as another source of expense, as the author may have to pay for the production and marketing, just like with records, err, cds.
So, aside from face to face income from performing, teaching, etc., you can generate income from recordings and songwriting in a number of ways. Each may be small, but together it can add up to the difference between a nice bottle of Cabernet and Boone's Farm.
So, does it make a difference when you download a song and share it with five of your friends? You bet it does.
And Janis Ian can kiss my okole if she thinks that illegal downloading is beneficial to indy artists. As I have said time and time again: If I give it away, it's a gift. If you take it, it's theft.
OK, gotta go pay Uncle Sam. Speaking of theft...
Mark
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thumbstruck
Ahonui
USA
2169 Posts |
Posted - 04/12/2007 : 11:57:41 AM
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| Someone told me that life would get easier when I learned that life just isn't fair. It didn't, but it made playing music with friends that much more valuable. Like Jack, aka Slipry1, tells the keiki, "Don't quit your day job!" |
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Mark
Ha`aha`a
USA
1628 Posts |
Posted - 04/12/2007 : 1:10:49 PM
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quote:
"Don't quit your day job!"
Actually, it is my day job. I go to accounting jams for fun...
For the record (so to speak) making a living as a musician is absolutely no different than any other form of creative self-employment: ya own yer tools, ya look for work, ya do the job and ya pays yer rent. Heck, it's no different from many knds of non-creative self-employment.
The difference is that no one glamourizes furniture builders or, oh, window washers...
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