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En_zed (1)
Friday, November 30, 2007

"There's this Band..."

Current mood: contemplative

Views: 243
Comments: 2
There's this band. They're pretty ordinary, but they're also pretty good, so they've attracted some attention. They're signed to a moderate-sized "independent" label owned by a distribution company, and they have another two albums owed to the label.
They're a little ambitious. They'd like to get signed by a major label so they can have some security you know, get some good equipment, tour in a proper tour bus -- nothing fancy, just a little reward for all the hard work.
To that end, they got a manager. He knows some of the label guys, and he can shop their next project to all the right people. He takes his cut, sure, but it's only 15└and if he can get them signed then it's money well spent. Anyways, it doesn't cost them anything if it doesn't work. 15f nothing isn't much!
One day an A & R scout calls them, says he's 'been following them for a while now, and when their manager mentioned them to him, it just "clicked." Would they like to meet with him about the possibility of working out a deal with his label? Wow. Big Break time.
They meet the guy, and y'know what -- he's not what they expected from a label guy. He's young and dresses pretty much like the band does. He knows all their favorite bands. He's like one of them. He tells them he wants to go to bat for them, to try to get them everything they want. He says anything is possible with the right attitude. They conclude the evening by taking home a copy of a deal memo they wrote out and signed on the spot.
The A & R guy was full of great ideas, even talked about using a name producer. Butch Vig is out of the question-he wants 100 g's and three points, but they can get Don Fleming for $30,000 plus three points. Even that's a little steep, so maybe they'll go with that guy who used to be in David Letterman's band. He only wants three points. Or they can have just anybody record it (like Warton Tiers, maybe-- cost you 5 or 7 grand] and have Andy Wallace remix it for 4 grand a track plus 2 points. It was a lot to think about.
Well, they like this guy and they trust him. Besides, they already signed the deal memo. He must have been serious about wanting them to sign. They break the news to their current label, and the label manager says he wants them to succeed, so they have his blessing. He will need to be compensated, of course, for the remaining albums left on their contract, but he'll work it out with the label himself. Sub Pop made millions from selling off Nirvana, and Twin Tone hasn't done bad either: 50 grand for the Babes and 60 grand for the Poster Children-- without having to sell a single additional record. It'll be something modest. The new label doesn't mind, so long as it's recoupable out of royalties.
Well, they get the final contract, and it's not quite what they expected. They figure it's better to be safe than sorry and they turn it over to a lawyer--one who says he's experienced in entertainment law and he hammers out a few bugs. They're still not sure about it, but the lawyer says he's seen a lot of contracts, and theirs is pretty good. They'll be great royalty: 13less a 10 ackaging deduction]. Wasn't it Buffalo Tom that were only getting 12ess 10? Whatever.
The old label only wants 50 grand, and no points. Hell, Sub Pop got 3 points when they let Nirvana go. They're signed for four years, with options on each year, for a total of over a million dollars! That's a lot of money in any man's English. The first year's advance alone is $250,000. Just think about it, a quarter million, just for being in a rock band!
Their manager thinks it's a great deal, especially the large advance. Besides, he knows a publishing company that will take the band on if they get signed, and even give them an advance of 20 grand, so they'll be making that money too. The manager says publishing is pretty mysterious, and nobody really knows where all the money comes from, but the lawyer can look that contract over too. Hell, it's free money.
Their booking agent is excited about the band signing to a major. He says they can maybe average $1,000 or $2,000 a night from now on. That's enough to justify a five week tour, and with tour support, they can use a proper crew, buy some good equipment and even get a tour bus! Buses are pretty expensive, but if you figure in the price of a hotel room for everybody In the band and crew, they're actually about the same cost. Some bands like Therapy? and Sloan and Stereolab use buses on their tours even when they're getting paid only a couple hundred bucks a night, and this tour should earn at least a grand or two every night. It'll be worth it. The band will be more comfortable and will play better.
The agent says a band on a major label can get a merchandising company to pay them an advance on T-shirt sales! ridiculous! There's a gold mine here! The lawyer Should look over the merchandising contract, just to be safe.
They get drunk at the signing party. Polaroids are taken and everybody looks thrilled. The label picked them up in a limo.
They decided to go with the producer who used to be in Letterman's band. He had these technicians come in and tune the drums for them and tweak their amps and guitars. He had a guy bring in a slew of expensive old "vintage" microphones. Boy, were they "warm." He even had a guy come in and check the phase of all the equipment in the control room! Boy, was he professional. He used a bunch of equipment on them and by the end of it, they all agreed that it sounded very "punchy," yet "warm."
All that hard work paid off. With the help of a video, the album went like hotcakes! They sold a quarter million copies!
Here is the math that will explain just how ****ed they are:
These figures are representative of amounts that appear in record contracts daily. There's no need to skew the figures to make the scenario look bad, since real-life examples more than abound. Income is underlined, expenses are not.
Advance: $ 250,000
Manager's cut: $ 37,500
Legal fees: $ 10,000
Recording Budget: $ 155,500
Producer's advance: $ 50,000
Studio fee: $ 52,500
Drum, Amp, Mic and Phase "Doctors": $ 3,000
Recording tape: $ 8,000
Equipment rental: $ 5,000
Cartage and Transportation: $ 5,000
Lodging while in studio: $ 10,000
Catering: $ 3,000
Mastering: $ 10,000
Tape copies, reference CDs, shipping tapes, misc. expenses: $ 2,000
Album Artwork: $ 5,000
Promotional photo shoot and duplication: $ 2,000
Video budget: $ 31,000
Cameras: $ 8,000
Crew: $ 5,000
Processing and transfers: $ 3,000
Off-line: $ 2,000
On-line editing: $ 3,000
Catering: $ 1,000
Stage and construction: $ 3,000
Copies, couriers, transportation: $ 2,000
Director's fee: $ 4,000
Band fund: $ 15,000
New fancy professional drum kit: $ 5,000
New fancy professional guitars [2]: $ 3,000
New fancy professional guitar amp rigs [2]: $ 4,000
New fancy potato-shaped bass guitar: $ 1,000
New fancy bass amp: $ 1,000
Rehearsal space rental: $ 500
Big blowout party for their friends: $ 500
Tour expense [5 weeks]: $ 50,875
Bus: $ 25,000
Crew [3]: $ 7,500
Food and per diems: $ 7,875
Fuel: $ 3,000
Consumable supplies: $ 3,500
Wardrobe: $ 1,000
Promotion: $ 3,000
Tour gross income: $ 50,000
Booking Agent's cut: $ 7,500
Manager's cut: $ 7,500
Merchandising advance: $ 20,000
Manager's cut: $ 3,000
Lawyer's fee: $ 1,000
Publishing advance: $ 20,000
Manager's cut: $ 3,000
Lawyer's fee: $ 1,000
record sales: 250,000 @ $12: $ 3,000,000
Gross retail revenue Royalty [13f 90f retail]: 250,000 @ $12: $ 351,000
Less advance: $ 250,000
Producer's points [3ess $50,000 advance]: $ 40,000
Promotional budget: $ 25,000
Recoupable buyout from previous label: $ 50,000
Net royalty: $ -14,000
Now, on the other hand, let's look at the record company income:
record wholesale price $6.50 x 250,000 $ 1,625,000 gross income
Artist Royalties: $ 351,000
Deficit from royalties: $ 14,000
Costs of manufacturing, packaging and distribution @ $2.20 per record: $ 550,000
Label's gross profit: $ 7l0,000
The Balance Sheet: This is how much each player got paid at the end of the game:
record company: $ 710,000
Producer: $ 90,000
Manager: $ 51,000
Studio: $ 52,500
Previous label: $ 50,000
Booking Agent: $ 7,500
Lawyer: $ 12,000
Band member net income each: $ 781.25
The band is now 1/4 of the way through its contract, has made the music industry more than 3 million dollars richer, but is in the hole $14,000 on royalties. The band members have each earned about 1/20 as much as they would working at a 7-11, but they got to ride in a tour bus for a month.
The next album will be about the same, except that the record company will insist they spend more time and money on it. Since the previous one never "recouped," the band will have no leverage, and will oblige.
The next tour will be about the same, except the merchandising advance will have already been paid, and the band, strangely enough, won't have earned any royalties from their T-shirts yet. Maybe the T-shirt guys have figured out how to count money like record company guys.
Some of your friends are probably already this fxxxxxd...

About the Author:
Steve Albini is a well-known engineer as well as an equally well-known critic of major labels and the "music industry". Steve has worked with artists ranging from the smallest garage band to the Pixies, Plant-Page and Nirvana. In addition to his recording work, Steve was also the founder of the seminal '80s noise-rock band Big Black, and now plays guitar in the underground rock band Shellac.
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10:59 am - 2 comments - 1 Kudos - Report!
Comments
SamTotman wrote on Dec 1st, 2007 2:20am

Damn corrupt record companies.

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En_zed wrote on Dec 1st, 2007 2:37am

The Pink Floyd song "Have a Cigar" is all about this. Gilmore wrote it after his own company pissed him off.

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