<<There's
This Band
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.
Anyway, it doesn't cost them anything if it
doesn't work. Fifteen
percent of 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
BACK
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 10
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 getting
a great royalty: 13% (less a 10% packaging
deduction). Wasn't it
Buffalo Tom that were only getting 12% less 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
contact 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 picks 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 fucked 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 boldfaced, expenses
are in normal type, comments are in italics.)
Advance: $250,000
Manager's cut: $37,500
Legal fees: $10,000
Recording Budget: $150,000
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
Lodgings while in studio: $10,000
Catering $3,000
Mastering: $10,000
Tape copies, reference CD's, shipping tapes, misc expenses:
$2,000
Album artwork: $5,000
Promotional photo shoot and duplication: $2,000
Video budget: $30,000
Cameras: $8,000
Crew: $5,000
Processing and transfers: $3,000
Offline: $2,000
Online editing $3,000
Catering: $1,000
Stage and construction: $3,000
Copies, couriers, transportation: $2,000
Director's fee: $3,000
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 rack of lights bass amp: $1,000
Rehearsal space rental: $500
Big blowout party for their friends: $500
Tour gross income: $50,000
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
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 (13% of 90% of retail): $351,000 less advance: $250,000
Producer's points: (3% less $50,000 advance) $40,000
Promotional budget: $25,000 Recoupable buyout from previous
label: $50,000 Net royalty: (-$14,000)
Record company income: Record wholesale price $6.50 x 250,000
=
$l,625,000 gross income Artist Royalties: $351,000 Deficit from
royalties: $14,000 Manufacturing, packaging and distribution @
$2.20 per record: $550,000 Gross profit: $710,000
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
Agent: $7,500
Lawyer: $12,000
Band member net income each: $4,531.25
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 1/3 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.