As I’ve said before, getting signed today isn’t what it used to be. Radio used to be the means for an artist to become nationally known, and while it’s illegal for someone to pay a radio station to play their songs, there are ways around this (paying for “advertising,” etc.). But that’s not the case anymore; nowadays radio stations rely on the labels to provide them the songs that will keep people listening (and often, radio stations have to pay for it). Radio is free because it’s paid for by advertising, and advertisers pay when a radio station can show that people are listening and therefore will hear their ads.
Now back to label contracts- Everyone imagines that it works this way: A band comes out with the “Coolest, best, most original/artistic etc.” music, records a quick home demo and sends it to a label exec. This person listens to the recording, really likes it and decides that your band could be the next [insert favorite major band name here]. They come and sign you, pay you a huge signing bonus, pay for your professional recording, reproduction/duplication of cd’s and merch, and send you on the road. Now, before I read Loren Weisman’s book The Artist’s Guide To Success In The Music Business (http://tag2nd.com/), I already had a basic understanding of how it really works, due to my work with a promoter. This book basically informed me way more in-depth about the business aspect of it all. Here’s a quick answer to why the above method doesn’t work anymore, and how it actually does work-
First of all, you have to look at a label not as your savior and ticket to the big-time, but as a business. Everything mentioned above costs money. Recording, distribution, advertising, etc. requires someone at each stage to be paid to make those things happen. Think of “getting signed” as exactly what it is- signing a contract. A lot of people think that labels just want to steal all the ownership of your music to sell themselves. But if they don’t take some of it, how will they get paid, and if they won’t then why would they sign you?
A quick breakdown of each stage of putting out a cd- First, you need a recording studio and a producer/mastering mixer. This usually costs more money per day than you would expect or be willing to pay. But unless you really know what you’re doing, a home recording just won’t cut it (be honest with yourself about your level of experience here, because you’ll only hurt yourself if you’re not). A professional recording is your product to be sold. Now, how to get millions to hear it without giving it away (since you’ve just dumped a ton of money into the recording)?
Promoter/advertiser- A promoter is usually someone who will get people to come to your shows by having posters made, radio advertisements, internet ads, etc. The best way (as far as I understand right now) for a band/artist to get paid is by touring. To do this, you need a booking agent (unless you want to do this yourself, though paying a professional to do it can get you into places you may have not had the option for yourself, and might also guarantee you a higher pay), and you will need a promoter/promotion team in the area of each show to ensure that people know what’s going on, and to entice them to want to come.
Now you’re at your show- Sell cd’s, sell merch, sell everything you can! This is where you make money. Don’t forget though, that to get this stuff costs money (and is always cheaper in bulk, if you can front the expense). Making shirts, stickers, physical copies of your albums, and anything else you will want to offer your fans will cost money. You can of course also sell merch and music online (and I don’t think anyone would ever recommend against it).
Now you’ve toured, you’ve sold tons of albums, merch, you had a great time and did decently for yourself. Plenty of artists/bands do this without being signed, but again, it costs money, and without a contract or some kind of fund raising efforts, it will not be easy. So if you’ve gotten signed, the big question is how much of this work did you do yourself? Anyone who put money into this is going to want their money back, with interest. If you’ve hired a booking agent, they’ll want a percentage of every show they’ve booked for you. This might just be 20% off the top, or they may want a percent of merchandise sales too (and a venue might as well; read your contract). Promoters will also want a cut (and you can’t expect them to work for free, so honestly if they’ve put the work into you, they deserve to be paid). Recording studios might want a percentage of your music sales on the album they recorded regardless of how long after the initial recording your cd sells. You can get out of this by paying more for the recording session, but it’s something you need to be aware of (again, READ YOUR CONTRACT).
So, with or without a label, you see that the amount you’re getting paid is starting to dwindle. If you’ve signed with a label, they can take care of a lot of this work (and stress) for you, but everyone involved needs to get paid. What I’m stressing here is that you need to be aware of how many people it really takes to make you a success; This doesn’t just happen because your music is amazing.
A quick rundown- 5 people in your band means that (unless otherwise agreed upon in advance) each person makes a maximum of 20% (after all expenses paid by whomever in the band paid them). For one show, you give a booking agent 15% (this is low by the way), and a promoter takes another 15% (again, low). Now you’re left with 70% to divide by five, and that’s with only two people helping you. You can see now how quickly your percentage of the pie starts to disappear.
As far as a label giving you a signing bonus, THIS IS NOT YOUR MONEY! This is a fronted amount that they will recoup from album sales, etc. You will owe them this money back, so don’t go out buying fancy cars and shit. Put this money into band travel, recording expenses, whatever. If you work your contract right (not that you’ll have much choice), you can minimize the percent of the pie that you have to give away.
A quick note I learned from the SoundOnSound article A Guide To Contracts For Producers (http://www.soundonsound.com/sos/jul08/articles/agreements.htm#Top), make sure to be aware of all aspects of the ownership of your music, i.e. can the label sell it to advertisers for tv and radio play, etc, and if so, what do you make from that. Hire an entertainment lawyer to look over a contract before you sign it; yes, it’s another expense you need to front, but can really save you later.
If there’s one thing I learned from Loren Weisman’s book, it’s this: Treat your band/album, whatever- your music, as a business. A professional business. Think of getting signed as signing a business loan. This is the key to being treated like a professional and retaining your rights.
Now that you know a bit more about what you can expect from labels if you decide to work towards getting signed, you should read about the RIAA and why signing might not be in your best interest- https://mikldeitrick.wordpress.com/2014/01/25/riaa-a-four-letter-word-also-info-about-copyrights/
Record companies are venture capitalists – they front bands money and expect to be paid back with interest. Sometimes they lose on the deal, sometimes they win. If they win that means you, the artist, wins…
Venture Capitalist is a good analogy, but still leaves a little lacking. A venture capitalist does not spend money FOR you and then require that it ‘re-coups’ it from the proceeds. For example : “Here’s a 1 million dollar advance. Oh, and we booked you at the Record Plant for a month for $500,000 and hired ‘Producer A’ for you. You’ll pay him 300 thousand.” Where, I might take that $1M and go over to Crabwalk for that same month and spend $10,000 and get Chris Newman and/or Jack Endino for whatever fee I could wrangle. That 1 mil is all the label is going to pay on that first album cycle, which you will be expected to promote for a year- year and half. If they (the label) spend 800,000 of it before you even opened your guitar case, then you are left with $200,000 to spread all of Mikl’s numbers over. What ever is left over is your income for that year/year and a half. That’s a little beyond mere venture capital, and also a good reason as to why the old business model is crumbling away.
The labels WOULD often lose on much of their roster, but on those that ‘won’ with, that win did/does not always trickle back to the artist under the old model. Many of those ‘old-school’ contracts split album revenue %80/%20 to the label AFTER recouping production expenses. So if you spend $10,000 (to keep the numbers easy)to make an album and you charge $10 each, you (the artist) see’s NO MONEY until you’ve sold 1000 units. AFTER 1000 units, the label would pay you $2 for each disc sold, and keep $8 for themselves. They cite lots of things to rationalize that, but in reality there’s no justification for an 80/20 split.
IF a label comes calling, take the call. But read articles like Mikls. Courtney Love (for all her other crazy) has a pretty good screed online somewhere about the labels that’s worth reading. Read Jack Albinis thing, read other bands experiences with labels and MOST importantly- Read the contract. A LOT. BEFORE ( If ) you sign it
I hadn’t read this until now, but it’s a great article- http://www.salon.com/2000/06/14/love_7/ Thanks Sean for mentioning it. 🙂
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