post007: monopoly money (oh, I mean “recording budget”)
This one is all about the idea of being paid for your work. While a controversial subject rife with different opinions about who, what and where the money should go to and when, no one seems to remember the last and most important thing here and that is WHY. Steve Albini wrote a very good article on the whole breakdown of your money if you are on a major label circa the mid-late 90’s and that was the realest of talk. Without saying too much (you should google the dude and then find the paper. this makes you 4% smarter than the person who didn’t) about the paper, he basically let you know how labels were basically banks based on the acquisition of intellectual property in the form of works by recording/performance artists, and the monopolistic availability of the recorded works in their respective formats. The whole distribution of wealth in the context of the music industry was never, ever, EVER in the artist’s behalf. The highest someone on a label can expect to be paid is 50% of what ideally amounts to the net earnings of the project. This is after whatever expenses that are recoupable get paid, this means your advance, publicity, recording and mastering budget and ANY and ALL expenses accrued during the making of this record. This means dinners, dates and drugs, ladies and gentlemen. Depending on what label you are on and how much your budget is, you could be paying for the food, drugs and dates of ANOTHER group. You may even be paying for the staples at the label, which equates to label overhead and that shouldn’t come from your budget. Anyway, based on the payment schedule of physical distributors which is twice a year if you sell, barring returns, this determines the whole “six month” rule of getting paid. If the label in question has what is commonly referred to as a “net 90” deal, then the distributor has a finite amount of product for 90 days and at the end of this term they pay you for whatever you net in those 90 days. Not gross, but net. 2 of these terms equate to roughly 6 months and if all of the expenses are paid off in six months or less then you are what is referred to as “in the black” for obvious reasons.
An important thing to talk about is actually two things and they are:
1. ship vs. sell: this is the thing that makes everyone hate record labels and call them liars for no apparent reason. basically, the numbers that a distributor and store order haven’t a damned thing to do with the numbers you actually sell as a recording artist. this is, until you sell all those numbers. an easy way to say it is like your distributor or whatever ships out 500 CDs to retailers and they sell out in a week. the distributor orders 500 more for stores and then 250 sell one week and 250 more sell over the course of the next month. on paper, you just sold 1,000 CDs in a month or two, but then people return a total of 150 to stores and don’t forget about the 43 that got broken on the way to so and so. so…. after 90 days, you may get paid for 807 CDs. or maybe not since some distributors hold up to 30% of the label’s net until the end of the year (which is way longer than 6 months) to cover things like those 43 CDs being broken. if a label tells you that they shipped 10,000 of something in the attempts of trying to impress you, ask them how much did the record actually SELL. or if it is a new record, tell them to come back in 1 year and give them updated analytics then. you will sound like a badass.
2. net vs. gross: this is easier to explain, but still something to wrap your head around if you aren’t familiar. the gross is the total income and the net is what the artist or label gets. usually the net term is used in a artist perspective because the gross number is what is used to determine how much the product actually made. if a project grosses 1000.00 and your percentage is 75% then you probably net 750.00. I say probably because numbers change when they want. when it comes to getting broke off with money, just worry about your net and arrange it to where you aren’t getting gouged to death in your mind. your net drops when more people are involved, BTW. when you pay folks in percentages, then everyone’s hand is in the gross and your quickly dwindling net comes last. compare it to a freefall of paying people back and your net is at the absolute bottom of the hole or chute or whatever.
What this has to do with recording budgets is tricky because if you get an advance, sometimes a label uses that to basically pay you for the right to OWN your master works. Other labels use whatever they spend on recording the record as justification to them owning the master. I’m all about home recording, so that makes it a bit harder than me going into someone’s studio and then leaving them with a record. I have done that in the past and it is an interesting thing. if you deal with a producer who has studio access, a label of some sort and maybe a couple of other resources, then you are completely at their mercy. You pick some backing tracks/instrumentals and drop vox to them and that is that. If you are lucky then they pay you for your time as well as give you a percentage of the sales. The last one rarely happens though. I am thinking of this because of having to do the total budget for s.h.a.r.k. bait and this encompasses:
1. Recording/Mixing/Mastering- I gotta have a spot to record along with stuff to record it on, someone better than me with different ears to mix it and another person to master it who actually does it for a living.
2. Manufacturing- This means CDs, Vinyl and maybe even another format capitalizing on the whole USB key thing. not to mention potential merchandise like shirts or whatever if some other clothes company doesn’t do it before me.
3. PR Budget- This pays for publicity and college radio play. it also gets the record out to magazines and ideally music supervisors and other industry folks that can put it in a good, visible, contextually rational place.
I have the right solutions for 1 and 3 but 2 is the one that is the trick because it is obligated to pay back all of the money spent for 1 and 3. If something like a licensing deal pops up and you hear a track on a pepsi commercial, then all of this becomes null and void.
(I didn’t even get into cross collateralization which is how labels muddy the waters of royalties and use this to pay for that or using your digital royalties to pay for physical expenses and licensing money to pay for something else, etc…)
