So you signed a million dollar deal with a record label...
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You're rich now, right? The record company has already given you 350,000 dollars of it!! Now you can run out and buy that Ferrari you've always wanted, buy all your friends a new car, etc!! You're RICH!! This is how many, if not most people think it works - and unfortunately, so do most new artists. Nah. You're about to learn a hard lesson. And this time next year you might actually owe the record label money. Lots of money.
There's no way to cover everything in one post. Plus, I'll have to cover parts of how it all works as I think of it, because it is too complicated to remember it all at once.. so I'll start with the contract.
Johnny Pop star spends years playing in all sorts of little dives, builds up a small following of fans who constantly tell him how good he is and how if he could only be discovered by a major label he'd sell tons of records. He dreams of it. But he's a musician, not a businessman. And, though he might be quite a good musician, he's not as good as he thinks. Finally he gets "discovered"! Yourescrewednow record label has offered him a million dollar record deal!! They've already given him a check for 350,000 dollars as an advance!! He goes on a little spending spree. He deserves it after all, right? He's worked so hard for so long for so little... But thats all behind him now!
No.
That 350,000 is an advance on EARNINGS, not a paycheck. That million dollar contract doesn't mean the record label is going to give him a million dollars. It means they have agreed to invest up to a million dollars of their money in helping you succeed. In return, you have signed ownership rights over to the record label. They will own your music, and as the owner of your music they will take the lions share of any money your music brings in.
That 350,000 is not so you can buy a ferrari.. it's so you can hire an agent to represent you, studio time, studio musicians, engineers, writers, arrangers.... equipment for touring, etc. YOU pay all that using the advance money. Meanwhile, the record label has their legal department taking care of all the legal issues, their accounting department keeping track of the money, their artist development department helping you, their marketing department promoting you, their sales department getting your record onto store shelves, etc. But of course... you've got to actually produce a record....
More in a minute...
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So the A/R guy books some studio time and hires some musicians, and produces a demo cut. Johnny Pop star is thrilled! He's never sounded so good! The demo is sent over to the suits at the record label whose money is at stake, and Johnny Pop star learns that he's not as good as he thought he was. A lit of work is going to have to be done before the song is ready to be recorded for sale to the public. The song needs a rewrite. It needs a better arrangement. The lyrics need work. ..... And it will all get done no matter what Johnny Pop star says about it, because it's their money on the line, not his.
Now this next part is important.... hehe....
Everyone who adds artistically to that song is entitled to royalties from that song. Bobby Wordsmith changes a few words in the lyrics, the suits approve it, and he is now a co-writer of the song, and will get the same percentage of royalties as the original writer, unless he needs some quick cash and agrees to accept a one time fee. He wont get listed as the writer on the album cover, but he will still get writer's royalties. Bobby also comes up with a new arrangement and gets writer's royalties on the music. He will have to stay in the background as far as the public is concerned, but he doesnt care. Hes making as much money off the song as the original writers are, but he doesnt have to pay anyone back if the record tanks.
Now the song has good lyrics and a more sophisticated arrangement, so back into the studio they go, but this time with A list musicians and engineers. A lot of money has been spent, expenses kept down some by sharing risk and royalties - the risk being that the song flops and there's no royalties to share...
Now, some math...
Johnny got 350,000 in advance to put out an album. He spent 150,000 of it getting it produced, he had to give up a portion of his royalties to get a quality product to sell, and it rakes in a million dollars in sales. The record label owns the music, and the contract Johnny Pop star signed states there is an 80/20 split. 80% of the money goes to the label. That leaves Johnny Pop star with 200,000 dollars in income, but he spent 150,000 of it already. So he earns 50,000. But he doesnt get a dime of that because hes still 200,000 in debt to the label. He needs to make another record, but hes not allowed to do so until the first one winds its way through the system - first it has tp peak in the US, then as it begins to drop it moves to europe, peaks, then to Asia, australia, etc. He wont be allowed to put out another record until it hits at least Asia.
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One of my favorite stories is Travis Tritt talking about when he "hit". Country Club was playing on ever country radio station and the studio decided to have him open for Charlie Daniels.
He said by the time he hired every one that needed to be hired, from the trucking company, etc. and absolutely worked his tail off on a six month tour, he was a lot more famous and on his way to being a star.
He was also a million dollars in debt.
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@Larry said in So you signed a million dollar deal with a record label...:
So the A/R guy books some studio time and hires some musicians, and produces a demo cut. Johnny Pop star is thrilled! He's never sounded so good! The demo is sent over to the suits at the record label whose money is at stake, and Johnny Pop star learns that he's not as good as he thought he was. A lit of work is going to have to be done before the song is ready to be recorded for sale to the public. The song needs a rewrite. It needs a better arrangement. The lyrics need work. ..... And it will all get done no matter what Johnny Pop star says about it, because it's their money on the line, not his.
Now this next part is important.... hehe....
Everyone who adds artistically to that song is entitled to royalties from that song. Bobby Wordsmith changes a few words in the lyrics, the suits approve it, and he is now a co-writer of the song, and will get the same percentage of royalties as the original writer, unless he needs some quick cash and agrees to accept a one time fee. He wont get listed as the writer on the album cover, but he will still get writer's royalties. Bobby also comes up with a new arrangement and gets writer's royalties on the music. He will have to stay in the background as far as the public is concerned, but he doesnt care. Hes making as much money off the song as the original writers are, but he doesnt have to pay anyone back if the record tanks.
Now the song has good lyrics and a more sophisticated arrangement, so back into the studio they go, but this time with A list musicians and engineers. A lot of money has been spent, expenses kept down some by sharing risk and royalties - the risk being that the song flops and there's no royalties to share...
Now, some math...
Johnny got 350,000 in advance to put out an album. He spent 150,000 of it getting it produced, he had to give up a portion of his royalties to get a quality product to sell, and it rakes in a million dollars in sales. The record label owns the music, and the contract Johnny Pop star signed states there is an 80/20 split. 80% of the money goes to the label. That leaves Johnny Pop star with 200,000 dollars in income, but he spent 150,000 of it already. So he earns 50,000. But he doesnt get a dime of that because hes still 200,000 in debt to the label. He needs to make another record, but hes not allowed to do so until the first one winds its way through the system - first it has tp peak in the US, then as it begins to drop it moves to europe, peaks, then to Asia, australia, etc. He wont be allowed to put out another record until it hits at least Asia.
I'm sure a lot of people get screwed, but that sounds like a triumph of a meritocracy enabled by a free market system. I mean good music does make money for most of the talent involved, even if some of the talent needs some worldly wisdom to tap into it.
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"Now look here, you Baltic gas passer... " - Mik, 6/14/08
The saying, "Lite is just one damn thing after another," is a gross understatement. The damn things overlap.
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Back into the studio:
Bear in mind that instruments are recorded on separate tracks. So they have all the individual tracks from the demo, plus all the individual tracks from the final cut. During the mix down, after all the musicians are long gone, the producers will pick the tracks they want to use. They might even bring in a new player and cut a new track if none of the existing tracks satisfy them. For instance, Ray Bass Man plays the bass on the demo, Billy Bobcat plays the bass on the final cut. They might end up using Day's bass track, they might use Billy's track, they might make a blend of the both of them, or they might bring in Chico Jones to play a new track.
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BTW, that brings up something else...Sidemen.
Some of my wife's family have worked as sidemen in the biz. Dennis played for Bill Monroe, Nick played for the Dixie Chicks. Gene played for Loretta for many years.
Dennis went back to being a plumber, Nick works for the city of Austin. Neither made what would be considered good money by being on the road.
Gene was the only one who made a living and I bet he never figured out what it actually paid him per hour...
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@George-K said in So you signed a million dollar deal with a record label...:
@Larry said in So you signed a million dollar deal with a record label...:
Tritt once asked me to go on tour with him. "I'll pay you 250.00 a week...."
I laughed...
$250 a week?
When was that? Like, 1962?
- He was signed to War er, same as me....
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@Horace said in So you signed a million dollar deal with a record label...:
Yeah but how many shares of Apple could have been bought.
Adjusted for splits, Apple stock had an average price of about 0.4893 USD per share.
$250 per week translates to about 511 shares of (post-split) Apple stock per week in 1992.
Today (2020-10-16), 511 shares of Apple stock is worth about 29,800 USD.
