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RIAA Accounting — How Labels Avoid Paying Musicians
An anonymous reader writes "Last week, we discussed Techdirt's tale of 'Hollywood Accounting,' which showed how movies like Harry Potter still officially 'lose' money with some simple accounting tricks. This week Techdirt is taking on RIAA accounting and demonstrating why most musicians — even multi-platinum recording stars — may never see a dime from their album sales. 'They make you a "loan" and then take the first 63% of any dollar you make, get to automatically increase the size of the "loan" by simply adding in all sorts of crazy expenses (did the exec bring in pizza at the recording session? that gets added on), and then tries to get the loan repaid out of what meager pittance they've left for you. Oh, and after all of that, the record label still owns the copyrights.' The average musician on a major record deal 'gets' about $23 per $1,000 made... and that $23 still never gets paid because it has to go to 'recouping' the loan... even though the label is taking $630 out of that $1,000, and not counting it towards the advance. Remember all this the next time a record label says they're trying to protect musicians' revenue."
We really need a wider adoption of a system like Flattr. We could download music, and still pay the artists (and only them).
She even has one of those "360 degree" contracts.
Let's see what happens to her.
RIP America
July 4, 1776 - September 11, 2001
That's more possible now, but back in the day, not a chance.... I have friends dying from depression and destitution because the were snookered by some exec, cut an album or two, never got paid, and then sued for no fulfilling the contract otherwise primarily because the couldn't eat, got sick, and to this day owe money to some one for their intellectual property.
In a grocery store that would be called a loss leader. Have something that you make no money on, but build up enough interest in something else that they'll buy it for enough money to make up the loss and then some.
In this case, you basically give away the CDs and the RIAA screws them over. But in the meantime, they're making a shedload of money from touring.
I don't want to deny the RIAA is screwing them over, but without the RIAA, they wouldn't be on tour to make the money.
Me, I'll just keep paying for a Magnatune subscription. Not all of their artists tour this area.
I read "Confessions of a Record Producer" where the dude gives you the step-by-step breakdown of where all of the money goes. One of the interesting ones is that the record companies now take out more for every CD pressed than they did for pressing LP's or cassettes, even though it's actually cheaper to make CD's.
He said that, every time he'd be at a cocktail party and someone would find out he's a record producer, they'd always ask "So, if I made an album that went gold, how much money would I get?". He proceeds to go through the cost accounting (which he describes earlier in the book) to arrive at some number like a 4-piece band making a gold record results in each member getting something like $23,000 or something. Don't quit your day job, fellas!
Also, back when Napster was really rolling, and the RIAA was freaking out, I recall reading an article by Janice Ian (a 70's 3-hit wonder) saying that she never got a statement from her record company that didn't say that she owed them money.
If you watch the RIAA's behavior carefully, you'll see that they're not really about attacking "piracy". They're trying to prevent any kind of delivery mechanism which takes them out of the loop... that connects the artist directly with the listener. "Disintermediation" is the big word for it. I recall several years back, there was a website (I forget it's name) where unsigned bands could post their songs as mp3's and they'd tag them with what known bands they thought they sounded like. So, you could go on there and search for "Dead Milkmen" and you could find all of these undiscovered bands who were influenced by them.
...
... and, of course, the RIAA figured out how to sue them into oblivion, even though they weren't really infringing on copyrighted material.
A Florida coupled sued the show for using their rented home as a set for a Cribs episode without permission.
They rent a property, borrow props and cars, film it, the rapper, does his thing and presents his false front, but the money isn't there. Even multi-platinum selling artists can't pay the $5 - $10 million needed to buy the mansion they pretend to own.
If they (performers, pop "music") do not make money, how is it that so many of them are obscenely rich?
The cash that gets thrown around by new acts is all part of the front money that needs to be repaid. Imagine if you were given a loan of your annual salary for the next couple of years right now and then need to work it off plus loan shark level interest and fees.
Speaking as a former "artist", who, to be published, had to sign a contract that reminded one of a ransom note or the plans Genghis Khan drew up for the fair treatment of a raised city... I am somewhat familiar with the industry. Our record sold moderately; not great but OK. It earned a few hundred thousand and I have a photocopy of my one royalty check for a whopping Twenty Bucks! Some years later I got the ASCAP rights for one of my songs reassigned to me, because the label had inadvertently let it lapse after 20 years. That search and work cost far more then I ever earned from it. But it was the principle of the thing. I am very happy the Internet is raining on the parade of these ghouls.
- Minutus cantorum, minutus balorum, minutus carborata descendum pantorum.
"Own your own stuff" - Joan Jett
Jett had, and has, her own record label. Worked out very well.
Also notable: Mick Jagger, London School of Economics '63.
If they screw over Darth Vader what do you think a bunch of musicians are going to do?
"God is a comedian playing to an audience too afraid to laugh. " -Voltaire
That article talks about the money the band pays their manager and lawyer. It's the *job* of the manager and lawyer to work in their bands best interest. Why are the managers and lawyers allowing their bands to enter into such horrible contracts?
The article, if that's true about how financing in the music industry works, is basically showing the record company 'double-dipping'. I mean, if they are just making me loans, fine, I'll take out a loan, and will repay it. But in that situation, I wouldn't give them the copyright (maybe use it as collateral to secure the loan), and I wouldn't give them royalties. I would pay back the loan, with interest.
If I'm giving them a cut of the royalties, then I shouldn't have to pay back the money they spend to produce and market the album. That, after all, is why I would be giving them a cut of the revenues. But to make every expense into a 'loan' which has to be repayed, then taking the lion's share of the revenue, that's just wrong.
Seriously, who signs such a contract? Who advises their client to sign such a contract? What are the lawyers getting paid for, anyhow?
I suggest you talk to Stardock Systems. They are an indy software developer. Because of problems regarding publishing, they self published their last title, Galactic Civilizations 2. You can find it in just about every major game seller (though on the budget rack now because it is like 5 years old now). They are doing so again with their next title, Elemental. For that matter, they've published two titles for other companies, Sins of a Solar Empire by Ironclad and Demigod by Gas Powered Games. If this keeps up, they may not be an indy studio in 20 years.
No big development or advertising budget, no attachment to a major publisher, just some guys from Michigan that can make a good game and get it out there. You can ask them who did the distribution, they'll tell you (they posted it I just forgot who it was).
Or, if videogames themselves don't work for you, how about Red vs Blue? Popular animated show made using the Halo engine. Started off as a few friends who like video games and cinema putting out products using a few Xboxes in the middle of the night while working real jobs and some donated web space. Now? You can buy the videos on Xbox live and the DVDs in Best Buy. They have their own company, with health insurance and everything. It is basically their full time jobs. The make money on t-shirts, DVDs, and people who subscribe to their site.
You are not required to work through the established system, unless you want to. Doesn't mean there isn't more work or risk to be taken on, but then there is more reward too. If you are lazy and just want to sign on the dotted line, well ok but then I don't really want to hear it from you.
Also there are intermediate options. Go to cdbaby.com, they can hook you up. One of the students that used to work here has a band on there. They handle publishing and distribution for you, and take a very reasonable cut. No, they won't get you in Best Buy. However they also won't fuck you. Also, if that is important to you to be in stores, well then look in to publishing and distributing agencies. They exist. Like I said, ask Stardock who they used. Probably videogames driven, but they might do music too.
If you want to make it big, then consider that some real effort may be needed on your part. If you look at most of the super rich business types out there, it was a combination of luck and a lot of hard work. Gates, Jobs, Buffet, Rockefeller, and so on, all had to do a shitload of work to get where they are. For all of them, there are countless more who worked had and got rich, but not so rich that we've heard about them, and still more who worked hard and just had a regular life. So I don't see why you should expect music to be any different.
This whole scene is a mess. Big Labels have way too much control of what music people actually get exposed to, and the chances of making it anywhere without them are pretty slim.
From what I've been told by a few insiders, except in very rare circumstances, the big labels won't even talk to new musicians these days until they've already "made it."
It's easy to say "just start an indie band", but what matters is not how many indie bands there are out there, but how many indie music customers there are out there. It's the buyers that make the difference, not the artists, and unfortunately I have little faith in the mass of sheep.
The record labels do, though! If you've managed to sell, say, 30,000 albums, managing successful tours, and getting airplay on the indie stations, they'll be all over making you into the "next big thing." (Direct quote from some A&R flack: "I don't want to talk to you until you don't need me."
They're still pushing "360 deals" too...where they wind up controlling every aspect of your image in exchange for a cut of merchandising and ticket sells. They consider it a win/win.
You dont need your record in the stores. Nobody buys music they never heard of in CD form from Walmart.
Airplay? Get off your arse and get it out to small stations. you will NEVER get airplay on the clearchannel stations unless you pay them to play it. But if you get airplay on all the smaller stations that are dying for something the big channels dont have... you spread like wildfire.
Get someone with real talent to shoot a video, get people to shoot "bootleg" videos at any concerts you play, get it on youtube and elsewhere. Get it out there. MARKET MARKET MARKET....
Distribution and self publishing is easier now than ever before.. Only really lazy people say it does not work.
Do not look at laser with remaining good eye.
look at the incentives here:
it gets to the point that you are about to be paid out $10,000
the executive decides to spend $10,000 on marketing - knowing that it will only generate an additional $5000 of sales
however, the $10,000 is fully deductable - so it comes out of your payout.
Of the new $5000, the executive will see 63% - so he is $3150 better off
However your $10,000 payout has been reduced to 13% of the new $5000 sales which is $650
this means that it is almost always in the interest of the exec to piss your cut away on marketing - even if it is obviously ineffectual marketing.
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Donald Passman's All You Need To Know About The Music Business details all this stuff. They can still rip you off, for example, for breakage (because shellac recordings are fragile!). Nothing is simple, and the contracts are intentionally impenetrable. Great, great book for anyone trying to break into the record business, though I suspect its advice may well be very dated at this point.
Dog is my co-pilot.
It might get you laid. And it might also get you famous. And if you're both smart and lucky it might get you famous enough that you can ditch the original label and work out something a little more profitable. Not saying that signing a deal with an RIAA affiliated company is a great option, but it might be the best option if your eventual goal is to become a "big name" star, or if you care more about getting your music heard than you care about the money.
This Space Intentionally Left Blank
Bands can't even trust indie labels. They always have to check their contracts and make sure they can get our of it if they have to. One friend's band got in with a manager they liked on an indie label, worked out some good deals, and everything was looking great. The indie label had another band a major label wanted so they just bought out the indie for the one band. My friends band were left with an album finished, already pressed, and sitting in warehouse, but it wasn't worth the big label's time to even talk to the band about selling those pressed disks to them, let alone going ahead and distributing them. So there they were, their best album to date, finished and ready to go, they can't get it, they can't sell it, they can't produce any more of it, and it was even questionable if they could play the songs in concert because rights were now tied up by a company that would rather just kill it rather than deal with it.
Well, what's the song? Did we hear it?
Dewey, what part of this looks like authorities should be involved?
The state lottery can give you all that, with about the same chance of success. Do you purchase your lottery tickets regularly? If not, why would you make an exception for the music lottery?
More and more, the big labels are nothing but factories for wholly-fabricated "artists" like Lady Gaga or the finalists of American Idol.
How exactly was Lady Gaga "wholly-fabricated" by big labels? Unlike many other pop stars, she writes all of her own songs and, by most accounts, earned her success through the merit of own performance. She admits that her music is pop but challenges the idea that there's anything wrong with that. Before signing with the behemoth Interscope, she signed with the small, no-name label created by Akon. Sure, her music sounds like it was made in an electronic pop-factory but that doesn't necessarily reflect on her personally.
And as for American Idol, that's the whole point. It's a show about taking someone out of complete obscurity and making them a star, and people love it. There's no skulduggery going on here...it's a case of people asking the industry to fabricate a star for them and then getting exactly what they asked for.
What do you guys think of spotify ?
Honestly, I suscribed for a premium account two weeks ago, and I love it, but even if it's the best way to enjoy legally copyrighted music without spending all the money I have on every single track of the 80 000 ones I listen to, I'm still not sure it's the best way to pay artists back.
I know the more people use and buy premium accounts on spotify, the bigger the share that spotify gives to the "artists" (in reality it's given to the Labels...), but there is no proof that those Labels give a fair amount to the artists.
So, what do you guys think of the Spotify option ?
Segmentation Fault in "Life, Universe and Everything" at line 42. Don't Panic.
More and more, the big labels are nothing but factories for wholly-fabricated "artists" like Lady Gaga or the finalists of American Idol. They simply skip over dealing with "artists" by fabricating their own. And this does not only apply to pop trash like Gaga. A lot of what's passing for rock and heavy metal is just Archies-style fabricated groups made up of out-of-work actors who basically lipsync and pretend to play their instruments while backing tracks play in concert.
This has always been a complaint, and it's been that way for longer than I've been alive. The music industry has been dirty for over a century.
The thing about these 'music factories' and production companies is that now they are really good, a lot better than most artists. Look at this piece of pop trash, Can't be Tamed by Miley Cyrus. Start with the video, it's top level polished Hollywood quality. Cynical yes, but top level. How often do you see wings like that? The backup dancers are good, better than Miley, but the camera work and directing helps compensate for the the fact that she can't dance. Listen to the orchestration. It has an interesting beat, interesting sub-themes, and it's solid. The sound engineering is a work of art. People who were working on that knew what they were doing.
In fact, the weakness in the composition is the melody, lyrics, and overall organization, and these were the parts written by Miley. She is absolutely the weakest link in the entire piece. Pretty near anyone could come out with an awesome record if they had that production company. Call it pop trash if you want, but pay attention to the fact that there's some very good work going on.
Incidentally, that particular song makes Lady Gaga look good. In contrast, she is usually a strength in her songs, not something that needs to be compensated for.
Qxe4
her persona may not be fabricated, and people may disagree on the quality of her work. That being said her music is way overplayed. Is it overplayed because people want to hear it so much, or because the record companies promote it so much, or because the way top 40 works?
I personally have no desire to purchase an album if the song is guaranteed to be heard on the radio in the next 5-10 minutes.
Bring back the old version of slashdot.
Did you hear anything about Lady Gaga's work before her first album?
She was an art student from Tisch who was groomed by an Interscope farm label for eventual Madonna-style splash. Her past "DJ-ing" was basically done during her grooming by Interscope. She was picked on the basis of her "conceptual art" projects at Tisch.
I know her vocal coach from her Interscope days. She was turned from a DJ and club kid into a "singer" during those days.
You are welcome on my lawn.
That's not true, rock and roll was never some synthetic, plastic marketing gimick like these Nickelodeon-created fantasies, rock sprang from the black ghettos, from rythem and blues, and an honest rebellion against the stale hypocricy of swing and jazz.
And "rap" was created as a *political* form of protest, it was never intended to be liked in any context other than a rebellion by blacks against the honkey white oppression.
When "Three The Hard Way" came out in 1974, that was the start of the *political* emergence of "rap" as virtually a weaponized version of non-music, it was specifically intended to not be "music as the white man knows it."