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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."
Reminds me of this horrific classic of how recording artists get ripped off:
http://www.negativland.com/albini.html
stuff |
The RIAA can't very well claim to be protecting the starving artists if the artists aren't starving.
We really need a wider adoption of a system like Flattr. We could download music, and still pay the artists (and only them).
someone has got to play devils advocate. the latest round of carefully cultivated pop stars and rock bands could very well be designed from their inception to be too outright stupid to determine how this scheme works. Rap stars are groomed and trained to pay attention only to the lambos, the parties, and the mansions. the quick-change mainstream music is where the RIAA is getting the most bang for their buck, and despite some artists attempts to buck the trend by creating their own labels their efforts are sadly misplaced. anything in the industry that so much as glances at a musical instrument is shackled to the wagon of the RIAA and regardless of whether artists select an independent distribution channel or the more commonly recognized channels its extremely difficuly to avoid paying at least some funding to the RIAA.
Good people go to bed earlier.
That is easy said. But I happen to make one part of my income with music... Can you press a nice looking album in good numbers? Can you distribute? Can you promote them? Those guys can... it is easy to fall for it. And Itunes? Well that is a product that attracts a certain kind of public. Not necessary a public that can see the difference between good music and a fucking promotion stunt... Hell, they buy their music on a medium where the Beatles have no place....... not that I am that big of a fan, but would you really buy music (as a real lover) in a store that doesn't have this part musichistory? It's easy said mate, but in the real world, those guys have all the things you need. And they are willing to sell it. They just don't tell you the real price. Don't get me wrong though, we agree, but this is not the musicians fault. Not at all.
TFA is heavily based on a Courtney Love speech from 10 years ago at http://www.salon.com/technology/feature/2000/06/14/love/print.html . Prettier charts in TFA, though.
"Remember all this the next time a record label says they're trying to protect musicians' revenue."
I haven't thought that labels were trying to protect musicians' ANYTHING since 1972. And it wasn't true before that.
deleting the extra space after periods so i can stay relevant, yeah.
Concerts and merchandise. Not CD sales. That's why Radiohead had no problems giving away their songs for free online.
'For we walk by faith, not by sight.' II Corinthians 5:7
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.
I think everything on that TV show is rented. I cannot believe that skateboarding hot-kid-of-the-month can afford a McMansion, 18 Escalades, a room full of arcade machines, yadda-yadda, from 2 or 3 endoresement deals when he will be old and stale before the year is out.
Either that, or the repo men have a heck of a time 6 months down the road.
That TV show, just like *everything* on TV is totally fake.
It's just not possible given the realities of these situations.
If telephones are outlawed, then only outlaws will have telephones.
Can you press a nice looking album in good numbers?
No, but you sure don't need the RIAA for that.
Can you distribute?
That's the real trick, getting your music distributed in stores.
Can you promote them?
Yes, and even if I can't a publicity firm is a lot cheaper than the RIAA.
And Itunes? Well that is a product that attracts a certain kind of public. Not necessary a public that can see the difference between good music and a fucking promotion stunt... Hell, they buy their music on a medium where the Beatles have no place.......
That's just an inane comment. iTunes is a store. If some company decides for whatever reason they don't want to sell in that store, fine, but that doesn't mean "it has no place". You might as well argue "The Electric Fetus" record store is a store where Jaime Thietten has no place since she won't let a store with "fetus" in the name sell her music.
...would you really buy music (as a real lover) in a store that doesn't have this part musichistory?
Yes. Like 99.9% of people, while I can't buy the Beatles albums there, I'm not going to let a boycott by one copyright holder over a trademark issue prevent me from doing business with them. That's just dumb.
It's easy said mate, but in the real world, those guys have all the things you need. And they are willing to sell it.
Wait, that's your argument. Well, the iTunes store is out because the Beetles catalog isn't there so I guess people have to be ripped off by the RIAA? Times are changing. There are numerous indie labels that will share the profits, print the music, and put your music in the iTunes store along with other places. The RIAA's strength has been in locking down the distribution channels and promotional channels (radio) but with the internet here, those methods are starting to fail. There are a lot of better ways for real musicians to make money than try to get a deal with an RIAA label.
Pot meet kettle.
Boredom is bliss.
radio is becoming increasingly irrelevant thanks to clearchannel...
Hell, they buy their music on a medium where the Beatles have no place....... not that I am that big of a fan, but would you really buy music (as a real lover) in a store that doesn't have this part musichistory?
So you're saying that just because the iTunes store doesn't have The Beatles, that people shouldn't buy from there, or if they do, they aren't real music lovers? I guess if you had to get all of your music from a single source, and you needed to have The Beatles, then iTunes wouldn't be for you, but iTunes has tons of stuff that you can't find in any brick and mortar store, and even a lot that Amazon doesn't have. Any real music lover wouldn't limit themselves by not shopping at a store simply because they didn't have one artist. If they did that, they wouldn't shop anywhere, as no store has every artist.
They could give their music away for fee
The ironing is delicious.
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.
Let me tell you how it will be;
There's 23 for you, 977 for me.
'Cause I’m the RIAAman,
Yeah, I’m the RIAAman.
Should zero per cent appear too small,
Be thankful I don't sue you all.
'Cause I’m the RIAAman,
Yeah, I’m the RIAAman.
And you're working for no one but me.
RIAAman!
well excuse me, but what good is a nice looking album distributed, promoted in good numbers going to do to you, if you do not even get $23 out of $1000, as per in the related article ?
Read radical news here
Absolutely nothing new here.
Steve Albini.
Courtney Love.
Both, I believe, 10+ years old.
Yeah, just like anyone who doesn't take the time to learn self-defense courses deserves to get beat up!
Listen, some of us may know what kind of deceitful manipulative wankers these guys are, but the general public is woefully unaware at just how underhanded the entertainment industries can be. We're talking about industries that know how to manipulate audiences and manufacture appeal among the masses... They know a thing or two about promoting images, including their own.
While I do wish more artists were better informed about what type of deal with the Devil they were making, but it's no excuse for how they get screwed over.
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. Even with the knowledge of how badly they treat the artists, some will still succumb because they feel it's their only real choice.
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.
Of course you can do all of those things without the RIAA or even a record label. And you can do it a lot cheaper. If you've ever seen an expense sheet from a label trying to justify not paying musicians (I have) you wouldn't believe how much labels claim stuff costs. When you do a tour of 5 college campuses and the label says they paid $20,000 to promote the shows when the only promotion that was done was using free spots on college radio stations and printing a single black and white flyer, you realize you're being screwed.
Further, it is quite possible to work with a record label but not with the RIAA. There is no such thing as a "standard contract" and if a label exec tells you that something in a contract is "standard language" run for the door. There are labels out there that will make all sorts of agreements, including I have learned from direct experience, letting the composer license the music via Creative Commons (which, by the way, is not a free license unless you make it so).
And creating your own label has never been easier or more economical. There has been absolutely no need for big record labels since at least 2003, but they keep going because of inertia and uninformed artists. 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.
The big music industry has been in its death throes for some years now. The corporations have already socked away the profits and are only padding their quarterly reports now until the end, when they'll just transition into some other scam. Maybe "internet television".
You are welcome on my lawn.
Ask and you may become enlightened.
Master of Overkill, I think you are.
The article (and most of the discussion) is about how the record company gives an artist a loan, makes that loan back by collecting 63% of every dollar they make on the album, while still requiring that the band pay back the full amount they loaned them out of the 37% and keeping the copyright over the works. If that's not a crooked scheme, I don't know what is.
I don't see it as a means to justify piracy, but I do see it as a means to question the RIAA when they push for draconian DRM & copyright laws in the name of "protecting the artists." Explain to me how purchasing an album legally helps the artist, if .63 for every dollar goes directly to the label, while the other 37 also goes to the label, except it's shuttled through the band's books first.
To put it in software terms, imagine a company that pays funds a group of employees to develop a software application. The company then turns around, sells it for $10mil, keeps $6.3mil off the top, and docks the pay of each of the employees that worked on it for promotion, expenses, sales channels, etc. PLUS docking them for the initial outlay of the cost of developing the software. And when it's all done, the employees don't get to keep the rights to redistribute or sell the software that they developed. Does that seem fair, even if the employees were dumb enough to sign a contract? Doesn't that seem like something labour laws were enacted to combat?
Or, to quote Jayne, ... let me do the math here ... nothin' into nothin' ... carry the nothin'."
"Ten percent of nothin' is
But that's not the issue here. If you want to make money with music, become a studio musician.
The RIAA is selling the dream of fame. You give them EVERYTHING and you get a shot at fame. And, as has been stated before, they could demand that you swim through a pool of sewage and if you refused, there would be someone else right behind you who would take that offer and think you were an idiot.
IF you did not want the easy mega money and bought into the lie that was the "rock star" then as a musician you can make money and do decently at it.
Expecting you to be coddled and have wads of cash thrown at you so you can screw off, I mean "create art" is utter bullshit.
Do not look at laser with remaining good eye.
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.
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.
Moses Avalon is a record company insider who has written some very funny books about the industry:
Million Dollar Mistakes
Confessions of a Record Producer
Secrets of Negotiating a Record Contract (maybe not funny, have not read it)
On his web site he as a royalty calculator that allows you to plug in numbers for a recording contact and see how much the band will make:
http://www.mosesavalon.com/calculate.shtml
It includes standard things in record contracts such as 10% record (CD) breakage and 23% production costs. He gives hints how to maximize the return to the band. At standard record industry contract terms with no advance to the band you have to sell over 3/4 of a million records in order to break even. This assumes the band has already recorded the album. Need an advance to do that, then you have to sell more albums in order to break even. It is fun to play with and the hints are funny and eye-opening. His basic point is that the only money the band is likely to see is the advance. So get as large an advance as possible and spend as little of it as you can.
At one time he had an article about the economics of a record contract and touring to support it and the end result is that for the hours the band worked, they would make the same money flipping burgers at MacDonald's. And this is for a band with a million selling record.
Now I do not know how this translates to itunes sales but I would not be surprised if itunes sales still have a 10% breakage allowance.
Moses is a very funny author to read.
RLH
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.
Bullshit. I and many friends of mine have songs and albums on iTunes. None of us are signed. We also have our music for sale/streaming on about 10 other site. We all set this up ourselves, no middle-man required. Although there are services that will distribute you music to any of the online sale sites for a fee or cut of your profits.