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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
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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).
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.
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.
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.
That may apply in some cases, but one case I have been following (mainly because I'm a huge fan) is Robert Fripp's multiyear odyssey to get UMG to give him a proper accounting of King Crimson's royalties. He has fairly good evidence that the band has not been properly paid out, but because of the complexity involved due to the mergers and buy-outs and such of publishing companies and the like, whether through maliciousness or incompetence, he and his band have been screwed. What's more, there is some pretty good evidence as far as online sales go that King Crimson has not seen royalties at all, and worse, in many cases, the artists were never even asked, despite a good deal of control over the release of recordings that the Crimson still holds. Fripp tried for some time to get to talk to someone, anyone, in a position of authority who could produce an accounting of earnings and royalties, and finally had to sue UMG, and only now is he finally getting some movement.
The general methodology of UMG, at least, is to delay, obfuscate and obstruct, claiming at times that it can't answer questions from subordinate companies, or forcing artists to deal with individuals who ultimately have no authority to answer or compel someone else to answer the artist's requests. While I suppose it could be colossal incompetence, I posit that the system is purposefully set up to steal money owed to artists.
The same thing has happened over at EMI, where the Beatles have been forced to sue over withheld royalties. I'm assuming every record company and major label probably uses the same tactics to screw over artists.
The world's burning. Moped Jesus spotted on I50. Details at 11.
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.
Absolutely nothing new here.
Steve Albini.
Courtney Love.
Both, I believe, 10+ years old.
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.
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.
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