RIAA Math: Sell 1 Million Albums, Still Owe $500k

An anonymous reader writes "For all the complaints from the RIAA about 'pirates,' who are the real pirates in this scenario? Through a variety of contractual tricks, it's nearly impossible for artists signed to major labels to get paid. The article and video detail how an artist who thinks he's getting a 10% royalty is actually getting closer to 2.5% through various tricks placed in the contract. The labels, then, end up with 97.5% of the gross revenue, and anything they 'spend' on the artist continues to come out of the royalties, not the labels' cut."

Comments

Shysters all

[dosius]

This is why I say fuck the MAFIAA.

-uso.

Re:Shysters all

[vlad30]

This is why I say fuck the MAFIAA.

-uso.

I wouldn't fuck them with your dick !

Re:Shysters all

[Soilworker]

When Oink Pink Palace died, someone posted a REALLY good article about the subject, a must read really:

http://www.demonbaby.com/blog/2007/10/when-pigs-fly-death-of-oink-birth-of.html

Re:Shysters all

[LordLimecat]

Given that weve seen similar stories for years (hollywood accounting, unfair contracts, better off going alone), 2 questions spring to mind:

1) Surely enough people have been burned to set up a class action lawsuit and /or lobbying for new regulation/legislation towards Hollywood / the recording industry for their accounting practices; Im generally gun-shy of unnecessary regulation but this seems to be an area where audits would be helpful, and the odd multi-million-dollar judgement might not hurt either

2) If these contracts are known for being so bad, why do people continue to sign them? I sympathize if the contracts are simply not being honored, but if it continues to happen and people continue to sign the contracts, my sympathy begins to wane. I do NOT want to get into a situation where contracts are no longer enforceable because of legislation protect people from sneaky contracts; people DO bear responsibility for contracts that they sign if they are upheld to the letter of the contract.

Articles like this make me really nervous because they may have a valid point, but I am terribly worried about the results of overambitious and overreacting legislation.

Re:Shysters all

[bhtooefr]

Well, there's the factor that, right now, to make it big, you have to do it through the established system - all major media is controlled by the established system. So, if your goal is to make it big...

Re:Shysters all

[mooingyak]

If these contracts are known for being so bad, why do people continue to sign them?

Lets say 95% of people are smart enough not to sign one. If you work for a record company, it means you only sign up people who fall in that 5% category. The pool of people who could actually make money for them will always be large enough that they can afford to ignore the rest.

And it gets worse. Let's say I started a record company today, and I genuinely want to do right by my artists. If I don't employ the same money squeezing tactics that the existing labels do, then my margins suffer and the only way to succeed is to have a much higher success/flop ratio with the acts I sign than everyone else. And that's not trivial to pull off.

Re:Shysters all

[bberens]

98% of all media are owned by less than 10 conglomerates. Where do you suppose you'll be advertising?

Re:Shysters all

[hairyfeet]

Everybody here seems to be missing a big factor....THEY ARE A CARTEL and as such control the gateway to the airwaves!

The little 5 piece I was playing with was quite popular in the region, and had been asked several times by local DJs to come onto their shows and play. But they couldn't play our albums, not a single track, why? "Because we are only allowed to play what is on the list and that is passed down from corporate" which is why they'd have to invite bands they liked to play live, as it was the only loophole that let them keep their jobs.

And it is THAT, that right there, that gives them the power to fuck kids over on contracts. I actually held one of those contracts in my hand and not even being a lawyer could smell the stench. We hired a lawyer who was like "Yeah...if you don't mind not owning any of your songs, having zero control of anything, and probably owing them money when its all done? Go right ahead" so needless to say we walked away. our opening act signed, what happened to them? They had to break up to get out of their contract after the label decided to "change direction" before the first album was even released, they got left holding the bag to the tune of $100,000 for an album they had paid to record themselves for "various promotion expenses" which believe me, they didn't get shit for promo.

So yeah its a scam, but they own the radio, they own the TV, and the fact that they do NOT own the Internet is why they want to shut it down. These are the same pricks that claimed with a straight face that Bat Out Of Hell I, an album that actually set a world's record for length on the top 200, didn't make a cent. Meatloaf ended up filing for bankruptcy while fighting them because he didn't get shit.

So please, rip them off. Copy your asses off, don't pay for shit, because they certainly aren't! Why they aren't busted for RICO is only because of the bags of money they pay congress critters.

Re:Shysters all

[QuantumPion]

2) If these contracts are known for being so bad, why do people continue to sign them?

Because while they may get ripped off on the record contract, they still get fame and recognition which allows them to make money on concert gigs.

Re:Shysters all

[mooingyak]

artists: the time has come to stop depending on 'art' to make a living. do it because you love it

Here's the problem with that. Let's say I'm an artist, and I make good quality music/art/books/whatever, and I do it because I love it, and people want more of it. If I do it in my spare time while working another job to make a living, that's less time I have available to create art. I currently have a number of hobbies that get neglected because I just don't have the time for them. We should pay artists enough for them to live on (and maybe a little more if they're that good) so that they can spend all their time creating art instead of sneaking it in when they have a moment.

Re:Shysters all

[jawtheshark]

With all due respect... Are you implying that you are entitled to make money with what you love doing? I assure you that's not even remotely close to how reality actually works. Most people have a day job that they either accept as "necessary" or flat out hate it. Many people, including me, used to love what they did, but the realities of the workplace and business requirements usually put a halt to that. My dad always used to say, "Find a job you love and you'll never work in your whole life". As a matter of fact, I have a corollary to that: "Find a job you love, and lose your love for it". Yes, I still love programming, fiddling with hardware (e.g. dumpster diving), helping out people with their computer problems, but it's for my own and for the people I care about. My job, is just that... a job.

What about the people who love things like D&D or simply going for a walk in the forest? Should they be able to make money of it? Sure... They should have the right to attempt that, but reality will kick your butt quickly.

My wife would love to make her money with her paintings. She's pretty good, but to make a living out of it? I'm doubtful, may happen, but only if someone rich actually fancies her art and gets her out in public.

Re:Shysters all

[secretcurse]

Sure you can. You just have to play an average of 3 or 4 nights a week, every week. You also have to be really, really good and really, really flexible. You have to be literate as a musician, though many people refuse to be. Reading and writing music is absolutely necessary if you want to make a living unless you're extremely lucky. It also helps to live in a metro area of at least 500,000 or so. You need to be good enough that you get called when any show is coming through your town and they need local musicians. You'll probably need to be in a great cover band that has a consistent Wednesday or Thursday night gig at a popular bar. If you or someone in your "main" band is a great songwriter, you might even make a few bucks playing original music. You're going to have to be in several groups and generally refuse to play for free unless it's something you're just dying to do.

Basically, a musician can make a living, they just have to work their ass off to do it and won't always be playing the music they love, just like any other job.

Re:Shysters all

[DJ Particle]

Actually, the message we hope to send to the truly good RIAA musicians (a slim lot, I know) is: "We want your music, but we don't want to help the RIAA."

Re:Shysters all

[Hatta]

Surely enough people have been burned to set up a class action lawsuit

They tried that in Canada. Out of $6 billion owed to artists, all they were able to get was $50 million.

If these contracts are known for being so bad, why do people continue to sign them

Mostly because it's their only shot at stardom. They don't pick people with talent who could hack it on their own. They pick kids from podunk towns just dying to get out and be famous.

Re:Shysters all

[Artifakt]

There are a whole hell of a lot of people who want to make it big big! BIG!!. Just look at all the people who are waiting for their big break in Hollywood while waiting tables or washing cars - there are literally a million people jockying for those few '10 Million a picture' jobs, and 99.something % of them have no chance at all by any objective measure. A person who gets a screen credit in a single motion picture during their acting career is in the top 1% of screen actors guild members. People most viewers think of as middle of the line actors (i.e. Whoopee Goldberg), are statistically in the top 1/100th of 1% by earnings, number of films or shows they have appeared on, recognizability and similar measures.
          This goes for somewhat lesser extent for pop musicians, athletes (particularly football players) and many others. There's really no point in asking If these contracts are known for being so bad, why do people continue to sign them?, because it's like asking these same people why they took that triple dog dare and got their tongue stuck to a pole. An actor/rockstar/celebrity is either an idiot who has let his dream of being big enough to overcome the emptiness in his soul overwhelm everything else, or he has some actual understanding of the odds, some actual understanding of his own worth, and (by the time he's done a few contracts) knows that all those idiots aren't just competition, but a thing that keeps the real actors down come contract time. Any serious actor is aware that the producers can always find somebody who will do the job for a pittance just to break in. He or she is aware that the producers have a generalised contempt for the actors they deal with that seems fundamental to their business models, and that he or she has to negotiate every deal through that. He or she swiftly hires an agent to handle that part.

Re:Shysters all

[s73v3r]

With all due respect... Are you implying that you are entitled to make money with what you love doing?

No, but I believe you're entitled to an honest chance at it. And the record labels are not doing that.

Most people have a day job that they either accept as "necessary" or flat out hate it.

I fail to see what that has anything to do with anything. Shit sucks for others, so it's required to suck for you?

Re:Shysters all

[BoberFett]

Hey there Mr. Indielabel that's a nice little website you have there. It'd be a shame if anything happened to it.

Oh, by the way, it sounds like one of the artists on your little label wrote a song that sounds similar to one of our millions of copyrighted songs, so we're suing you for $1,000,000,000 right after the Division of Homeland Security shuts down your website for copyright infringement and the SWAT team kicks down your door.

Re:Shysters all

[onepoint]

You are never entitled to anything, you have to earn it some how or let it fall in your lap ... come from a rich family, sleep with the boss, have straight A's in school, be at the right place at the right time or even get lucky.

having an honest chance is what the internet does, you post your music and video to YouTube and hope. to increase your 'honest chances' hire someone to do your video with better editing, maybe a sound guy for better production value, a good SEO for rank improvement on searches, a good SEM to buy traffic, maybe a black hat marketer to promote your site & to drive traffic to it...

Things suck that's a fact, make due with what you have then improve on it so it does not suck.

Re:Shysters all

[LordLimecat]

Wait, ClearChannel and company own 98% of the internet?

Last I checked, getting on Pandora, Grooveshark, GoogleAds, etc didnt require you to be signed on with ANYONE. Get on pandora and all of a sudden you have a lot of exposure to your very demographic.

Re:Shysters all

[Jason Levine]

You aren't entitled to make money selling music, but if you sell a million CDs, you should be entitled to a decent share of the profits and not have the recording industry say "Well, that million sales album actually lost ten thousand dollars so you owe us money."

The RIAA is using Hollywood accounting (and other sleazy tactics) to keep as much money to themselves and away from the artists as possible. But they don't want you to pirate because they care so much about the artists!

Re:Shysters all

[jfengel]

It has been possible to make a career as a musician. Not as a get-rich-quick scheme, but by being talented, working hard, and all that other classic stuff. Traveling even regionally makes it hard to hold down a regular job, and playing only local gigs saturates your market. Even your avid fans don't want to see you every week.

As with any profession, there's a difference in quality between somebody who plays the occasional bar gig and a band who can really take the time to perfect their stagecraft. Part time work gets you part-time results.

Unfortunately, it was always insanely difficult to do music as a career, and has now become practically impossible, no matter how hard you work. It's just reality, and musicians have to get used to it. But it's too bad that we'll likely miss out on some great music we could have had.

The rise of indie

[theillien]

With the ability to distribute online so easily these days, I don't know why artists even bother with major labels anymore. I'm sure with a little investment even the smallest artist can attain a decent marketing campaign. Word of mouth and social networks are a wealth of free publicity as well.

Re:The rise of indie

[bsDaemon]

Unlike self-publishing, indie labels and self-sales/recording have never had the same stigma of lack of legitimacy. However, I think there is still an impression, even among the artists, that getting signed to a major label is what "success" means. It might be due to confusion in that success and slavery both start with an 's'.

Re:The rise of indie

[Moryath]

- The MafiAA control the booking for 99% of the performance venues that seat more than 50 people. Get yourself to a large enough following, and you'll have problems. Piss off the MafiAA by being independent too long and they'll have you blackballed from performance venues.

- The MafiAA control the vast, vast majority of sound studios. Want to rent time and the equipment to record your album? Their response will be "fuck you, you're not under contract, get lost till someone signs you."

- Likewise, the vast majority of record producers, sound mixers, etc... are under MafiAA control.

- The MafiAA control the "top 40" lists and radio playback. Your music will never get onto the radio or onto satellite radio without them, let alone onto the pre-show movie screener reels or any other of the "combined marketing" channels. And like it or not, that is STILL how most people get exposed to new music these days.

I have several friends who've gone the indie route. Some of whom are merely good, one of whom is a fucking virtuoso, can pick up almost any instrument and give a good accounting, is phenomenal on the guitar, and has a killer instinct for writing earworms. The most he's ever been able to earn in a year, despite these talents, is about $20k - not bad for a part-time gig, but when he didn't have a day job, making a living as an indie was a matter of Just Barely Breaking Even month to month living in the crappiest, cheapest possible apartment and scheduling band practices at - you guessed it - the drummer's garage.

Note I don't say he wasn't being paid well, by most standards, for the gigs (and they had a decent number). But once you count in fuel costs, equipment costs, instrument maintenance, and split the remainder four or five ways, the money for "indie" bands to perform isn't really all that much at all.

Re:The rise of indie

[Eraesr]

It is still incredibly hard to become a successful (read: profitable) artist without the help of a (major) label. Big artists like Coldplay and Nine Inch Nails can afford to publish their own albums online without a label coming in between because any product with their names tied to it is guaranteed to sell. Starting artists just don't have the budget, the connections or the know-how on promoting their own music or landing gigs in large venues.

Re:The rise of indie

[KDR_11k]

And yet even with all those roadblocks you're likely getting more money by staying independent than by selling yourself to the labels and living in slavery. Only the overproduced stars that are pretty much a disposable cog in the music industry and chosen to be advertised big get big money to keep the dream of being a rock star alive and musicians willing to sign up despite getting screwed.

Re:The rise of indie

[maztuhblastah]

- The MafiAA control the booking for 99% of the performance venues that seat more than 50 people. Get yourself to a large enough following, and you'll have problems. Piss off the MafiAA by being independent too long and they'll have you blackballed from performance venues.

Indeed. This is why artists such as Dispatch were never able to play venues such as Madison Square Garden, and were unable to get more than a few people at their show at the Hatch Memorial Shell.

Oh. Maybe not...

Re:The rise of indie

[geekoid]

No they do not own 90% of the venue over 50.

We have the internet, musician can distribute. It can take longer, but the pay off is higher.

The RIAA is losing control. Can the 'virtuoso' write catchy music? if not then he will never make big dollars.

I would like to point out the that 20K is 20K more then he would make with the RIAA. The article is about selling a million and STILL OWING money.

Seem like what your friend needs is a good manager. Someone who know technology and can get music out there and on iTunes, Amazon et al.

I know street performers that make 3-6 times that amount, so maybe he needs to find a good place that has street music as part of its culture?
Or maybe, just maybe, he isn't as good as you think. He is your friend, so you have an emotional connect that will probably bias you.

Re:The rise of indie

[Whorhay]

I'm a Dispatch fan. I have a bunch of their albums on CD, and went to see them at the Garden when I lived in Alabama.

I can't speak to whether or not the MAFIAA controls booking in 99% of the large venues or not. But when Dispatch played at Madison Square Garden they had already contracted with a major label to distribute their old albums. That may or may not have had anything to do with them being able to book three consecutive days of sold out shows there.

Re:The rise of indie

[smellsofbikes]

And yet even with all those roadblocks you're likely getting more money by staying independent than by selling yourself to the labels and living in slavery. Only the overproduced stars that are pretty much a disposable cog in the music industry and chosen to be advertised big get big money to keep the dream of being a rock star alive and musicians willing to sign up despite getting screwed.

Another consideration is that when you have a contract you have a budget, even if you're not taking home a hefty salary. I have one friend who is a genuine rock star, and another who is independent (and really good: he's won Guitar Magazine's 'best guitarist in the world' annual competition once.) They both make about the same amount of money from playing music, which is to say not very much, at all. However, the genuine rock star gets flown to Europe to perform, and their band travels around the US in enormous comfortable buses and has hotels everywhere they stay, whereas the independent guy drives around the US in an old beat-up van and stays in my basement for all the gigs he does in this state. Comfortably poor beats uncomfortably poor, and the record companies are willing to keep you in comfortable servitude to keep you making music for them.

Don't sign it

[Neil Watson]

The RIAA is not fully to blame here. If I don't like a work contract I get it changed or walk away. If someone is too eager to be famous to take the time and negotiate I can hardly feel sorry for them.

Re:Don't sign it

[Richard_at_work]

I agree.

If you don't like the contract, don't sign it.

If you don't like the contract someone else has signed, don't buy their music.

If you want to make a statement, go without . Nothing gets my back up more than the people here on Slashdot who says "this has pushed me to piracy" - grow a pair and go without if you aren't willing to pay for it otherwise you are part of the problem, not part of the solution. Yes, the RIAA and MPAA have onerous terms and conditions, if you don't like them then find something you do agree with and support that.

Re:Don't sign it

[Eraesr]

You as contractor have a bargaining position. You can afford to walk away. Most artists cannot afford this, simply because in most cases the alternatives are just as bad or worse.

Re:Don't sign it

[Moryath]

If I don't like a work contract I get it changed or walk away.

Now imagine that the "work contract" includes a no-compete clause that you can't look for other employment or even strike out on your own. One way the MafiAA keeps "artists" in limbo is by forever delaying an album. They sign you to a 4 record deal? Three records down, you're a fairly popular band, working on the fourth... they'll start exercising a "discretion clause" to keep sending it back and disapproving it over and over and over until you finally break down and re-sign with them.

And you CAN'T go anywhere else. Want to go to another label? Whoops, there's already a contract, we can't sign you. Want to go solo? Unless you have the following of The Weirdo Formerly And Then Again Known As Prince, you're going to have to leave your name and all your previous material behind, never even be able to perform it on tour again.

Re:Don't sign it

[linuxwolf69]

I think part of the point parent was making is that if you pirate the music, the RIAA has that as an "excuse" for why profits are down. If people "did without" then it might force the RIAA to realize their business model is old and crusty.

That said, I agree that the contracts are shady. However, I've known about "hollywood accounting" for years, is it really safe to assume that these artists are really THAT stupid that they don't know there is shadyness, and find out what it is, before they sign?

Re:Don't sign it

[nedlohs]

One would hope the lawyer they have give the contract (at least) a once over has at least five minutes of experience with the usual traps.

Where's the news?

[SJHillman]

This stuff has been known for a long time

Re:Where's the news?

[multisync]

True enough. Courtney Love schooled the RIAA years ago on this very subject.

Steve Albini Wrote About This A While Back

[CowboyBob500]

http://www.negativland.com/albini.html Major labels have always screwed their artists, which is why I've always attempted to go it alone - even though I've so far been fairly unsuccessful, that's still better than going with the majors.

This is nothing new...

[AngryDeuce]

Hollywood's been doing this for years, they call it Hollywood Accounting. For instance, Rain Man, Who Framed Roger Rabbit, Batman (1988), and Forrest Gump all lost money on paper, despite the fact that they took in HUGE amounts of money at the box office.

Why it's allowed, I have no idea. Just another sign of corruption in our regulatory bodies and government...

It gets better, RIAA can't even process...

[Kirgin]

I've worked as an IT professional on an royalt processing system for the 3 of the biggest labels. The project failed because the royalty processing algorithms needed are so convoluted and the backlog of unprocessed royalties so large that you would need supercomputer level processing to get through it. Fact #1: Royalty processing systems of today are 25 years old, based on midframe/mainframe technology and would take 3 months to process the monthend of all their artists. What does that mean? They selectively choose what artists they calculate royalties for (read new artists) and shunt the others to their backlog of billions of unpaid royalties. Fact #2: Current system is album based, even a per song sale requires an album in their system, this adds to the complexity. Fact #3: Because they've already collected money for royalty but not processed the artist portion, they are sitting with billions and billions of unpaid royalties...A lot of artists have to sue their own labels for their royalties and the ARTISTS have to prove the royalties were owing. Only then will the label get off its ass, do an emergency processing of royalties for that artist and then pay it out.

Re:It gets better, RIAA can't even process...

[Dynedain]

That sounds like criminal negligence to me.

Chump Matching

[Software Geek]

Your comment is based on the false assumption that the music business is about selling music. Since the artists provide the music, they are entitled to the lion's share of the profits.

In reality, the music business is more of a chump matching service. The music companies match up chumps who are willing to pay for music with chumps who are willing to sign away their rights to music. Since the music companies provide the chumps, they are entitled to the lion's share of the profits.

Good Book on the Subject

[MarkvW]

I read a very good book called "Confessions of A Record Producer" by Moses Avalon.

This book breaks down and explains the contracts involved in music production. It is quite informative. It left me with the clear impression that the labels are incredibly greedy and rapacious, but so are the producers and the artists. The only difference is that the labels have all the bargaining power.