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

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

[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

[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

[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.

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:Where's the news?

[multisync]

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

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.

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: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.

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.

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

[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.