Over the last few years this column has concentrated on issues related to promoting and marketing your career as an independent musician. The most important thing an artist can do to get the attention of the recording industry is to start your own label, and build a reputation for your music by showing the industry how popular your music is, i.e. how many people bought your record.
Over
the last few years this column has concentrated on issues related to
promoting and marketing your career as an independent musician. The most
important thing an artist can do to get the attention of the recording
industry is to start your own label, and build a reputation for your music
by showing the industry how popular your music is, i.e. how many people
bought your record.
As the
new year begins I wanted to give you some information about what can
happen IF you do get the industry's attention. Starting an indie label is
really quite similar to starting your career as a musician. Your label
needs to impress the music industry with its stories of success, just like
you as a musician need to do the same with your creative talents. The
reward for building a successful label is the possibility of doing
business with a major label someday…on your terms. Major labels need to
work with successful indie labels to maintain their viability in a
ever-changing popular music environment, so they keep their eyes open for
indie labels and artist who have had success with a certain musical genre
or musical styles
There
are several deals that may come your way as you get more successful. The
following short summaries of the most common kinds of indie/major deals
are given to you as an introduction to them. They are discussed with far
more detail in the book The Musicians Business and Legal Guide published
by Prentice Hall. There will be a new 3rd edition of this book available
in the spring of 2001 by the way.
I
would like to thank Bart Day, my co-author of the chapter dealing with
this topic, for his cooperation and help in preparing this information.
- Pressing
and Distribution ("P&D") Deals: The name of this deal
describes its basic premise. The indie label finances the recording
process and delivers the final master recording to a major label
distribution company, which then presses (i.e., manufactures) the
records and distributes those records to sub-distributors, retailers,
etc. In the case of P&D deals, as in the case of the next three
distribution-oriented deals discussed below, the independent label
will retain all ownership rights in the master recordings.
- "Distribution
Only" Deals: Basically the same as the "P&D" deal
described above, except that here it is the indie label, not the major
label that presses the records. The major label's role is
"distribution only."
- Fulfillment
Deals: Again, basically the same as the "P&D" deal
described above, except that here the records are not distributed
through the major label's traditional distribution system, but instead
through an ostensibly "independent distributor" that is
owned by the major label. This "independent distributor,"
acting on behalf of the indie label, then ships such records as are
ordered by indie sub-distributors and indie record stores, and it also
handles all billing responsibilities. In short, the "independent
distributor's" role here is to fulfill orders from third parties
for the independent label's records.
- "Piggyback"
Deals: Used when an indie label doesn't have the clout to get its own
distribution deal. Instead, in order to find distribution, the indie
label must instead "piggyback" onto another indie label's
already-existing distribution deal with a record distributor.
- Production
Deals: The "independent label" here is really just a
production company financed by the major label, and is created solely
for the purpose of producing records. The production company uses the
major label's financing to sign artists and produce records, and then
delivers the masters to the major label. The major label will
manufacture and distribute the records and handle the marketing and
promotion activities. The major label will own the masters.
- Joint
Venture Deals: The word 'joint' implies a joining of forces by a major
label and an indie label, whereby they agree to share responsibility
for the making of records and for the marketing and promotion of those
records. These responsibilities are divided in whatever way the two
labels agree upon in their formal joint venture agreement. The major
label finances the joint venture. Then, from records sales income, the
major label will reimburse itself for the expenses that it has
occurred, and the net profits are then divided between the two labels.
- Equity
Deals: Think of 'equity' as having an investment in something. With
this type of deal, the major label invests money in the independent
label, and in exchange the major label acquires a part ownership or
total ownership of the independent label and the independent label's
assets and its contracts with artists.
- Licensing
by Major Labels: Here the major label owns the masters, but
"licenses" (i.e., leases) the masters to the independent
label for a limited amount of time (usually a few years), during which
time the independent label will have the rights to sell records made
from those masters. In return, the independent label will pay a
royalty to the major label for each record sold. All manufacturing,
marketing and promotion costs are paid by the independent label. The
major label continues to own the masters at all times.
- Licensing
To Major Labels: The exact reverse of the above deal. Here it is the
independent label which owns the masters, and which is licensing
(leasing) the masters to the major label for a limited period of time.
In exchange, the major label will pay royalties to the independent
label.
- Rights
Buyouts": In a "rights buyout" situation, the
independent label will have previously signed a recording contract
with an artist. Then at some later time, a major label buys all of the
rights of the independent label in the artist-in other words, all
rights that the independent label has in the artist under the terms of
its recording contract with the artist. In short, the major label
steps into the shoes of the independent label. In return, the major
label normally agrees to pay a cash advance to the independent label
and a royalty on future sales by the major label of records featuring
that artist.
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