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A much talked about article and must read.
This is an article from Maximum Rock n' Roll #133 written by
Steve Albini, and it details the problems encountered when
dealing with a major label. Many people have seen this article
many times and many haven't. That's why it's being printed here.
If you've read it before, read it again. You can avoid this type
of problem by knowing the music business and how it works so that
you don't get stuck in a nasty trap.
-ED
Whenever I talk to a band who are about to sign with a major
label, I always end up thinking of them in a particular context.
I imagine a trench, about four feet wide and five feet deep,
maybe sixty yards long, filled with runny, decaying shit. I
imagine these people, some of them good friends, some of them
barely acquaintances, at one end of this trench. I also imagine
a faceless industry lackey at the other end holding a fountain
pen and a contract waiting to be signed.
Nobody can see what's printed on the contract. It's too far
away, and besides, the shit stench is making everybody's eyes
water. The lackey shouts to everybody that the first one to swim
the trench gets to sign the contract. Everybody dives in the
trench and they struggle furiously to get to the other end. Two
people arrive simultaneously and begin wrestling furiously,
clawing each other and dunking each other under the shit.
Eventually, one of them capitulates, and there's only one
contestant left. He reaches for the pen, but the Lackey says
"Actually, I think you need a little more development. Swim
again, please. Backstroke. And he does of course.
- A & R Scouts
Every major label involved in the hunt for new bands now has on
staff a high-profile point man, an "A & R" rep who can
present a comfortable face to any prospective band. The initials
stand for "Artist and Repertoire." because historically, the A
& R staff would select artists to record music that they had
also selected, out of an available pool of each. This is still
the case, though not openly.
These guys are universally young [about the same age as the bands
being wooed], and nowadays they always have some obvious
underground rock credibility flag they can wave. Lyle Preslar,
former guitarist for Minor Threat, is one of them. Terry Tolkin,
former NY independent booking agent and assistant manager at
Touch and Go is one of them. Al Smith, former soundman at CBGB
is one of them. Mike Gitter, former editor of XXX fanzine and
contributor to Rip, Kerrang and other lowbrow rags is one of
them. Many of the annoying turds who used to staff college radio
stations are in their ranks as well.
There are several reasons A & R scouts are always young. The
explanation usually copped-to is that the scout will be "hip to
the current musical "scene." A more important reason is that the
bands will intuitively trust someone they think is a peer, and
who speaks fondly of the same formative rock and roll
experiences.
The A & R person is the first person to make contact with the
band, and as such is the first person to promise them the moon.
Who better to promise them the moon than an idealistic young turk
who expects to be calling the shots in a few years, and who has
had no previous experience with a big record company. Hell, he's
as naive as the band he's duping. When he tells them no one will
interfere in their creative process, he probably even believes
it.
When he sits down with the band for the first time, over a plate
of angel hair pasta, he can tell them with all sincerity that
when they sign with company X, they're really signing with him
and he's on their side. Remember that great gig I saw you at in
'85? Didn't we have a blast.
By now all rock bands are wise enough to be suspicious of music
industry scum. There is a pervasive caricature in popular
culture of a portly, middle aged ex-hipster talking a
mile-a-minute, using outdated jargon and calling everybody
"baby." After meeting "their" A & R guy, the band will say to
themselves and everyone else, "He's not like a record company guy
at all! He's like one of us." And they will be right. That's
one of the reasons he was hired.
These A & R guys are not allowed to write contracts. What
they do is present the band with a letter of intent, or "deal
memo," which loosely states some terms, and affirms that the band
will sign with the label once a contract has been agreed on.
The spookiest thing about this harmless sounding little memo, is
that it is, for all legal purposes, a binding document. That is,
once the band signs it, they are under obligation to conclude a
deal with the label. If the label presents them with a contract
that the band don't want to sign, all the label has to do is
wait. There are a hundred other bands willing to sign the exact
same contract, so the label is in a position of strength.
These letters never have any terms of expiration, so the band
remain bound by the deal memo until a contract is signed, no
matter how long that takes. The band cannot sign to another
laborer even put out its own material unless they are released
from their agreement, which never happens. Make no mistake about
it: once a band has signed a letter of intent, they will either
eventually sign a contract that suits the label or they will be
destroyed.
One of my favorite bands was held hostage for the better part of
two years by a slick young "He's not like a label guy at all," A
& R rep, on the basis of such a deal memo. He had failed to
come through on any of his promises [something he did with
similar effect to another well-known band], and so the band
wanted out. Another label expressed interest, but when the A
& R man was asked to release the band, he said he would need
money or points, or possibly both, before he would consider it.
The new label was afraid the price would be too dear, and they
said no thanks. On the cusp of making their signature album, an
excellent band, humiliated, broke up from the stress and the many
months of inactivity.
- There's This Band
There's this band. They're pretty ordinary, but they're also
pretty good, so they've attracted some attention. They're signed
to a moderate-sized "independent" label owned by a distribution
company, and they have another two albums owed to the label.
They're a little ambitious. They'd like to get signed by a major
label so they can have some security you know, get some good
equipment, tour in a proper tour bus -- nothing fancy, just a
little reward for all the hard work.
To that end, they got a manager. He knows some of the label
guys, and he can shop their next project to all the right people.
He takes his cut, sure, but it's only 15%, and if he can get them
signed then it's money well spent. Anyways, it doesn't cost them
anything if it doesn't work. 15% of nothing isn't much!
One day an A & R scout calls them, says he's 'been following
them for a while now, and when their manager mentioned them to
him, it just "clicked." Would they like to meet with him about
the possibility of working out a deal with his label? Wow. Big
Break time.
They meet the guy, and y'know what -- he's not what they expected
from a label guy. He's young and dresses pretty much like the
band does. He knows all their favorite bands. He's like one of
them. He tells them he wants to go to bat for them, to try to get
them everything they want. He says anything is possible with the
right attitude. They conclude the evening by taking home a copy
of a deal memo they wrote out and signed on the spot.
The A & R guy was full of great ideas, even talked about
using a name producer. Butch Vig is out of the question-he wants
100 g's and three points, but they can get Don Fleming for
$30,000 plus three points. Even that's a little steep, so maybe
they'll go with that guy who used to be in David Letterman's
band. He only wants three points. Or they can have just anybody
record it (like Warton Tiers, maybe-- cost you 5 or 7 grand] and
have Andy Wallace remix it for 4 grand a track plus 2 points. It
was a lot to think about.
Well, they like this guy and they trust him. Besides, they
already signed the deal memo. He must have been serious about
wanting them to sign. They break the news to their current
label, and the label manager says he wants them to succeed, so
they have his blessing. He will need to be compensated, of
course, for the remaining albums left on their contract, but
he'll work it out with the label himself. Sub Pop made millions
from selling off Nirvana, and Twin Tone hasn't done bad either:
50 grand for the Babes and 60 grand for the Poster Children--
without having to sell a single additional record. It'll be
something modest. The new label doesn't mind, so long as it's
recoupable out of royalties.
Well, they get the final contract, and it's not quite what they
expected. They figure it's better to be safe than sorry and they
turn it over to a lawyer--one who says he's experienced in
entertainment law and he hammers out a few bugs. They're still
not sure about it, but the lawyer says he's seen a lot of
contracts, and theirs is pretty good. They'll be great royalty:
13% [less a 1O% packaging deduction]. Wasn't it Buffalo Tom that
were only getting 12% less 10? Whatever.
The old label only wants 50 grand, an no points. Hell, Sub Pop
got 3 points when they let Nirvana go. They're signed for four
years, with options on each year, for a total of over a million
dollars! That's a lot of money in any man's English. The first
year's advance alone is $250,000. Just think about it, a quarter
million, just for being in a rock band!
Their manager thinks it's a great deal, especially the large
advance. Besides, he knows a publishing company that will take
the band on if they get signed, and even give them an advance of
20 grand, so they'll be making that money too. The manager says
publishing is pretty mysterious, and nobody really knows where
all the money comes from, but the lawyer can look that contract
over too. Hell, it's free money.
Their booking agent is excited about the band signing to a major.
He says they can maybe average $1,000 or $2,000 a night from now
on. That's enough to justify a five week tour, and with tour
support, they can use a proper crew, buy some good equipment and
even get a tour bus! Buses are pretty expensive, but if you
figure in the price of a hotel room for everybody In the band and
crew, they're actually about the same cost. Some bands like
Therapy? and Sloan and Stereolab) use buses on their tours even
when they're getting paid only a couple hundred bucks a night,
and this tour should earn at least a grand or two every night.
It'll be worth it. The band will be more comfortable and will
play better.
The agent says a band on a major label can get a merchandising
company to pay them an advance on T-shirt sales! ridiculous!
There s a gold mine here! The lawyer Should look over the
merchandising contract, just to be safe.
They get drunk at the signing party. Polaroids are taken and
everybody looks thrilled. The label picked them up in a limo.
They decided to go with the producer who used to be in
Letterman's band. He had these technicians come in and tune the
drums for them and tweak their amps and guitars. He had a guy
bring in a slew of expensive old "vintage" microphones. Boy,
were they "warm." He even had a guy come in and check the phase
of all the equipment in the control room! Boy, was he
professional. He used a bunch of equipment on them and by the end
of it, they all agreed that it sounded very "punchy," yet "warm."
All that hard work paid off. With the help of a video, the album
went like hotcakes! They sold a quarter million copies!
Here is the math that will explain just how fucked they are:
These figures are representative of amounts that appear in record
contracts daily. There's no need to skew the figures to make the
scenario look bad, since real-life examples more than abound.
income is underlined, expenses are not.
Advance: $ 250,000
^^^^^^^ ^^^^^^^
Manager's cut: $ 37,500
Legal fees: $ 10,000
Recording Budget: $ 150,000
Producer s advance: $ 50,000
Studio fee: $ 52,500
Drum. Amp, Mic and Phase "Doctors": $ 3,000
Recording tape: $ 8,000
Equipment rental: $ 5,000
Cartage and Transportation: $ 5,000
Lodgings while in studio: $ 10,000
Catering: $ 3,000
Mastering: $ 10,000
Tape copies, reference CDs, shipping
tapes, misc. expenses: $ 2,000
Video budget: $ 30,000
Cameras: $ 8,000
Crew: $ 5,000
Processing and transfers: $ 3,000
Off-line: $ 2,000
On-line editing: $ 3,000
Catering: $ 1,000
Stage and construction: $ 3,000
Copies, couriers, transportation: $ 2,000
Director's fee: $ 3,000
Album Artwork: $ 5,000
Promotional photo shoot and
duplication: $ 2,000
Band fund: $ 15,000
New fancy professional drum kit: $ 5,000
New fancy professional guitars [2]: $ 3,000
New fancy professional guitar amp
rigs [2]: $ 4,000
New fancy potato-shaped bass guitar: $ 1,000
New fancy rack of lights bass amp: $ 1,000
Rehearsal space rental: $ 500
Big blowout party for their friends: $ 500
Tour expense [5 weeks]: $ 50,875
Bus: $ 25,000
Crew [3]: $ 7,500
Food and per diems: $ 7,875
Fuel: $ 3,000
Consumable supplies: $ 3,500
Wardrobe: $ 1,000
Promotion: $ 3,000
Tour gross income: $ 50,000
^^^^^^^^^^^^^^^^^ ^^^^^^
Agent's cut: $ 7,500
Manager's cut: $ 7,500
Merchandising advance: $ 20,000
^^^^^^^^^^^^^^^^^^^^^ ^^^^^^
Manager's cut: $ 3,000
Lawyer's fee: $ 1,000
Publishing advance: $ 20,000
^^^^^^^^^^^^^^^^^^ ^^^^^^
Manager's cut: $ 3,000
Lawyer's fee: $ 1,000
Record sales: 250,000 @ $12 = $3,000,000
Gross retail revenue Royalty
[13% of 90% of retail]: $ 351,000
Less advance: $ 250,000
Producer's points
[3% less $50,000 advance]: $ 40,000
Promotional budget: $ 25,000
Recoupable buyout from previous label: $ 50,000
Net royalty: $ -14,000
^^^^^^^^^^^ ^^^^^^
Record company income:
Record wholesale price
$6.50 x 250,000 = $1,625,000 gross income
Artist Royalties: $ 351,000
Deficit from royalties: $ 14,000
Manufacturing, packaging and
distribution @ $2.20 per record: $ 550,000
Gross profit: $ 7l0,000
The Balance Sheet: This is how much each player
got paid at the end of the game.
Record company: $ 710,000
Producer: $ 90,000
Manager: $ 51,000
Studio: $ 52,500
Previous label: $ 50,000
Agent: $ 7,500
Lawyer: $ 12,000
Band member net income each: $ 4,031.25
The band is now 1/4 of the way through its contract, has made the
music industry more than 3 million dollars richer, but is in the
hole $14,000 on royalties. The band members have each earned
about 1/3 as much as they would working at a 7-11, but they got
to ride in a tour bus for a month.
The next album will be about the same, except that the record
company will insist they spend more time and money on it. Since
the previous one never "recouped," the band will have no
leverage, and will oblige.
The next tour will be about the same, except the merchandising
advance will have already been paid, and the band, strangely
enough, won't have earned any royalties from their T-shirts yet.
Maybe the T-shirt guys have figured out how to count money like
record company guys.
Some of your friends are probably already this fucked.
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