Today’s music economy is all over the place, isn’t?  Artists and/or bands have to work harder than ever to get ahead, sell product, book shows and of course: make some money.  So, how do you do all those things?  Is it who you know?  Is it how good your music is?  Is it how big your fan base is?  Or is it how well you perform on stage?  While all these things are all important, I would suggest the core part of being successful starts with the coordination and proper planning of your team members at hand.

First of all, what is it exactly that you’re trying to do?  Make money?  Get noticed?  Get a record deal?  Have fun?  Believe it or not there are tons of artists and bands out there that have never taken the time to sit down and establish this.  Whether your a solo artist with a group of creative professionals or a traditional band where everybody has a vote, you need to sit down, get out a piece of paper and write down your objectives.  This might sound mundane at first, but I guarantee you that by going through this simple exercise you will discover some things you didn’t know about each other’s vision for what you’re doing and might even come up some new ideas that no one individually would have thought of on their own.

The next step is to identify the critical success factors.  I know what you’re thinking: What the heck does that mean?  Well*once you establish an agreed upon goal or list of goals, you need to figure out what it’s going to take to achieve those goals.  For example, let’s say one of you goals is to record an album but there isn’t any capital available to do so.  The obvious question, or sub-goal rather, is to come up with the money, right?  At this point the sky is the limit depending on who you are, what your other talents are or who you know.  Maybe the drummer has a rich uncle that will loan you the money?  Maybe you can set up a string of house parties and play covers for pay in order to fund the project?  Perhaps you can have a bake sale at the local Wal-Mart?  You laugh-but I have seen it been done.  (Do you know how much money those girl scouts make selling cookies?)  All kidding aside, everyone has skills and connections.  Think outside the box and use them!

Lastly, you need to prioritize.  If you are currently in a heavy writing phase, it’s not the time to raise money to record an album.  You need to concentrate on the writing!  Don’t put the cart before the horse.  Write twenty songs, play them live for your fans, get some feedback, go back to the drawing board, tweak the songs, go back out and play them live again, start eliminating the weaker ones, etc.  Then, once you have started honing in and on the “gems”, (you know-the ones everyone is starting to remember the words to) then you can start planning your recording project or whatever your next goal may be.

Planning, prioritizing, etc. can be a frustrating process.  The plan can keep evolving-and that’s fine!  Just keep tweaking it and repeating the process. Always remember:  If you don’t know where you’re going, how do you know it when you get there?

Mark’s blog site: http://www.markhornsby.com/

Of course, it’s actually even more ridiculous than this report makes it out to be. Going back ten years ago, Courtney Love famously laid out the details of recording economics, where the label can make $11 million… and the actual artists make absolutely nothing. It starts off with a band getting a massive $1 million advance, and then you follow the money:

What happens to that million dollars?

They spend half a million to record their album. That leaves the band with $500,000. They pay $100,000 to their manager for 20 percent commission. They pay $25,000 each to their lawyer and business manager.

That leaves $350,000 for the four band members to split. After $170,000 in taxes, there’s $180,000 left. That comes out to $45,000 per person.

That’s $45,000 to live on for a year until the record gets released.

The record is a big hit and sells a million copies. (How a bidding-war band sells a million copies of its debut record is another rant entirely, but it’s based on any basic civics-class knowledge that any of us have about cartels. Put simply, the antitrust laws in this country are basically a joke, protecting us just enough to not have to re-name our park service the Phillip Morris National Park Service.)

So, this band releases two singles and makes two videos. The two videos cost a million dollars to make and 50 percent of the video production costs are recouped out of the band’s royalties.

The band gets $200,000 in tour support, which is 100 percent recoupable.

The record company spends $300,000 on independent radio promotion. You have to pay independent promotion to get your song on the radio; independent promotion is a system where the record companies use middlemen so they can pretend not to know that radio stations — the unified broadcast system — are getting paid to play their records.

All of those independent promotion costs are charged to the band.

Since the original million-dollar advance is also recoupable, the band owes $2 million to the record company.

If all of the million records are sold at full price with no discounts or record clubs, the band earns $2 million in royalties, since their 20 percent royalty works out to $2 a record.

Two million dollars in royalties minus $2 million in recoupable expenses equals … zero!

How much does the record company make?

They grossed $11 million.

It costs $500,000 to manufacture the CDs and they advanced the band $1 million. Plus there were $1 million in video costs, $300,000 in radio promotion and $200,000 in tour support.

The company also paid $750,000 in music publishing royalties.

They spent $2.2 million on marketing. That’s mostly retail advertising, but marketing also pays for those huge posters of Marilyn Manson in Times Square and the street scouts who drive around in vans handing out black Korn T-shirts and backwards baseball caps. Not to mention trips to Scores and cash for tips for all and sundry.

Add it up and the record company has spent about $4.4 million.

So their profit is $6.6 million; the band may as well be working at a 7-Eleven.

And that explains why huge megastars like Lyle Lovett have pointed out that he sold 4.6 million records and never made a dime from album sales. It’s why the band 30 Seconds to Mars went platinum and sold 2 million records and never made a dime from album sales. You hear these stories quite often.

And note that those are bands that are hugely, massively popular. How about those that just do okay? Remember last year, when Tim Quirk of the band Too Much Joy revealed how Warner Music made a ton of money of of the band’s albums, but simply refuses to accurately account for royalties owed, because the band is considered unrecoupable. Sometimes the numbers even go in reverse. If you don’t understand RIAA accounting, you might think that if a band hasn’t “recouped” its advance, it means that the record labels lost money. Not so in many cases. Quirk explained the neat accounting trick in a footnote to his post about his own royalty statement:

A word here about that unrecouped balance, for those uninitiated in the complex mechanics of major label accounting. While our royalty statement shows Too Much Joy in the red with Warner Bros. (now by only $395,214.71 after that $62.47 digital windfall), this doesn’t mean Warner “lost” nearly $400,000 on the band. That’s how much they spent on us, and we don’t see any royalty checks until it’s paid back, but it doesn’t get paid back out of the full price of every album sold. It gets paid back out of the band’s share of every album sold, which is roughly 10% of the retail price. So, using round numbers to make the math as easy as possible to understand, let’s say Warner Bros. spent something like $450,000 total on TMJ. If Warner sold 15,000 copies of each of the three TMJ records they released at a wholesale price of $10 each, they would have earned back the $450,000. But if those records were retailing for $15, TMJ would have only paid back $67,500, and our statement would show an unrecouped balance of $382,500.

I do not share this information out of a Steve Albini-esque desire to rail against the major label system (he already wrote the definitive rant, which you can find here if you want even more figures, and enjoy having those figures bracketed with cursing and insults). I’m simply explaining why I’m not embarrassed that I “owe” Warner Bros. almost $400,000. They didn’t make a lot of money off of Too Much Joy. But they didn’t lose any, either. So whenever you hear some label flak claiming 98% of the bands they sign lose money for the company, substitute the phrase “just don’t earn enough” for the word “lose.”

So, back to our original example of the average musician only earning $23.40 for every $1,000 sold. That money has to go back towards “recouping” the advance, even though the label is still straight up cashing 63% of every sale, which does not go towards making up the advance. The math here gets ridiculous pretty quickly when you start to think about it. These record label deals are basically out and out scams. In a traditional loan, you invest the money and pay back out of your proceeds. But a record label deal is nothing like that at all. 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. That’s one of the most lopsided business deals ever.

So think of that the next time the RIAA or some major record label exec (or politician) suggests that protecting the record labels is somehow in the musicians’ best interests. And then, take a look at the models that some musicians have adopted by going around the major label system. They may not gross as much without the major record label marketing push behind them, but they’re netting a whole lot more, and as any business person will tell you (except if that business person is a major label A&R guy trying to sign you to a deal), the net amount is all that matters.

By Mike Masnick

Here’s an excerpt from Gear Slutz- Producer’s points from Michael Wagener on producer points for all of you who want to get that part of the music business clarified. You can go to the link above to see the entire thread:

In general, if there is no special deal going, producers points are paid from actual sales. They are calculated of the net retail price, which is a floating price to say the least.

The way it is normally set up (or at least was when the industry was still halfway sane):
The artist (with an artist deal at a label) gets anywhere from 10 to 20 % (points) of the net retail, which could be anywhere from $7 to $18 depending on the the deal the label has with distributors and a million other things. Out of the artist points he/she pays the producer’s points.

Lets say for numbers sake and very much simplyfied:
the artist gets 13%, and out of that he/she pays the producer 3%, so he/she is left with a net artist rate of 10%. The net retail price for numbers sake, is at $10. That means the producer would make $0.30 per actual CD sold. The artist would make $1 per actual CD sold.

Here comes the hitch:
Royalties are normally paid retroactive from sale of unit one, after the "Recording Cost" are recouped. Recording cost (which include anyting to do with making the album, except for producers advances) are recouped at the "net artist rate" which in our example is 10%. So, again for numbers sake: Let’s say the record cost $100,000 to make. The artist would have to sell 100,000 units to recoup the recording cost. At that time everybody would start to get paid royaties, BUT retroactive to sale of unit one. In other words, as a producer you would not see a dime until CD 100,001 is sold but then you would get $30,000 right away, plus whatever sales over 100,000 are accounted for, minus all the other contractual deductions for reserves, returns, packaging etc. etc. etc. The artist would get paid $100,000 at that point, minus any advances he/she got to survive during the making of the CD. If the producer got any advances for the project, he/she would have to recoup those first. In our examle above: if the producer got an advance of $20,000, he/she would get paid $10,000. After recoupment there should be a 3 month or 6 month statement, hopefully with a check attached.

The producer has no right to any Publishing royaties, unless he is part writer of a song or the artist "gives" him writing credits for his work on the songs. I never ask for publishing, but leave it completely up to the artist to include me in it, if they feel I contributed enough to a song to make a difference. Publishing is about the only money an artist will make for a while (other expenses like touring, or a video shoot will eat up any royalties), and since they have to be able to exist, otherwise they can’t tour and sell CDs, I advise every artist to not let anybdy touch their publishing (and merchandising for that matter). Also, publishing is paid from sale one and is not reliant on recoupment of the Recording Cost.

All that said, you can imagine it takes a upwards from 50 pages contract to nail this down (especially since royalties are at a different rate in different countries), so I changed my royalty system to $0.0X per song sold, very simple, the artist sells a song (download or CD) and I get paid $0.0X. Makes for a one page contract.

This is a very simplified exlanation of the whole deal, but I hope this helps.