The ultimate prize a recording contract..II….


The last section covered how a recording deal is structured.  Please read it before reading this blog. If you don’t I guarantee that you’ll be confused.

As I mentioned in the last blog the deal is structured as a series of options. These lock the band into a consecutive series of time periods when they are bound to the label and are working on creating a set of recordings that meet their obligations laid out in their contract. I realize that sentence is pretty complex and may not make much sense without a great deal of head scratching. Let me put it another way.

A recording contract says that the band can only record for the label and no one else. This is absolute and final. There is no scenario where the label will allow the band to record tracks without the label being in absolute control of those masters. I have run into these kind of conflicts while managing bands. For example the band Miracle Legion was on tour with the Icelandic band The Sugarcubes. As is natural on a tour the bands became good friends. Soon they started to join each other on stage. The logical next step? I get a call saying that they would like to record together.

I immediately knew the problems that would come once the labels got wind of this plan. Miracle Legion was signed to Rough Trade at this time and that label, perhaps the only one in existence at the time that would allow it, I knew would work out a compromise. The Sugarcubes on the other hand, were signed to Electra. Electra, like all majors, had no capacity to compromise.

As soon as the bands brought it up I booked the time and rearranged the tour to free up a recording block. I then set about doing my best to cover up what we were doing. I started some false rumors. “Miracle Legion was leaving the tour” “There was tension based upon who was sleeping with whom” etc. All the rumors were untrue of course, but I tried to make them as plausible as possible knowing that any potentially harmful rumor would grab the label’s attention. If they were concerned about who Bjork was sleeping with they might not spend the time to notice exactly why a hole had appeared in the band’s schedule and it conveniently left both bands in New York for three days. I knew that the key was to get the bands into the studio and get the tracks cut before the label could stop them. That’s exactly what we did.

The end result was 4 wonderful songs and years of war with electra. We put the tracks out under Rough Trade and said “Sue us”. So they did. At least the fans got to hear it. The point to this little tale is that once you sign with a label they own you. What I did with the Sugarcubes was basically unheard of… no one signs with a major and then records without their approval.( well Hendrix did and Miles Davis, and a few others…) They never, ever, ever give their approval unless it is their idea.

So if you sign with a label you are their possession, their slave. If this doesn’t sit well with you then DON’T SIGN WITH A MAJOR LABEL! I am sure some of you are imagining that your stubborn son of a bitch personality will allow you to manipulate them into allowing whatever you want. This is extremely naive. They have enslaved bigger egos than yours, bet on it.

So now lets look at the second half of a recording contract the section that covers royalties and payments. This is the heart of the agreement and this is the section where the band gets screwed. Yes the first section that controls everything you do is bad but the second section where the deal outlines how the band is paid is the part that really guts the band and controls them.

The way that royalties are paid and accounted for is based upon the way records were sold long, long ago. As a result the language used and the system used can be confusing. The first thing to understand is that everything is based upon MSRP. Manufacture’s Suggested Retail Price. This is a price, agreed by the major labels and representatives of retail music chains. It is a fictional price that is somewhere near the real average price that CDs sell for on a daily basis. I have been in the business for twenty-five years and I am unsure exactly how they decide this number. I expect that I could find out more about the process but I just don’t care to. The only thing that matters is knowing what the number is. For the balance of this blog let’s just assume that the MSRP is currently $14.98. I have no idea if this is current but it doesn’t matter. The number is a basis for calculating what a band is paid.

A typical contract my say that the band will be paid 12% of MSRP. This works out to $1.80. So it appears that for each CD sold the band, the artist, you will be paid $1.80. Sounds great doesn’t it. So you sell a 100,000 CDs and get paid $180,000. Fantastic. Well it would be. It’s just that the balance of the of the language in the contract takes this simple formula and starts to alter it. So what is the real formula? Well it goes something like this……. The first thing they take off is called a “packaging deduction”. This is a fictional discount that the artist pays for to “package the CD”. ???? What the hell does that mean? Well, quite simply they are charging you for putting the CD in a jewel case and putting a booklet in the case. The standard seems to be 25% currently. So now we add this to the formula and it looks like this $14.98 x 75% =$11.24 $11.24 x 12% royalty = $1.35. So that little trick cost you $.50 of your royalty.

So now you sell those 100,000 CDs and you get paid $135,000 right? No, not so fast. It seems that the sales figures and not just a simple count of CDs sold. The first 50,000 CDs get half the normal royalty rate….What???!!! what the fuck???!! Oh yeah, don’t worry about that you’re gonna sell millions right?

So let’s look at the formula again….100,000 sales now pays $106,000. Ok still seems like you can get by on this kind of money. BUt that, of course, is not what the band is paid. The band paid the producer, 40,000 and the studio 90,000 so that money is still owed. Yes, that’s right, the fees for production and recording come out of the band’s share. Doesn’t sound fair does it? (Let’s not get all trapped in the whole “fair” thing…it’s just too complex) This little fact looks even more outrageous when you consider that the band pays for the recording sessions and producer, engineers etc but the label owns the recording. In fact even though the band is paying the producer the producer answers directly to the label. Any band that thinks otherwise will learn a quick lesson.  It might be workable if this is where the band’s debts ended but, of course, it doesn’t.  The band also pays for promotions costs. Yup, that’s the costs that the label incurs to promote the record. The band pays for radio bribes. The band pays for print advertising. The band pays for the generation of artwork. Let’s just cut to the chase—- the band pays FOR EVERYTHING THAT HAS TO DO WITH THE ALBUM!!!. Yes that’s correct. I didn’t just make it up. 

So the A & R guy flies out from LA to visit the studio while the band is cutting tracks. He stays a few days a goes back to tell the label how brilliant the band’s new tracks are….. and sure enough 18 months later the costs of the flight, the hotel he stayed out, the car he rented (and boy was it a nice one), the meals he ate and yes, that nice meal he treated the band to… they are all deducted from the band’s cut.

Here’s another possibility. The record starts to get some college airplay in the Northwest on a half-dozen college stations. The head of College promotions jumps right on this trend. He jets out to Seattle, rents a car, gets a pocketful of cash and starts to make the rounds of the radio stations. he hires as many of the music directors and program directors for these radio stations.  He pays them to put up flyers for the band on campus and more importantly on other campuses and to talk to other DJs and staff at other college stations about how they too could have this cool, lucrative job putting up flyers. As a result the band’s record climbs from 36 on the Northwest college charts to #11.  This whole little exercise costs $43,000 over the course of two months. two years later the band discovers they must pay back $43,000 before they earn any money.

Here’s another angle.  The band hears about the scheme to promote the record in the Northwest and says “hey we got a better idea. Why don’t we play in Seattle and Tacoma and Portland and Vancouver!!”  So you rent a bus and gear and travel around and play all these towns and your record goes from #36 on the college charts to #1 on the college charts. The label, orgasmic over this cosmic stroke of luck decides to celebrate. They fly a third of the staff out to Seattle for a rocking celebratory show. Here it comes… you guessed it kiddies…two years later the band discovers that their tour support, the chartered plane, the hotels, the bribes they still insisted on handing out to DJs etc. are all being paid back out of the bands cut of the royalties. It all comes to a whopping $211,000. Are you starting to see the picture here?

Let me be extremely clear about this blog and this particular topic. IF A BAND SIGNS A MAJOR LABEL CONTRACT EVERY SINGLE DIME SPENT TOWARDS MAKING THE RECORD OR PROMOTING THE RECORD OR PAYING ANYONE COMES OUT OF THE BAND’S CUT!!! As a result, unless you become Bruce Springsteen you will make nothing from recording for a major label. There is only one exception to this rule. Whoever writes the songs and controls the publishing of the songs on the record may very well make some money. Since the law demands that labels pay for the use of the songs the songwriter is the only one that gets paid consistently when a record sells.

Well that’s enough for the moment. I realize that I haven’t been posting lately so I am now back in the swing of it……….

©Brad Morrison/ Billiken Media 2010

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10 thoughts on “The ultimate prize a recording contract..II….

  1. Hi,
    Do you know what the Miracle Legion/Sugurcube’s EP was called? Also, do you have any idea where I could get a copy?
    Thanks,
    Kevin

    • Hi Kevin,
      The EP was issued under the name “SugarLegion”. I’m embarassed to admit, that as I sit here in my kitchen, on this cold rainy evening, that I can’t remember the track listing….there has been so much water under the bridge since then. It came out under the Rough Trade US label (I think). As for finding it, it didn’t sell well since the battle over release delayed it for over a year. Try Ebay…………
      Thanks for asking.
      Brad

  2. Hey Brad,
    Just finished reading ALL of your posts after finding finally finding your blog. I have been looking for something like your blog since I started trying to get my band to go somewhere. I really appreciate you sharing your experience. I have been booking/managing my band, Cloud of Suns (www.cloudofsuns.com), primarily by necessity, and I have several questions for you.

    We have been playing where we can get gigs for the past 8 months or so (we are a new band, about a year since we got together now). We have written and rehearsed material, gotten together a press kit (physical and electronic (www.cloudofsuns.com/EPK.html), recorded (and properly mastered) an EP as our “calling card” and we have been playing shows frequently to hone and polish our live show. I have tried to get the papers and blogs to review our album, and we have gotten a few quotes, sold a few CDs. We have T-shirts, all the social media that we use to stay connected with fans. And just to be clear, we get a lot of really good feedback (such as, “I was expecting just a bar band, but you guys are really good!” which we hear at every show). Our friends come see us, and bring their friends the next time, ect., so our fan base is growing.

    We are out here in the over saturated, Portland, OR music scene, and have just recently started discussing regional shows. The indie/folk pop rock genre is huge here, but we are a psychedelic hard rock band. So far we can only get gigs at the lowest (read no booking standards) places in town. This poses several problems for us. We have a modest draw, but being on a bill with bands that a) have NO draw means we don’t make any money (all these clubs take some fee off the door, and the bands split the rest of the door according to draw, or equally) and don’t get to play for new ears and b) are not very good (and boy, do we hear about from our fans, “You guys need to play with better bands”). Yeah, we try, but it seems like we need to open for better acts, but those gigs have been elusive.

    I have read some of your posts about getting buzz, makes sense, and we are working on some strategies to do that. We have tried to partner with the better bands similar in genre to us, but we have gotten anywhere with that yet. We have taken on a trial period with a local booker in the hopes of getting better gigs, but the jury is still out there. We also try and do non-traditional venues, basically anywhere we can play for people that are in our target audience. It is somewhat disheartening to hear from the people running these venues that we are “too good” to be playing at their venues, time after time. I was just told this again on Saturday night at our first out of town gig, “you guys are too good to be playing here.”

    So what to do? Keep doing crappy gigs where we get jerked around and the door guys under count us and everything is a hassle? Play fewer shows, starve our market some? Hit the road? Just keep trying and be patient? What else can we do to get better gigs? We try to get any gig that would put us in front of our target audience. It seems we are stuck in a catch 22.

    Second, I was wondering if you could post something about negotiating over e-mail verses the phone. Lots of venues these days will only communicate with you via e-mail, and it would seem that negotiating strategy would need to change some. I would much rather talk on the phone, because it is more efficient, but I don’t always get that option.

    Also, I was wondering if you could talk about why people sign major label deals. My understanding is that you get screwed, royally, all around (I mean, if the artists has to pay for the production and promotion of an album, and give up some control, why not just do it yourself on a smaller scale and build it up?). I have done enough of the recording and promoting myself to know it is a lot of work, and many avenues are not open to independent artists that could be open to an artist when signed to a label. So how about a post about indie labels, and when signing with someone is a good idea and when you are better off staying independent.

    Anyway, thanks so much for writing this blog, and keep up the good work. If you want to rip up our EP, feel free. I would appreciate the feedback from someone with your experience.

    • Hi Tim and hello to Cloud of Suns,
      Thanks for the lengthy question. Wow you’ve read my whole blog. I’m impressed. I figured there had to be one or two of you out there. I’ll take the compliment and move on. Your post is extremely long and I’ll try to cover most of it.
      First, it sounds like you are doing the correct things. Even your frustration is a sign that you are on the right path. Keep the faith you are doing the correct things. Patience in effort and energy in action. I guess that’s enough Kung Fu philosophy.
      You need to both get out of town and STOP PLAYING IN PORTLAND. Save your draw for 4-6 shows a year in Portland. You friends and their friends have gotten used to the social outing of going to see you. That’s key. Leave them wanting more, leave them asking for more shows. You have saturated the Portland market at the level you are playing. Don’t flog that horse. Cut back on your shows and push on one path only with the local promoters “We want the big show!” Also read my blogs about putting on an all ages show. I cover all of the basics about being your own promoter. If you can plan and run your own show locally. It will scare the shit out of the local promoters. Their clubs will be dead that night and they will all, collectively, have the same revelation. It’s a better world when “cloud of suns” headlines my venue. Be careful to make sure that you really have reached the point of saturating your market. Don’t fool yourself into believing it if it isn’t true.

      Next step. Get out of town. Play some shit gigs in other regions. The shows themselves don’t matter. What matters is going to the city and making friends and contacts.(and meeting women) Ask the promoters what local bands draw best. Get their contact info and offer them opening slots for your shows. This is an ancient technique. I am certain ancient troubadours did the same thing as they wandered around middle aged Europe. Here is another place where you need to be patient. During the phase where the band grows to a regional band your number of gigs will drop. This is normal.

      Now, let me turn to PR. It is time to figure out the way to pull a PR stunt. Hmm… let me think…. Cloud of Suns….Hmmm….Ok I will think out loud here, it won’t be pretty and won’t be the answer but I’m trying to give you some insight to the process…..Hmmm clouds….global warming…maybe something there , it’s currently becoming unhip…. Suns…hmm…sons….Paternity? Hmm… maybe something there… OK got one….”Local band denies paternity rumors!” release reads “local band cloud of suns recently released their new album entitled “We’ve come for your women!” . Lead guitarist Romeo Sun has stated publically that the rumors that the band has collectively fathered 67 illegitimate children are completely untrue. Romeo went on to state that although band members have numerous relationships it is likely that this number is overstated. Further, criticism that the bands “female followers” have created a burden on the county social services system are completely unfair.” This kind of thinking is how PR is done. PR is when you create a story. It’s best of it’s true but it doesn’t really matter. Frank Zappa made a career by being outrageous. If you are not willing to be laughed at, or talked about or criticized then maybe you don’t want to be a star. In short. Get ON THE NEWS! Get in the paper! Piss off the parents! You’re a rock star damnit!

      Next question…whew! this is a long post…hang in there with me….. Negotiation. Email is essentially the same as the phone. It just takes longer and more patience. Let say you contact the promoter he says “great! I got a gig on the 17th of May And I can pay you $12 dollars this time!!! ” You write back “Great joke. Our minimum is $150 and our last show brought in 86 people on a Tuesday when the weather sucked. ” His reply ” So I’ve penciled you in for the 17th and sorry I can only do $12 but if you draw 200 people I’ll toss in a little more” You right back “Gee it seems that we may now have a conflict over the 17th. It looks like we are setting up a show at the American Legion Hall on that date with the bass player of the Foo Fighters new band “Giszmo Whatever”. The key here is to talk about putting on a competing show on a date that is key to him. Promoters usually have one show each month which is the key to him making money that month. His greatest fear is unknown events that fuck him up. Promoters are people that understand power. Get to know how power works (read Greene’s 48 laws of power) Always remember to approach him/her with something for them. example email subject “Info on the Palace’s September gross”. What the hell is that? In this fictional example you are offering to pass on information on how much money his competitor is grossing at the door. Of course you need to use some networking to find out things he might want to know. Don’t just become a snitch for him that will turn bad quickly, instead look for a way to open the door to a promoter in a creative way THAT HELPS HIM OUT. He’s not stupid. After you have found a way to offer him something of value a few times ask for a gig of value in return.

      OK I have finally made it to your last points. Why do bands sign to major labels? Well the label has clout and power and money. Most of Rock history is a series of major label bands making it big. Further, everyone likes to believe that they are smarter and won’t get screwed. If I flew into Portland, saw your show, came backstage and told you I was giving you a deal with Warners for 500,000 a record I bet I can talk you into signing it. This is slowly changing. Artists like Fugazi and Ani Difranco have started to break the system. 20 years from now the labels will be different and the system will be different but there will still be companies at the top that make major money creating stars. And at that time the dirty little secret will be the same it is today…. they don’t create stars they poach them from the cream rising to the top of underground music…………………….
      Thanks again for the questions
      Brad
      PS In 1990 I signed a band from Tucson called Black Sun Ensemble. The band was led by two people Jesus and Thor. That’s right Jesus and Thor. Jesus the guitarist, was a “mexicano barrio kid, born poor with no shoes on his feet. He’s notorious for drug fueled periods of madness where he disappears into the desert. His partner the lead singer Thor, is the king of the local gypsies and reputedly has over 40 illegitimate children.” Old trick ya see…………………..

  3. Hi Brad, first of all thanks for the blog, its great! Just a quick question. I have just recorded a CD, its already mastered and ready for replicating, the thing is that the artwork has a big chance to get censored by retailers (you can check it out in my myspace, http://www.myspace.com/danielberges is that drawing of a girl masturbating). My question is what do you think about that, my band is not famous so I don’t care to be banned at Walmart because I’m not going to sell anything there, but do you think I can get problems promoting/selling the album because of the cover? Or it can be a big chance to be ‘talk about’? I am not from the US, so I don’t really know how thinks work here in terms of ‘permission’. Any opinion or comment?
    Thanks

    Dan

    • Dan,
      Go ahead and use the cover that will get censored. Yes, it will get your band talked about. If it does sell to one of the big chain stores then you can put a big sticker that says “Censored by Corporate Scum!!” over the picture. Either way it will help get you noticed. It is thinking the way that you are thinking that will get your band ahead. Best of luck……………..

    • Eric,
      Sorry but your question is a little vague. The real point is getting to the top. Getting screwed is just part of the experience. If you worry too much about getting screwed, that is to say, worry so much that you don’t take chances and don’t push hard enough to get to the top, then your priorities are all messed up. Everyone that makes it and becomes famous gets screwed in one way or the other. Grow up, accept it and use your fame and fortune to make great albums. That is the part that really counts……………….

  4. Hi, my name is shilo im in a metal band called soulrot. I live in utah witch is probably the most moral state in the US. Witch is making it hard to find a vocalist and bass player. I was wondering if you could get me in touch with a manager who could help us?

    • Hi Shilo,
      I’m sorry to hear about your singer bassist problems. Unfortunately I can’t help you find a manager or band members. How about stealing them from another band?
      Regards
      Brad

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