(All You Need to Know About the Music Business)

These are the people with the "ears" who find and nurture new talent

A & R

The people who get your records into stores and on digital sites

Sales

The people who cover advertising, publicity, album cover artwork, promotional videos, and merchandise

Marketing

The people who get records on the radio

Promotion

The people who try to get old/new recordings into movies, TV, commercials

Catalog/Synch

The people who cover manufacturing, cover printing, assembly, and shipping CDs to distributors

Production

The people who compute your royalties and keep track of company income/expenses

Finance

How many major distributors are left after years of consolidation?

3 - Sony, Universal, WEA

How is a true independent record company different from a major-distributed independent record company?

A true independent is not owned by a major label, but rather is financed by its owners/investors

Sony

Columbia, Epic, RCA Records

Universal

Universal/Republic, Interscope, Capitol, Island, Def Jam

WEA

Warner Bros, Elektra, Atlantic

True Independent

XL, Merge, Sub Pop, Epitaph, Rounder Records, Victory

The "original tape recording" made in the studio is called a ...? Is there a second meaning?

Master. The word master also means a recording of one particular song

What is SRLP and PPD?

Suggested retail list price

Published price to dealers

What does a "point" refer to?

Each royalty percentage is known as a point (10% royalty = 10 points)

Promotion CDs are CDs given to radio stations for free to promote the music, so they yield what kind of royalty?

None

When a company holds back some of the money due the artist because not all the records may sell, that holdback is called a

Reserve

What does cross-collateralization mean?

Connected albums to gain recoupment of earnings

What is the relationship between recoupment and the advance?

Money to recover advances (company portion) is recoupment

There is a separate marketing department for older product called

Catalog product

The major record companies' records are all distributed by

Major distributors

The true independents distribute their records through

Independent distributors

Today, most of the CDs in the United States are sold by Amazon and

The big-box retailers

Biggest retailer of music in the United States

iTunes

Music on demand to your mobile phone, computer, etc. and is the fastest growing area of the business (other than vinyl)

Streaming

Information that tells the user the name of the song, artist, album, who to pay, etc.

Metadata

What does SKU stand for

Shop Keeping Unit. It's like a bar code for each version of a master to keep track of who gets paid

A record with sound and visual images

Audiovisual

EQ'ing stands for

Equalizing. The bass, midrange and treble are each adjusted to the right level so that none of them overpower the other

These individual recordings are also called

Cuts because of the historical fact that each selection was made by cutting grooves into vinyl

The artist royalty is a percentage of the

Wholesale price

What does BPD stand for?

Base price to dealers

Companies give away free goods, also known as

Special campaign free goods

Physical records are sold on a

100% return privilege

Packaging charge is also called

Packaging deduction or container charge

Those "free" records were known as

phony free goods

The amount of unrecouped monies is called your

Deficit or red position since this is the amount that has to be recovered before you get paid

Once you recoup, you are said to be

In the black

The minimum amount a union requires everyone to pay its members

Union scale

Members of your team (in the beginning)

Personal Manager
Attorney
Business Manager
Agent (booking agent)

Pre-team strategies

Record a demo
Perform in public
Build a fanbase
Network

Personal Manager tasks

-Helps with major business decisions
-Helps with creative process
-Promotes your career
-Assembles/leads professional team
-Helps coordinate concert tours
-Lobbies record company on your behalf
-Provides a buffer between you and your demands coming from outside world

Personal manager commission rate

15-20% of gross earnings

Business manager tasks

The person on your team who handles all your money

(caution: check references, beware sharks)

Attorney tasks

-Heavily involved in structuring deals
-Can have large client lists and many connections
-Sometimes have clout
-Must be competent

Agent tasks

-book live performances/venues

-typically work for an agency

(ex: CAA, Billions, High Road Touring, William Morris Agency, etc)

Record Company tasks

-Advance money for recording and marketing
-Market and promote your music
-Distribute your music
-Provide tour support
-Provide publishing support
-Handle finances of recorded music revenue

Royalties

-Payments made to the artist by the record label
-Usually in terms of percentage or points
-Record labels keep the vast majority

Royalty Computation

Artist royalty is a percentage of the wholesale price - published price to dealers (PPD)

Do artists get paid on free/promotional copies of their music?

No

Return Privilege

A practice that allows retailers the right to return unsold goods (recordings) to the label for a refund.

Advance

amount of money paid to an artist by a label at the time of signing

-Label keeps artists royalties until

advance is paid back

The process of keeping the money to cover an advance is called

Recoupment

Cross-Collateralization

The use of an asset that is not the subject of a loan to collateralize that loan.

clause in a record contract making costs accrued on all recordings recoupable out of royalties on all recordings;

the clause makes it hard for an artist's royalty account to ever be in the black

100k or less records sold
13-16% royalty rate

New Level Artist

100k-500k records sold
15-18% royalty rate

Mid Level Artist

500k+ records sold
18-20% royalty rate

Superstar

Escalation

Negotiating an escalating royalty rate at higher sales plateaus (250k, 500k, etc)

"All-in"

The producer/mixer royalty is paid out of the artist royalty

NEVER good

$0-$200,000 advance

New Level Artist

(depending on indie or major label)

$350,000-$750,000 advance

Mid Level Artists

$1,000,000+ advance

Superstars

360 Deals

record company gets a share of the total pie of artist's earnings

touring, songwriting, merchandising, fan clubs, sponsorship, motion picture acting, etc

Producer Royalties

3-5%
Taken from artists royalties

Mixers royalties

Typically paid a flat fee
sometimes get a percentage with clout (2% or less)

Major Distributed Independent

Make deals with a major label to performa all functions except recording the records

-Little or no staff
-Sign artists
-Find talent
-Push distribution companies to promote

True Independent

Not owned by a major label, but rather is financed by its owners and/or investors

-Use independent distributors

(XL Recordings, Sub Pop)

sells 500,000 U.S units

Gold certification

sells 1,000,000 U.S. units

Platinum certification

sells 2,000,000+ U.S. units

Multi-Platinum certification

Commercial Satisfactory

Record company only has to take recordings it believes will sell

-Can send you back to the studio/terminate deal

Technical Satisfactory

Recordings have to be well-made to a standard or match style/quality of prior recordings

Demo Deal

A type of record label deal where the record company spends a modest amount of money for the artist to go into a studio and record demos. The demo will determine if the artist gets a full-blown contract.

-Must be paid back

Development Deal

An introductory contract offered to a recording artist or songwriter that allows the artist time to prepare before undertaking a larger contractual creative endeavor.

-Negotiates # of albums, royalties, advances before shelling out the big bucks

First Refusal

If offered a better deal from a different company, you must go to your current one first and give them the opportunity to make a better offer