RIAA Accounting — How Labels Avoid Paying Musicians 495
An anonymous reader writes "Last week, we discussed Techdirt's tale of 'Hollywood Accounting,' which showed how movies like Harry Potter still officially 'lose' money with some simple accounting tricks. This week Techdirt is taking on RIAA accounting and demonstrating why most musicians — even multi-platinum recording stars — may never see a dime from their album sales. '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.' The average musician on a major record deal 'gets' about $23 per $1,000 made... and that $23 still never gets paid because it has to go to 'recouping' the loan... even though the label is taking $630 out of that $1,000, and not counting it towards the advance. Remember all this the next time a record label says they're trying to protect musicians' revenue."
Anyone who is stupid enough to work with the RIAA (Score:3, Insightful)
New Slogain... (Score:1, Insightful)
Download Music, Buy Tickets, Save Musicians
Comment removed (Score:5, Insightful)
Re:Anyone who is stupid enough to work with the RI (Score:5, Insightful)
Um, um... (Score:5, Insightful)
"Remember all this the next time a record label says they're trying to protect musicians' revenue."
I haven't thought that labels were trying to protect musicians' ANYTHING since 1972. And it wasn't true before that.
So question (Score:3, Insightful)
Re:So question (Score:3, Insightful)
It's not their money, it's the label's.
The labels have to show a few musicians that at least appear to be rich. Otherwise no one would ever sign with them.
MTV Cribs (Score:5, Insightful)
I think everything on that TV show is rented. I cannot believe that skateboarding hot-kid-of-the-month can afford a McMansion, 18 Escalades, a room full of arcade machines, yadda-yadda, from 2 or 3 endoresement deals when he will be old and stale before the year is out.
Either that, or the repo men have a heck of a time 6 months down the road.
That TV show, just like *everything* on TV is totally fake.
It's just not possible given the realities of these situations.
Re:Anyone who is stupid enough to work with the RI (Score:4, Insightful)
Can you press a nice looking album in good numbers?
No, but you sure don't need the RIAA for that.
Can you distribute?
That's the real trick, getting your music distributed in stores.
Can you promote them?
Yes, and even if I can't a publicity firm is a lot cheaper than the RIAA.
And Itunes? Well that is a product that attracts a certain kind of public. Not necessary a public that can see the difference between good music and a fucking promotion stunt... Hell, they buy their music on a medium where the Beatles have no place.......
That's just an inane comment. iTunes is a store. If some company decides for whatever reason they don't want to sell in that store, fine, but that doesn't mean "it has no place". You might as well argue "The Electric Fetus" record store is a store where Jaime Thietten has no place since she won't let a store with "fetus" in the name sell her music.
...would you really buy music (as a real lover) in a store that doesn't have this part musichistory?
Yes. Like 99.9% of people, while I can't buy the Beatles albums there, I'm not going to let a boycott by one copyright holder over a trademark issue prevent me from doing business with them. That's just dumb.
It's easy said mate, but in the real world, those guys have all the things you need. And they are willing to sell it.
Wait, that's your argument. Well, the iTunes store is out because the Beetles catalog isn't there so I guess people have to be ripped off by the RIAA? Times are changing. There are numerous indie labels that will share the profits, print the music, and put your music in the iTunes store along with other places. The RIAA's strength has been in locking down the distribution channels and promotional channels (radio) but with the internet here, those methods are starting to fail. There are a lot of better ways for real musicians to make money than try to get a deal with an RIAA label.
And they think consumers are theives? (Score:4, Insightful)
Re:Anyone who is stupid enough to work with the RI (Score:5, Insightful)
radio is becoming increasingly irrelevant thanks to clearchannel...
Re:Anyone who is stupid enough to work with the RI (Score:5, Insightful)
Hell, they buy their music on a medium where the Beatles have no place....... not that I am that big of a fan, but would you really buy music (as a real lover) in a store that doesn't have this part musichistory?
So you're saying that just because the iTunes store doesn't have The Beatles, that people shouldn't buy from there, or if they do, they aren't real music lovers? I guess if you had to get all of your music from a single source, and you needed to have The Beatles, then iTunes wouldn't be for you, but iTunes has tons of stuff that you can't find in any brick and mortar store, and even a lot that Amazon doesn't have. Any real music lover wouldn't limit themselves by not shopping at a store simply because they didn't have one artist. If they did that, they wouldn't shop anywhere, as no store has every artist.
Re:Anyone who is stupid enough to work with the RI (Score:5, Insightful)
Re:Anyone who is stupid enough to work with the RI (Score:4, Insightful)
How many bands get airtime at all? When I listen to the radio, it's the same handful of songs playing over and over and over. Any small band who signs with a RIAA label hoping to get big might as well sell their instruments and buy lottery tickets. They've got about the same chances of striking it rich.
So how are "artists" so ultra-rich? (Score:2, Insightful)
Even rappers, who do nothing more than chant to a monotonous beat, live in multi-million dollar estates.
If no-talent street thugs make that kind of money, how bad could the situation be?
Re:Anyone who is stupid enough to work with the RI (Score:3, Insightful)
That is easy said. But I happen to make one part of my income with music... Can you press a nice looking album in good numbers? Can you distribute? Can you promote them?
No, but the point of doing all that is to get people to pay you to listen to your music... Why would you get the RIAA to do it when people won't pay you to listen to it, but pay the RIAA instead?
Re:Anyone who is stupid enough to work with the RI (Score:5, Insightful)
Yeah, just like anyone who doesn't take the time to learn self-defense courses deserves to get beat up!
Listen, some of us may know what kind of deceitful manipulative wankers these guys are, but the general public is woefully unaware at just how underhanded the entertainment industries can be. We're talking about industries that know how to manipulate audiences and manufacture appeal among the masses... They know a thing or two about promoting images, including their own.
While I do wish more artists were better informed about what type of deal with the Devil they were making, but it's no excuse for how they get screwed over.
This whole scene is a mess. Big Labels have way too much control of what music people actually get exposed to, and the chances of making it anywhere without them are pretty slim. Even with the knowledge of how badly they treat the artists, some will still succumb because they feel it's their only real choice.
It's easy to say "just start an indie band", but what matters is not how many indie bands there are out there, but how many indie music customers there are out there. It's the buyers that make the difference, not the artists, and unfortunately I have little faith in the mass of sheep.
most people have no savings (Score:4, Insightful)
Why celebrities should be so special as to take huge loans and live lavishly and then end up ahead is a question no one seems to want to ask. If I were allowed to take a multimillion dollar loan against future earnings my life might be much better. I certainly would have difficult paying it back, but even living off the investment I would have more money. Such a loan might return more in investment than the average income
So record labels are loan sharks giving away money in exchange for future earnings. Some might not be able to pay back the loan. Well, boo hoo. Millions of Americans are in the same boat, with things such as pay day loans, but don't have the life style that these guys do. It is why people see how much Madonna has, and how little they have, and find it hard to understand how listening to one of her songs without a license is stealing. Does she still have a house?
Ani DeFranco (Score:4, Insightful)
Ani DeFranco recently said The business is distilling in a way to where those who can make it by performing can make a living. As records become less a way of making money, the real performers will make it. We're all gonna be folk singers by the time this is over. [chron.com]
You could always make money in the music business if you were into the business side like Madonna and DeFranco, but we're not really sure there are enough organizations like Righteous Babe or Magnatune for ordinary people to also make a living.
Re:most people have no savings (Score:4, Insightful)
You only need $250,000 (Score:2, Insightful)
I don't think it is as easy as you make it out. Theory vs. Practice. Take a look at from NPR who interviewed OK Go!
http://www.npr.org/blogs/money/2010/04/the_tuesday_podcast.html [npr.org]
In it the lead of OK Go! says they are leaving their major labor record for thier own. Basicly the reasons you mentioned.
On the other hand, he is not sure if they could have started out as you suggested. He thinks it takes 250k to lauch a low cost, no thrills alt-indie band like his. More if you want to go mainstream. He talks about the months that it took to write, produce and polish their first albume. Quiting their part time jobs to work full time on the album. Thier first tour, upfront costs, etc.
He could not get a bank loan to lauch this because 19 out of 20 bands fail comericially. So they needed the upfront loan to lauch.
He think the internet is getting to the point where a start up band could by-pass the major labors and their label is going to try it. So, yeah, in theory you don't. In practice, for today....
Side Note: Why do Rock Bands make more money then Rap Acts? It not because of the white/black divided. It because Rock Bands then to have a uncle who is a accountant who tell them if the thier agent gets 50% and the managment company gets 50% it is not a good deal.
Let us note the differance between a good / bad idea and a good / bad execution of that idea.
Re:That's all well and good... (Score:5, Insightful)
The article (and most of the discussion) is about how the record company gives an artist a loan, makes that loan back by collecting 63% of every dollar they make on the album, while still requiring that the band pay back the full amount they loaned them out of the 37% and keeping the copyright over the works. If that's not a crooked scheme, I don't know what is.
I don't see it as a means to justify piracy, but I do see it as a means to question the RIAA when they push for draconian DRM & copyright laws in the name of "protecting the artists." Explain to me how purchasing an album legally helps the artist, if .63 for every dollar goes directly to the label, while the other 37 also goes to the label, except it's shuttled through the band's books first.
To put it in software terms, imagine a company that pays funds a group of employees to develop a software application. The company then turns around, sells it for $10mil, keeps $6.3mil off the top, and docks the pay of each of the employees that worked on it for promotion, expenses, sales channels, etc. PLUS docking them for the initial outlay of the cost of developing the software. And when it's all done, the employees don't get to keep the rights to redistribute or sell the software that they developed. Does that seem fair, even if the employees were dumb enough to sign a contract? Doesn't that seem like something labour laws were enacted to combat?
Mod parent up. (Score:5, Insightful)
Or, to quote Jayne, ... let me do the math here ... nothin' into nothin' ... carry the nothin'."
"Ten percent of nothin' is
But that's not the issue here. If you want to make money with music, become a studio musician.
The RIAA is selling the dream of fame. You give them EVERYTHING and you get a shot at fame. And, as has been stated before, they could demand that you swim through a pool of sewage and if you refused, there would be someone else right behind you who would take that offer and think you were an idiot.
Re:You only need $250,000 (Score:4, Insightful)
Fucking major citation needed. Seriously, what decade do you think it is?
Re:Anyone who is stupid enough to work with the RI (Score:4, Insightful)
> Yeah, just like anyone who doesn't take the time to learn self-defense courses deserves to get beat up!
No. If you decide to go fight in the Kumate without doing so much as taking a Karate class at the local Y then you deserve to get pummeled.
If you go chasing fame, perhaps you should get yourself a clue and figure out how to do it right.
Re:Yet I still pay for CDs... (Score:3, Insightful)
man said, "man sed". that's what.
Getting your copyrights taken away (Score:4, Insightful)
but at least they won't take your copyrights away.
Until you're accused of having accidentally copied part of some decades-old song still playing on the oldies station. It happened to George Harrison [vwh.net].
Re:You only need $250,000 (Score:4, Insightful)
Let's assume that your unsupported claim that rap acts earn less than rock acts is true.
One reason could be that, as rock was back in the day, rap is a producer-led game with various interchangeable personalities marketed as the "artist" towards certain demographics. However, their artistic contribution is minimal and they rely on the producer for the beats, the melody, the technical skills, etc. In most rap, the PRODUCER is the one making the music, and the "artist" is just a face they use to sell the product. Rock was like that for a while too.
Re:Ani DeFranco (Score:5, Insightful)
IF you did not want the easy mega money and bought into the lie that was the "rock star" then as a musician you can make money and do decently at it.
Expecting you to be coddled and have wads of cash thrown at you so you can screw off, I mean "create art" is utter bullshit.
These practices need to be criminalized (Score:3, Insightful)
It's really as simple as that. All manner of other practices have been outlawed in the past. Most of these have been associated with other forms of paid labor where [big] business had been taking unfair advantage of individuals. Making law against these unfair and unethical practices as described in the articles both current and previous would just seem reasonable and fair.
Of course there would be campaigns against this, but they certainly couldn't spin this by saying "the artists won't get paid" in this case.
Still, these descriptions of how the MPAA and RIAA are essentially using accounting tricks to avoid paying people need to be repeated often and in a way that the average person can understand. I hate to say it this way, but this is exactly what people mean when they say someone was "Jewed out of what they are owed/deserved." That expression did not come out of thin air.
"Money games" need to be brought under control. Obvious targets for control that people largely agree with are loan sharks... already illegal in most places. Also in the sites of many laws in many states are those "pay day loans" activities. The people already pretty much agree with this because they understand it and why it's bad. Now we just have to expand that existing understanding to include the MPAA/RIAA as "bad organizations" that need to be limited and controlled.
Once this gets better understood, I think it would be hard to get juries to award millions of dollars for sharing data on a P2P connection.
Re:Anyone who is stupid enough to work with the RI (Score:3, Insightful)
Wow, this is the first time I've seen this from someone else. I live in Philadelphia (A wholly owned subsidiary of Clear Channel (even the clubs!)). I stopped listening to OTA radio sometime in the 90s and never missed it since. Top 40s and oldies are great, but every station?
Re:Anyone who is stupid enough to work with the RI (Score:3, Insightful)
Once you are established, you can make better deals because people know you can deliver. Madonna isn't getting $23 out of every $1000. Beyonce is making real money. So is Shakira. The artists that can provably make money also make money for themselves.
Re:Anyone who is stupid enough to work with the RI (Score:3, Insightful)
"the chances of making it anywhere without them are pretty slim"
The chances of making it anywhere WITH them are pretty slim too. So what have you go to lose by doing it without them?
Re:Anyone who is stupid enough to work with the RI (Score:3, Insightful)
I seem to recall such a thing in my youth, but now, there is nothing worth listening to.
That's the real problem---finding new music. The last radio station I enjoyed was run by a record producer who did it for love and as a vehicle for his ego. Sometimes you'd listen and all there was would be a drunken rant, in which case---come back tomorrow. The rest of the time was a vast amount of amazingly diverse material, old and new. Most of which was OK, some of which I hated, and some of which I loved. I discovered several new bands, and old bands that were new to me. Most importantly, the music was never bland, and the guy (and his helpers) vibrated with passion.
Then he died.
They sold the station and the frequency went to a boring hard-rock-and-nothing-but-hard-rock-we-are-so-hardcore-and-cool-and-like-dude terminally boring. Bletch.
Radio nowadays is run by droids who aim to maximize the monetization of the target demographic for the benefit of the shareholders through targeted focus groups in order to minimize risk, leveraging economies of scale to squeeze out costs...
Go and listen to a live band, radio is dead. Requiescant in pace.
*Any* artist can do it (Score:4, Insightful)
I'm seeing a lot of dismissive comments in here about what labels allegedly do and how much easier it will be for an artist to do it themselves. Also a lot of hyperbole about "if they're getting ripped off, how come they're so rich"?
Let's say you are a good songwriter and performer, and you've shelled out your own money to record a handful of songs to a reasonable enough quality that a consumer would buy it if they heard it. You have no management. You have no agent. You have confidence and this product that you've agonized over. You don't want to go the major label route. You my distrust labels of any sort. You possibly have a deep dislike for the RIAA.
To get on iTunes, you used to have to be signed to a label of any sort who would represent your recordings so that iTunes would add it to their catalogue. That was from whenever iTunes started to around 2005 or so. That has been loosened somewhat so now an artist can go to CDBaby, who still require a CD of your work before doing so, and will only represent one (1) song to iTunes.
Once that song is actually in iTunes, now what? It doesn't just show up on the front page. In fact depending on which country you're from, you won't automatically show up in other countries on iTunes thanks to 100+ year-old physical distribution laws.
But what do you do? You can't simply persuade iTunes to feature your product on their service, not on your own. They have a staff who essentially act like retail used to: they "front rack" products. They do this based on the pedigree of the recordings coming in and a considerable amount of marketing push from the majors. I'm not privy to that major label process, but I can tell you there are thousands of indie artists who are having a very hard time getting any kind of meaningful exposure via iTunes without that same attention and manpower.
Tunecore - a sort of ex-major label A&R and promotions collective - will represent a completely independent artist but they still essentially only seek out artists with some kind of touring career already in place. They promote to iTunes essentially like a major label would.
It is also not that easy to sell your music - even if you're really good - without a lot of physical effort on your part. Touring. Actually pressing CD's and making them attractive and inexpensive enough that even one person would be intrigued to buy one. I don't know many people who buy CD's at all, and that includes at shows. They'd sooner buy a T-Shirt, so the artist also has to make sure they get good at shirt manufacturing. (Something few musicians assume they should know anything about.)
If your goal is just to write and perform music and possibly make a little bit of cash for fun, sure. You don't need a label. If you want to have a career at it, you may not need a label but you will need lots of other representation. Managers, agents, promoters, etc. You'll still need some financial backing to get a world class recording, and at that point you still need to answer the question of how you'll be properly exposed on iTunes. It is not nearly as easy or straightforward as many of these commenters are indicating. To have a genuine certifiably successful career? Labels are still good at that, they've just lost their taste for putting three albums worth of nurturing effort to get there. Your first album has to hit. Otherwise they will just move on. That wasn't always the case.
Comparing marketing options for a new, unknown artist who is bewildered as to what to do with their brand new music career without labels and an artist like Robert Fripp who started touring in 1966, and has released several dozen albums on a variety of internationally distributed record labels and built up a loyal audience spanning over 40 years now is (to put it mildly) apples and oranges. Same goes for Nine Inch Nails and Radiohead. Name me an artist that has succeeded on par with these artists in today's climate without a label, and I'll be interested to hear about it. Even Trent Reznor's attempt to marke
Re:Anyone who is stupid enough to work with the RI (Score:4, Insightful)
Re:You only need $250,000 (Score:3, Insightful)
A bank manager has very little ability to determine whether or not an applicant has all the requisite skills that would give them a hope of achieving success.
Whereas, a record company not only has people that can recognise which applicants have a reasonable chance of success, but also has the resources and knowledge to supplement the artist with whatever tools/skills they may be lacking.
Where a bank may look at the loan as a 1 in 20 long shot; a record company is able to reject 17 of the 'no hopers', help 2 bands break even, and make money from the 1 artist who does succeed.
So the risk to a record company is far lower than it would seem on the surface.