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."
Re:Yet I still pay for CDs... (Score:5, Interesting)
Re:Anyone who is stupid enough to work with the RI (Score:3, Interesting)
She even has one of those "360 degree" contracts.
Let's see what happens to her.
Re:Anyone who is stupid enough to work with the RI (Score:5, Interesting)
Re:So question (Score:3, Interesting)
In a grocery store that would be called a loss leader. Have something that you make no money on, but build up enough interest in something else that they'll buy it for enough money to make up the loss and then some.
In this case, you basically give away the CDs and the RIAA screws them over. But in the meantime, they're making a shedload of money from touring.
I don't want to deny the RIAA is screwing them over, but without the RIAA, they wouldn't be on tour to make the money.
Me, I'll just keep paying for a Magnatune subscription. Not all of their artists tour this area.
Hear, hear! (Score:5, Interesting)
He said that, every time he'd be at a cocktail party and someone would find out he's a record producer, they'd always ask "So, if I made an album that went gold, how much money would I get?". He proceeds to go through the cost accounting (which he describes earlier in the book) to arrive at some number like a 4-piece band making a gold record results in each member getting something like $23,000 or something. Don't quit your day job, fellas!
Also, back when Napster was really rolling, and the RIAA was freaking out, I recall reading an article by Janice Ian (a 70's 3-hit wonder) saying that she never got a statement from her record company that didn't say that she owed them money.
If you watch the RIAA's behavior carefully, you'll see that they're not really about attacking "piracy". They're trying to prevent any kind of delivery mechanism which takes them out of the loop... that connects the artist directly with the listener. "Disintermediation" is the big word for it. I recall several years back, there was a website (I forget it's name) where unsigned bands could post their songs as mp3's and they'd tag them with what known bands they thought they sounded like. So, you could go on there and search for "Dead Milkmen" and you could find all of these undiscovered bands who were influenced by them.
...
... and, of course, the RIAA figured out how to sue them into oblivion, even though they weren't really infringing on copyrighted material.
Cribs is fake (Score:2, Interesting)
A Florida coupled sued the show for using their rented home as a set for a Cribs episode without permission.
They rent a property, borrow props and cars, film it, the rapper, does his thing and presents his false front, but the money isn't there. Even multi-platinum selling artists can't pay the $5 - $10 million needed to buy the mansion they pretend to own.
Re:Question.. (Score:4, Interesting)
If they (performers, pop "music") do not make money, how is it that so many of them are obscenely rich?
The cash that gets thrown around by new acts is all part of the front money that needs to be repaid. Imagine if you were given a loan of your annual salary for the next couple of years right now and then need to work it off plus loan shark level interest and fees.
Re:Um, um... (Score:5, Interesting)
"Own your own stuff" (Score:3, Interesting)
"Own your own stuff" - Joan Jett
Jett had, and has, her own record label. Worked out very well.
Also notable: Mick Jagger, London School of Economics '63.
Re:Anyone who is stupid enough to work with the RI (Score:2, Interesting)
And get a better manager/lawyer (Score:3, Interesting)
That article talks about the money the band pays their manager and lawyer. It's the *job* of the manager and lawyer to work in their bands best interest. Why are the managers and lawyers allowing their bands to enter into such horrible contracts?
The article, if that's true about how financing in the music industry works, is basically showing the record company 'double-dipping'. I mean, if they are just making me loans, fine, I'll take out a loan, and will repay it. But in that situation, I wouldn't give them the copyright (maybe use it as collateral to secure the loan), and I wouldn't give them royalties. I would pay back the loan, with interest.
If I'm giving them a cut of the royalties, then I shouldn't have to pay back the money they spend to produce and market the album. That, after all, is why I would be giving them a cut of the revenues. But to make every expense into a 'loan' which has to be repayed, then taking the lion's share of the revenue, that's just wrong.
Seriously, who signs such a contract? Who advises their client to sign such a contract? What are the lawyers getting paid for, anyhow?
Well for all that (Score:4, Interesting)
I suggest you talk to Stardock Systems. They are an indy software developer. Because of problems regarding publishing, they self published their last title, Galactic Civilizations 2. You can find it in just about every major game seller (though on the budget rack now because it is like 5 years old now). They are doing so again with their next title, Elemental. For that matter, they've published two titles for other companies, Sins of a Solar Empire by Ironclad and Demigod by Gas Powered Games. If this keeps up, they may not be an indy studio in 20 years.
No big development or advertising budget, no attachment to a major publisher, just some guys from Michigan that can make a good game and get it out there. You can ask them who did the distribution, they'll tell you (they posted it I just forgot who it was).
Or, if videogames themselves don't work for you, how about Red vs Blue? Popular animated show made using the Halo engine. Started off as a few friends who like video games and cinema putting out products using a few Xboxes in the middle of the night while working real jobs and some donated web space. Now? You can buy the videos on Xbox live and the DVDs in Best Buy. They have their own company, with health insurance and everything. It is basically their full time jobs. The make money on t-shirts, DVDs, and people who subscribe to their site.
You are not required to work through the established system, unless you want to. Doesn't mean there isn't more work or risk to be taken on, but then there is more reward too. If you are lazy and just want to sign on the dotted line, well ok but then I don't really want to hear it from you.
Also there are intermediate options. Go to cdbaby.com, they can hook you up. One of the students that used to work here has a band on there. They handle publishing and distribution for you, and take a very reasonable cut. No, they won't get you in Best Buy. However they also won't fuck you. Also, if that is important to you to be in stores, well then look in to publishing and distributing agencies. They exist. Like I said, ask Stardock who they used. Probably videogames driven, but they might do music too.
If you want to make it big, then consider that some real effort may be needed on your part. If you look at most of the super rich business types out there, it was a combination of luck and a lot of hard work. Gates, Jobs, Buffet, Rockefeller, and so on, all had to do a shitload of work to get where they are. For all of them, there are countless more who worked had and got rich, but not so rich that we've heard about them, and still more who worked hard and just had a regular life. So I don't see why you should expect music to be any different.
Re:Anyone who is stupid enough to work with the RI (Score:2, Interesting)
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.
From what I've been told by a few insiders, except in very rare circumstances, the big labels won't even talk to new musicians these days until they've already "made it."
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.
The record labels do, though! If you've managed to sell, say, 30,000 albums, managing successful tours, and getting airplay on the indie stations, they'll be all over making you into the "next big thing." (Direct quote from some A&R flack: "I don't want to talk to you until you don't need me."
They're still pushing "360 deals" too...where they wind up controlling every aspect of your image in exchange for a cut of merchandising and ticket sells. They consider it a win/win.
Re:Anyone who is stupid enough to work with the RI (Score:3, Interesting)
You dont need your record in the stores. Nobody buys music they never heard of in CD form from Walmart.
Airplay? Get off your arse and get it out to small stations. you will NEVER get airplay on the clearchannel stations unless you pay them to play it. But if you get airplay on all the smaller stations that are dying for something the big channels dont have... you spread like wildfire.
Get someone with real talent to shoot a video, get people to shoot "bootleg" videos at any concerts you play, get it on youtube and elsewhere. Get it out there. MARKET MARKET MARKET....
Distribution and self publishing is easier now than ever before.. Only really lazy people say it does not work.
Re:Albini's story redux (Score:5, Interesting)
look at the incentives here:
it gets to the point that you are about to be paid out $10,000
the executive decides to spend $10,000 on marketing - knowing that it will only generate an additional $5000 of sales
however, the $10,000 is fully deductable - so it comes out of your payout.
Of the new $5000, the executive will see 63% - so he is $3150 better off
However your $10,000 payout has been reduced to 13% of the new $5000 sales which is $650
this means that it is almost always in the interest of the exec to piss your cut away on marketing - even if it is obviously ineffectual marketing.
Donald Passman (Score:5, Interesting)
Re:Anyone who is stupid enough to work with the RI (Score:3, Interesting)
Re:Yet I still pay for CDs... (Score:5, Interesting)
Bands can't even trust indie labels. They always have to check their contracts and make sure they can get our of it if they have to. One friend's band got in with a manager they liked on an indie label, worked out some good deals, and everything was looking great. The indie label had another band a major label wanted so they just bought out the indie for the one band. My friends band were left with an album finished, already pressed, and sitting in warehouse, but it wasn't worth the big label's time to even talk to the band about selling those pressed disks to them, let alone going ahead and distributing them. So there they were, their best album to date, finished and ready to go, they can't get it, they can't sell it, they can't produce any more of it, and it was even questionable if they could play the songs in concert because rights were now tied up by a company that would rather just kill it rather than deal with it.
Re:Um, um... (Score:4, Interesting)
Well, what's the song? Did we hear it?
Re:Anyone who is stupid enough to work with the RI (Score:3, Interesting)
Re:Hear, hear! (Score:4, Interesting)
Also, back when Napster was really rolling, and the RIAA was freaking out, I recall reading an article by Janice Ian (a 70's 3-hit wonder) saying that she never got a statement from her record company that didn't say that she owed them money.
If you watch the RIAA's behavior carefully, you'll see that they're not really about attacking "piracy". They're trying to prevent any kind of delivery mechanism which takes them out of the loop... that connects the artist directly with the listener. "Disintermediation" is the big word for it.
Yes, I read Janis' article too. Search for "The Internet Debacle" to find it. She now sells CDs direct from her web site, and tours.
Fifteen years ago I lived upstairs from a guy who managed a jazz orchestra (and played drums). He put it in a nutshell for me. "There's a minimal price people will pay for just good music. If you want to make more than that, you have to be famous." He knew the big labels had the power to make his band famous, and that there were other bands out there who could play good music too. But he had more of a business head on his shoulders than 99% of musicians, so he didn't sell his band down the river in the hope of being made famous. And I learned that a band that doesn't have a big contract and isn't famous can sound just as good as one that has and is.
The fundamental problem was pointed out two or three years ago by some big dude from Yahoo!. As he put it to a room full of RIAA suits, the physics have changed. Disintermediation can no longer be prevented. Bands can get famous on YouTube. The artificial scarcity that RIAA exploited no longer exists, because it was a scarcity of information: there were ten thousand bands out there and the only way for me to learn which ones I would like was via some channel that RIAA controlled. Now there are more channels for information than anyone can control, this side of Beijing.
All the more reason for RIAA to screw even more out of the few artists they still have a legal clamp on. They now try to get artists to sign a so-called 360 contract, where the company takes the revenues from touring and gives the artist a few crumbs of those. And of course some artists fall for it.
What's left for the RIAA? People who don't care whether the music they're listening to is good music as long it's famous, as long as it's what the people around them are listening to. In a word: teenagers.
Re:Anyone who is stupid enough to work with the RI (Score:5, Interesting)
More and more, the big labels are nothing but factories for wholly-fabricated "artists" like Lady Gaga or the finalists of American Idol.
How exactly was Lady Gaga "wholly-fabricated" by big labels? Unlike many other pop stars, she writes all of her own songs and, by most accounts, earned her success through the merit of own performance. She admits that her music is pop but challenges the idea that there's anything wrong with that. Before signing with the behemoth Interscope, she signed with the small, no-name label created by Akon. Sure, her music sounds like it was made in an electronic pop-factory but that doesn't necessarily reflect on her personally.
And as for American Idol, that's the whole point. It's a show about taking someone out of complete obscurity and making them a star, and people love it. There's no skulduggery going on here...it's a case of people asking the industry to fabricate a star for them and then getting exactly what they asked for.
Justi curious (Score:3, Interesting)
Honestly, I suscribed for a premium account two weeks ago, and I love it, but even if it's the best way to enjoy legally copyrighted music without spending all the money I have on every single track of the 80 000 [lastfm.fr] ones I listen to, I'm still not sure it's the best way to pay artists back.
I know the more people use and buy premium accounts on spotify, the bigger the share that spotify gives to the "artists" (in reality it's given to the Labels...), but there is no proof that those Labels give a fair amount to the artists.
So, what do you guys think of the Spotify option ?
Re:Anyone who is stupid enough to work with the RI (Score:3, Interesting)
More and more, the big labels are nothing but factories for wholly-fabricated "artists" like Lady Gaga or the finalists of American Idol. They simply skip over dealing with "artists" by fabricating their own. And this does not only apply to pop trash like Gaga. A lot of what's passing for rock and heavy metal is just Archies-style fabricated groups made up of out-of-work actors who basically lipsync and pretend to play their instruments while backing tracks play in concert.
This has always been a complaint, and it's been that way for longer than I've been alive. The music industry has been dirty for over a century.
The thing about these 'music factories' and production companies is that now they are really good, a lot better than most artists. Look at this piece of pop trash, [youtube.com] Can't be Tamed by Miley Cyrus. Start with the video, it's top level polished Hollywood quality. Cynical yes, but top level. How often do you see wings like that? The backup dancers are good, better than Miley, but the camera work and directing helps compensate for the the fact that she can't dance. Listen to the orchestration. It has an interesting beat, interesting sub-themes, and it's solid. The sound engineering is a work of art. People who were working on that knew what they were doing.
In fact, the weakness in the composition is the melody, lyrics, and overall organization, and these were the parts written by Miley. She is absolutely the weakest link in the entire piece. Pretty near anyone could come out with an awesome record if they had that production company. Call it pop trash if you want, but pay attention to the fact that there's some very good work going on.
Incidentally, that particular song makes Lady Gaga look good. In contrast, she is usually a strength in her songs, not something that needs to be compensated for.
Re:Anyone who is stupid enough to work with the RI (Score:3, Interesting)
her persona may not be fabricated, and people may disagree on the quality of her work. That being said her music is way overplayed. Is it overplayed because people want to hear it so much, or because the record companies promote it so much, or because the way top 40 works?
I personally have no desire to purchase an album if the song is guaranteed to be heard on the radio in the next 5-10 minutes.
Re:Anyone who is stupid enough to work with the RI (Score:4, Interesting)
Did you hear anything about Lady Gaga's work before her first album?
She was an art student from Tisch who was groomed by an Interscope farm label for eventual Madonna-style splash. Her past "DJ-ing" was basically done during her grooming by Interscope. She was picked on the basis of her "conceptual art" projects at Tisch.
I know her vocal coach from her Interscope days. She was turned from a DJ and club kid into a "singer" during those days.
Rock was not "like that for a while," no (Score:1, Interesting)
That's not true, rock and roll was never some synthetic, plastic marketing gimick like these Nickelodeon-created fantasies, rock sprang from the black ghettos, from rythem and blues, and an honest rebellion against the stale hypocricy of swing and jazz.
And "rap" was created as a *political* form of protest, it was never intended to be liked in any context other than a rebellion by blacks against the honkey white oppression.
When "Three The Hard Way" came out in 1974, that was the start of the *political* emergence of "rap" as virtually a weaponized version of non-music, it was specifically intended to not be "music as the white man knows it."