Wednesday, December 26, 2012

Steve Albini does the math for you...

When it comes to music and money, Steve Albini knows
what he's talking about... this just might be one of the
most important articles ever written about music -
absolutely crucial reading for anyone in a band
otherwise thinking about making living
from the sound of music...

from Maximum Rock n' Roll #133

The Problem With Music
by Steve Albini

Whenever I talk to a band who are about to sign with a major label,
I always end up thinking of them in a particular context.
I imagine a trench, about four feet wide and five feet deep,
maybe sixty yards long, filled with runny, decaying shit.

I imagine these people, some of them good friends, some of
them barely acquaintances, at one end of this trench.
I also imagine a faceless industry lackey at the other end
holding a fountain pen and a contract waiting to be signed.

Nobody can see what's printed on the contract. It's too far
away, and besides, the shit stench is making everybody's
eyes water. The lackey shouts to everybody that the first one
to swim the trench gets to sign the contract.

Everybody dives in the trench and they struggle furiously
to get to the other end. Two people arrive simultaneously
and begin wrestling furiously, clawing each other and
dunking each other under the shit.

Eventually, one of them capitulates, and there's only one
contestant left. He reaches for the pen, but the Lackey says
"Actually, I think you need a little more development.
Swim again, please. Backstroke".

And he does of course.

Every major label involved
in the hunt for new bands
now has on staff a high-profile
point man, an "A&R" rep
who can present a comfortable
face to any prospective band.
The initials stand for "Artist and Repertoire" because historically,
the A&R staff would select artists to record music that they had also selected, out of an available pool of each.

This is still the case, though not openly. These guys are universally young (about the same age as the bands being wooed), and nowadays they always have some obvious underground rock credibility flag they can wave.

Lyle Preslar, former guitarist for Minor Threat, is one of them.
Terry Tolkin, former NY independent booking agent and
assistant manager at Touch and Go is one of them.
Al Smith, former soundman at CBGB is one of them.
Mike Gitter, former editor of XXX fanzine and contributor
to Rip, Kerrang and other lowbrow rags is one of them.
Many of the annoying turds who used to staff college radio
stations are in their ranks as well.

There are several reasons A&R scouts are always young.
The explanation usually copped-to is that the scout will be
"hip to the current musical "scene." A more important reason
is that the bands will intuitively trust someone they think
is a peer, and who speaks fondly of the same formative rock
and roll experiences.

The A&R person is the first person to make contact with the band,
and as such is the first person to promise them the moon.
Who better to promise them the moon than an idealistic
young turk who expects to be calling the shots in a few years,
and who has had no previous experience with a big record

Hell, he's as naive as the band he's duping. When he tells
them no one will interfere in their creative process, he probably
even believes it. When he sits down with the band for
the first time, over a plate of angel hair pasta, he can tell them
with all sincerity that when they sign with company X,
they're really signing with him and he's on their side.

Remember that great gig I saw you at in '85? Didn't we have
a blast? By now all rock bands are wise enough to be suspicious
of music industry scum. There is a pervasive caricature
in popular culture of a portly, middle aged ex-hipster talking
a mile-a-minute, using outdated jargon and calling everybody "baby."

After meeting "their" A&R guy, the band will say to themselves
and everyone else, "He's not like a record company guy at all!
He's like one of us." And they will be right.
That's one of the reasons he was hired.

These A&R guys are not
allowed to write contracts.
What they do is present
the band with a letter of
intent, or "deal memo," which
loosely states some terms, and affirms that the band will sign with the label once a contract has been agreed on.

The spookiest thing about this harmless sounding little memo,
is that it is, for all legal purposes, a binding document.
That is, once the band signs it, they are under obligation
to conclude a deal with the label. If the label presents them
with a contract that the band don't want to sign, all the label
has to do is wait.

There are a hundred other bands willing to sign the exact
same contract, so the label is in a position of strength.
These letters never have any terms of expiration, so the band
remain bound by the deal memo until a contract is signed,
no matter how long that takes.

The band cannot sign to another label or even put out its own
material unless they are released from their agreement,
which never happens.

Make no mistake about it: once a band has signed a letter
of intent, they will either eventually sign a contract that
suits the label or they will be destroyed.

One of my favorite bands
was held hostage for the
better part of two years
by a slick young "He's not
like a label guy at all" A&R
rep, on the basis of such
a deal memo.

He had failed to come through on any of his promises (something he did
with similar effect to another well-known band
), and so the band
wanted out.
Another label expressed interest, but when the A&R man was asked
to release the band, he said he would need money or points,
or possibly both, before he would consider it.

The new label was afraid the price would be too dear, and
they said no thanks. On the cusp of making their signature
album, an excellent band, humiliated, broke up from the
stress and the many months of inactivity.

There's this band...

There's this band. They're pretty
ordinary, but they're also pretty good,
so they've attracted some attention.

They're signed to a moderate-sized "independent" label owned by a distribution company, and they have another two
albums owed to the label.

They're a little ambitious. They'd like to get signed by a major
label so they can have some security: you know, get some
good equipment, tour in a proper tour bus -- nothing fancy,
just a little reward for all the hard work.

To that end, they got a manager. He knows some of the label
guys, and he can shop their next project to all the right people.

He takes his cut, sure, but it's only 15%, and if he can get
them signed then it's money well spent. Anyways, it doesn't
cost them anything if it doesn't work.
15% of nothing isn't much!

One day an A&R scout calls them, says he's "been following
them for a while now," and when their manager mentioned
them to him,
it just "clicked."

Would they like to meet with him about the possibility
of working out a deal with his label?

Wow. Big Break time.

They meet the guy, and y'know what -- he's not what they
expected from a label guy. He's young and dresses pretty
much like the band does. He knows all their favorite bands.
He's like one of them. He tells them he wants to go to bat 

for them, to try to get them everything they want.
He says anything is possible with the right attitude.

They conclude the evening
by taking home a copy of a
deal memo they wrote out
and signed on the spot.

The A&R guy was full of great
ideas, even talked about using
a name producer. Butch Vig is
out of the question — he wants
100 Gs and three points, but they can get Don Fleming
for $30,000 plus three points.

Even that's a little steep, so maybe they'll go with that
guy who used to be in David Letterman's band. He only
wants three points. Or they can have just anybody record
it (like Warton Tiers, maybe-- cost you 5 or 7 grand) and
have Andy Wallace remix it for 4 grand a track plus 2 points.

It was a lot to think about.

Well, they like this guy and they trust him. Besides, they
already signed the deal memo.He must have been serious
about wanting them to sign.

They break the news to their current label, and the label
manager says he wants them to succeed, so they have his
blessing. He will need to be compensated, of course, for
the remaining albums left on their contract, but he'll work
it out with the label himself.

Sub Pop made millions from selling off Nirvana, and Twin Tone
hasn't done bad either: 50 grand for the Babes and 60 grand
for the Poster Children -- without having to sell a single
additional record. It'll be something modest.

The new label doesn't mind, so long as it's recoupable out
of royalties. Well, they get the final contract, and it's not
quite what they expected. They figure it's better to be safe
than sorry and they turn it over to a lawyer--one who says
he's experienced in entertainment law and he hammers
out a few bugs.

They're still not sure about it, but the lawyer says he's seen
a lot of contracts, and theirs is pretty good. They'll be a great
royalty: 13% [less a 10% packaging deduction].

Wasn't it Buffalo Tom that were only getting 12% less 10?

The old label only wants 50 grand, and no points.
Hell, Sub Pop got 3 points when they let Nirvana go.

They're signed for four
years, with options on
each year, for a total
of over a million dollars!

That's a lot of money in
any man's English. The
first year's advance alone
is $250,000. Just think about it, a quarter million,
just for being in a rock band!

Their manager thinks it's a great deal, especially the large
advance. Besides, he knows a publishing company that
will take the band on if they get signed, and even give them
an advance of 20 grand, so they'll be making that money too.

The manager says publishing is pretty mysterious, and
nobody really knows where all the money comes from,
but the lawyer can look that contract over, too.
Hell, it's free money.

Their booking agent is excited
about the band signing to a major.
He says they can maybe average
$1,000 or $2,000 a night
from now on.

That's enough to justify a five week tour, and with tour
support, they can use a proper crew, buy some good
equipment and even get a tour bus!

Buses are pretty expensive, but if you figure in the price
of a hotel room for everybody
in the band and crew, they're
actually about the same cost. Some bands like Therapy? and
Sloan and Stereolab use buses on their tours even when
they're getting paid only a couple hundred bucks a night,
and this tour should earn at least a grand or two every night.

It'll be worth it. The band will be more comfortable
and will play better.

The agent says a band on a major label can get a merchandising company to pay them an advance on T-shirt sales! Ridiculous! There's a gold mine here!

The lawyer should look over the merchandising contract,
just to be safe. They get drunk at the signing party. Polaroids
are taken and everybody looks thrilled. The label picked them
up in a limo.

They decided to go with the producer who used to be
in Letterman's band. He had these technicians come in
and tune the drums for them and tweak their amps and
guitars. He had a guy bring in a slew of expensive old
"vintage" microphones. Boy, were they "warm."

He even had a guy come in and check the phase of all
the equipment in the control room! Boy, was he professional.
He used a bunch of equipment on them and by the end of it,
they all agreed that it sounded very "punchy," yet "warm."

All that hard work paid off. With the help of a video,
the album went like hotcakes!

They sold a quarter million copies!

Here is the math that will explain
just how fucked they are: These
figures are representative of amounts
that appear in record contracts daily.

There's no need to skew the figures to make the scenario
look bad, since real-life examples more than abound.
     Income is bold and underlined, expenses are not.

Manager's cut:
Legal fees:
Recording Budget:
Producer's advance:
Studio fee:
Drum Amp, Mic and Phase "Doctors":
Recording tape:
Equipment rental:
Cartage and Transportation:
Lodgings while in studio:
Tape copies, reference CDs, shipping tapes, misc. expenses:
Video budget:
Processing and transfers:
On-line editing:
Stage and construction:
Copies, couriers, transportation:
Director's fee:
Album Artwork:
Promotional photo shoot and duplication:
Band fund:
New fancy professional drum kit:
New fancy professional guitars [2]:
New fancy professional guitar amp rigs [2]:
New fancy potato-shaped bass guitar:
New fancy rack of lights bass amp:
Rehearsal space rental:
Big blowout party for their friends:
Tour expense [5 weeks]:
Crew [3]:
Food and per diems:
Consumable supplies:
Tour gross income:
Agent's cut:
Manager's cut:
Merchandising advance:
Manager's cut:
Lawyer's fee:
Publishing advance:
Manager's cut:
Lawyer's fee:
Record sales:
250,000 @ $12 =
Gross retail revenue Royalty:
[13% of 90% of retail]:
Less advance:
Producer's points:
[3% less $50,000 advance]:
Promotional budget:
Recoupable buyout from previous label:
Net royalty:

Record company income:
Record wholesale price:
$6.50 x 250,000 =
$1,625,000 gross income
Artist Royalties:
Deficit from royalties:
Manufacturing, packaging and distribution:
@ $2.20 per record: 550,000
Gross profit:

The Balance Sheet: This is how much
each player got paid at the end of the game.
Record company:
Previous label:
Band member
net income each:

The band is now ¼th of the way through its contract,
has made the music industry more than 3 million dollars
richer, but is in the hole $14,000 on royalties.

The band members have each earned about one third
as much as they would working at a 7-11, but they got
to ride in a tour bus for a month.

The next album will be about the same, except that the record
company will insist they spend more time and money on it.
Since the previous one never "recouped," the band will have
no leverage, and will oblige.

The next tour will be about the same, except the merchandising
advance will have already been paid, and the band, strangely
enough, won't have earned any royalties from their T-shirts yet.
Maybe the T-shirt guys have figured out how to count money
like record company guys.

Some of your friends are probably already this fucked.


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