Monday, October 20, 2008

Record Labels

I used to work at a record label, and loved the job. Almost as much as I love making my own music for a job.

There is a lot of trash talked about record labels, and I read a lot of independent artists regurgitating the same complaints over and over. But I feel like most of this contempt is towards the huge corporations that own the labels. It's really the system that's the pain in everyone's ass, not the labels.

Record labels have to operate a business, just like I'm trying to do with my music. Labels have to hit quarterly numbers to satisfy their corporate owners, or else heads roll. Every ethical problem people have with labels screwing over artists is rooted in money and could probably be traced to somebody trying to keep their job. On the contrary, my short term goals are best achieved when I focus on the greater long term goal. Money is an issue, but I'm trying to make a career, not just a weekly paycheck.

One thing I learned when I worked at the label was that most artists need this. It's nearly impossible for one person to work a record the way five professionals specializing in production, sales, marketing, promotion and publicity can. Then there's the internet--a good new media person can coordinate multiple websites, social networks, and blogs from a single feed. Trying to do all that alone eats up all the time for everything else. Forget making the actual music.

Perhaps one reason so many unsigned artists complain so much is lack of understanding mixed with jealousy. They want to be signed, otherwise I don't know why they are complaining. I don't want to be signed, which is why I view this objectively. My opinion is based on some first hand experience and education, not what I hear other people say, and definitely not what I read in music business books that are practically obsolete by the time they are published.

It's also worth noting that a lot of artists know what they're doing when they sign a deal. Most of the artists on this label were pretty smart, as were their managers. I didn't work in the legal department, and I never saw any deal memos, but here's how I came to understand things:

Artists usually try to get the largest advance they can, because recouping costs and making royalties is a long way off, if it happens at all. All those pie charts you see where the artist get $0.00009 of every CD sold don't account for the $50k advance. Rather, once the artists' cut pays back the advance and agreed portion of the rest of the budget, royalties begin to flow (or trickle). If an artist can continue to sell enough records to release something every few years, they can make an advance on each record. Factor in the money from various other revenue streams and they're doing alright.

The real problem is that it's really, really hard to break a new artist. It's an investment and costs a whole lot of money that you hope to make back on the second or third record. The terrain is so rocky today that who knows what's going to be happening five years down the road when the third record is released. Meanwhile the labels have to pay their employees, and that adds up even in smaller companies. So decisions have to be made to cover the bottom line.

The way I see it, I would love to have my former colleagues working my albums, but there's just no way my music will generate the amount of revenue needed to support that effort. I also don't want to forfeit ownership of my recordings. And my general rule of thumb is that if you want to work with me and get a cut of my revenue, then you have to be able to triple what I'm making now so I feel justified in giving you a percentage.

Someday, somebody is going to figure out how to restore some balance. Maybe I'll come up with it on this blog.

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