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Independence for Bands: 101 Pt. 1

08/11/2009

“Want a record contract?” No, not really.

The good old rock ‘n’ roll myth of the perfect record deal is dead.

9 out of 10 (major label) albums cost more to produce than they make.

Of all acts signed in 2007, 70% didn’t have their album released.

The point at which an artist has many fans and is proving profitable is when labels show interest in signing an artist, and is exactly the point when an artist doesn’t need a record label.

Traditional record deals, as outlined below by Chris Healings, break down to around 15% to the artist, 85% label (there are even more aggressive and all encompassing 360 Deals). Assuming a dealer price of £5 per album, that means that for every record you sell, your band gets £0.75, the label takes £4.25. With your 75P per album, you have to pay the record label for every recoupable expense ever levied against you:

The money the label gave you to live off – The money spent recording your album (and if  for example Sony were to put you in a Sony studio, this money just moves from one arm of Sony to another) – Advertising – PR – Plugging – The limo that picked you up for the awards ceremony that it was good to be seen at – The cost of the video – Artwork costs – The train/taxi/plane fare for the conference that your A&R man had to go to to promote your record – the money loaned to you to live off whilst on tour.

So, say on record one, the label spends a meagre £100,000 on making and promoting your record (nowhere near enough to fund say a major TV campaign for example), that means that before you see a penny from record sales, you have to sell more than 133,000 albums; a massive total, especially for an emerging band. During this time, the label has taken the full £5 per unit, so at the point your band breaks even, your record has generated £650,000 of income for your label, and over £1/2 million pounds net profit.

The artists I happen upon who are happy with their financial deal are almost exclusively those who are independent, have their own label, connect directly with fans and just want to make new fans. How? We’ll get onto that. There’s never been a better time to be an independent artist, but for now, let’s deal with why your shouldn’t sign a 15/85 split label deal.

At the recent UnConvention Swansea, session two of day one was “Don’t Throw The Baby Out With The Bathwater”. Made up of professionals from the independent and traditional sectors, panel two was supposed to show what it is that the old school do that’s worth keeping, what works and how to apply that to today’s music industry. Fascinatingly (and in alarmingly car crash fashion, it’s not how the panel played out. Even supposed proponents, with major label deals behind them, bemoaned their own deal, their own label and the rewards:

“We’ve never made any money on the sale of a record, ever”,

“They’re not the best label” and

“A million pound  deal which is an absolute load of bollocks. It’s probably the amount of money that the whole record company spent on themselves” – Chris Healings of Hybrid

I wonder if their label know.

Even the most successfully exposed international superstars, with millions of album sales, say that they aren’t making money from record sales. It can’t be because they’re not selling enough records. If my band had sold half a million records since we formed our label, it’d have made a return of millions.

For me, the unanswered questions remained: How do record deals benefit the artist? How many artists do you know personally who have a record deal that they’re happy with?

The notion of the ideal record contract may still be living in the minds of some, but there’s little evidence of it existing outside of the minds of artists who don’t have a deal.  There is however a growing, and strong community who believe, as I do, that there’s never been a better time to be an independent musician. Today, musicians have the best opportunity ever to connect with and build their own fanbase, to be artists making the music they want to make, and to make making music a viable part of their life. I’ll be moving onto that in “Independence for Bands: 101 Pt. 2.

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22 Comments leave one →
  1. 09/11/2009 9:28 pm

    Great post Rich. But an artist still needs a team to help make things happen, otherwise they’ll never have time to tour, tour, tour and write that next record! lol. The dynamics have definitely changed. Artists no longer need to work FOR a Record Label. In fact, Record Labels need to work for, and with, the artist.

    _____________________
    The Bleeder Blog
    Thorny Bleeder Records
    http://www.thornybleeder.com

    • 10/11/2009 10:05 pm

      I do believe that there’s room in the world for labels, I just think as you say that their role has changed; or rather, should change.

      One of the biggest questions of our age (as regards the business of music at least) remains “What should the role of the label be?”. I’m open to suggestions there!

  2. 09/11/2009 9:45 pm

    There is one thing that indie labels can’t do properly, while majors can: PR.

    Majors can put your songs to the radio, can put you on TV etc. Indie labels rarely have this skill, and if you outsource PR to a third party PR company (there are many of them in the US), the result is usually very underwhelming.

    So while I agree that majors are a curse with the kind of business they do overall, they do have the contacts and the ability to make you ultra-famous. Then again, as you correctly mentioned, being famous doesn’t necessarily make you rich.

    • 11/11/2009 8:28 pm

      The reality of promotion is that you, as an artist, have to pay for every bit of publicity the record labels generate. An independent can pay for record promotion directly. You can also get your records in all the chain stores if you’re willing to pay the fee for ‘top shelf’ display, which you would pay the major label for as well. The only advantage to having a deal that I can surmise is having a line of credit, which is basically what a record deal comprises. If you have your own credit source, you might as well use that, keep control of the masters of your albums and bypass the middle-men. IMHO

      • 13/11/2009 12:38 am

        My problem is with radio/TV/mags. Indie labels, and independent PR firms, simply don’t have the right contacts for that purpose. Getting on TV/radio/mags requires some weight, and indie labels/PR are not taken seriously by the big DJs and magazines.

        Anything else, e.g. online marketing, small mags, LP placement, bookings etc, can all be done easily. It’s the TV/Radio and major magazines that I am having a problem with. There are in fact very few indie bands that make it to TV.

        Back in the day the free iTunes Single of the Week really had a nice selection of indie and majors acts. These days, 2/3s of these free singles are just coming from majors, even if only 5% (or less) of all the artists in their catalog are signed up with majors. What I am saying is that the majors are more aggressive in marketing, and usually get what they want, one way or another.

  3. 09/11/2009 10:14 pm

    While I do agree that major labels do have promotional clout, their use of said marketing muscle is limited, and in my opinion often maligned. Their chasing of “The next big hit” leaves artists who’d be more profitable long term ignored and has arguably crippled the music industry.

    When Alamo was formed we spent a small fortune on 3rd party PRs and with only a modicum of success. However I’m not convinced that majors do the job any better. Realising that around 30% of signed artists get to release their album and that only 1 in 10 albums recoup, majors aren’t really succeeding at selecting or promoting their acts. It’s not a chance I’d be willing to take.

  4. 09/11/2009 10:21 pm

    Listened to the entire audio from unconvension. More confused than ever! Thanks.

    • 09/11/2009 10:26 pm

      Yep, it was a car-crash that session. Andrew Dubber, Steve Lawson, Ben Walker and I all walked out. A shame for anyone who is unsure of their position, not so for me. I was just fuming. There were good and useful sessions though! More to come.

  5. 09/11/2009 10:38 pm

    Thank you for the reply! However, I am actually convinced that they do WAY better in marketing.

    Example: the “Barcelona” band. They release their album by themselves, and they hired a PR/marketing company. Their first single (“It’s about time”) did end up as a free promo mp3 in a few music magazines, like Spinner.com. At this point, they have had fewer than 15 “ratings” on their US iTunes Store page, and 3-4 comments.

    Then a few months later, Universal Motown signs the band, and re-releases the *exact same record*. A few months later than that, there are over 90 comments, and 368 ratings on their iTunes page. The band is now obviously much more famous, and has sold better.

    There are other such examples too. Even the biggest indie label today, SubPop, has a LOT of contacts in many radio, music magazines and TV outlets. It was the band “Blitzen Trapper” who said recently that SubPop has had all the right contacts to get them reviewed by big magazines, getting on many radio shows, and even on Conan O’Brien on TV. Without SubPop, none of that would have happened. And that’s an indie label we are talking about (albeit the biggest one).

    In my mind, there’s not a single doubt that the majors can get you very famous if they get behind you. They have the tools to make you so. The only thing that’s questionable here, is if the artist will make any money at the end, and not end-up in huge debt, since their contracts are brutal — as you correctly pointed out. Also, the majors would like to “pop-ify” your record, to make it more accessible. Not all artists like to be told how to arrange their music.

    Some artists are not ok with all this, and that’s fine. But some others, people who are mostly after their 15 minutes of fame, they would go for it.

    As for the majors not releasing all albums at the end, it sucks of course, but that’s not what I was replying to. I only replied for the PR/marketing side of things — after an album actually has come out.

    In my opinion, the _only_ reason left to sign with a major is that PR/marketing they got. Everything else, can be done cheaply by the bands themselves, with easily available tools. But the promotion thing, remains one big thorn for them.

    • 09/11/2009 11:06 pm

      Great point and beautifully evidenced. I’d consider that a great argument for licensing a record to a larger label, though not for signing.

      • 09/11/2009 11:32 pm

        Indeed. However, unless the majors really are in their deathbed financially, they won’t accept a mere licensing deal, they would want the whole pie. Although, I must say, that the way things are going for them, they might have to settle for it, since the only ace they have left is these TV/radio/mags contacts. Anything else can be done cheaply by the bands themselves.

        Just last Saturday I watched this video, which was shot by the band themselves (I believe their keyboardist rent a RED ONE professional camera, directed, and edited the video). Great result, without involving their indie label, or third party directors/studios that could cost them thousands of dollars.

      • 11/11/2009 2:58 am

        The only tork a major label has against great indie labels and artists is the base funding. The money they take from one artist and invest in another, continuously picking from their artists piggies, which means never really accumulating great profits but rather living on constant credit. Which still makes a nice bank roll; much nicer than your average indie artist. Even with a nice sugar daddy, some good sponsors and members who throw in all the money they get into the pot, that’s still not the same budget available for hiring powerful marketing strategists and agencies, design studios, ‘exclusive’ photographers, well established publicists, public relations, and on and on. And they don’t come cheap. Hux said it himself.

        However, this new gen of emerging (and established) indie artists are quickly understanding that building their own personal network of hungry professional or talented amateur youth, looking to make their own names in their respective industries, is impressively powerful. Collaboration is a big part of the new indies, even amidst these tempting major deals. Collaboration is the same philosophy majors use, “You scratch my back, I scratch yours”. Just throw on a few more 00’s at the end of the paycheck.

        Artists need to be just as sharp with their social skills than their talents, even if it means going to a few events, talking your way into a friend or collegue’s dinner party. The results are often very interesting and can make for some great work and results. But it takes a little longer to talk out a deal then to just sign a check.

        We need to develop strategies for funding, get educated about the marketing and promotions aspect of having and running a successful band and be seen, be seen, be seen. (Even if it’s exhausting.) And it’s not always just about playing shows.

    • 11/11/2009 5:14 pm

      It seems to me that PR is the #1 thing that separates “major” labels from the pack. Making connections with opinion leaders around the country or getting a spot on Conan is not something anyone off the street can just pick up the phone and be successful at. I’m new to the publicity game, but it seems like people tend to work with people they know and trust as opposed to taking a chance, or even answering a phone call or email, from an “independent.”

      From my perspective, it looks like major labels spent many years and dollars making connections across the globe. I guess the question is can you balance a dollar amount to the amount of time you would have to spend making those connections yourself.

      A platinum record at $10 would be $5M, or 62,500 tickets to a show at $80. How long would it take Kenny Chesney to sell those tix?

  6. 11/11/2009 2:32 am

    Hey all. I actually run a small interdependent (not indie) record label. This wording plays a big role in what we are doing to help “start up” artist create their careers.

    I don’t believe that fm airplay or any other mass marketing technique works the way it used to. I actually think it hinders a lot of artists ability to create a genuine connection with new friends.

    I believe we, as a label are on the right track with what a label should do in todays market.

    We work directly with the artist and STRUCTURE a marketing campaign around their goals, values, and beliefs. We provide guidance on how to deal with the good and the bad in the business professionally so as not to burn any bridges.

    We also help artist utilize the demographic research tools that have already been provided for them for free thanks to the internet (myspace artist dashboard, twitter lists, forums, Jango, etc.). This will also help with structuring marketing campaigns and streamlining connection (not promotion. promotion should be eliminated from the artist dictionary) strategies.

    Of course we also help with getting radio airplay, tour support, and providing financial assistance for recording and the above mentioned. However, we refuse to bankrupt ourselves or the artists. We limit a bands budget based by their current career goal and their own willingness to interact with and connect to potential new friends (the word fan should also be eliminated from the artist dictionary). We base the campaigns so in theory, The artist and label profits will at least cover the next connection campaign. We also don’t cut ourselves a check for our percentage (we do a 50/50 split with artist) until we cut the artist a check as well.

    So to sum that all up, we arm artist with knowledge, professionalism, and structure; the artist goes out and records, connects, and performs. By the end of the first year the artist will know how to do everything we do. They only have to keep us for convenience.

  7. 11/11/2009 9:18 am

    I suspect that the record deal, if you take away the fantasy, boils down to

    -distribution
    -promotion
    -a cash advance
    -parenting

    (something else?)

    All of these ingredients are important. No questions!

    What we’re seeing is that distribution and promotion can be achieved via the internet with a bit of administrative work and a little bit of ingenuity.

    The cash advance, (pat on the back… good work, here’s a little something for you), is harder to come by. This is where the record deal becomes very interesting, and exciting. Fast cash! But, of course, it comes at a price.

    The forth part, the good or bad parenting that a record label could provide. Every piece of Intellectual Property needs an administrator, somebody who is going to make sure that the album sells.

    Points 3 and 4, song management and financial management is moving online. To be launched early 2010, for a small test group, by a Stockholm-based start/up.
    Sign up to the blog now, and sign up for the beta soon.

    /ray

  8. 11/11/2009 2:06 pm

    Great blog Rich – couldn’t agree more with Brian x

  9. 25/01/2010 10:16 pm

    Rich I agree with you on almost every level, and I also agree with what everyone has been saying. While it is true that most artists could continue to make a sucesssful career out of performing and selling their music, it is the large scale distribution, marketing and packaging that the major labels can give artists that makes them worth while.

  10. 26/01/2010 8:58 pm

    great blog article on the indie artist and going the diY’er way- new statistics side with the independent artist forging his own way through the social media maze and tour booking to support new releases- and kudos btw to the 1’s who can manage that!

    however, i have to agree with the thorny bleeder post about artists with a “team” behind them in the form of a record label- and if it’s a real team effort by artist/label, it can be a win-win!

    \m/ mike
    http://www.twitter.com/audioK9

    • 16/02/2010 2:21 pm

      Great comments thank you all. I appreciate that I have been fairly strident in my views here, and while I do agree that to have a team around you is a benefit, I don’t believe that has to be a record label.

      The point I’m trying to get across is that you you don’t need a record label per se. A team can include social media whizzes, an agent, a PR… and while the benefits of a “proper label” may well be experience, getting a team of non-music specific skilled enthusiasts could result in as good results. For me, where labels really score is with their existing contacts and routes to market and an independent’s barriers to those things still exist… Majors still have a hold on radio, TV and the mass media.

      How do independent artists and labels compete with that?

Trackbacks

  1. Music Industry Report - Pingback
  2. Independence for Bands: 101 Part 1 at "Echoes" - Insight for Independent Artists
  3. Independence for Bands: 101 Pt. 2 « Rich Huxley AKA TheHuxCapacitor

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