Broadband Making Record Labels Irrelevant > id pay

said by Skilos:

Personally, i would rather pay the artist directly. Sounds like an interesting model.

But that still leaves the little guys "small bands" to fend for them selves it terms of getting gigs, and shelling out cash for studio time and putting out CD's.

said by battleop:

"But will you, if you can get his songs for nothing?"

I will. Just on principal. I am sure he has put a lot of thought into this and he is probably in a position that if he were to stop making music today he would be able to live a very comfortable life the rest of his days.

said by PolarBear03:

You think that NIN would need label backing to book a venue? Most venues would LOVE to have an artist like NIN grace them with their presence.

said by jp10558:

And as I understnad it, not being a musician - they suck ass as a bank. It would seem you'd actually get screwed less going to your Financial Institution of choice for a small business loan or personal loan. Amazing... The traditioanl banks won't ask (I would be surprised if they did) for any IP rights, just interest and payments on time.

said by jp10558:

I guess the problem is the payments - if you flop you are screwed pretty bad - but what do the lables do if you can't repay your advance/loan because you flop?

Did I say the band was going to actually receive royalties? Not so fast. The other major concept involved in record contracts is the term "recoupment". Recoupment is a fancy word for pay back. Record companies expend a lot of money on bands. They pay for all the studio time, give the band an advance, promote the band, etc. All of this money is a loan to the band which the band must pay back. This is recoupment. The band pays back the record label out of their royalties. For example, if a major label spends $250,000 to record an album, the band must make over $250,000 in royalties until they receive their first royalty check. Once a band sells enough records to pay back the amount to the record label, the band has recouped and will receive royalties on future record sales. Approximately 80% of albums never reach this point which means that most bands NEVER receive any royalty checks. Do the math yourself, if you owe the record company $250,000 and you make $1.00 per CD, that is a quarter of a million CD's you must sell before you collect royalties. The one redeeming feature is if the band does not sell enough CD's to recoup, they don't have to pay the record company back. It does not come out of the band's personal pocketbook.

Now for the topic everyone asks about: "How much is my advance?" Not surprisingly, this question is also not as simple as it seems. In the past, record labels would sign a band and write a check to the band as a signing bonus and then pay and record an album. Some bands abused this and went over-budget on recording, much to the record company's dissatisfaction. To remedy this abuse, record companies developed the "recording fund." The recording fund is the recording budget AND the advance rolled into one. The contract states that you have one lump sum to record your album, and if you are under-budget, anything left over is your advance. If you want to stay at the Ritz and waste time in the studio, that means less money for you for your advance. This has proved a marvelous incentive for bands to be efficient in the studio.