Funny Money

The acrimony between the record labels and the artists is flaring up again. The artists say:

At a state hearing in Los Angeles, the musicians said they had sold millions of songs or albums only to receive sparse royalties or to be told they actually owed their respective record labels money to recoup advances.

In their own defernse, the record companies say:

Charles Ciongoli, senior vice president finance for Vivendi Universal's Universal Music Group, the world's largest record company, said "the facts tell a far different story than some of our detractors would like to admit, and are not nearly as headline grabbing as the acrimonious accusations of a few who irresponsibly label us criminals and thieves."

Much as I hate to agree with "the Chuckster," he does have a point. While it is true that both sides would benefit from clearer and cleaner contract language, the recording artists get far better press than they deserve. There is plenty to be critical of the RIAA member companies for, especially on the legislative front, but there are two sides to every story. The record companies do much worse on the Royalty end than most people realize.

To illustrate this I will re-post an item I wrote in July. It sparked quite a bit of debate when I originally posted it on my site, so I figured I'd re-post it here to piss off a whole new audience. I've edited it slightly from the original.

Yup, it sure is a great rant that Courtney Love wrote. Her thoughts on where the music industry is going are really interesting, and some sections are quite heartfelt:

Artists will make that compromise if it means we can connect with hundreds of millions of fans instead of the hundreds of thousands that we have now. Especially if we lose all the crap that goes with success under the current system. I'm willing, right now, to leave half of these trappings — fuck it, all these trappings — at the door to have a pure artist experience. They cosset us with trappings to shut us up. That way when we say "sharecropper!" you can point to my free suit and say "Shut up pop star."

Here, take my Prada pants. Fuck it. Let us do our real jobs. And those of us addicted to celebrity because we have nothing else to give will fade away. And those of us addicted to celebrity because it was there will find a better, purer way to live.

I agree with her position on work for hire and the cluelessness of the majors vis a vis the web ¹. The rant is long, but well worth reading. Don't let her do your taxes, though. Love's music biz accounting is horrible, even if you use her numbers (which I wouldn't). There is plenty of reason to hate the record companies without making shaky arguments. Shaky arguments you say? Shall we take a quick look-see?

This story is about a bidding-war band that gets a huge deal with a 20 percent royalty rate and a million-dollar advance. (No bidding-war band ever got a 20 percent royalty, but whatever.) This is my "funny" math based on some reality and I just want to qualify it by saying I'm positive it's better math than what Edgar Bronfman Jr. [the president and CEO of Seagram, which owns Polygram] would provide.

Actually, Seagram sold to Vivendi, and Jean-Marie Messier ² is the CEO of the group that owns PolyGram, not Edgar. Oh yeah, I forgot, Messier just resigned. Fair enough - I suppose it is kind of hard to remember who the players are without a program.

What happens to that million dollars?

They spend half a million to record their album. That leaves the band with $500,000. They pay $100,000 to their manager for 20 percent commission. They pay $25,000 each to their lawyer and business manager.

Why are you spending $500,000 to record the album? The top-flight studios are expensive because they provide highly pampered services. In the old days there was a reason to spend that money but now I have friends whose home studios are more sophisticated then Abbey Road was when the Beatles recorded Abbey Road. You don't have to spend near $500,000 getting a high quality album made these days.

That leaves $350,000 for the four band members to split. After $170,000 in taxes, there's $180,000 left. That comes out to $45,000 per person.

Why is the manager getting 20%? Managing "high maintenance" bands, they earn it, but really, why should they get an equal share? Also, what difference does it make that 50% ³ goes to taxes? Love makes it sound like it is the record company's problem that she pays here manager 20% or that she has to pay taxes. They pay taxes too. Besides, don’t most artists support politicians that want to raise taxes? Note that although a solo artist has to pay taxes to, he doesn't have split his money with band members either.

That's $45,000 to live on for a year until the record gets released.

You don't need a business manager and a band manager to turn $1,000,000 dollars into $45,000. Either hire managers that know what they are doing or fire them both and pocket their fees.

Article Author: Martin Devon

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