[quote author=“Drachen”][quote author=“babahi”]The record company, however, has made a killing before even a quarter of the advance is paid off, since they get the largest chunk from album sales. The artist has always been the loser, unless he writes his own material, since composer/producer royalties do not apply against the record company advance, in any case.
I certainly can’t argue with the second part, since I’ve seen a lot of bands get fucked. With quite a few bands, the record is finished and just never sees release before the band is dropped. Others just see limited test release and others just get dropped after the first or, less common these days, second album tanks. The band doesn’t even own the material after that. It’s the label’s.
I don’t know if I’d agree that the label makes a killing on most records. Depending on the number of units you’re expected to move and what sort of contract you have, they’re putting out a lot of actual cash including advances, tour support, indie radio promo (bigger scumbags than the labels!) and coop advertising. If you only sell 25,000 units and they were expecting 50,000, the label has to eat the balance. Even big acts fall victim to it. I know a band that on their second record needed to sell 2 million(IIRC) to break even and only ended up selling 800k (after 2 years) on an initial ship of a million. I’ve heard it said that 10% of the acts on a label carry the company, at least financially.
Honestly, I wouldn’t cry for any of label though, especially those owned by a major.
Good points there.
However one small correction regarding owning the material: the songwriter will always own the copyright, but just not the rights to the music. This only means the administration of the music. If the record company decides to put the band’s songs onto some compilation the band does not see fit, then the band can’t do a thing about it. But no matter what the record company does, each time the music is played/sold/etc then the band receives a royalty. Of course, the record company can also sit on the product for the duration of the rights ownership (typically 5 years for first-timers).
But the record company does make a lot of money way before the artist does. All that tour money, video shoot money, recording money, promo and ad money is part of that advance which the act has to pay off before seeing a penny. Of course, this excludes anything done in-house, as the record company is supposedly working for you!
Let’s say that an act needs to sell 2 million albums to recoup the advance, which is normal for a major deal today. BTW, by “major” I mean a major record company, not a major-sized deal. The record company will see a profit after sales of only a couple hundred thousand. Break it down and you’ll see why: wholesale on a cd is 12-14 bucks. They pay the act way less than a buck a cd. Subtract distribution and manufacturing and you’ve still got well over 10 bucks profit left per CD. So the record company gets over 10 bucks profit per CD sold, whereas the artist gets less than a buck. So the couple of million the record company gave as an advance is quickly made back after only a few hundred thousand unit sales, wheres the act has to reach the 2 million mark to see any cash. Remember: 2 million albums sold means that the act will start seeing cash for everything sold after that! So if the act goes double platinum and sells 2 million, the artist has done it for free, basically. If he sells over 2 million, then he starts to see the cash trickle in.
I’m happy to be on the other side now. I was really young when I started in the band thing, and we got pretty lucky. We made good cash and had a great time, but I’m the only one who left and went into the business side of it.
