20 Important Things You Should Know About Today's Music Business
1. What do Record Labels do?
The function of a record label is to find and sign artists, provide the recording budget, hire producers, oversee the graphic design process, manufacture the record, distribute and market the record to retail outlets, put in place promotion to help sell the record, collect money and make payments, and in many cases provide tour support. Somebody once said that major record labels are the bank, the distributor and the copyright holder - the bank because they provide the money, the distributor because they put the records into the hands of consumers and the copyright holder because they own the finished product. Major record labels do many of these functions in-house with additional money paid out to hire independent promoters and publicists. Most independent labels do not have the staff and have to hire outside help to perform most of these functions. In other instances, independent labels have very little budget and have one or two people perform most of the duties.
2. How do artists get signed to record labels?
There are many different ways artists get signed to labels. Some are more difficult than others. The better question is how does an unknown artist get signed to a record label? Unknown artists with no track record have to be brought to the label by somebody who has an ongoing relationship with that label. That person could be a producer who has produced for the label, a manager who has an artist on the label, a promoter that the label has hired previously, an attorney who has negotiated with the label before, a singer or musician who has performed backup duties on an album produced by the label, and so on. Another way that unknown artists get signed to major record labels is to release an album that sells thousands of units, perform live to thousands of paying fans, get radio airplay that is reported and garner great reviews. An individual with little or no money does not so easily do this. Needless to say, A&R reps (see below) at major record labels rarely are interested in an artist who is unknown except for certain styles of music like Hip-Hop. Artists have an easier time getting signed to an independent label that can help them achieve some of the results necessary to attain a major label deal. An important point to keep in mind is that there is life for you in music without a major record deal. If you are passionate about your music you should do it with or without a deal.
3. How much money can an artist expect from the record label?
This question can have a very complicated answer because there are a lot of variables involved and everything depends on what the terms of the contract are. Basically an artist is signed to a record label and the terms of their deal, including how much money the artist is owed, are spelled out in the contract. If the artist is not a songwriter or does not have any publishing rights to the material included on the album then the money owed them is described in terms of an 'artist royalty'. This is usually a percentage of the money collected by the record label from the distributor or the price suggested by the label to the retail accounts. This percentage ranges from 10-18% of the suggested list price (price suggested by the label to the retail accounts) or roughly double that for the wholesale price (money collected by the record label from the distributor). In most cases the label will not pay this percentage to you until certain expenses have been recouped, which in itself is a very complicated matter. In any case, the exact figure will depend entirely on what you and your attorney negotiate in your contract and what type of leverage you have going into the negotiations.
4. What is an advance?
Sometimes a record label will pay you in advance some of the money that it expects to owe you later. This is usually a good-faith expenditure since there are no guarantees you will actually sell enough records to earn that money. On the other hand the money allows you to spend your time on writing, recording and promoting your record instead of having to pay your bills with the money you make at Burger King. There are also the issues surrounding labor laws that require employees to pay at least a minimum wage and certain benefits to employees in exchange for keeping them in an exclusive and binding contract for a certain period of time. However, most independent labels cannot afford to pay artists any kind of advance. The actual amount of money an artist can get also depends on the size of the label and the track record of the artist. The figures start at zero and go all the way into the high six-figure range.
5. What does an A&R person do?
A&R stands for 'Artists & Repertoire'. The original A&R rep was somebody who found Artists and developed their Repertoire. This person is hired by a record label to find talent and sign it to the label. The A&R person is an on-going link between the label and the artist and ideally should share the vision of the artist while keeping in mind the overall objectives of the record label. This position has evolved to be a very high-risk one because the failure of the artist usually falls on the shoulders of the A&R person. This has made A&R reps very reluctant to bring artists to the label unless they consider it a sure thing. However, once they bring an artist on board they will act as the main cheerleader for that artist within the label and try and keep the artist a priority in terms of budget for promotion and publicity and commitments in the release schedule. Most major record labels like to keep an ear on the street in every major city around the country so they while employ the ears of talent scouts. These are people who aren't exactly on salary at the label but sniff around the clubs, venues, retail stores, radio stations, publications, etc., for upcoming talent. Their job is to keep an eye on talent and make sure the other labels don't get a jump on an artist that should be signed. Many independent labels are too small to have separate A&R departments and instead have the owner or producer double as the A&R rep.
6. Do major labels accept demo tapes directly from artists?
Almost all major record labels refuse to accept 'unsolicited submissions' from artists. A label exposes itself to potential lawsuits when an artist/writer accuses that label of copying and recording a song that the artist previously submitted to the label. This costs the label time and money even if they win their case. In addition, most industry insiders agree that the majority of demo tapes submitted directly by artists are vastly inferior to the ones brought to the label by a known producer, manager, attorney, promoter, etc. An artist is also more attractive to a major label once a knowledgeable team has been placed around them. In other words the best way to get into the major labels is through somebody who has an ongoing relationship with that label.
7. Is it worth it to sign a deal with an independent label?
There are many more artists (by a huge margin) than there are major record labels. It is impossible for everybody who is talented to get signed by a major label just because of the sheer volume of artists available. The odds indeed are a million to one. On top of that, most major record labels would rather sign somebody 'safe' who fits the sound of the day than take a chance on a new, untested sound. In that regard, it becomes necessary for most artists to look elsewhere for ways to get a record released.
8. How and why do major labels test their music?
Major record labels test their music in order to get a sense of whether or not the record will sell. They do this before the record comes so that they can make adjustments to the sound if necessary. It costs a lot of money to release a project and labels look for any way they can minimize the loss. Testing (or 'research') is done at radio, on the Internet, on the street, in clubs and in auditoriums. The record labels utilize companies who arrange to have the songs listened to and rated. These companies pass the information to the record labels so they can make a decision on which songs to proceed with.
9.What is a demo deal?
The astronomical costs of producing and releasing a record in today's environment have caused labels to re-evaluate their pace of signing new and untested artists. It sometime makes sense to offer an artist a demo deal first in order to evaluate them. In this scenario a record label (usually a major) will give an artist money to record a demo. If they like what they hear on the demo they will have the 'right of first refusal' to sign the artist to a full recording contract with a complete album and if they don't the artist gets to keep the demo. The cost of failure is much lower with a demo than with a full album and hundreds of thousands of dollars later.
10. What is a development deal?
A development deal is somewhat like a demo deal except that the terms and options last for a little bit longer and the purpose is slightly different. In this scenario the record label and the A&R rep will spend some time working with all aspects of the artists package to try and bring it up to the level where they can commit to spending more money on a full release. If the artist fails to mature to the appropriate level they can be let go, again saving the label the money associated with a full-scale release. These types of deals are happening less and less now, and when they do they are sometimes implemented for the wrong reasons; like removing a competing artist from the scene so that a label can reap the full financial benefits of their current artist's release.
11. How do I copyright my songs?
From the moment you create an original piece of music or write an original lyric and reduce it to some tangible form (e.g. a piece of paper, on a cassette tape, on a napkin, etc.) you have it copyrighted. Notice I did not say 'copy written' which means something else altogether. However, in order to obtain full legal protection in a court of law and collect money damages in the event of an infringement you will have register that copyright with the library of congress. You can use a Form PA for your written music and lyric sheets and / or a Form SR for the recorded representation of the music and lyric (the sound recording). You can get these forms and instructions from http://www.loc.gov/copyright or by calling their forms and publications hotline at (202) 707-9100. You will have to fill out the form and send it, along with your tape or written work and a payment of $30, to the Library of Congress. Once they register the work in their database you will receive a 'receipt' of sorts with a registration number that you can keep. You can either register your songs individually or as a collection of songs under one title. Registering as a collection for one fee can save you money in the long run if you write and register a lot of songs. You can register your song collection as a whole using the Form PA (for one fee) and then use the Form CA to write out the names of the individual songs in the collection. This way you can identify each of the songs registered in the collection.
12. What does a record producer do?
This is somewhat of a controversial subject. Some people think that producers are totally unnecessary while others find them to be indispensable. Producers do a lot of things, some of which are not entirely in their job description. It is more important to describe what a good producer should do. A good producer is like a good film director. Their job is to get the best performances out of all the musicians and singers involved. A good producer will know when to shut up and let the magic happen and when to interrupt and help to focus a session back in the right direction. A good producer will help keep an artist fresh and prevent them from reaching for the same predictable riffs over and over again. It is the producer's job to keep the project on schedule and within budget while at the same time keeping the creative process going. It is also the producer's job to make sure all the necessary forms are signed (talent releases, assignments, work-for-hire agreements, mechanical license requests, sample clearance, tax paperwork, union paperwork, etc.). Many times producers are the ears of the record labels in their area and can help get unsigned artists signed if they have the right connections.
13. What does a Personal Manager do?
There are generally four types of managers, although most independent artists will probably only interact with one of these: the Personal manager, the Road manager, the Tour Manager and the Business manager. The Personal manager has the most interaction with the artist. They are involved in planning, advising, coordinating and organizing the career of the artist. In many instances a record label, booking agent, publicist or publisher would rather talk to the manager than the artist. In this sense the manager acts as a buffer between industry people and the artist they represent. The manager and artist are always on the same page and should always be going in the same direction. The personal manager should research the music industry and know which publicists, producers, record labels, publishers, booking agents, promoters, stylists, photographers, engineers, graphic designers, video directors and licensees to work with. The more contacts the manager has the more effective they will be at their job.
14. What does a Business Manager do?
The Business Manager, usually an accountant by trade, manages the income and expenses of the performer. They also advise the artist on investments, savings and taxes. Most artists do not realize that they have tax obligations that relate to their performance income, CD and merchandise sales, equipment purchases, etc. Business managers also try to get their artist clients to invest in their future and save something for a rainy day. Even the most successful artists eventually stop making records and touring.
15. What does a Road Manager do?
The Road manager takes care of logistics while the artist is on tour (or on the road). This includes making sure that everything on the road is provided as contracted and money is paid on time. The artist should concentrate on their performance and not whether the promoter, venue booker or booking agent made enough money to pay them. The road manager also follows up on items that were promised as part of the contract such as accommodations, food, equipment rentals, etc.
16. What does the Tour Manager do?
The Tour manager on larger tours coordinates all the Road managers along with the details and logistics of the tour itself. Sometimes the road manager and the tour manager are the same person.
17. What is a Performing Rights Organization (PRO)?
There are three main performing rights organizations in the United States: ASCAP, BMI and SESAC. These organizations collect payments for licensed public works on behalf of their member copyright owners. The PRO's negotiate fees, monitor and collect royalty payments from establishments and venues (e.g. restaurants, nightclubs, bowling alleys, radio stations, etc.) and pay the appropriate music publisher members. You can join these organizations as a songwriter and/or a publisher member. Each organization has different criteria for accepting or rejecting applicants. They can be reached online at http://www.ascap.com, http://www.bmi.com and http://www.sesac.com.
18. What is a distributor?
The distributor is the middleman between the record label and the retail stores where the public buys records. Distributors provide the network to place your product into retail outlets. They will attempt to convince the retail stores to buy and stock your product. They provide the warehouse space and inventory management and ship products to the retail accounts that place orders. An additional function is for the distributor to invoice the retail stores and collect money on product sold. They pay you the money owed according to your distribution contract. It is your job to produce and provide the entire finished product. It is also your job to promote your record to the general public and make them aware of where they can purchase it. Sometimes distributors will offer to actually manufacture and distribute the records in exchange for a larger percentage than a regular distribution arrangement. These types of deals only get offered to artists that have had a track record of solid sales.
19. How do I get distribution?
The better question is "why do you want distribution"? There is no point having your records in the stores if you can't get people in there to buy them. It takes a considerable amount of promotional resources and finances to make people aware of your record and its availability. The cost of retail promotion, posters, listening stations, radio airplay or ads, print promotion and publicity is out of reach for many independent artists. Even worse, distributors are notorious for not paying independent artists in a timely manner or even at all. For many independent artists, consignment is a better way to go. However, for those artists who have financing and promotional support, distribution can be achieved if certain other things are in place. Most distributors are interested in how many artists you have on your label, how many albums each artist has in their catalog, how many years you've been in business, how many units you've previously sold, how much of an advertising and promotion budget you have, how many performances you have scheduled, what press you've received, what radio airplay you've had, etc. As you can see, most independent artists are unable to meet the necessary criteria to get proper regional or national distribution.
20. What is a one-sheet?
A one-sheet is an 8½" X 11" page that provides essential information about the release to distributors, retailers, print media, venues or radio stations. Information on your one-sheet can include your album cover photo, quotes from reviewers, a description of your style, a brief bio, names of musicians, your tour schedule, media and marketing campaign, etc. A one-sheet can be used in a few different ways. A distributor one-sheet is used both to attract a distributor and to convince retailers to stock your product. A radio one-sheet is used to convince radio stations (college and non-commercial) to play your record.
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