p2pnet news | Music:- Warner Music, EMI, Vivendi Universal and Sony BMG, who run the Big 4 organised music cartel, disingenuously claim they do everything they can to protect the artists under contract to them, and to treat them fairly.

There is, however, as much truth in that as their assertion that they have their customers’ best interests at heart.

“Rapcointelpro is Rap Coalition’s Intelligence Program for artists who want to put out their own records,” it says on its webpage, going on:

“This site includes information on pressing, distribution, street teams, foreign licensing, overseas distribution, artist development, flow of product, retail and radio, artist imaging and more …

“Remember, if you don’t own your own shit, you’re just a sharecropper …”

With that in mind, sats Hippie in a Readers Write in p2pnet’s It’s illegal to rip CDs: RIAA post >>>

http://www.rapcointelpro.com/

“Here’s an example of a relatively fair record deal for a new rap group with some clout in the industry and a terrific negotiating attorney:

ROYALTY RATE: 12%

We’re going to assume that there are 3 artists in the group, and that they split everything equally. We’re also going to assume that they produce their own tracks themselves, contributing equally.

Suggested retail list price (cassettes) $10.98

less 15% packaging deduction (usually 20%) =$ 9.33

gets paid on 85% of records sold (’free goods’) =$7.93

So the artists’ 12% is equal to about 96 cents per record sold. In most deals, the producer’s 3% comes out of that 12%, but for the sake of brevity, in this example the group produced the whole album, buying no tracks from outside producers, which is rare.

Let’s assume that they are a hit and their record goes Gold (although it is rare that a first record blows up like this). Let’s also assume they were a priority at their record label and that their label understood exactly how to market them (which is also rare). So they went Gold, selling 500,000 units according to SoundScan (and due to the inaccuracies in SoundScan tracking at the rap retail level, 500,000 scanned probably means more like 600,000 actually sold–but they’ll only be accounted to for the 500,000 SoundScan verified units instead of what actually has sold).

GOLD RECORD = 500,000 units sold multiplied by 96 cents = $480,000. Looks like a nice chunk of loot, huh? Watch this: Now the label recoups what they’ve spent: the cost to make the record, independent promotion, 1/2 the video cost, some tour support, all those limo rides, all those out of town trips for the artists and their friends, etc.

$480,000
-$100,000 recoupable stuff (recording costs)
——
$380,000
-$100,000 advance
——
$280,000

Still sounds OK? Watch …

Now, half of the $380,000 stays ‘in reserve’ (accounting for returned items from retail stores) for 2 to 4 years depending on the length specified in the recording contract. So the $100,000 advance is actually subtracted from $190,000 (the other $190,000 is in reserves for 2 years). Now, there’s also the artist’s manager, who is entitled to 20% of all of the entertainment income, which would be 20% of $380,000, or $76,000. Remember, the artist is the last to get paid, so even the manager gets paid before the artist. The attorney is entitled to 10% of the upfront value of the deal, which in this case was $200,000, so the lawyer made $20,000 the day the contract was signed, which the artist pays back now out of royalties.

So the artists are in debt to the label yet their album went Gold, and they are experiencing some pretty good fame and perceived success. Unless they are making money in other areas (shows, mostly) they are completely broke. In two years when the reserves are liquidated, IF they’ve recouped, they will each receive another $63,000. IF they’ve recouped. Guess who keeps track of all of this accounting? The label. Most contracts are ‘cross-collateralized,’ which means when the artist does not recoup on the first album, the money will be paid back out of the second album. Also, if the money is not recouped on the second album, repayment can come out of the ‘in reserve’ funds from the first album, if the funds have not already been liquidated.

Even if all the reserves are paid in our example, each artist only actually made 38 cents per unit. The label made and/or recouped about $7 per unit. This example also doesn’t include any additional production costs for an outside producer to come in and/or do a re-mix, and you know how often that happens.

So each artist in this group has received a total of about $96,000 ($63,000 on the back end and one-third of the initial $100,000 advance). After legal expenses and costs of new clothing to wear on stage while touring, etc, each artist has probably made a total of $75,000 before paying taxes (which the artist is responsible for– remember Kool Moe Dee?). Let’s look at the time line now.

Let’s assume the artists had no jobs when they started this. They spent 4 months putting their demo tape together and getting the tracks just right. They spent another 6 months to a year getting to know who all of the players are in the rap music industry and building a local buzz while shopping their demo.

After signing to a label, it took another 8 months to make an album and to get through all of the label’s bureaucracy. When the first single dropped, the group went into promotion mode and traveled all over promoting the single at radio, retail, concerts, and publications for free–unless they had a radio hit as their single, in which case they began getting some show money for about half or a third of the dates they performed.

This was another six months. The record label decided to push three singles off the album so it was another year before they got back into the studio to make album number two. This scenario has been a total of 36 months. Each member of the group made $75,000 for a three year investment of time, which averages out to $25,000 per year.

In corporate America, that works out to be $12 per hour (before taxes). ‘

The labels are really great eh ?

Yup.

Slashdot it!

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This entry was posted on Thursday, December 13th, 2007 at 9:11 am and is filed under Music. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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