Percentage paid to artist for CD is ? -Sound Forge - PC

Subject:Percentage paid to artist for CD is ? Posted by: Will_3 Date:4/6/2004 11:26:46 AM When an artist signs a record deal... 1 - What are the typical percentages paid to the artist/band/musician for each CD sold? 2 - What about for a DVD of the artist/band/musician performing... what percentage for media like this? 3 - Are any cost held out of the artist share... like promototion, advertising, marketing or other? 4 - Is there a web site that outlines any of this? My guess is that it is negociated but there must be a high-low range... and maybe even a normal standard. Thanks for any help - Will
Subject:RE: Percentage paid to artist for CD is ? Reply by: Buckskin Date:4/6/2004 11:37:24 AM here's the basics; 50% of the publishing means you get 50 cents for every dollar the publishing of the song brings in. #2 below is what points is about, a point is one percent. Of course your song is one of ten (thats as many are as counted on an album) so you are actually getting one tenth of one percent of each album sold. If it sells a million copies at ten dollars, you get $10,000. Points are not worth negotiating unless you firmly believe the album is going to sell. So the other option instead of a point is a flat fee (essentially charging them for your "studio time" for any masters you give them). You'll want a publisher, if the band is well-known and they are using a song you wrote, you should be able to get a publshing deal.. ____________________ A recording contract potentially provides two income streams: (1) Mechanical royalties; This is money that goes directly to the owner of the publishing, that is either the writer and/or publisher of the song. This is the most lucrative stream to participate in and one that every one wants to attach to. (2) The other income stream is a royalty based on the sales of the CD; This is the cateagory that most musicians fall into. It is here where we enter the topsy turvy world of creative accounting and antiquated thinking that permeates the industry. When an artist negotiates a contract (preferably through a music attorney) he or she must come to terms as to what share of the price of the CD goes to the artist and what share goes to the company. This is referred to as "points" or a percentage of sales. An industry standard point allocation to the artist is usually 10 to 12. This means that the artist will get 10 to 12 percent of the sale of the CD. But 10 to 12 percent of what number? Is it the retail price? The wholesale price? The manufacturer's price? For this there is no standard and different companies will try to enforce different numbers. Thus, 10 percent of a retail price of $18 dollars could be $1.80 or 10 percent of a wholesale price of six dollars could be $.60. Now does this mean that the artist will receive money from every CD they sell? Not on your life! In fact, most will never see a royalty at all. Here's why: Let's say you're a great singer or player who does not write songs. This does not entitle you to the mechanical or publishing income stream, but only the potential share in points. Now, an A&R person comes up to you and says "You're great and I'm going to give you a hundred thousand dollars and 10 points to make a CD for my company". You may think you've finally made it. Here is the reality. This hundred thousand is an advance against earnings not a gift.This means you must pay back the record company a hundred thousand dollars out of YOUR points in order to see penny one in royalties.This is called recoupment. Out of this hundred thousand you need to pay for the production of your CD meaning rehearsals, musicians, studio, engineering and producer fees, and miscellaneous expenses. This can easily cost you most or all of your money. So, say you make a CD for one hundred thousand dollars and you have ten points of a price of ten dollars. If you hired a producer to work with you they usually take three points as a fee, three of YOUR points. Now you're down to seven points or seven percent of ten dollars which is $.70 for each CD sold. Now, let's say you sell 50,000 units at ten dollars each (your negotiated wholesale price). This means the record company made $450,000.00 and you've made $35,000.00. You still owe the company $65,000.00 of the original $100,000.00 that you were advanced. Now, let's add insult to injury and talk about a clause that is still in practice today. This is the "breakage" clause that stipulates that the artists not get paid on one hundred percent of sales but rather on 90 percent of sales. That means instead of paying you on 50,000 sales that you've sound-scanned you're only going to get paid for 45,000! Why? Get this-this clause goes back to the days of 78 r.p.m records that used to break during transport and is still in effect today. So let's now decrease your $35,000.00 by ten percent, now you're down to $31,500. 00 You owe the company $68,500. 00 . Now let's say that same A&R person says "Well you didn't recoup your $100,000.00 advance but we love you and want to give you another $100,000.00 to make another CD. Now you owe them $168,500.00. The same rules apply and the cycle starts again. This form of cross-collateralization and usury has gone unregulated, unabated, and unchallenged for as long as the industry has existed. This debit to your account is further augmented by any other associated recoupable costs, such as, videos, re-mixes, and tour support. Record companies are also known to keep an artist under contract for years without releasing any product until they think it's commercially acceptable. This has caused companies to reject effort after effort by wonderful artists keeping them in virtual creative and financial prison. Your best option isto get a lawyer that knows what he/she's doing in this, and spend as much time in negotiating as possible.
Subject:RE: Percentage paid to artist for CD is ? Reply by: Will_3 Date:4/6/2004 1:16:54 PM Buckskin, Thanks for the info. Actually, I will be the "record company" if I do this deal and want to understand what is typical and normal... and who pays what ouf of what share. I have talked to one "entertainment lawyer" but they had no idea of standard rates and cost division. It looks like from your ourline that _everything_ comes out of the artist share... can that be true? And... 10% of what is a really good question. If you make it 10% of the price printed on the CD you would really be in a jam later on if you wanted to discount unsold inventory just go get rid of it. 1 - I would like to hear other comments on this from anyone with experience or knowledge. 2 - Anyone know a good entertainment lawyer? Thanks for any additional comments. - Will
Subject:RE: Percentage paid to artist for CD is ? Reply by: Rednroll Date:4/6/2004 9:04:04 PM "2 - Anyone know a good entertainment lawyer?" No such thing as a GOOD entertainment lawyer. I have had many artists spoil getting record deals due to having an entertainment lawyer. I understand the use of the entertainment lawyer, because you're unfamiliar with the business and want to make sure you don't get screwed. The people looking into scouting and signing an artist are taking risks, just like the artist. When you make things difficult by adding an entertainment lawyer into the mix, it makes taking that risk very unattractive by the people putting up all the upfront money. Therefore, 100% of zero is still zero.

here's the basics;

50% of the publishing means you get 50 cents for every dollar the publishing of the song brings in.

#2 below is what points is about, a point is one percent. Of course your song is one of ten (thats as many are as counted on an album) so you are actually getting one tenth of one percent of each album sold. If it sells a million copies at ten dollars, you get $10,000.

Points are not worth negotiating unless you firmly believe the album is going to sell. So the other option instead of a point is a flat fee (essentially charging them for your "studio time" for any masters you give them).

You'll want a publisher, if the band is well-known and they are using a song you wrote, you should be able to get a publshing deal..
____________________

A recording contract potentially provides two income streams:

(1) Mechanical royalties; This is money that goes directly to the owner of the publishing, that is either the writer and/or publisher of the song. This is the most lucrative stream to participate in and one that every one wants to attach to.

(2) The other income stream is a royalty based on the sales of the CD; This is the cateagory that most musicians fall into. It is here where we enter the topsy turvy world of creative accounting and antiquated thinking that permeates the industry.

When an artist negotiates a contract (preferably through a music attorney) he or she must come to terms as to what share of the price of the CD goes to the artist and what share goes to the company. This is referred to as "points" or a percentage of sales. An industry standard point allocation to the artist is usually 10 to 12. This means that the artist will get 10 to 12 percent of the sale of the CD. But 10 to 12 percent of what number? Is it the retail price? The wholesale price? The manufacturer's price? For this there is no standard and different companies will try to enforce different numbers. Thus, 10 percent of a retail price of $18 dollars could be $1.80 or 10 percent of a wholesale price of six dollars could be $.60. Now does this mean that the artist will receive money from every CD they sell? Not on your life! In fact, most will never see a royalty at all. Here's why:

Let's say you're a great singer or player who does not write songs. This does not entitle you to the mechanical or publishing income stream, but only the potential share in points. Now, an A&R person comes up to you and says "You're great and I'm going to give you a hundred thousand dollars and 10 points to make a CD for my company". You may think you've finally made it. Here is the reality. This hundred thousand is an advance against earnings not a gift.This means you must pay back the record company a hundred thousand dollars out of YOUR points in order to see penny one in royalties.This is called recoupment. Out of this hundred thousand you need to pay for the production of your CD meaning rehearsals, musicians, studio, engineering and producer fees, and miscellaneous expenses. This can easily cost you most or all of your money.

So, say you make a CD for one hundred thousand dollars and you have ten points of a price of ten dollars. If you hired a producer to work with you they usually take three points as a fee, three of YOUR points. Now you're down to seven points or seven percent of ten dollars which is $.70 for each CD sold. Now, let's say you sell 50,000 units at ten dollars each (your negotiated wholesale price). This means the record company made $450,000.00 and you've made $35,000.00. You still owe the company $65,000.00 of the original $100,000.00 that you were advanced. Now, let's add insult to injury and talk about a clause that is still in practice today. This is the "breakage" clause that stipulates that the artists not get paid on one hundred percent of sales but rather on 90 percent of sales. That means instead of paying you on 50,000 sales that you've sound-scanned you're only going to get paid for 45,000! Why? Get this-this clause goes back to the days of 78 r.p.m records that used to break during transport and is still in effect today. So let's now decrease your $35,000.00 by ten percent, now you're down to $31,500. 00 You owe the company $68,500. 00 . Now let's say that same A&R person says "Well you didn't recoup your $100,000.00 advance but we love you and want to give you another $100,000.00 to make another CD. Now you owe them $168,500.00. The same rules apply and the cycle starts again. This form of cross-collateralization and usury has gone unregulated, unabated, and unchallenged for as long as the industry has existed. This debit to your account is further augmented by any other associated recoupable costs, such as, videos, re-mixes, and tour support. Record companies are also known to keep an artist under contract for years without releasing any product until they think it's commercially acceptable. This has caused companies to reject effort after effort by wonderful artists keeping them in virtual creative and financial prison.

Your best option isto get a lawyer that knows what he/she's doing in this, and spend as much time in negotiating as possible.