ABC’s of the Music Industry

Music is a fun, but when it comes to the music genre is all about money!

If anyone or any company feels your music won’t make them money, there’ll be absolutely no interest in your music. Thats it in the nut shell. Remember, to always remember this. The Audio Industry is about Money!

There are a couple sources of money to be made in the audio industry. They include but are not limited to:

Record sales

Tunes played on the radio

In films and television

Concerts

Song writing

Producing

Merchandising

Advertising

CD-ROMs/DVDs

If you’re an artist and want to enter the audio business, you want 3 very important very great people in your corner batting for you on a daily basis. They include:

Personal Supervisor The most of important of those three. They ought to have contacts in the music industry, keep eye on all your affairs, advise you on matters to do, and help boost your music, producers to hire, who to register with when to select tour. The private manager will receive 15% and 20% of an artists gross earnings and have great connections with record companies A&R, Marketing / Sales, and Promotion departments.

Music Attorney A fantastic lawyer specializing in the audio will understand how to correctly negotiate and structure the deals a artist makes. They ought to have great contacts and be trust worthy. Expect to pay between 100 and 200 per hour to get a fantastic audio lawyer. If an attorney thinks you’ll have signed, they forego a set fee and charge a proportion of artists earnings. In larger towns, youll pay more than in smaller cities.

Music Agent Book theatres and unique looks. A Personal Supervisor will assist the artist by choosing a fantastic agent.

If you blow up and begin generating the huge money, then a fantastic Supervisor / Accountant will be needed to deal with your tax situation, examine royalty statements, funding excursions, provide invest advice and how to deal with your money.

Getting recognized by mailing your presentation to record labels isnt hopeless, nevertheless, 99.9percent of the time your material isn’t going to get listened to. Even if you’ve got the best tune on the planet, it won’t be listened to. Record labels wish to limit their liability, so they don’t hear unsolicited music. Record labels dont want to follow numerous songs then be held liable in case a person asserts their substance has been copied.

Should you choose to email your CD to record tag, send the solicited material. First get a touch, preferably a person in the Artists & Repertoire (A&R) section. Contact and first speak to someone. After sending your CD follow up to determine if the targeted individual received your material and another follow up call to decide whether it was listened to. Split 3 to 6 songs and deliver a bio and picture of your self. This isnt the favorite method to submit your material to major record labels.

Until you’ve audio business consultants in your corner seeking to promote you and there is a buzz going around about you, your presentation won’t get to the decision makers at the record labels. Document businesses on a daily basis receive tens of thousands of unsolicited CDs. Most probably your CD will be chucked into a bin situated in a remote room full of overflowing bins of CDs.

Record labels like to handle artists that have a background of record sales. These are artist that may have made and sold their own CDs locally or regionally. Record labels like to handle artists who have completed their stuff and there is this buzz going on around them. MC Hammer, until he became famous, performed his very own materials and sold his own documents before a significant record label signed him. MC Hammer had a great deal of leverage in negotiating a fantastic contract because he already proved on a local basis he could sell records.

Record companies want to limit their liability. If you’re signed, you’re considered an investment that will require some money and they want to find a premium yield on their own money invested in you. The more you’re able to demonstrate you could sell record, the better odds you can get signed.

If you get signed to a recording company, you the artist will go into the studio and record songs for the album company. The record company makes duplicates of the master recording and ships it to a distributor. The distributor is a wholesaler who subsequently sells the CDs to retail outlets like Best Buy, Sam Goody and Tower Records. The record company then pushes money into marketing by advertising and promoting your music with hopes of selling documents, hence making you a celebrity and getting rich!

It’s not quite as simple as it seems. It requires a lot of hard work by a gifted group of people. Everybody must work together to make this happen. There are usually lots of people behind the scenes working to earn a artist a star.

Record companies often categorized into 4 classes: Major label record companies – have the listing and working resources to complete all function to market records. Major label list companies are integrated because they could take care of the promotion, sales, advertising, and distribution to market music. Leading label list companies are Arista, Atlantic, Capital, and Sony.

Major tag affiliate labels have specific agreements with the significant label record companies, in which the significant label may finance the smaller labels recording and managing costs in exchange for a part of the smaller tag profits.

Separate labels – distributes documents through significant labels. Independent labels have several workers. They have a tendency to find ability, sign the talent, sees to it the audio is listed along with contracts with major recording labels to perform the promotion, promotion, and other functions.

Authentic independent labels Has no affiliation with a significant label and distribute their music through independent vendors.

The A&R (Artists & Repertoire) Department

The A&R department is that the talent scout. They’re responsible for finding new abilities. They’re the eyes and ears of the record company. Yet, not because you get signed to a record label because an A&R representative enjoys it doesnt mean your CD will ever get produced and released. Executives higher in the company could cancel your deal should they believe your CD won’t sell. A record company is going to need to invest a few hundred thousands of dollars to release your own CD, so they will be extremely cautious on whom they release.

The Marketing and Sales Department

This section is responsible for receiving the public excited about your music and original selling to retail shops the notion of transporting your CD. They are accountable for promotional merchandise, advertising your CD, in shop displays, promotion, your CD cover, etc.,.

The Promotions Department

This section is responsible for getting your music played on your radio. The people in this section will go to the a variety of radio channels to persuade them to perform your material. If your substance doesnt have played, nobody will now how you’re. Individuals might examine your CD in the retail shop and wonder who you’re. There is also a direct correlation with all CD sales vs. how often a song for that CD gets played on the radio. More air time in the radio equates to more CD revenue for the record companies.

Remember music is art, but into the record companies, its about money. Keep in mind that its a business. Keep in mind everybody is out to earn money. The moment men and women believe you won’t earn money for them, you’ll be dropped and these very same people will turn to find other artists they believe will make them money. Sad to say, the list business doesnt believe in grooming people. In case your very first CD isnt a success, then you’re out. There are rarely second opportunities. There are other gifted people behind you who what their shot at fame.

Distribution

Most major retailers like Tower documents won’t take a CD unless the record has a distributor. A powerful distributor ensures your CD will be available in enough places so your CD will market to finally generate income. Big labels utilize large distributors who are much better able to find record shops stocked. After decades of oversight, there are only 5 major national wholesale distributors in the US that are possessed by conglomerates who also own major record labels. They are:

BMG (spreads Arista, BMG and RCA)

EMI (spreads Capital and Virg.)

Sony Music (distributes Columbia, Epic and Sony)

Universal Music Group (distributes Interscope, Island/Def Jam, along with MCA)

WEA (spreads Atlantic, Elektra and Warner Bros..)

Distribution through the Web Record labels and artists are increasingly using the web to distribute their music. Unknown artists may also use websites like this mZeus.com, http://www.mZeus.com, to generate buzz about their music. But, unknown artists will still need to work hard to get the buzz going about their music. Finally, signing up a contract with a significant record label is your thing to do. The significant record labels have the muscle and people to provide you with a fantastic chance at getting famous.

Lets face it. Its all about money! Yes, the entertainment industry seems exciting and fun, but people are in it to make money. As an artist the main contract in the audio sector is the listing contract. The royalty is a part of money from album sales paid for the artist for his/her music. The record contract that’s a negotiated legal agreement between the record label and artist will state just how much royalty an artist is entitled to among other matters.

An artist should have a fantastic understanding of how royalties are calculated. A fantastic audio lawyer will aid with this procedure by making certain the artist has been compensated what he/she warrants. Even a 13% royalty for one artist may be a great deal of money, but a 13% royalty for another maybe chump change.

So this is how the numbers work. A artist successfully signs a record contract. The artist belongs into the studio and work to make a CD the record company totally supports. The record company via its supplier sells the CD using a suggested retail list price (SRLP) of $ .99 into a retailer for approximately .99. The distributor will take 10% – 14% of their .99. Therefore the record company will get regarding the SRLP of .99. Independent record companies can receive less than the SRLP. Major record companies pay artist royalty as a proportion of SRLP.

Rates will differ from every artist based on how effective their record sells. For a new artist that never had a record deal or has offered less than 100,000 albums will find a normal royalty rate of 12% to 14% of those SRLP. To get an independent record label it maybe 10 percent to 14% of those SRLP. For established artists that have a track record of selling 200,000 to 500,000 albums the royalty rate maybe 14% to 16 percent. For artists that have sold over 750,000 albums that the royalty rates maybe 16 percent to 18%. As you may see, the more effective the artist is, the greater the royalty. Furthermore, royalty maybe according to how well the record sells. For instance, the record contract may state that an artist will get 12% to the first 100,000 units offered, 14% to 100,001 to 300,000 units offered, and 16 percent for over 300,000 units offered.

But hold your horses. In the event you sell 500,000 albums and have a royalty rate of 12% doesnt mean you’ll receive 12% of 500,000 in a SRLP of .98 that would equivalent,078,800. This is because as stated in the record contract, you will find deductions (expenses) that need to be deducted.

To eliminate the bat, then the record company will subtract a packing charge from the SRLP that is typically 20% to cassettes and 25% for CDs.

Secondly, more often the artist is liable for paying the album producer some of his or her holdings. Typically a producer will receive 3% to 4% of the SRLP.

Third, in the record industry, the contract will state that the artists simply generates royalties on 85 percent of the unit sales. For each 100 albums sold, 15 albums sold, the artist has no royalty.

Forth, the record company will hold some of the royalty money because the distributor typically features an agreement with all the retail outlets to choose credit and back the retail shops money in unsold units. This is very important, because a fantastic part of your record may be returned into the record company if the record doesnt sell! The money thats held is called a reserve. Reserves maybe held for 2 years before its compensated into the artist. Typically a significant record label will hold a reserve of 25% to 40 percent of their royalties.

Fifth, improvements paid in the record company into the artist have been deducted in the artists royalty. Advances include but are not limited to the:

Recording studio costs (new artists into a independent my undergo an advancement of to,000, new artist into a Significant record label 0,000 into 0,000

Hiring independent promoters to help promote the records

Cost of making a music video (promotions along with an inexpensive music video may cost 0,000 into 0,000.

When money is made for the album sales, all these costs are deducted in the artists royalties. This is called re-coupment. Therefore, if the artists record isnt effective, the artist may never see a dime. If the exemptions are significantly less than the deductions, then they artists might spend the record company money by being in the red! This negative cost maybe carried over to another album release. A fantastic record contract won’t allow a negative cost from 1 record to be carried over to a different record (cross collateralization). If there isnt another record the record company generally eats the reduction.

There are quite a few different costs the record company won’t bill the artists. This includes in-house and marketing promotions (free CD give away, etc.).

Just just how much can an artist create for a gold record (500,000 albums sold).

Take a Look at the mathematics:

CD (suggested retail list price SRLP) = $ 17.99 Less CD Packaging of 20% = $ -4.50 NET = $ 13.49 Times: Web artist royalty rate (12% – 3% to manufacturer ) = X 9% Gross royalty per CD (9% of .48) = $ 1.21 Times 500,000 albums = $ 500,000 SUB TOTAL = $ 605,00 Times: Royalty posture% (15% o = no royalty) = X 85 percent Gross Royalty = $ 514,250 Less improvements: Recording, promo, music video, tour = $ -350,000 TOTAL ROYALTY TO ARTIST = $ 164,250 – Reserves (35 percent ) returned by retailer) = $ -57,487.50 (1) ACTUAL ROYALTY PAID TO ARTIST = $ 106,762.50

(1)Reserves will be compensated to artist in 2 years when no CDs returned by retailer

Bear in mind the artist has to pay TAXES! Dont forget Uncle Sam must receive his cut! Also, dont forget that the Personal Manger, the Lawyer, the Accountant, the Agent along with other numerous expenses.

But, there are many different royalties an artist could obtain. They include, Record Clubs, Compilation CDs, Samplers (low-cost records in which several artists have been featured), Premiums (albums sold with different goods, such as cereal), Film Soundtrack Album, Music Video Revenue, Greatest Hits Record, Australian Royalties (tune played in some foreign state radio stations pay exemptions, including the US), Master Use License (music employed in a movie, tv, commercial, and the world wide web, CD-ROM and DVD), etc..

Obviously because of the world wide web, the rules royalties are changing. Lots of people now buy their music through the Internet. Just think, no packaging needed and no distribution to traditional retail shops needed. Some websites make it possible for customers to buy individual songs as oppose to an album. Changes are now taking place on how exemptions are computed because of the web. Many attorneys are pushing to get royalties be based on each song offered as oppose to every record sold. So stay tuned!