There’s always crooks in the music business woods and they are finding creative ways to steal.
Judas Priest posted a message recently about a fake “Glen Tipton Foundation” account doing the rounds and asking people to donate. Metal fans (like most music fans) are loyal so they give. I’m not sure how many fans have given monies to this fake foundation but it’s not surprising that the crooks are targeting artists.
Because if this artist loyalty didn’t exist, platforms like Kickstarter, Pledge and Indiegogo who allow fans to fund their favourite artists would also not exist nor would they make any money in the process from their percentage cut. And even then, these platforms take a long time to make the payments they gathered to the artists. So for all their good intentions as enablers, these platforms also act like crooks, keeping money which is not theirs for a longer term to earn more money from it.
Even the platforms that allow you to upload music to digital providers, keep your royalty payments for at least three to six months before clearing them for payment. The collection agencies are also the same.
And it doesn’t end there.
The record labels always want a deal which favours them more than the artist.
An 80/20 royalty deal is normally the case, which means that 80% goes to the label and 20% to the artist. This deal is also seen as “artist friendly”. But before any royalty is paid back to the artist, all of the advances given to the artist, plus recording costs and marketing costs need to be recouped back by the label.
And the way the monies are recouped by the label is via the royalty split.
For example, let’s just say that the artist is given a $60K advance, $20K recording budget and a $20K marketing budget. All up these payments totals $100K. All of these monies need to be paid back to the label.
So if the artist makes $100K in their first week sales, the label makes a profit of $80K which they bank, and the $20K the artist makes, also goes to the record label to pay back the $100K in loans given. So at this point in time the artist has only paid back $20K of their $100K loan.
For the artist to pay back the label the original $100K loan, they will need to generate $500K in sales.
And from the $500K sales, the record label has banked $400K as pure profit, and the artist has repaid the $100K loan.
And now, the artist can start earning a split of all future sales made from this point on. But the labels will add video shoot costs, photo costs, car hires, plane tickets, consultant fees, lawyer frees and everything else to the bill, to ensure the artist stays in a state of debt, so that the label could keep banking the 100%.
Let’s not forget that the artist themselves will also have an entourage of people waiting on advances and payments, like managers, accountants, lawyers.
Here is a pretty cool article about these kind of record deals from the recent UK Government inquiry into the music business.