The History channel morphed from running historical documentaries to scripted TV shows and unscripted reality shows. Home Box Office morphed from running licensed movies to creating its own content and renaming itself HBO.
Newspapers ran long form stories that people wanted to read. Then the goal shifted to profit-seeking click bait and we got news tainted by money and political agendas from the owner of the news outlet. In the end, the papers got rich by selling advertisements and re-printing PR stories. And the people stopped buying newspapers and took to the internet for their news. The urban boundaries of the traditional newspaper suddenly couldn’t compete with the worldwide boundaries of the internet.
Change is constant, because we get bored easily. The internet connected billions of people and almost 20 years later we take it for granted, the same way we take electricity for granted. We expect it to work all the time and god forbid if we have downtime.
Great buildings of yesteryear are being torn down as cities constantly reinvent themselves. Hell, my hometown is in the midst of converting from an industrial steel city into an innovation hub. So why should music be chained to the ways of the old.
Steve Albini published his 1993 essay “The Problem with Music”. You can find it at this link.
Here is a brief summary of the figures found in it;
These figures are representative of amounts that appear in record contracts daily. There’s no need to skew the figures to make the scenario look bad, since real-life examples more than abound. Income is underlined, expenses are not.
- Advance: $250,000
- Manager’s cut: $37,500
- Legal fees: $10,000
- Recording Budget: $150,000
- Producer’s advance: $50,000
- Studio fee: $52,500
- Drum, Amp, Mic and Phase “Doctors”: $3,000
- Recording tape: $8,000
- Equipment rental: $5,000
- Cartage and Transportation: $5,000
- Lodgings while in studio: $10,000
- Catering: $3,000
- Mastering: $10,000
- Tape copies, reference CD’s, shipping tapes, misc expenses: $2,000
- Video budget: $30,000
- Cameras: $8,000
- Crew: $5,000
- Processing and transfers: $3,000
- Offline: $2,000
- Online editing: $3,000
- Catering: $1,000
- Stage and construction: $3,000
- Copies, couriers, transportation: $2,000
- Director’s fee: $3,000
- Album Artwork: $5,000
- Promotional photo shoot and duplication: $2,000
- Band fund: $15,000
- New fancy professional drum kit: $5,000
- New fancy professional guitars (2): $3,000
- New fancy professional guitar amp rigs (2): $4,000
- New fancy potato-shaped bass guitar: $1,000
- New fancy rack of lights bass amp: $1,000
- Rehearsal space rental: $500
- Big blowout party for their friends: $500
- Tour expense (5 weeks): $50,875
- Bus: $25,000
- Crew (3): $7,500
- Food and per diems: $7,875
- Fuel: $3,000
- Consumable supplies: $3,500
- Wardrobe: $1,000
- Promotion: $3,000
- Tour gross income: $50,000
- Agent’s cut: $7,500
- Manager’s cut: $7,500
- Merchandising advance: $20,000
- Manager’s cut: $3,000
- Lawyer’s fee: $1,000
- Publishing advance: $20,000
- Manager’s cut: $3,000
- Lawyer’s fee: $1,000
- Record sales: 250,000 @ $12 = $3,000,000 gross retail revenue Royalty (13% of 90% of retail): $351,000
- less advance: $250,000
- Producer’s points: (3% less $50,000 advance) $40,000
- Promotional budget: $25,000
- Recoupable buyout from previous label: $50,000
- Net royalty: (-$14,000)
- Record company income:
- Record wholesale price $6,50 x 250,000 = $1,625,000 gross income Artist Royalties: $351,000
- Deficit from royalties: $14,000
- Manufacturing, packaging and distribution @ $2.20 per record: $550,000
- Gross profit: $710,000
THE BALANCE SHEET
This is how much each player got paid at the end of the game.
- Record company: $710,000
- Producer: $90,000
- Manager: $51,000
- Studio: $52,500
- Previous label: $50,000
- Agent: $7,500
- Lawyer: $12,000
- Band member net income each: $4,031.25
The band is now 1/4 of the way through its contract, has made the music industry more than 3 million dollars richer, but is in the hole $14,000 on royalties. The band members have each earned about 1/3 as much as they would working at a 7-11, but they got to ride in a tour bus for a month.
The next album will be about the same, except that the record company will insist they spend more time and money on it. Since the previous one never “recouped,” the band will have no leverage, and will oblige.
The next tour will be about the same, except the merchandising advance will have already been paid, and the band, strangely enough, won’t have earned any royalties from their t-shirts yet. Maybe the t-shirt guys have figured out how to count money like record company guys.
So you wonder why artists are still in debt to their label. Yeah they might have recorded and they might have toured, but they really didn’t make anything. So if you are an artist today, what era would you rather be in.
But Steve Albini didn’t stop there. 21 years later, Albini did a presentation about music at an event. You can read the whole presentation here.
Here is a summary;
I hear from some of my colleagues that these are rough times: that the internet has cut the legs off the music scene and that pretty soon nobody will be making music anymore because there’s no money in it. Virtually every place where music is written about, there is some version of this troubling perspective. People who used to make a nice income from royalties, they’ve seen the royalties dry up. And people who used to make a living selling records are having trouble selling downloads as substitute for records, and they no longer make records.
It’s worthwhile to remember from where we’ve come. From where this bitchiness originates. In the 1970s through the 1990s, the period in which I was most active in bands in the music scene – let’s call this the pre-internet era. The music industry was essentially the record industry, in that records and radio were the venues through which people learned of music and principally experienced it. They were joined by MTV and videos in the 80s and 90s, but the principle relationship people had with music was as sound recordings. There was a booming band scene and all bands aspired to getting recorded, as a mark of legitimacy.
In the 70s and 80s most bands went through their entire lifecycle without so much as a note of their music recorded. But recording was a rare and expensive enterprise, so it wasn’t common. Even your demo tape required considerable investment. So when I started playing in bands in the 70s and 80s most bands went through their entire lifecycle without so much as a note of their music ever being recorded.
The key point here is the artists who played music for their whole lives, wrote songs and never had anything officially recorded. All because the gatekeepers of the day didn’t see them worthy. Today, everyone can record and release their music. If it gets heard, is another story, but you have a chance to record and build a musical legacy.
Radio stations were enormously influential. Radio was the only place to hear music from any people and record companies paid dearly to influence them. Direct payola had been made illegal but this was a trivial workaround. Record pluggers acting as programming consultants were the middlemen. They paid radio stations for access to their programmers and conducted meetings where new records were promoted.
CBS told Journey to change their style and become more radio friendly otherwise they would no deal in place.
The most significant bit of tailoring was an accounting trick called recouping costs. The costs of making a record wasn’t borne by the record label, except initially. Those costs were recouped or taken out of the income the band might otherwise run as royalties. The same was true of all those promo copies, posters, radio pluggers and payola men, producers, publicists, tour support, 8×10 glossies, shipping, freight – basically anything that could be associated with a specific band or record was ultimately paid for by the band, not by the record label.
As the label shifted from vinyl to CD as the dominant format, the labels could easily sell the CD as a convenient, compact, trouble-free way to listen to music. The profit margin exploded and the money got stupid. Retails costs of a CD was half again or double more than an LP but the manufacturing, shipping and storage costs were a tiny fraction. The labels even used vinyl’s legacy as a tool to increase this profit margin by charging bands for unique packaging, despite the fact that CD packaging was designed to be standardised.
21 years later and Albini is still pointing out the record label creative accounting. And these creative accounting practices have been in place since the 1930’s and they are still in place today. The whole world changes, wars happen, we put man on the moon and the recording label contracts having changed a bit.
You may have noticed that in my description of the mass market music scene and the industry as it was pre-internet I made little mention of the audience or the bands. Those two ends of the spectrum were hardly considered by the rest of the business. Fans were expected to listen to the radio and buy records and bands were expected to make records and tour to promote them. And that was about all the thought either were given. But the audience was where all the money came from and the bands were where all the music came from.
So true. The audience/fans are what makes music money but they never had a say or were not even considered in any discussion when it comes to music. And Albini’s comments highlight the viewpoints the record label suits had. Fans were expected to pay. So what a shock they all got when Napster showed them what fans really want. So now we are living in an audience driven distribution system, albeit the record labels are trying very very hard to get it back to a record label driven distribution system.
Fans can find the music they like and develop direct relationships with the bands.
The world and social media allows it to happen. Hell, I don’t even understand why artists would want to do interviews for magazines or websites or radios. With social media, artists can control the narrative themselves. That’s better than a stupid magazine. Artists can tour places they never could have done before.
A couple of years ago my band mounted a tour of eastern Europe. We played all the hot spots: the Czech Republic, Poland, Croatia, Slovenia, Macedonia, Bulgaria, we made it as far as Istanbul, Turkey. It was a magical experience, playing in front of audiences who were relatively unjaded by the routine of touring bands and we were welcomed like friends. We played to full houses at the same size venues as the rest of Europe. The same sizes as we would play here in Australia. And the audiences seem equivocally familiar with our music. The key difference being that most of the places have literally never sold a single record. Essentially 100% of our exposure had been through informal means over the internet or hand-to-hand.
Iron Maiden toured Central America and places like Costa Rica to sold out audiences and they never sold a recorded album there. Same deal with India and other Asian countries.
There is great public good by letting creative material lapse into the public ownership. The copyright law has been modified so extensively in the past decades that now this essentially never happens, creating absurdities whenever copyright is invoked. There’s a huge body of work that is not legally in the public domain, though its rights holder, authors and creators have died or disappeared as businesses. And this material, from a legal standpoint now removed from our culture – nobody may copy it or re-release it because it’s still subject to copyright.
I guess the problems with music are still there and with the lobby groups preaching stronger copyrights and jail times on par with murder and drug trafficking, it could get worse. Seen the memo on the war against drugs. Enforcement is losing.