Fun_People Archive
16 Feb
Friends don't let friends sign to major record labels.

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From: Peter Langston <psl>
Date: Wed, 16 Feb 100 22:43:14 -0800
To: Fun_People
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Subject: Friends don't let friends sign to major record labels.

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Forwarded-by: Kevin Johnsrude <kevinj@roguewave.com>
[Pardon the language.  If you don't like language, don't read it. ;-)
-Kevin]

"Making music makes you smarter."
 -- Winter NAMM 2000 Slogan


Some of Your Friends are Already This Fucked
by Steve Albini
from The Baffler issue #5

Whenever I talk to a band who are about to sign with a major label, I always
end up thinking of them in a particular context. I imagine a trench, about
four feet wide and five feet deep, maybe sixty yards long, filled with
runny, decaying shit. I imagine these people, some of them good friends,
some of them barely acquaintances, at one end of this trench. I also imagine
a faceless industry lackey at the other end, holding a fountain pen and a
contract waiting to be signed.

Nobody can see what's printed on the contract. It's too far away, and
besides, the shit stench is making everybody's eyes water. The lackey shouts
to everybody that the first one to swim the trench gets to sign the
contract. Everybody dives in the trench and they struggle furiously to get
to the other end. Two people arrive simultaneously and begin wrestling
furiously, clawing each other and dunking each other under the shit.
Eventually, one of them capitulates, and there's only one contestant left.
He reaches for the pen, but the Lackey says, "Actually, I think you need
a little more development. Swim it again, please. Backstroke."

And he does, of course.


A&R Scouts

Every major label involved in the hunt for new bands now has on staff a
high-profile point man, an "A&R" rep who can present a comfortable face to
any prospective band. The initials stand for "Artist and Repertoire,"
because historically, the A&R staff would select artists to record music
that they had also selected, out of an available pool of each. This is
still the case, though not openly.

These guys are universally young [about the same age as the bands being
wooed], and nowadays they always have some obvious underground rock
credibility flag they can wave. Lyle Preslar, former guitarist for Minor
Threat, is one of them. Terry Tolkin, former NY independent booking agent
and assistant manager at Touch and Go is one of them. Al Smith, former
soundman at CBGB is one of them. Mike Gitter, former editor of XXX fanzine
and contributor to Rip, Kerrang and other lowbrow rags is one of them. Many
of the annoying turds who used to staff college radio stations are in their
ranks as well.

There are several reasons A&R scouts are always young. The explanation
usually copped-to is that the scout will be "hip" to the current musical
"scene." A more important reason is that the bands will intuitively trust
someone they think is a peer, and who speaks fondly of the same formative
rock and roll experiences.

The A&R person is the first person to make contact with the band, and as
such is the first person to promise them the moon. Who better to promise
them the moon than an idealistic young Turk who expects to be calling the
shots in a few years, and who has had no previous experience with a big
record company. Hell, he's as naive as the band he's duping. When he tells
them no one will interfere in their creative process, he probably even
believes it.

When he sits down with the band for the first time, over a plate of angel
hair pasta, he can tell them with all sincerity that when they sign with
company X, they're really signing with him and he's on their side. Remember
that great, gig I saw you at in '85? Didn't we have a blast.

By now all rock bands are wise enough to be suspicious of music industry
scum. There is a pervasive caricature in popular culture of a portly, middle
aged ex-hipster talking a mile-a-minute, using outdated jargon and calling
everybody "baby." After meeting "their" A&R guy, the band will say to
themselves and everyone else, "He's not like a record company guy at all!
He's like one of us." And they will be right. That's one of the reasons he
was hired.

These A&R guys are not allowed to write contracts. What they do is present
the band with a letter of intent, or "deal memo," which loosely states some
terms, and affirms that the band will sign with the label once a contract
has been agreed on.

The spookiest thing about this harmless sounding little "memo," is that it
is, for all legal purposes, a binding document. That is, once the band sign
it, they are under obligation to conclude a deal with the label. If the
label presents them with a contract that the band don't want to sign, all
the label has to do is wait. There are a hundred other bands willing to
sign the exact same contract, so the label is in a position of strength.

These letters never have any term of expiration, so the band remain bound
by the deal memo until a contract is signed, no matter how long that takes.
The band cannot sign to another label or even put out its own material
unless they are released from their agreement, which never happens. Make
no mistake about it: once a band has signed a letter of intent, they will
either eventually sign a contract that suits the label or they will be
destroyed.

One of my favorite bands was held hostage for the better part of two years
by a slick young "He's not like a label guy at all,' A&R rep, on the basis
of such a deal memo. He had failed to come through on any of his promises
(something he did with similar effect to another well-known band), and so
the band wanted out. Another label expressed interest, but when the A&R
man was asked to release the band, he said he would need money or points,
or possibly both, before he would consider it.

The new label was afraid the price would be too dear, and they said no
thanks. On the cusp of making their signature album, an excellent band,
humiliated, broke up from the stress and the many months of inactivity.


There's This Band

There's this band. They're pretty ordinary, but they're also pretty good,
so they've attracted some attention. They're signed to a moderate-sized
"independent" label owned by a distribution company, and they have another
two albums owed to the label.

They're a little ambitious. They'd like to get signed by a major label so
they can have some security-you know, get some good equipment, tour in a
proper tour bus-nothing fancy, just a little reward for all the hard work.

To that end, they got a manager. He knows some of the label guys, and he
can shop their next project to all the right people. He takes his cut,
sure, but it's only 15%, and if he can get them signed then it's money well
spent.  Anyway, it doesn't cost them any thing if it doesn't work. 15% of
nothing isn't much!

One day an A&R scout calls them, says he's "been following them for a while
now," and when their manager mentioned them to him, it just "clicked."
Would they like to meet with him about the possibility of working out a
deal with his label? Wow. Big Break time.

They meet the guy, and y'know what-he's not what they expected from a label
guy. He's young and dresses pretty much like the band does. He knows all
their favorite bands. He's like one of them. He tells them he wants to go
to bat for them, to try to get them everything they want. He says anything
is possible with the right attitude. They conclude the evening by taking
home a copy of a deal memo they wrote out and signed on the spot.

The A&R guy was full of great ideas, even talked about using a name
producer. Butch Vig is out of the question-he wants 100 g's and three
points, but they can get Don Fleming for $30,000 plus three points. Even
that's a little steep, so maybe they'll go with that guy who used to be in
David Letterman's band. He only wants three points. Or they can have just
anybody record it [like Warton Tiers, maybe-cost you 5 or 10 grand] and
have Andy Wallace remix it for 4 grand a track plus 2 points. It was a lot
to think about.

Well, they like this guy and they trust him. Besides, they already signed
the deal memo. He must have been serious about wanting them to sign. They
break the news to their current label, and the label manager says he wants
them to succeed, so they have his blessing. He will need to be compensated,
of course, for the remaining albums left on their contract, but he'll work
it out with the label himself. Sub Pop made millions from selling off
Nirvana, and Twin Tone hasn't done bad either: 50 grand for the Babes and
60 grand for the Poster Children-without having to sell a single additional
record. It'll be something modest. The new label doesn't mind, so long as
it's recoupable out of royalties.

Well, they get the final contract, and it's not quite what they expected.
They figure it's better to be safe than sorry and they turn it over to a
lawyer-one who says he's experienced in entertainment law-and he hammers
out a few bugs. They're still not sure about it, but the lawyer says he's
seen a lot of contracts, and theirs is pretty good. They'll be getting a
great royalty: 13% [less a 10% packaging deduction]. Wasn't it Buffalo Tom
that were only getting 12% less 10? Whatever.

The old label only wants 50 grand, and no points. Hell, Sub Pop got 3 points
when they let Nirvana go. They're signed for four years, with options on
each year, for a total of over a million dollars! That's a lot of money in
any man's English. The first year's advance alone is $250,000. Just think
about it, a quarter-million, just for being in a rock band!

Their manager thinks it's a great deal, especially the large advance.
Besides, he knows a publishing company that will take the band on if they
get signed, and even give them an advance of 20 grand, so they'll be making
that money too. The manager says publishing is pretty mysterious, and nobody
really knows where all the money comes from, but the lawyer can look that
contract over too. Hell, it's free money.

Their booking agent is excited about the band signing to a major. He says
they can maybe average $1,000 or $2,000 a night from now on. That's enough
to justify a five week tour, and with tour support, they can use a proper
crew, buy some good equipment and even get a tour bus! Buses are pretty
expensive, but if you figure in the price of a hotel room for everybody in
the band and crew, they're actually about the same cost. Some bands (like
Therapy? and Sloan and Stereolab) use buses on their tours even when they're
getting paid only a couple hundred bucks a night, and this tour should earn
at least a grand or two every night. It'll be worth it. The band will be
more comfortable and will play better.

The agent says a band on a major label can get a merchandising company to
pay them an advance on T-shirt sales! Ridiculous! There's a gold mine here!
The lawyer should look over the merchandising contract, just to be safe.

They get drunk at the signing party. Polaroids are taken and everybody
looks thrilled. The label picked them up in a limo.

They decided to go with the producer who used to be in Letterman's band.
He had these technicians come in and tune the drums for them and tweak
their amps and guitars. He had a guy bring in a slew of expensive old
vintage microphones. Boy, were they "warm." He even had a guy come in and
check the phase of all the equipment in the control room! Boy, was he
professional. He used a bunch of equipment on them and by the end of it,
they all agreed that it sounded very "punchy," yet "warm."

All that hard work paid off. With the help of a video, the album went like
hotcakes! They sold a quarter million copies!

Here is the math that will explain just how fucked they are:

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 CDs, 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.

Some of your friends are probably already this fucked.

(c) 1999 [indiecentre]

© 2000 Peter Langston