DIY / HOW TO START A RECORD LABLE

HawkeyeHawkeye 896 Posts
edited August 2006 in Strut Central
Many times I saw questions about how to run a record lable on this lovley forum.I found this site on the net which I think is intressting for those people. It got a lot of articles on this topic which explain all the things in a simple HipHop way so that even YOU will get it. HOW THE MUSIC BIZ WORKS This is one of the many articles, even if you dont want to run a record lable it is intresting to see what kinda traps people are running in. Reprinted from NEWSWEEK Magazine July 18, 1994 issue pages 56-57A Risky BusinessBy, RICK MARIN with ALLISON SAMUELS in New YorkEntertainment: Rappers talk tough about life in the 'hood but when it comes to money, many are babes in the woods. Some top stars never get top dollar.CHERYL JAMES AND SANDY DENTON knew very little about the music business when they landed their recording contract that transformed a couple of Sears customer-service reps into rap's most successful girl group: Salt 'N' Pepa. How little? In 1985, when their manager said sign on the dotted line, they did: a 1~year contract with Next Plateau Records for 50 cents per album sold (half the going rate) with no option to renegotiate even if they were to become, say, a top 40 hit machine. Three platinum albums later, they made about $100,000 a year each, while their manager and record company raked in millions. "I always knew something wasn't right with it, but I didn't know what," says Denton of their ironclad deal. "We were intimidated by this white business-man telling us it was the right thing to do." Adds James: "We never even thought of a lawyer."Few young black hip-hop performers do, until it's too late. Dr. Dre (Andre Young), producer of his own top-selling album "The Chronic" as well as Snoop Doggy Dogg's huge hit "Doggystyle," says he plans to file a $20 million lawsuit next month against Ruthless Records for living up to their name and underpaying royalties while he was with the proto-"gangsta" group N.WA. The suit will claim Ruthless took advantage of Dre's lack of business knowledge and that he received only $90,000 a year in royalties for producing N.W.A.???s three platinum albums (more than a million sold of each). In April, Bobby Brown filed a $10 million suit against his former business managers, Jeffrey Turner and Brian Irvine, claming they "took advantage of his naivete about the business." After making $27 million from 1989 to 1993, Brown says he's nearly broke and owes $3 million to the IRS because of his managers shoddy accounting. (Being married to Whitney Houston may have lessened this financial blow.) Similar actions have been going on for years. After KRS~One (Kris Parker) released his debut album, "Criminal Minded," on B-Boy Records in 1987, he sued the now-defunct label for back royalties and to get out of a lengthy contract, citing lack of legal representation when he agreed to the deal. 'As successful as that album was," says Parker, "I never got a cent" The suit was settled out of court.Labels ripping off managers ripping off artists has long been the food chain in the musicindustry, from Little Richard to Billy Joel. But rappers may be even more likely to get eatenalive. Tough, aggressive survivors, they escape the projects of Chicago or the streets of South-Central LA only to be suckered by record-industry "suits" armed with Mont Blanc pens and 60-page contracts. They unwittingly sign away royalties, publishing rights and contractual freedom in exchange for BMWs (the current signing inducement of choice) and a few grand in fast cash. ???These kids are not business savvy nor for the most part are their famlies," says Matt Robinson, vice president of A&R at Capitol Records. A white kid in a grunge band is more likely to have an uncle who's a lawyer. KRS-One was homeless on the streets of New York when he signed his deal. Rap music generated $800 million for the recording industry last year but is still taken less seriously than white-dominated genres like metal or alter-native rock. Says Robinson: "Because the record companies don't see any long term future for rap, they fail to nurture these kids the way they should"Rap acts are routinely signed for half the $300,000 advance that the average new white alternative band can expect for their first album. Traditionally the performer gets an 8 to 12 percent royalty on the retail price of his record and the option to renegotiate. "'That's not what I see when these kids come to me to get their contracts changed," says Steven Barnes, a top black entertainment lawyer. "'The royalty is usually significantly lower than that, with other problems as well." Rap duo Kid 'N Play got 1 percent of their first album; R Kelly was 18 years old and living in a Chicago housing project when he signed an eight-year deal that he thought was for two. ???It was hell to get out of," says Kelly.Black performers have lived this hell before. Motown's Jackie Wilson and Mary Wells both came to fame in the '60s from impoverished Detroit neighborhoods and both died broke, exploited by the label they helped make famous. Is racism to blame? In part, but it's more complicated than that. After all, Motown founder Berry Gordy was black. And many of the bad deals signed today are the result of abuses not only by white-owned record conglomerates but the black-owned production companies and managers who recruit new artists from the street and then serve as the middlemen. "Gang-banged by your manager fella/ Getting money out of your ass like a mother fucking Ready Teller," rhymes Ice Cube (O'shea Jackson) on his album "Death Certificate." (Ice Cube has said that he had to hang his platinum records at his mother's house because he couldn't afford his own.) Dr Dre's video "Dre Day" includes a scathing depiction of a white record company owner and his black partner. "If I knew how to handle business, I'd have gone into it"' says Dre. "I feel, as an artist, I shouldn't have to worry constantly about the business side."The record and production companies don't see it that way. They argue that signing an unknown is a financial risk and that adult performers are legally responsible for deals they put their signature to. Ruthless Records attorney Mike Bourbeau says the company paid Dr Dre more than $1 million for his work with N.W.A. Salt 'N' Pepa's manager, Hurby Azor, says that he deserves 50 percent of their money, twice the normal cut, for discovering them, but he also adds, "They should have paid more attention to what was going on with their business."It's an emotional issue, filled with had blood and nasty ironies. ???These kids aren't thinking beyond today and the new car and the house, because those are things they haven't had," says Gladys Knight, who, as an early Motown star, watched these same riches-to-rags stories unravel 30 years ago. ???They don't realize that if they don't get what they deserve in the beginning, it's going to be hard to pay the bills in 10 years when the hits stop coming," As this rueful history repeats itself, it seems apt that one of the songs named in Dre's deposition is titled "Poor, Broke and Lonely."JULY 18, 1994 NEWSWEEKPeaceHawkeye

  Comments


  • soulmarcosasoulmarcosa 4,296 Posts
    Does that article have rule #1?

    1. Learn how to spell "label"

  • RustyBRustyB 223 Posts
    Damn I was gonna say the same exact thing... ZING

  • girgir 329 Posts
    Does that article have rule #1?

    1. Learn how to spell "label"

    dude, he's spelling it so it makes sense to soulstrut.

  • HawkeyeHawkeye 896 Posts
    Sometimes I wish I had your problems instead of mine, but take care guys your civil servant mind and your correctness works as long as you sit in front of these machines.

    If you go outside.......... nah forget it. Please stay at home !!!!



    And don't forget my sweet little nitpicking pettifoggers to always split enough hair.


    ??????????????


    !!!!!!!!!!!!!!!!!!!








  • Options
    interesting response to a pasted article from newsweek.
    maybe you could be less vague

  • d_wordd_word 666 Posts
    Wendy Day is behind that project. I'm sure she could write a great book about her experiences with the business.

  • soulmarcosasoulmarcosa 4,296 Posts
    Sometimes I wish I had your problems instead of mine, but take care guys your civil servant mind and your correctness works as long as you sit in front of these machines.

    If you go outside.......... nah forget it. Please stay at home !!!!



    And don't forget my sweet little nitpicking pettifoggers to always split enough hair.

    Sounds to me like your Soulstrut alias may not fit your lifestyle.

  • brodambrodam 46 Posts
    good info on that site
    THNAKS FRO POSTING

  • Rich45sRich45s 327 Posts
    You'd be well advised to read 'All You Need To Know About The Music Business' by Donald Passman to. More from a bands perspective than label owner / founder but essential

  • HawkeyeHawkeye 896 Posts
    I'll always try my best to entertain the geeks !!!!!

  • BamboucheBambouche 1,484 Posts
    (...) it is intresting to see what kinda traps people are running in.

    Reprinted from NEWSWEEK Magazine July 18, 1994 issue pages 56-57(...)


    A year before the article you cited appeared in Newsweek, a similar article appeared in Baffler Number 5 and Maximum Rock'n'Roll #133. I find this article to be much more informative:



    THE PROBLEM WITH MUSIC[/b]
    Steve Albini


    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 again, please. Backstroke". And he does of course.



    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 signs 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 terms 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 laborer 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. 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. Anyways, it doesn't cost them anything 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 7 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 great royalty: 13% [less a 1O% packaging deduction]. Wasn't it Buffalo Tom that were only getting 12% less 10? Whatever. The old label only wants 50 grand, an 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 bold, expenses are not.



    Advance: $ 250,000
    [/b]
    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
    Off-line: $ 2,000
    On-line 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
    [/b]
    Agent's cut: $ 7,500
    Manager's cut: $ 7,500

    Merchandising advance: $ 20,000
    [/b]Manager's cut: $ 3,000
    Lawyer's fee: $ 1,000
    Publishing advance: $ 20,000
    [/b]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[/b]

    -------------------------------------------------

    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: $ 7l0,000

    -------------------------------------------------

    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[/b]


    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.


  • HawkeyeHawkeye 896 Posts
    Maybe I should stop posting things here because it seems that I'm not able to make my point clear, maybe it is the language barrier but otherwise there are enough people here in my land that are not able to understand what I tell them which must be a proof for my total inabiltiy to communicate with the human race !!!



    Anyway, my post is not about the one article I pasted into this thread in my over ambitious mood of having fun while I found something in my opinion interesting to read to ............. my point was the WHOLE WEBSITE.

    On this website you get some infos about topics that pop up on this forum quiet often and I thought "Ohh, this could be something helpfull for the guys at soulstrut that always ask about publishing / copyrights / rightsholder and running a record company".

    So I say I'm sorry (no homo) to all the people who got offended (no pun intended) by
    my bad spelling abilitys .... ooops... abilties.


    I hope you can forgive a dumbass from germany.



    Peace
    Hawkeye

  • Maybe I should stop posting things here because it seems that I'm not able to make my point clear, maybe it is the language barrier but otherwise there are enough people here in my land that are not able to understand what I tell them which must be a proof for my total inabiltiy to communicate with the human race !!!



    Anyway, my post is not about the one article I pasted into this thread in my over ambitious mood of having fun while I found something in my opinion interesting to read to ............. my point was the WHOLE WEBSITE.

    On this website you get some infos about topics that pop up on this forum quiet often and I thought "Ohh, this could be something helpfull for the guys at soulstrut that always ask about publishing / copyrights / rightsholder and running a record company".

    So I say I'm sorry (no homo) to all the people who got offended (no pun intended) by
    my bad spelling abilitys .... ooops... abilties.


    I hope you can forgive a dumbass from germany.



    Peace
    Hawkeye


    damn shame, as a fellow german i feel ur pain i always get ridiculed when my english starts to messes up (usually either in the morning, late at night, or when im drunk) but i think outside of the always too critical ppl lots of cats will find this to be an interesting read.

    btw hawk,back in the days when i saw u on the music channels here u always tried to bring some old school sense and knowledge to the ppl and ur moderations, and god knows thats rare in this country, much respect and keep on posting!

    (no homo)


  • kwalitykwality 620 Posts
    Good site. Albini is always on point with the truth. Another good book is "Million Dollar Mistakes" which basically outlines every trap, pitfall and con in the whole business.
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