ROYALTIES 101, WITH PROFESSOR DAVID ELLEFSON
Thursday, August 6th, 2009 at 1:30pm by Vince NeilsteinMetal Injection has posted a video clip from David Ellefson’s industry-centric video blog The Rock Shop, in which the ex-Megadeth bassist explains in detail how artists get paid from sales of their recorded music. We see retarded comments all the time by people who just don’t understand how the industry works, so if you’re one of these people (as if any of you would be self-aware enough to realize) or you’re in an unsigned band gunning for a record deal, you should definitely give this 5-minute clip a watch. Personally I think he’s being quite generous with his $2 per record figure, but I guess the math works out nicely for his example. The takeaway: your band needs to sell a shitload of records before you start seeing any money from those sales.
-VN
That was quite a good video. Nothing I hadn’t heard already, but he explained it very well. Definitely worth watching.
Cool story ahead:
I happen to have seen the bassist/vocalist of the band Cormorant post on a forum explaining their financial situation with their upcoming debut album “Metazoa”. Basically, the band had gotten a bunch of independent label offers, but in this economic climate, they were all quite shitty. Some didn’t even have an advance (meaning that the band had to fund the album all by themselves), and only 15% of total sales as royalties. I don’t have all of the figures that they calculated, but in the end, they decided to reject the label offers and self-release it, with a distribution deal with another label where they still completely own the rights to their music. The logic behind it was that it they would have to sell much fewer copies of the album to recoup the initial cost of recording, and as I said, they’d still own the rights to everything. I know I’m a bit vague on the details, since I only followed the band’s story as a lurker, but it’s certainly interesting enough. They’re releasing the album on Sept. 22, and the album cover is simply amazing! Check them out!
http://www.myspace.com/cormorantmusic
Here’s the cover! http://www.roadrunnerrecords.com/blabbermouth.net/reviewpics/cormo_cd.jpg
it’s just smarter to self-release your album because frankly, labels don’t do shit for you anymore. unless you’re a decent sized band, you can’t even count on your label for tour support anymore. so that just leaves marketing and promotions. let’s face it – you can get just as much done as any independent label so as long as you’re willing to put in the time and effort.
but it’s really a case of asking yourself what you’re doing and what you need your label to do for you. obviously there is still a place for the major labels, but if you’re a progressive death metal band who is going to sell something like 500 or 1000 copies of your album (at most), you really need to question whether or not it’s actually going to benefit you.
Also, an interesting tidbit that the guy from Cormorant explained–bands earn more royalties from downloads than from physical albums (about 30% of sales compared to 15%).
Once you factor in that packaging costs and middle men are out of the way when you buy digitally, it makes sense that the artist earns more. Still, buying digital music is lame. You might as well buy a CD of uncompressed audio instead of paying a few dollars less for a intangible, compressed product often filled with DRM and crap.
yeah, i agree. even though i don’t listen to actual physical albums anymore, i still buy them if i really like the album and keep the mp3s on my hard drive for listening purposes. frankly,having only digital audio seems really nebulous to me and i just don’t like the idea of losing all of my favourite records in a hard drive crash.
i like to use the word “album” excessively.
Steve Vai explains this also! A distribution deal is so much better…yes, you have to fund your own record but in the long run you will make ten folds! Rather than making a dollar per cd to split between 4 or 5 of you, you can make up to $4…much better deal!!!!!!!
This is very similar to our label’s methods. No longer do labels need to “purchse” the rights. We designed our label off of a “partnership” model. We put up to 70% of sales into the artists pocket.
After dealing first hand with situations where we sold albums, played huge shows and were making less than when we played local bars something had to change.
Dave is on the money here…thanks man…Also you still rock, bring the show to DC bother!
Yeah,$2 is probably purely for ease of the math in this example. It is also going to depend on how big the band is but for most, royalties amount to next to nothing especially in these times. I had a friend running a site at one time and he interviewed cattle decapitation once while they were in town shortly after one of their albums came out and the subject of sales and how much they got per copy came up and the figures they quoted were disgusting. a band like that is never going to make a ton off of record sales just because they are way under mainstream radar but i think the figure was something like .40-.50 cents per record or something like that was what they were getting. They basicly were putting out the albums at a loss just to get the touring cycle going so they could actually make some money. Royalties especially for metal bands will get you no where these days.
After 7 months of frustrating label negotiations, I have to vent. This may bore you, but here’s one example of my band’s situation.
I’m in a band that’s talked with about 8 labels so far in our career and signed with none of them as of yet, for the same reasons as the band mentioned above. I keep some of the contracts on my computer just to laugh at how unfair they are. I, like so many musicians I think, look at the current music business model as ridiculously unfair and pointlessly confusing (as well as out of date of course). For instance, the contract will often specify a royalty percentage, then clauses hidden in the rest of the contract with carve that percentage down to half of what it really was. The contract never gives you a straight-foward breakdown of those cuts and leaves it to you (and your lawyer really) to figure it out.
Dave’s breakdown is very accurate, although when I explain it I say $1 for the artist and $3 for the label, based on a 10-12 dollar cd price. I met Dave briefly at our last Arizona show and he was a really cool guy, as down to earth, clear speaking and logical as he is in these videos, obviously a guy who knows his shit.
However there is one really lame industry reality that is truly preventing the business model from evolving in my opinion, and that is actually touring. Sure it’s sad that bands are paying to get on tours, but that’s really because there are just too many bands out now and the market is flooded. The real problem is this: without a label it is next to impossible to get decent opening slots on tours. We’ve worked with high level booking agents and thought it would solve the problem, but they just keep telling us to get signed and then we can tour full time. Many bands have done the hard math and realized they would make more money purely on album sales through self release (established bands especially) but the loss of tour opportunities and touring money (which is the bulk of what bands use to pay the bills) brings them back to the labels who have entrenched themselves into the system in this way. It’s partly because the headlining band (or their organization) wants the opening band’s label to cross promote, or the label of the headlining band is pushing a new artist of theirs to be on the tour, but it ends up feeling like a rigged game to purposefully unsigned bands.
No matter how many times you show people your sales statistics and explain how you’re unsigned by choice, much of the metal industry still will view you as illegitimate and won’t work with you. We managed to get an opening slot on a great tour last year due to a popular band that like us enough to demand we were on the tour, did very well and have the statistics to prove it, but sadly that didn’t change how we were perceived.
Bottom line: we’re still considering deals (2 on the table right now, one big label one small one) almost exclusively to get on tours. We’re not dumb enough to sign the horrible deals we’ve seen so far but if one we get is even half decent we’ll probably take it. Music sales are the dying part of the music business, so if your record deal forfeits most of that money it’s not that bad for the band as long as they keep the lion’s share of touring money / merch and play the right tours (we’ve never paid to be on a tour and have a minimum guarantee level which is an important standard for a band to have, even if it results in some painful choices).
The real problem will be that the touring money with be targeted more and more by labels as music sales keep dying, and that shift I think will be the catalyst that causes professional bands to feel financially threatened enough to hopefully act together and end the label hegemony. Maybe that’s a total fantasy I know, but a man can dream…
Interesting insight. Thanks.
Such a nice dude, David. Hope he get back on track with his new projects.
Oh, and great post form pompox also.
Steve Albini said it better.
http://www.negativland.com/albini.html
Doesn’t anybody read anymore?