In response to recent information floating around the blogosphere about the old record deal model versus the new DIY model being more profitable for the artist, I thought I’d throw in some aspects that might not have been considered.

There are 4 pieces to this puzzle that must be weighed before making official judgment one way or another.
1. The business of a record label
2. The record contract and ultimately the individual deal
3. Ownership of the master recording and the mechanical rights
4. Comparison costs Label vs DIY

1. The Business of a Record Label
Let’s begin with an understanding of the business of being a label. Most labels focus on building their catalog of master recordings and ownership of publishing rights to original music. You may think they are in the business of developing artists and certainly that plays a role, but ultimately they are building their catalog of music. The value of the company comes from their catalog in case they are bought out or absorbed by a larger company. The labels look for artists that may prove to be potentially hot sellers, which purposefully increases the value of their catalog.

It’s important to view a record deal from this perspective to understand what any advance money, large or small, if any, is actually buying. They are buying your master recording. And every label also wants a piece of the publishing, whether you own your own publishing or another publisher owns the rights to your music. Most deals won’t happen unless you or your publisher, share the ownership of the original material, the copyright. As a songwriter, this is huge and must be taken into consideration as you weigh and compare the value of any deal.

2. The Record Contract and Deal
As you consider all those perceived benefits of working with a label, you think, great, they’ll pay for the art work, the manufacturing, the radio promotion, the print media promotion and maybe even some tour support to help get the act on the road promoting the new recording. And then you and hopefully your lawyer actually read the record contract. In the contract, any standard record contract, you will find the Packaging Clause that tells you that the art work and the photo shoot are recoupable items. The Manufacturing Clause also indicates that manufacturing the CD is a recoupable item along with the Promotional Budgets—all recoupable.

A recoupable expense is one that the label lays out up front, but in the end you pay them back as CDs get sold before you get paid any royalties. As you go through that contract, pretty much everything they pay for up front is recoupable; tour support and even that fabulous advance to record the CD in the first place.

One of my favorite clauses in any record contract is the Cross Collateralization Clause. Say you sign a 2 or 3 record deal and you do the first recording. Since it’s your first CD and you’re just growing your fan base, you sell some but not yet enough to pay back all those recoupable expenses. But it’s time to do the second CD and the label feels good enough about how the first one is going so they give you another advance for the recording, they manufacture the second CD, promote it and it starts selling. BUT, the first CD hasn’t yet recouped all of its expenses, so any sales from the second CD as well as the first CD will now all go to pay off the expenses from the first CD. The result—No royalties to you from the first CD yet because the contract says the label can take any money from the second CD to help pay off expenses from the first. This then continues for as long as the contract is in effect, CD after CD.

So when do you make money? You can make some money from selling your CDs from the stage or your website while you’re on tour IF the label allows you to sell from the stage or your website. Sometimes you may not, since that would cut into label sales at distribution points. Oh, and did I mention you have to buy the CDs from the label to sell at a slightly better price than a distributor, but not much. And if you want to have your record sales count as royalty units (sales counted towards your royalties), then the artist price goes up a few bucks.

While we are talking royalties, they are generally calculated on the wholesale price of the recording. Let’s just use $15 as the retail price. Wholesale would be about $9.25 which is where your royalty might begin to be calculated. But, then there is distributor pricing which is usually 55% off retail, so now we are down to about $8.25. Now what did you or your lawyer, negotiate for your royalty rate? If you are a hot artist already, this rate might be 10% or a bit higher, but mostly you’ll find royalty rates from 7%, 8% or 9% of the royalty rate, $9.25 or the distribution rate, $8.25. This will vary, but it IS that low.

Now when might you get paid, if there happens to actually be anything to be paid? Contracts are usually set up to pay twice a year. You’ll get your royalty statement and any amount due thirty, sixty and sometimes ninety days after the close of their accounting period. Then you open the statement and look at what you might have gotten paid and you are shocked. Where’s all the money? And what is that 20% that is being withheld to cover returns?

Ah, yes, the Returns Clause that says, even though they shipped 1000 CDs to some distributor, the distributor could ship them back even after a year if they don’t sell. So your label doesn’t want to pay you for something they may not get paid for, so they withhold a percentage to cover that possibility. You only get paid for what is actually sold through, not shipped.

3. Ownership of Master Recording & Mechanical Rights
As mentioned above, the label owns your master recording in most label deals as well as a portion of the copyright or mechanical rights. Let’s say you record a CD with ten songs, just to make this simple. Nine of those songs are your own originals and one is a cover of another artist. The label has to pay the other artist or the artist’s publisher for their mechanical rights. Somewhere in your contract there is the Mechanical Rights Clause that describes exactly how many songs the label will pay rights for and it is usually not 100% of the songs on the CD, but more like 70%. If one of those songs is a cover; that means you will get mechanical royalties on six of your songs instead of seven. You just won’t get paid for two of your songs at all.

That isn’t even the most important aspect of the ownership portion. The most important piece is that if and when your contract is over or if and when they cancel your contract or you try to cancel your contract, depending on how the contract is written, the label still owns those masters and a portion of the copyrights, sometimes “in perpetuity” (forever). There are those situations when the artist is offered a deal, they begin to record the music which the label is paying for, and then midway through a shift in leadership of the label occurs and the new president doesn’t like some of the acts already signed. They can and do shuffle the decks, once in a while, as it happened at RCA a number of years ago. New leadership came in and canceled 30 act’s contracts. But what happened to the music, those fledgling recordings, still being worked on in the studio? They went into the label’s vault. The creations of the artists were now no longer available to them because the deals said the label owned the rights to that music, whether it was released or not.

4. Cost Comparison Label vs DIY
I love to present these comparisons in terms of getting a loan, since essentially that is exactly what a record deal is, a loan to cover the expenses of recording. Now that you have some of the royalty figures from above, you could say that with a very generous 10% royalty rate, and 100% of the potential pie at stake, your loan is costing you 90% interest.

Compare that to most loans you might deal with in life, a car loan or a home loan where now interest rates are at all-time lows of 3.99% – 4.35%. Even the exorbitant credit card interest rates at their highest of 35% are even better. At least when you pay off your car or your house, you own it. In the case of the label deal, you do not.

The DIY Scenario
Continuing with the loan analogy, perhaps you borrow the recording money from your folks or Uncle Joe or a really great friend or even an investor and they agree to a 10% interest rate. That means that on every CD you sell, you keep 90% of retail, wholesale, whatever. Once the loan is paid off plus the 10%, or to use similar terminology as a label, once the investor recoups their initial investment plus interest, you own the master and all of the publishing on your original material. Now on every sale, you keep 100%.

Yes, the cost to record, manufacture, promote the CD and tour are yours. Now with Kickstarter campaigns as well as borrowing, your CD is also yours along with the rights to your music.

Now there are the costs for distribution. Most distribution companies charge 55%. Some actually get your music out there and it sells but some just hold your product in warehouses waiting for enough demand for the music to make a sale. Just because your label has a distribution deal and has delivered product to the distributor, doesn’t mean it is going to sell. Just because you have a distribution deal, it also doesn’t mean it’s going to sell.

In today’s online world, the companies distributing your music do take what might seem a large cut for seemingly doing very little. But even if they take 30%, they only take that percentage on actual sales and you get paid on a regular basis every single month. Plus your music is available world-wide depending on to which online services you are able to gain access. If you are using a company like CDBABY to disseminate your music to the various online sales points like iTunes, and get it to others like the Orchard or TuneCore for example, then you have your membership costs, but again, that is very small comparatively, and again they pay you monthly.

You may think that these online companies are doing very little to get a piece of your pie. Again, they make your music available to a huge online world. Their expenses lie in keeping their technology updated and ahead of the techno-wave. This allows you to reach a far wider audience than ever anticipated. Now with some savvy marketing and focus on your particular niche audience, you could be selling very well without even touring. But, throw in a great CD Release concert, some well managed tours and your ability to sell at each gig and you’ll be recouping any expenses and paying off any loans in no time. And when you do, you will own your master, own your publishing and be making money to save for your next recording, month after month after month.

Weigh the facts and the real costs of this recording business, either doing it on your own or with a record deal. Take the emotion out of the equation and deal with the numbers that are actually involved. When you take all of this into account, then and only then, can you make an educated decision as to which works best for you. When you understand what you have to gain and what you have to lose in each scenario only then can you be comfortable either way. One scenario may be good for one artist and not for another. Begin this process with a complete understanding of what is at stake, and you will simply make a better decision.

I’ve been writing and recording Biz Booster Hot Tips for 4 years now.

If you’ve been following these Hot Tips, I hope you have found some valuable information to incorporate into your business. Now I’d love to hear about your success and I’d love for you to share your success with others so they may learn from your efforts.

If you have a success story, please post it below so we all may see how you’ve taken a Biz Booster and put it to use in your business.

Thanks for sharing.

Jeri

Anything You Want
Derek Sivers

From the moment Derek contacted me about my book, How to Be Your Own Booking Agent, I’ve watched his little business CD Baby grow into a not-so-little business and was amazed at how it doubled every year. This very honest account of how he grew CD Baby from a basement cottage hobby to a warehouse Indie institution, is thoughtful, concise, informative and inspiring. If you are running any kind of business and especially if you are a musician running your own business, this book of insightful stories, lessons-learned will be a boon to your view of the really important stuff to focus on. These lessons make sense, plain and simple. With all the how-to books, videos and friendly advice one can be inundated by, learn from Derek’s down-to-earth, come-from-the-heart lessons learned from trial and error, listen-to-your-heart and do-what’s-right-for-you method. Clearly Derek Sivers is a different sort of a business founder and his stories demonstrate that. Yet, it always comes right down to being yourself and relying on YOUR creativity that will make a difference in how well your business life goes. If the stories in this little book are any indication of how taking the opposite approach from the crowd can work in your favor, then learn these lessons well. If the lessons in this book can offer you a direction or a theme to guide you, it would be to dare to be unique, strive to follow your heart no matter how far you may stray from what everyone else is doing. Let the creative in you take over and influence your moves so you do stand out from the rest. But most of all, run your business in the service of your customer’s betterment. Let them always be your guide. Great, quick read that get’s to heart of what being in business is all about.

Sure, I can tell you a bunch of great stuff about getting
sponsorships to help offset some or all of your touring expenses-

But,

Nothing beats hearing it from artists who have put the info to the
test and have gotten sponsorship.

I’ll have some guests on the tele-seminar that will tell you exactly
how they did it and what’s been the result of their efforts. No joke-this stuff really has made a difference in their touring, their audience building and their recognition in their niche.

Join me on Tuesday, June 14th to hear their story and get some really valuable insights into the process that you can put to immediate use on your tours.

Sponsorships-Additional Income Streams
On Tuesday, June 14th
at 7pm Eastern, 4pm Pacific

Plan on 1-2 hours so there is plenty of time for questions.

Here’s a reminder of what else I’ll cover:

1. Where to find potential appropriate sponsors
2. What potential sponsors need
3. How to build your sponsor benefits
4. How to create your budget line items
5. How to create a desirable pitch
6. How to set up a multi-level price plan
7. How to create your sponsorship template
to continue to find sponsors over and over again
8. How to work with fund-raising events using
sponsorships to get paid

This training will be done by phone to listen and participate. The tele-seminar training will also be available for download after the event for those who have paid in case you have other commitments on June 14th.

$20 bucks will get you the information you can use for the rest of your life to add new income streams to your career and help cover some or all of your expenses.

$20.00- Sponsorships Teleseminar

Buy Now

Once you pay, stay on the paypal receipt page and you will be taken to the details page for the event for the call in number and access code.

Sign the email form on the details page to get all the teleseminar info and link to the PDF Action Guide to take notes.

I’m looking forward to talking to you on the 14th.

Cheers,

Jeri
jg@performingbiz.com

Sponsorships-Additional Income Streams

There are a lot of expenses involved in created a successful touring career. Now that’s an understatement you don’t need to be reminded of.

I’ll bet you would be a happy camper if there were a way to get some of those expenses paid for by someone else.

You know, those hotel bills that eat away at your gig income for the night. Or the cost of printing those cool t-shirts & hats. Or how about just getting your gas expenses covered for the next few tours. Wouldn’t that be amazingly helpful so you can put more towards the next recording project.

Or, what about getting parts of that recording project covered?

I’d like to show you how you might do just that by creating an additional income stream with SPONSORSHIPS.
On Tuesday, June 14th I’ll be offering a tele-seminar at
7pm Eastern, 4pm Pacific

Sponsorships-Additional Income Streams

Plan on 1-2 hours so there is plenty of time for questions.

Here’s what I’ll cover:

1. Where to find potential appropriate sponsors
2. What potential sponsors need
3. How to build your sponsor benefits
4. How to create your budget line items
5. How to create a desirable pitch
6. How to set up a multi-level price plan
7. How to create your sponsorship template to continue to find sponsors over and over again
8. How to work with fund-raising events using sponsorships to get paid
If you are like so many artists that I know and work with, you are probably always trying to make money from your tours rather than having every tour end up being yet another investment.

Join me on Tuesday, June 14th at 7pm eastern, 4pm Pacific and let me share some valuable information that may just be the difference between investment or break-even tours and tours that put money in YOUR bank.

I am offering this training to you for only $20.

This training will be done by phone to listen and participate. The tele-seminar training will also be available for download after the event for those who have paid in case you have other commitments on June 14th.

You’ll be able to ask questions by calling in during the event during multiple Q & A times.

Join me on Tuesday, June 14th at 7pm Eastern, 4pm Pacific.

$20 bucks will get you the information you can use for the rest of your life to add new income streams to your career and help cover some or all of your expenses.

$20.00- Sponsorships Tele-seminar

Buy Now

Once you pay, you will be taken to the details page for the event for the call in number and access code.

You will also get the PDF Action Guide to take notes.

I’m looking forward to talking to you on the 14th.

Finally, at long last, BMI has created a system for performing songwriters to get paid for their live performances. At first blush, it is very similar to the SOCAN system in Canada. Now, with this new potential income stream, it is more important than ever to save your set lists from all of your gigs. (Please see Important Considerations below.)

BMI has an instructional video on their website: www.bmi.com/live

It seems a simple process to file your set lists. The form tells you the exact time-frame for which BMI is accepting submissions. You can even submit a new song for inclusion in your catalog directly from this form.

BMI member assistants are standing by to help you with any questions and they have created a helpful FAQ area that will answer most of your questions.

Once you submit your set lists, you can get specific information about when you can expect to get paid your royalties. They pay quarterly.

First step to participating in this program is to make sure that you have registered all of your songs, most importantly, the ones you regularly perform live. Get those into the system first, then register the ones you might include in your set lists from time to time.

Next step is to go back six months and see if you can piece together your set lists from the last six months worth of gigs. Hopefully you have a folder, a binder, a book of some sort where you keep a record of your sets lists. If you have not done this up to now, START at your next gig. Make sure you include the name and address of the venue on the page where you write your list. This is required information on the BMI form.

Now if you haven’t yet signed up at BMI to be able to access your account online, you must do this in order to input your set lists for this program. You’ll need to know your BMI account number and your Registration Code. To get your code, you’ll need your Tax ID or Social Security Number. If you are a publisher who is not also a songwriter, you’ll need your company name. All of this login information will be required only this first time, after that you’ll just need your login name and password to access the account. Now more than ever, this is worth doing.

I speak to so many songwriters who have neglected to register their songs with their Performing Rights Organization (PRO). It has been a frustrating process for the unknown songwriter to get their broadcast royalties in the face of the mainstream recording artist competition. But now finally, BMI has created a logical, simple system to give the non-mainstream songwriter at least a chance to get paid for their live performances. Now one word of caution-BMI does say your submission will be considered for payment-but you will never get the consideration you are due if your songs are not registered-so start there.

Important Considerations: I would recommend that you use this for when you perform at clubs and concert venues that you KNOW already have a license agreement with the PRO’s in place. If you perform at house concerts or other small rooms and non-traditional venue types that are unlikely to even know what a performing rights organization is, you might want to ask the organizer if they are registered before submitting your set lists for that gig.

Another consideration is which PRO you belong to and what their live performance payment policies are. You may find a better deal with another PRO if you are not yet registered with one already. In the US, the other possibilities are ASCAP and SESAC.

OK, songwriters, the additional income stream for live performances has just widened. Find out all you can about this, register your new and old songs that are likely to end up on your live performance set lists and then keep track of those set lists so you may submit them when the time frame is appropriate.

Good luck and I hope this helps,

Jeri

What’s At Stake? Culture in America

That’s right-just think National Endowment for the Arts, National Public Radio, Public TV, National Endowment for the Humanities, Arts Councils across the country, funding for grants to arts in the schools.

Yes, all of these things are would be targets for budget cuts when the Republicans get into office. If they are not committed to the Department of Education, do you really think they would stay their axe when it comes to Arts and the Humanities?

As artists we must do our civil duty to save the arts and lend our voices to help make certain that these cultural entities continue to exist.

Beyond all the name-calling, the posturing and positioning, the reality and the fact of the matter is—if you love what you do as an artist, if you want to continue what you do and if you believe that what you do matters in the lives of those who benefit from your gift, then you must get out and vote for the democratic candidates running in your districts to preserve your ability to practice your art in the future. You must vote to preserve these grand programs that help us present our art and share our art with audiences throughout this country. Vote for culture, vote to save the arts and humanities and thousands of jobs for people who serve our cultural communities. It’s up to us to get out and VOTE!

Jeri Goldstein

jg@performingbiz.com

If you are serious about you performing career, you can take the necessary steps to make sure it is a success. That’s exactly what singers/songwriters Coco and Lafe did when they took to the streets of Boston to begin their performing careers as buskers or street performers. Armed with a guitar, a sound system, a bucket full of original songs, their rescue beagle Lila and an excel spreadsheet, they headed out each day, testing street corners, squares, parks, markets, malls, and subway stops.

At the end of each day, they entered extensive notes into their spreadsheet, tracking their income in tips, CDs sales in person and CD sales after the gig from the website, the weather, the number of people in the crowd, the time of day for best sales and crowds, the day of the month. Rain or shine, they tested their performance spots during this first year in Boston taking extensive notes about each spot they played.

When they returned to Boston the next year, they chose their performance spots based on the results of their previous years’ excel spreadsheet findings. Back they went to the choice spots, the places where they sold the most CDs or where the tips were the greatest.

On rainy days they went underground to the best subway stops. Even though Lafe wasn’t fond of the subways since he preferred open-air performances, on those rainy days, the excel spreadsheet reminded them that their CD sales were actually good, not in-person since the crowds were rushing by with little time between trains to stop for long to listen, but from Website sales after these folks heard them in the subway. There may not have been enough time to stop, listen and buy a CD, but the brief encounter was enough to send a passer-by to their website to purchase, after the fact. Tracking the spikes in Web sales one or two days after a subway performance gave them clear indications that they were having an impact, even with the moving crowd.

Reviewing the numbers entered into their spreadsheet served as a constant guide of where to set up, what time of day to play, and how long to stay at a particular spot to maximize their sales and tips based on the crowd’s traffic patterns.

Year after year, they track their sales, their tips and the choice spots to focus on the best spots and remove the less productive spots from their list. This practice has become their standard to gauge their success, track their progress and plan their future. They build an excel spreadsheet to track every phase of their career, whether busking or performing at house concerts or on their national tour of Farmer’s Markets. By keeping track of their numbers, then reviewing those numbers before making plans for the next tour, or the next day, they have been able to plan for their success every step of the way with precision and focus. And they are having a blast doing it.

This monday I sent out a Biz Booster that focused on your greatest challenge. Today,  pianist Laura Dean shared her reaction to Monday’s Biz Booster and I just had to share it with you. Here’s what Laura wrote:

Dear Jeri,

On Monday, your biz booster tip asked us to identify the one thing that is getting in our way of being truly successful. After some thought I was able to identify that one thing and thought I would share.

It is the organization of tasks that I have to deal with: writing and emailing press releases, sending contracts, staying on top of my marketing material, rehearsing my shows, booking airline tickets, etc. etc.) – I don’t really have one system in place for dealing with this deluge of tasks, everything is in several different files, a laptop, a computer, notebooks, etc. Not to mention, I am a prolific idea person, so I have pages and pages of musings about marketing ideas, future programs, etc. I am quite an organized person, but I don’t have one system in place for dealing with all of this stuff! But it was all in tidy piles

After listening to your biz booster, I decided to do something about this hap hazard system. I have gathered everything together and spent several hours over the past couple of days putting my tasks and notes into one program that synchs with all of electronic devices. I am organizing my promo material both in hard copy form and on the computer so it is easy to email or mail. Next I will tackle my filing system so I can easily put my finger on the file for each performance in a tour. I have your set of forms, so that really helps to organize things.

I am already feeling better just having taken this task on. In the next couple of days, all systems should be in place for smooth marketing, phoning, contract mailing, etc.

Looking forward to getting rid of funky sized envelopes, outdated marketing material, and everything that is not of use to me anymore.

I love your book and your biz booster tips. Thanks for your great work.

Laura Dean, pianist

www.lauramusic.biz

Thank you Laura for sharing your success story.

If you have a success story to share, please post it here or dropm me an email: jg@performingbiz.com