I got something in the mail last week I’d been wanting for years: a Too Much Joy royalty statement from Warner Brothers that finally included our digital earnings. Though our catalog has been out of print physically since the late-1990s, the three albums we released on Giant/WB have been available digitally for about five years. Yet the royalty statements I received every six months kept insisting we had zero income, and our unrecouped balance ($395,277.18!)* stubbornly remained the same.
Now, I don’t ever expect that unrecouped balance to turn into a positive number, but since the band had been seeing thousands of dollars in digital royalties each year from IODA for the four indie albums we control ourselves, I figured five years’ worth of digital income from our far more popular major label albums would at least make a small dent in the figure. Our IODA royalties during that time had totaled about $12,000 – not a princely sum, but enough to suggest that the total haul over the same period from our major label material should be at least that much, if not two to five times more. Even with the band receiving only a percentage of the major label take, getting our unrecouped balance below $375,000 seemed reasonable, and knocking it closer to -$350,000 wasn’t out of the question.
So I was naively excited when I opened the envelope. And my answer was right there on the first page. In five years, our three albums earned us a grand total of…
What the fuck?
I mean, we all know that major labels are supposed to be venal masters of hiding money from artists, but they’re also supposed to be good at it, right? This figure wasn’t insulting because it was so small, it was insulting because it was so stupid.
Why It Was So Stupid
Here’s the thing: I work at Rhapsody. I know what we pay Warner Bros. for every stream and download, and I can look up exactly how many plays and downloads we’ve paid them for each TMJ tune that Warner controls. Moreover, Warner Bros. knows this, as my gig at Rhapsody is the only reason I was able to get them to add my digital royalties to my statement in the first place. For years I’d been pestering the label, but I hadn’t gotten anywhere till I was on a panel with a reasonably big wig in Warner Music Group’s business affairs team about a year ago
The panel took place at a legal conference, and focused on digital music and the crisis facing the record industry**. As you do at these things, the other panelists and I gathered for breakfast a couple hours before our session began, to discuss what topics we should address. Peter Jenner, who manages Billy Bragg and has been a needed gadfly for many years at events like these, wanted to discuss the little-understood fact that digital music services frequently pay labels advances in the tens of millions of dollars for access to their catalogs, and it’s unclear how (or if) that money is ever shared with artists.
I agreed that was a big issue, but said I had more immediate and mundane concerns, such as the fact that Warner wouldn’t even report my band’s iTunes sales to me.
The business affairs guy (who I am calling “the business affairs guy” rather than naming because he did me a favor by finally getting the digital royalties added to my statement, and I am grateful for that and don’t want this to sound like I’m attacking him personally, even though it’s about to seem like I am) said that it was complicated connecting Warner’s digital royalty payments to their existing accounting mechanisms, and that since my band was unrecouped they had “to take care of R.E.M. and the Red Hot Chili Peppers first.”
That kind of pissed me off. On the one hand, yeah, my band’s unrecouped and is unlikely ever to reach the point where Warner actually has to cut us a royalty check. On the other hand, though, they are contractually obligated to report what revenue they receive in our name, and, having helped build a database that tracks how much Rhapsody owes whom for what music gets played, I’m well aware of what is and isn’t complicated about doing so. It’s not something you have to build over and over again for each artist. It’s something you build once. It takes a while, and it can be expensive, and sometimes you make honest mistakes, but it’s not rocket science. Hell, it’s not even algebra! It’s just simple math.
I knew that each online service was reporting every download, and every play, for every track, to thousands of labels (more labels, I’m guessing, than Warner has artists to report to). And I also knew that IODA was able to tell me exactly how much money my band earned the previous month from Amazon ($11.05), Verizon (74 cents), Nokia (11 cents), MySpace (4 sad cents) and many more. I didn’t understand why Warner wasn’t reporting similar information back to my band – and if they weren’t doing it for Too Much Joy, I assumed they weren’t doing it for other artists.
To his credit, the business affairs guy told me he understood my point, and promised he’d pursue the matter internally on my behalf – which he did. It just took 13 months to get the results, which were (predictably, perhaps) ridiculous.
The sad thing is I don’t even think Warner is deliberately trying to screw TMJ and the hundreds of other also-rans and almost-weres they’ve signed over the years. The reality is more boring, but also more depressing. Like I said, they don’t actually owe us any money. But that’s what’s so weird about this, to me: they have the ability to tell the truth, and doing so won’t cost them anything.
They just can’t be bothered. They don’t care, because they don’t have to.
“$10,000 Is Nothing”
An interlude, here. Back in 1992, when TMJ was still a going concern and even the label thought maybe we’d join the hallowed company of recouped bands one day, Warner made a $10,000 accounting error on our statement (in their favor, naturally). When I caught this mistake, and brought it to the attention of someone with the power to correct it, he wasn’t just befuddled by my anger – he laughed at it. “$10,000 is nothing!” he chuckled.
If you’re like most people – especially people in unrecouped bands – “nothing” is not a word you ever use in conjunction with a figure like “$10,000,” but he seemed oblivious to that. “It’s a rounding error. It happens all the time. Why are you so worked up?”
These days I work for a reasonably large corporation myself, and, sadly, I understand exactly what the guy meant. When your revenues (and your expenses) are in the hundreds of millions of dollars, $10,000 mistakes are common, if undesirable.
I still think he was a jackass, though, and that sentence continues to haunt me. Because $10,000 might have been nothing to him, but it was clearly something to me. And his inability to take it seriously – to put himself in my place, just for the length of our phone call – suggested that people who care about $10,000 mistakes, and the principles of things, like, say, honoring contracts even when you don’t have to, are the real idiots.
As you may have divined by this point, I am conflicted about whether I am actually being a petty jerk by pursuing this, or whether labels just thrive on making fools like me feel like petty jerks. People in the record industry are very good at making bands believe they deserve the hundreds of thousands (or sometimes millions) of dollars labels advance the musicians when they’re first signed, and even better at convincing those same musicians it’s the bands’ fault when those advances aren’t recouped (the last thing $10,000-Is-Nothing-Man yelled at me before he hung up was, “Too Much Joy never earned us shit!”*** as though that fact somehow negated their obligation to account honestly).
I don’t want to live in $10,000-Is-Nothing-Man’s world. But I do. We all do. We have no choice.
The Boring Reality
Back to my ridiculous Warner Bros. statement. As I flipped through its ten pages (seriously, it took ten pages to detail the $62.47 of income), I realized that Warner wasn’t being evil, just careless and unconcerned – an impression I confirmed a few days later when I spoke to a guy in their Royalties and Licensing department I am going to call Danny.****
I asked Danny why there were no royalties at all listed from iTunes, and he said, “Huh. There are no domestic downloads on here at all. Only streams. And it has international downloads, but no international streams. I have no idea why.” I asked Danny why the statement only seemed to list tracks from two of the three albums Warner had released – an entire album was missing. He said they could only report back what the digital services had provided to them, and the services must not have reported any activity for those other songs. When I suggested that seemed unlikely – that having every track from two albums listed by over a dozen different services, but zero tracks from a third album listed by any seemed more like an error on Warner’s side, he said he’d look into it. As I asked more questions (Why do we get paid 50% of the income from all the tracks on one album, but only 35.7143% of the income from all the tracks on another? Why did 29 plays of a track on the late, lamented MusicMatch earn a total of 63 cents when 1,016 plays of the exact same track on MySpace earned only 23 cents?) he eventually got to the heart of the matter: “We don’t normally do this for unrecouped bands,” he said. “But, I was told you’d asked.”
It’s possible I’m projecting my own insecurities onto calm, patient Danny, but I’m pretty sure the subtext of that comment was the same thing I’d heard from $10,000-Is-Nothing-Man: all these figures were pointless, and I was kind of being a jerk by wasting their time asking about them. After all, they have the Red Hot Chili Peppers to deal with, and the label actually owes those guys money.
Danny may even be right. But there’s another possibility – one I don’t necessarily subscribe to, but one that could be avoided entirely by humoring pests like me. There’s a theory that labels and publishers deliberately avoid creating the transparent accounting systems today’s technology enables. Because accurately accounting to my silly little band would mean accurately accounting to the less silly bands that are recouped, and paying them more money as a result.
If that’s true (and I emphasize the if, because it’s equally possible that people everywhere, including major label accounting departments, are just dumb and lazy)*****, then there’s more than my pride and principles on the line when I ask Danny in Royalties and Licensing to answer my many questions. I don’t feel a burning need to make the Red Hot Chili Peppers any more money, but I wouldn’t mind doing my small part to get us all out of the sad world $10,000-Is-Nothing-Man inhabits.
So I will keep asking, even though I sometimes feel like a petty jerk for doing so.
* A word here about that unrecouped balance, for those uninitiated in the complex mechanics of major label accounting. While our royalty statement shows Too Much Joy in the red with Warner Bros. (now by only $395,214.71 after that $62.47 digital windfall), this doesn’t mean Warner “lost” nearly $400,000 on the band. That’s how much they spent on us, and we don’t see any royalty checks until it’s paid back, but it doesn’t get paid back out of the full price of every album sold. It gets paid back out of the band’s share of every album sold, which is roughly 10% of the retail price. So, using round numbers to make the math as easy as possible to understand, let’s say Warner Bros. spent something like $450,000 total on TMJ. If Warner sold 15,000 copies of each of the three TMJ records they released at a wholesale price of $10 each, they would have earned back the $450,000. But if those records were retailing for $15, TMJ would have only paid back $67,500, and our statement would show an unrecouped balance of $382,500.
I do not share this information out of a Steve Albini-esque desire to rail against the major label system (he already wrote the definitive rant, which you can find here if you want even more figures, and enjoy having those figures bracketed with cursing and insults). I’m simply explaining why I’m not embarrassed that I “owe” Warner Bros. almost $400,000. They didn’t make a lot of money off of Too Much Joy. But they didn’t lose any, either. So whenever you hear some label flak claiming 98% of the bands they sign lose money for the company, substitute the phrase “just don’t earn enough” for the word “lose.”
** The whole conference took place at a semi-swank hotel on the island of St. Thomas, which is a funny place to gather to talk about how to save the music business, but that would be a whole different diatribe.
*** This same dynamic works in reverse – I interviewed the Butthole Surfers for Raygun magazine back in the 1990s, and Gibby Haynes described the odd feeling of visiting Capitol records’ offices and hearing, “a bunch of people go, ‘Hey, man, be cool to these guys, they’re a recouped band.’ I heard that a bunch of times.”
**** Again, I am avoiding using his real name because he returned my call promptly, and patiently answered my many questions, which is behavior I want to encourage, so I have no desire to lambaste him publicly.
***** Of course, these two possibilities are not mutually exclusive – it is also possible that labels are evil and avaricious AND dumb and lazy, at the same time.
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#1 for my song Tranquility in the New Age category of MP3.com in 1997. Did I see money? Pennies. But it was #1.
I remember Too Much Joy from my Sega CD compilation sampler, Donna Donna Everywhere.
I do not think you are being petty, I think you are paying attention to detail. Maybe the IRS should audit the offending parties for 2009. That would wake them up.
It bears reflection that there will probably be a certain number of bands (a very small number, though maybe not as small as we’d think) for whom transparent accounting of just these sorts of tiny details could mean the difference between being unrecouped/recouped. I think that’s the real power dynamic behind the industry stance. Of course they don’t want to owe more to the big bands, who already earn them plenty of profits anyway; they REALLY don’t want to all of a sudden owe money to more bands, especially bands that just squeak over the line. Then their trick of keeping you feeling like a petty prick would stop working!
I don’t know you or your band at all, somebody reposted this and I saw it on twitter.
I found it to be incredibly informative, interesting and engaging. Thanks for writing it!
That’s really sad, it really does bum me out to hear how labels treat artists.
Hilarious in its stupidity!
It’s not like people in general, including musicians, don’t know how computer programs work these days. You write a program, once, to calculate digital royalties, and they work the same for every artist. It’s not like they have to write a special one just for you.
I am sure that most (and probably all) of the digital download companies can and will provide the royalty information in an electronic format that could be automatically imported into the record company’s database as well.
I’d pursue it. Somewhere out there is a band that’s right on the brink of recouping, but they’re never going to know.
This piece was picked up by the DGMLive website – as King Crimson have had similar tales over the years.
Just a thought, but why don’t you do an official audit of Warners – most contracts stipulate that they have to pay the fees if there are errors of over 10%….you wouldn’t get any money, as you would still be unrecouped, but they would face a $10,000 bill for the cost of the audit. And you couold keep doing it.
If all their unrecouped artists did it, they might just decide it was more cost effective to start accounting correctly….
“Because accurately accounting to my silly little band would mean accurately accounting to the less silly bands that are recouped, and paying them more money as a result.”
Also, not doing careful accounting for unrecouped bands makes it that much harder for them to recoup!
That seems kind of an obvious flaw in the ‘you’re unrecouped’ (and $10K-is-a-rounding-error) attitude.
A very insightful blog entry on a touchy issue for many an artist and artist manager. We reported on it and offered some comment on our News-Blog here – http://tinyurl.com/yzoxcdu. Hope you don’t mind me plugging it here, but thought it might be of interest to people reading this article.
Well there’s something to look forward to. Why don’t they tell you this before you sign up? Oh, right, they’re in it for the money. Thanks for the warning.
Quite interesting. Let me just say that Son of Sam I Am remains a favorite of my college years. TMJ rocks!
What an excellent blog / expose…very well written and described. As someone who runs a very small indie label I find it appalling that the majors behave this way.
When we receive our digital statements ( also IODA ) for just a few artists it can take a while to fully analyse the revenues but we are always able to report figures and recoupment to our artists when requested.
Don’t let them off the hook ! What is interesting is that they will keep recouping money from a vast number of artists without ever reporting, simply because the artist is unrecouped
Royalty Accounting for Dummies!
I do the royalty accounting at a small indie label… we’ve got about 60 releases to keep track of. We get our physical and digital earnings statements from our distributor each month… the physicals quickly get punched into each bands excel statement (e.g. 50 sold at $6.00 each = $300), and the digital get emailed to us in excel files, which are copy/pasted into each bands’ excel statement, and all the little pennies and dollars easily totaled up by quickly summing them via a simple excel formula – no matter how many or few, it still takes about 2 seconds to do this. There are certainly a few other quirks, but thats basically it.
I’m 23, have no accounting skills whatsoever, and was taught how to do this in about 20 minutes. It takes about an hour every month. The odd mistake is certainly made from time to time (it’s inevitable), but is of course always corrected and profusely apologized for.
Point is, this is not hard stuff! Anyone who tells you otherwise is full of shit. Seriously. I realize 60 releases is absolutely nothing to a major label, but again, this takes an hour a MONTH, but I’m just one person and I’m no accountant.
Thanks for your candid level-headed account. Major record labels have had a long time to master “losing” money, in whatever sense, in their own favor.
I recall how, back in the late ’80s, “getting signed” was the brass ring for my musical peers in the short-lived but robust “indie” scene. Aside from being legitimated as a musician, it also promised to lead to better touring conditions (i.e., scrapping the old junker van) and better-quality recordings, and more widespread distribution, and not having to live off the girlfriend anymore – or to finding a wealthier and more attractive girlfriend to live off. There was also the aspect of being one of the Kool Kids, just like in high school, to which I saw many parallels in the music scene. I watched, over and over, the insidious rationalizations of selling-out overtake my friends’ attitudes toward music, but also saw those who didn’t end-up on Letterman drag their tails after having been dumped or fucked-over – or just forgotten – by the labels to which they’d been signed.
Another thing I observed happening around then was how the major labels started treating “indie” labels as farm-teams for A&R recruitment, to the point, circa 1990, of establishing their own minor-league subsidiaries that looked and acted like “independent” labels but were entirely funded by and beholden to the “majors.” “indie” bands started playing into the scheme induced by the majors’ exploitation by thinking that all they had to do was show success on “indie” terms, and then they’d find reward in being “signed to a major.” It became the game to play, letting the majors exploit the loyal, grassroots fan-base established from years of touring in a crappy van, sleeping on the floors of loyal fans who’d put the musicians up for the night, and so on. On the other hand, anyone who’s lived like that for long enough wants to be taken seriously and to be able to afford good-sounding recordings of one’s music – and for them to reach as broad an audience as possible. A well-funded record label would take care of all the things that musicians’ doing for themselves got to be overwhelming – pressing the records/CDs, printing the covers, distributing the recordings, pay the studio and engineer, schedule the tours, et al.
Even so, what happened was that the major labels orchestrated the dismantling of a very strong underground cultural network wherein musicians and their audience operated entirely outside of the major labels’ reach, but also outside of the socio-political mainstream. This included musicians in all varieties of music – but most certainly, punk, rock, and hip-hop. It takes little extrapolation to imagine what other elements besides the music biz might have wanted this trend neutralized.
A lot of indie bands who’d shown enough popularity and economic viability on indie labels in order to be signed to majors were kept on retainer by the major labels, had their recording insufficiently promoted or distributed by the majors – in favor of records by musicians more likely to “recoup.” Meanwhile, the former indie bands now saw their fan-base disappear, they found themselves in debt for more money than they’d (n)ever seen in their lives, and sometimes were contractually obligated not to record for any other label.
None of this isn’t anything that hasn’t been described before, but the point is that major labels have so much economic and political power that they can get away with anything they want to – and not even have to ponder whether they can. It’s ironic (well, no: it’s double-talk) that they deem as “theft” peoples’ downloading music (that “belonging” to major labels, naturally) “illegally,” when they neglect to report or even record – musicians’ royalties from digital downloads. It works both ways in the majors’ favor to adhere to the per-physical-unit model, and also to pay selective attention to the digital format.
I’ve read some of the comments over at Gizmodo and am a bit confused about the $400K. Is that real money that was spent on advances, tour, promotion, etc or is it an arbitrary number they assign that they *think* is what they spent? How can they not account for all the money spent?
Also, I wrote you a freaking letter right when Son of Sam I am came out and you actually replied. Thanks. I also saw you guys play at Wellsley College in MA. Weird thing was, I didn’t know it was an all-girl college. Even weirder, it took me about 45 mins to figure that out. I did track you down at the end of the show and you made the t-shirt guy open back up and sell me a shirt.
Where’s 60 Minutes when you need them?
A lack of accountability permeates the industry – from the lobbyists at the RIAA, to BMI, ASCAP, all major labels – and now SoundExchange on the digital media end practicing their special form of extortion on internet streaming radio stations – under the disguise of protecting ‘artists rights’. A very thick, opaque wall has been built around music royalty collection – and no wonder – it is through this lack of accounting that millions of dollars are siphoned away from songwriters every year – and into the pockets of industry executives and lobbyists.
Sounds like an expose’ and a congressional hearing is in order. Great article, by the way!
“the music business sucks” – Fred “Sonic” Smith (MC5 etc.)
If I remember correctly, revenues are calculated not on actual plays, but on a statistical sampling of songs played everywhere.
Synthdave, you’re thinking of how composers and publishers get paid for radio plays by Performance Rights Organizations such as ASCAP and BMI. For on-demand streams, each and every play gets tallied, reported and (theoretically) paid on.
Dan London, glad you asked about the advance, as it’s an important point I left out of the footnote. None of that money went into any band members’ pocket (unless you count the per diems we took during recording sessions, which were used to buy lunch and dinner). All that money was spent making and marketing the records, which Warner Bros. owns in perpetuity — even if we ever recoup. So it’s not like the band spent $400,000 of the label’s money living it up. We spent that money on the records, touring and videos, not on ourselves.
The latest statement does not detail what the $400k includes, but back in the ’90s each statement would itemize any new additions to the balance.
thank you, thank you, thank you! I made a record for Virgin in the mid 90s in a band called the Slingbacks. things didn’t go according to plan (like the records failed to physically make it to the shops while we were on tour, no one remembered to get the producer his work permit, etc..) and we were summarily dismissed. such is life. I always kind’a wondered where the admittedly small amount of money for digital downloads went. did it vanish into the ether? was it just absorbed by the giant colon of PRS/MCPRS? where did it go? like a zen koan… thanks for having the tenacity to at least try to unravel the mystery.
all hail the three minute pop song –
wow… thank you so much for your story, this has opened my eyes up on the market goin’ on the other side…
5 albums on large indie labels, 20k + sales each.. 10 years total earnings: £250.00
1 album released out of my bedroom, 6 months total earnings: £3670
Bye bye record industry, we won’t miss you…
thank god my dream of wanting to get a “label deal” NEVER happened! i stopped recording my music 5 years ago because no one buys music anymore– in ANY format! (i did make a whopping $33 from itunes in the last 6 months)…..hmmmmmmm…….all i have left is to play music in bars for my income….but even in that capacity i am relegated to being “atmosphere” because the state of live music sucks now too….clubs just want the security of knowing theres some dude in the corner with a guitar who they can turn to when their hometown team loses or they get too drunk to pick up a fat chick
In view of all the material covered in this blog article (especially the detailing of the major label accounting methods), I can’t for the life of me see why ANY musician or band would have anything to do with a major label.
Even the big name acts like Red Hot Chili Peppers that can somehow get paid. I mean, why give a license to rob you blind to someone just because you make so much money for them there’s a piece of it left over once they’ve picked your pocket so thoroughly they get bored with it and let you have whatever meat’s left on the carcass after they’re so stuffed they can’t eat another bite?
The math says it all. You only have to sell 1/10th as much product on iTunes, AmazonMp3, etc. to make the same amount you would make AFTER you’ve repaid the “unrecouped balance” debt at (effectively) 1000% interest.
I seem to recall that the definition of ‘insanity” is: you do the same thing over and over with bad results, yet each time you do it again expecting a good result. Remember what happened to the rock stars of the 1950’s, like Little Richard? Or what Verve did to Frank Zappa in the 1960’s? Back then there was no online marketing and sales alternative. Back then making a record or album cost more than most starving musicians could possibly afford. Back then, musicians and bands had no choice. They had to deal with the music industry mob or hang it up.
There’s absolutely no reason to do that any more.
Wow, how can they be so lacadastical about this? Don’t they ever get audited or something?
Brother, I feel you and your Orwellian pain.
Thank you for writing this post. Your chronicle feels like a snowball that in a perfect would would reach the bottom of the hill as it runs into Senate hearings and audits, as well as collusion, breach of contract and fraud charges against Warner Brothers and the rest of the slumbering giants.
I’m a bass player from a couple of little known “un-recouped” bands in Austin, TX. So I just wanted to let you know that your actions on behalf of Too Much Joy are significant and important. Whether you know it or not, you’re speaking for/asking questions on behalf of all of us, “the hundreds of other also-rans and almost-weres.”
Thanks! (…and keep on rockin’)
Ludicrous. If CDBaby can manage to account to every indie artist on there for the money received from Rhapsody, Emusic, Spotify, iTunes and the like (and they account to the one-percent-of-a-penny level, and seemingly accurately) then there’s no reason on earth Warner’s can’t.
And if they’re going around ‘accidentally’ making $10,000 ’rounding errors’ that’s going to mean there’s quite a lot of bands who they claim are unrecouped but *aren’t*, who could do with that money…
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I know I downloaded a TMJ song from iTunes this year. The bastards. Keep up the good fight. I agree that the real issue is for bands on the “cusp” where this type of sloppy accounting means the difference between no royalties and some. And for whom $10,000.00 ain’t “nothing.”
I was in a band on the same label as TMJ (Discovery/Warner) in the mid-90s. My memories of first walking into their offices were of feeling I had stepped onto the set of “The Stepford Wives”. It was creepy. None of the bands were selling well, yet everyone here was pulling salary, going to lunches on the company card, etc. They put us in a hotel in Bel-Air. The label dissolved less than a year later. This post of yours comes as no surprise.
Whoever said the accounting “errors” were to keep more bands unrecouped is right. That’s the game.
It goes hand-in-hand with making unrecouped bands feel like s***, which labels are very good at. You go from being treated way more important than you are to being treated like a total loser — and it’s on purpose. It’s because they owe you money,
Signing with a label is like buying a used car: when you first walk in the door they treat you like a king. When you come back with a problem they act like you’re a bum that wandered in off the street, And it’s absolutely on purpose. If you stick up for yourself they’ll yell, use profanity, etc. Whatever it takes to get you to go away with your tail between your legs.
The “you never made us s***” line is a perfect example. Of course you made them money. They probably made all their money back they day you sold 50,000 records. After that it’s all a game to make sure they never have to pay you a cent.
Are they making a lot off TMJ? No. But multiply that by every band they aren’t paying, and you get the picture.
We now the fun begins for the industry in canada with the 50 million buck law suit over the industry not paying up to artist like. If the law suit wins Fine are 20 grand each song with 300 thousand songs with royalties not paid makes the 6 billion bucks. I hope they win. they being stealing for artists for years.
Rad article, I’m sorry for you about the situation, but it’s a really interesting read. Thanks man.
Well, my statements from Sony BMG have been the size of phonebooks and I get like $23.00. On an iTunes download where they get like $ .70, I get sometimes less than a penny. There is the “packaging” deduction, the CD deduction (I know there is no packaging or CD), the foreign royalty deduction, the deduction for less than “full price,” whatever that might be. Add all these up and the math makes me poor. Forget that my contract actually said that we would split digital royalties. Just try to sue. With the paltry roayalties they give me, my legal bills add insult to injury. Oh, and all the big lawyers are in bed with the labels. The bigger the law firm, the cosier the sleeping partner.
Wow. Great Article. My band was offered a distribution deal through a major label and all they wanted was for us to post a $250,000 marketing bond to allow us to put their imprint on our CD which we had already produced with a Grammy winning engineer and producer (and which they suggested we re-record with one of their producers at one of their studios). They would allow us at our expense to “tour” with one of their other artists and attempt to recoup our investment with merch/swag sales (no tickets) and publishing income from radio spins and “other opportunities, should the arise through TV and film.” We did some digging to find out that they were offering this deal to everyone with any kind of financial where with all and that it apparently was a deal they had concocted with the major retailers who were “demanding” exorbitant “slotting fees” for product placement. We then found out if your product could not prove sales at over 50,000 units before hand, the major retailer would not allow placement for the CD at all. The industry sells “the dream” not only to the fans who want to lick the sweat of their star idols brow but to musicians who seek to play their music before a sea of screaming orgasmic fans. The real truth is that it’s all just a party and as one previous post so aptly said, the label personnel for the most part have no interest in the long term viability of the band or the label, they are just trying to make sure they have extended enough favors to secure their next gig when the current one plays out. No one wants to admit that there have been just enough perfect storms (Elvis, The Beatles, Springsteen, U2) in the business to carry the fantasy forward just one more day. All the rest is just bad accounting.
Finance is not math. Finance is story telling with numbers.
Keep this in mind as you read the following:
You’re not being petty. And you’re right, they’re not trying to srew you. But that absolutely doesn’t excuse them and their ITdepartments from using the ubiquitious-ly (pretty sure I made that word up) available technology to accurately track the total recoverable base of their client bands (yes, I was ever-so-briefly a CFO at a fortune 50 company, but I’ve done many Hail Marys to abate the guilt).
Your contracts suck, from an accounting perspective. What they’ve done is taken the math perspective direct expense in plus indirect expense (the band’s share of their overhead that you shared like their PR folks) to equal your total recoverable base and then subtracting the TOTAL revenue recouped by sales to determine if they broke even, lost money, or owe you.
What they did is ALMOST right – direct expense plus indirect expense to equal your total recoverable base and then subtract the revenue THE BAND recoups to determine if they broke even. That math sucks, but it’s fairly common in finance.
I have a great sticker that says “I’m too pretty to do math” when what it should say is “I’m too pretty to do finance”.
I think you remain fabulous in every way for being pissed. And I spend a LOT of money on music, and if I knew a way to pay musicians directly instead of buying CDs (sorry, still that old school) or downloading iTunes, I would send you a check directly.
I’ve gotten MORE than enough joy out of Sort of Haunted House and Unbeautiful (the theme song for every less-than twenty-something), ‘Sorry’ when I began to think maybe the Clash and the Who weren’t the only bands who mattered. So thank you.
Enjoy your coroporate hackery. I know I enjoy mine.
Goodbye, Ohio. (says the very very aged fan from Ohio)
If I owned stock in this company (and I probably do thru my 401ks) I would be VERY VERY VERY concerned about this. That is an amazingly shoddy accounting practice. If you want to get some real attention on this hand it to some account managers at the 401ks.
They are playing an amazingly risky game with other peoples money. They are taking on a huge risk for many many small rewards. These sorts of things lead to class action lawsuits…
Take away for me is do not touch record company stocks with a 10ft barge pole. If they are willing to lie to people they owe money to what are they putting in the other books where they report ‘profit’?
400 grand? Talk about signing your life away! Didn’t you think to cut your losses at 50k, 100k, 200k? Just curious.
I used to work for a branch of WEA in the 90s. A major label such as Elektra or Atlantic (etc) woudl put out an average of 43 records a year back when I was there. Our plan was for TWO to make money. Two. That means that the other 41 record did not recoup. I still have presentation handouts outlining this “plan.” So when you wonder how many bands are in your situation… multiply that by the number of labels you consider major x the number of years you think it’s been going on…
Funny story. I was in a band on Geffen in the mid 90s that is also unrecouped. But I’m also a current employee at a major label royalty department. I loved your rant, especially from an insider’s perspective as a digital retailer. Unfortunately, I have to substantiate your “it’s equally possible that people everywhere, including major label accounting departments, are just dumb and lazy” as a sad but true fact.
I can’t speak for the WEA system, but at the conglomerate I work for, we have 3 different computer systems built in 3 different eras that rarely work harmonious. Seriously, one of them runs in what appears to be DOS! And the most modern of the systems is the most flawed. In fact, I read this while waiting for the IT people to fix it so I can get back to work.
Most of us who work here are either musicians, housewives and knuckleheads (it’s a Union gig!). However, we are instructed to rigorously observe the letter of all contracts in order to avoid litigation. Most of us take pride in getting the “little guy” paid when we can, but like any job, there’s a boss pushing for you to get X amount of work accomplished in Y amount of time.
I’m guess I’m writing to share what I learned (and it sounds like you learned as well) from my major label experience: there are no evil monsters. There is no Man. Conspiracies don’t exist because they require too much coordination and involve too much conflicting self-interest. I have given up on the inane notion of “justice.”
The sun is shining today. I still have all my fingers, toes, eyes and teeth. Lucky enough to have most of my hair and a tolerable beer gut. I have just read a great rant and the Posies have just followed Sabbath on my iTunes shuffle. Somehow, I still love music…
In the immortal words of the great Ice Cube, “Today Was A Good Day…”
A few questions, Tim. So, when you were touring you made no money off of ticket sales? Second, do some bands sign, spend a lot less of the initial advance on promotion, etc,and then get to keep the left over money for themselves? Third, would you guess then that that a lot of the rappers on major labels that brag about how much money they’re making in the music business are actually lying and getting shafted?
As a former musician/current music teacher I completely understand what you’re going through. I was in a band that was touring extensively, and on the cusp of signing a major label deal when the lead singer (then a business major in college) saw through the ‘fuzzy math’ of the contract and we broke up. I realized that all of the work we’d put into our craft would more than likely not pay off, and we went our separate ways to get day jobs.
While your article brought back some memories as well as some heartbreaks, what it did remind me of is how much I dug seeing TMJ live! You’ve inadvertently convinced me to re-buy some of your albums I had on vinyl and tape while in high school and college. Is it bad that I’ll more than likely buy them via iTunes? At least I’m doing my part to help get you a little bit closer to recouping!
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Answers to ThePDW’s questions: 1) Touring income (as well as publishing income and merchandise income) was totally separate from our deal with the label. We had gotten to the point where we were self-sustaining on the road (we didn’t come home with a lot of money, but we came home with some) just before we signed to Warner. During our Warner tenure, we interspersed headlining shows (which were profitable) with opening slots for bigger acts in larger venues (for which we’d get something like $250/night, and which meant we needed tour support from the label in order to keep ourselves fed and the van gassed up, etc.). 2) TMJ was toward the cheap scale of advances for those days. Some folks (especially acts on Sire) would make records for $50,000 or less, but $100,000 wasn’t particularly extravagant by Hollywood standards, and we wound up spending it all on the records. But yes, we could have spent less on the recordings and put some of that advance money in our pockets. We would have wound up owing the label the same amount, either way. 3) Yes, absolutely.
media companies are really ridiculous…
Thanks for reminding me why, in the 10 years I have been playing as a recording artist, I have never seen a dime for my music other than the money I made at the venues. I’m still waiting to get myself out of contract with BMI who has never issued me one statement in spite of the fact that my cd were selling on the internet for years. Technology has advanced to the point where it is exposing the shady dealings of the industry (as you so articulately described); but where is the accountability!? Why are the corporate entities not held to the same standards that they themselves hold us to? This is the heart of the matter.
Thanks for your post!
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Wow, this is a perfect example of why I love your band. Too Much Joy is too beautiful for this world.