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By the Power of Satan
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Posted by
Will
on April 22, 2004 at 15:27
| Ed wrote: | The following article was blatantly ripped off from MAXIMUMROCKNROLL #133, in 1994 (please don't sue us!), which is quite a while ago, so a lot of the things referenced to have either changed or simply don't exist anymore.
But the main gist of the thing is still spot on... What Lee says might make you realize a few scary truths about the 'big boys' of the recording/distribution world. |
By The Power of Satan...
Author: Lee Diamond
MAXIMUMROCKNROLL #133.
(almost) everything you ever wanted to know about major labels that they never told you...
Most people live under the mistaken assumption that the only real way to make money off of music is to sign a contract with a major label. This is an attempt to prove how extraordinarily fucked that notion is. No one will put you in debt quicker than a major label.
The myths behind the supposed wisdom attached to signing with a major label are easy to dispel. Most of these myths are not even the deliberate work of the labels themselves, as much as they are the assumptions that people have of rock stars and music performers. In the artificial world of rock video and paparazi, everyone is rich.
When one goes to an "alternative" concert, one is bound to see tour busses, groupies, roadies, techs, lighting engineers, sound engineers, stage props, and endless supplies of guitars, basses, drum heads, Sticks, strings, and what not. The automatic impression is that 1. the label is picking up the tab, and 2. the band is swimming in bucks.
Sorry, wrong answer, but thanks for playing!
Let's start at the very beginning. This is a treaty. It is a declaration of my commitment to the underground, my sincere devotion to punk rock. Though I make it a rule to never say never, I am now proclaiming I will never sign to a major label. I have researched this area considerably, and I believe that major labels are rip-off artists to a huge degree, that they cheapen art and artists, and for these reasons are an evil entity in this world, and I will not sign a deal with such a company.
Separating fact from fiction, it is important to investigate what the majors say or imply and compare it to what they mean. By no means is it the same thing. They will tell you what you want to hear, but that isn't what will necessarily take place.
A common belief with most people is that majors will "stand behind" the band, provide tour support, do promo work and so forth. All that is true, but the unspoken glitch is that it is paid for by the band, not the label.
A band on a major label is paid via royalties. For every record sold, they get a certain percentage, or points. Usually, the royalties are in the neighborhood of 10 to 15 points. Huge stars like Michael Jackson, Madonna, or Guns and Roses can get near 30 points. There are numerous other factors involved and other opportunities for income. Some artists are on salary instead of points. This guarantees them an income if the record should do poorly and in that case is a pretty good deal, but if the record really takes off, it is a disaster.
The label usually takes in 70 to 90 points less production costs, advertising, shipping, and miscellaneous expenses. The average cost for a single CD (including CD, mastering, printing, packaging, inserts, jewel box and shrink wrapping) in a press of over 10,000 is a round $1.50 per CD. For a large release (over 100,000 pressed) the price drops considerably so that a single CD of say Nirvana's "In Utero," costs the label as little as 90 cents per unit, and in turn sells in a store for $12 to $16 plus tax.
Aside from production, advertising, and a few miscellaneous things, the rest of the expenses including promo CDs to publications and radio stations, promo packaging, recording costs, artwork, producers, engineers, and technical assistance are the responsibility of the band. All the label does is act as coordinator for the band. They arrange the promos that get sent out and what goes in a promo package, but the band pays for it.
Usually, the method labels use to lure bands is to provide the band with an initial advance. This is a huge sum of money advanced to the band from their expected royalties. It is not given to the band, it is loaned to the band. Thus, when you hear that Nirvana signed for a million bucks, or Urge Overkill signed for $250,000 or Helmet signed for $500,000, what that really means is that they were loaned that money from their cut of the royalties before the record is produced. This is where most bands get into real serious trouble.
Say that you are in a band. You've got the typical problems of a band, and maybe you're traveling to shows in a broken down van or a couple of cars. Suddenly, you have a cashiers check for $100,000 from the major label you just signed with. It seems about time to buy a real nice new Econoline XL or Clubwagon van. Maybe even a bus!
As long as all of that money is lying around, it might also be nice to take a little of that money to buy some new equipment (assuming that like most bands, you don't get full instrument endorsement) and of course there are personal expenses, needs, wants.
About one or two months after you've signed, it's time to take those songs into the studio. Time to get cracking. Time to get fucked.
It is around now that the band finds out its real expenses. The band, if they were well disciplined might have 1/2 to 3/4 of their advance money left. This money must cover the following expenses in most contracts: manager's cut, legal fees, recording (including: producer's fees, studio rental, engineer's fees, technical assistance, equipment rental, tape, mastering, etc.), video expenses (even though bands maybe contractually obligated by the label to do one or more videos, the band still picks up the tab, including: cameras, crew, pre-production costs, postproduction costs, props, stage, director's fee and so forth), album artwork, band photos, promo shots, promo material for tours, record stores, radio stations, clubs, and industry people, all tour expenses, merchandise expenses, and endless miscellaneous expenses.
This is the responsibility of the band. Yes, the band. Obviously, as bands rise in popularity, they inevitably make more money (or get less in debt) and when a band gets huge (filling arenas), they can renegotiate contracts and force the label to pick up recording costs, video shoots, etc. That's great for them, but not so wonderful for the average "alternative" band.
If you're thinking you can avoid all of this by signing a better contract, forget it. Not only is the opportunity for improvement on the basic contract limited, it is also highly unlikely. Consider that bands like Superchunk, Jesus Lizard, Jawbreaker, Liz Phair, Tar, and Fugazi are about as large as one can get in the underground, and they would not get everything they want on a major label contract (assuming they would even want one), what makes you think that you and your dinky little band can do better?
NO person or band in the industry has a contract that allows them complete artistic control. NO ONE. Major labels must protect their corporate interests, so if an artist was about to do something that might jeopardize the label's standing with another industry, corporation, politician, etc., they must be able to take action. They have full veto power over any aspect of an artist's work.
Nirvana was refused permission to release "In Utero" with the production they wanted. Numerous other bands have had to cut song length, remove songs from records, change lyrics, alter album covers, or do other things that compromised their personal integrity. Even in videos, the label has full approval of the final product even though they did not pay for its production.
A major label contract averages over 100 pages. This is a contract created by dozens of high priced lawyers which is designed to make the label as much money as possible, which in turn means giving as little as they can to the band. The average person presented with such a contract would be utterly lost. It would be impossible for the layman to understand over 100 pages of cross-referenced, complex legal jargon. It is safe to assume that the average band would be clueless, and in serious potential danger if they signed such a contract without a lawyer.
So, the band hires a lawyer. Let's say its a cheap lawyer and he or she only gets about $50 an hour. How long would it take the lawyer to go over a hundred pages carefully? Let's underestimate and say 10 hours. So in 10 hours, the lawyer finds the contract is not OK. That just cost the band $500.
On the other hand, maybe the lawyer says that the contract seems good and the band believes him. It is inconceivable that in a few hours a single low budget lawyer is going to be able to see every potential liability, responsibility, and loophole present in a contract perfected over years by some of the best lawyers in the country.
There are further technicalities, techniques, and methods used by the major labels to play you like a sucker. A&R reps (Artist and Repertoire) are a valuable tool in the industry. These are folks just like you. They're young, they're hip, they know the bands you know, they dress like you, they talk like you. These folks are the buffer elite of the music industry.
A&R reps usually contact a band after reading about them in CMJ, Spin, Rolling Stone, or MRR. (If you think that the majors don't keep an eye on the underground right at the source then you are extraordinarily naive.) Poobah got over a dozen letters and calls from major labels due to a single paragraph about us in the CMJ.
When a label is interested in a band, a scout might come to check out one ot their shows. If they are REALLY interested, the label will fly down to discuss stuff or fly the band to Los Angeles or New York to talk. The band will then talk to one of the rebellious young A & R reps who will convince the band what a great deal they are going to get.
The band often feels at this point that life couldn't be better. The A & R rep was so cool! He/she wasn't at all like a typical industry type! He/she is on our side!
During this meeting, the band might sign an innocent looking letter of intent or "deal memo" which states that the band and the label will come to some kind of contractual agreement at some point. This letter is a binding contract. It puts the band in a legal outhouse.
Basically, the band will be forced to sign a contract with that label, buy out of the agreement, or break up. After signing this letter of intent, all intellectual, musical, and Archly ideas of the band belong to the label. They can't even release their own material by themselves. The deal memo does not expire, and the label has all the time and all of the leverage. You can pretty well guess who is left holding the shitty side of the toilet paper.
Major labels hold all the cards in terms of distribution and connections. It appears that major labels can help you so much because they act as arrangers. Most of the things that major labels do for their bands is get them in the door. Sure, major labels will give you tour support, promo posters, and so forth, but remember that it is on YOUR tab, just like an independent.
The truth of the matter is that a band who wants to get a fair shake and make some money can only do this on an independent label. On a large independent label, you can still have the label put buttloads of promo out, help you with your bookings, and all sorts of shit, and just like with the majors, you pay for it. The difference is that you also have control over where it goes, and when it stops. On a major label, you pick up the tab, but they make the decisions.
Independent labels as a general rule are also not interested in holding the band in some type of legal vice. An independent will let you sing about what you want to sing about. They aren't going to tell you that you must put a lime warning sticker on your CD, or that the cover is too graphic, that the lyrics are too anti-establishment, that the third song on the CD sucks so it's coming off, that you have to go to Camelot Music to do a promo, that you better have that video at their offices by next week, that you can't use a certain producer, that you have to tour with Therapy? whether you like it or not, or that you better get on your knees and start sucking.
With an independent, obviously the audience is smaller, thanks to the major label's choke-hold on distribution, however the percentage that you make back off of what is sold is much larger. Independent labels rely on the underground to sell their records. If an independent were to fuck over a band, the band will damage their reputation with the underground and the label will lose their audience. For this reason, it is in their own best interest to not do such a thing.
Each band from the punk scene that signs to a major label has sold us out. When a band on an indie sells 50,000 copies of their album, it is good for everyone in the scene. It opens new distribution doors, it strengthens the label, and it puts more people in touch with the underground without compromising! When a band reaches this point, they are probably making more money on the independent then they would on a major label anyway.
When a band signs to a major label, they are abandoning the people that got them to where they are now. Signing to a major hurts the entire indie scene, not just the individual label that they were on. The band is proclaiming that their underground base of fans that bought their records, went to their shows, and got them to where they are now, were OK, but they got a better offer. This sounds a lot like dumping your girlfriend or boyfriend because a better looking one came along.
Another issue which really gets me foaming at the mouth is the Columbus-esque manner in which the major labels have acted as if they have created or discovered this "brand new" form of music. Needless to say, punk has been around in some form for a long fucking time. It was about 1979 when the majors declared it to be dead and it kept going without them, and thrived in spite of their best efforts to ignore and destroy it.
Now, MTV, Spin, Rolling Stone, and so forth act as if they discovered these bands playing in their garage. People without a fucking clue about where everything came from think that THEY are the underground. If you read an article in one of those big-time music magazines, you can see endless homage paid to bands like Minor Threat, Black Flag, Mission of Burma, Halo Of Flies, Big Black and a million other bands that they ignored while they were in existence. The impression is that the labels and MTV and magazines and so forth are rebellious, anti-establishment, revolutionaries rejecting pop culture, even though they are pop culture.
There are so many more reasons why this situation is so fucked, but going into all of them would take a billion years and make this already wordy diatribe dangerously similar in length to a Russian novel. I want to thank Steve Albini for his article in The Baffler #5âreprinted in this issue further onâwhich inspired me (along with other research and mental fits over this topic) to write this article.
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