Here is the breakdown. Prepare to be amazed (or disturbed)...
Our artist has made a gold record and sold 500,000 copies. He has a royalty rate of 14%, pays the producer 3%. Has recording costs of $250,000 and tour support of $50,000.
Wholesale Price (what they base your royalty rate on) $12.05
Royalty Rate (14% all-in, minus 3% for producer) $1.32
Royalty X 500,000 Units $640,000
Less 10% Free Goods (Promo copies) -$64,000
____________
$576,000
Less: Recording Costs -$250,000
Less: 50% of Independent Promotion -$75,000
Less: 50% of Video Costs -$50,000
Less: Tour Support -$50,000
____________
Total: $151,000
To add salt in the wound the record company holds a reserve on your gross royalties ($576,000) meaning they keep 35-50% of your royalties in case your sales boomerang. At 35% that is $201,600. So in this first statement you get NOTHING. You may get that back if yo continue to sell, but they still have you.
And it gets worse…
Suppose you took the record companies advance of $300,000 towards this album. That means after this album you are in the hole $149,000. Which they will gladly take from the royalties of your next album, if you have a two-album deal.
Still want to become a rock star?
I got these figures from a great book “All You Need to Know About the Music Business” by Entertainment Attorney Donald S. Passman.
Great Stuff, always interesting to see what you put on here.
ReplyDeleteBrad Wallace