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This is how your $250,000 Advance is split. You may be a bit surprised.

The Problem With Music
by Steve Albini

Whenever I talk to a band who are about to sign with a major label, I
always end up thinking of them in a particular context. I imagine a
trench, about four feet wide and five feet deep, maybe sixty yards long,
filled with runny, decaying shit. I imagine these people, some of them
good friends, some of them barely acquaintances, at one end of this
trench. I also imagine a faceless industry lackey at the other end
holding a fountain pen and a contract waiting to be signed. Nobody can
see what's printed on the contract. It's too far away, and besides, the
shit stench is making everybody's eyes water. The lackey shouts to
everybody that the first one to swim the trench gets to sign the
contract. Everybody dives in the trench and they struggle furiously to
get to the other end. Two people arrive simultaneously and begin
wrestling furiously, clawing each other and dunking each other under the
shit. Eventually, one of them capitulates, and there's only one
contestant left. He reaches for the pen, but the Lackey says "Actually,
I think you need a little more development. Swim again, please.
Backstroke". And he does of course.

Every major label involved in the hunt for new bands now has on staff a
high-profile point man, an "A & R" rep who can present a comfortable
face to any prospective band. The initials stand for "Artist and
Repertoire." because historically, the A & R staff would select artists
to record music that they had also selected, out of an available pool of
each. This is still the case, though not openly. These guys are
universally young [about the same age as the bands being wooed], and
nowadays they always have some obvious underground rock credibility flag
they can wave.

Lyle Preslar, former guitarist for Minor Threat, is one of them. Terry
Tolkin, former NY independent booking agent and assistant manager at
Touch and Go is one of them. Al Smith, former soundman at CBGB is one of
them. Mike Gitter, former editor of XXX fanzine and contributor to Rip,
Kerrang and other lowbrow rags is one of them. Many of the annoying
turds who used to staff college radio stations are in their ranks as
well. There are several reasons A & R scouts are always young. The
explanation usually copped-to is that the scout will be "hip to the
current musical "scene." A more important reason is that the bands will
intuitively trust someone they think is a peer, and who speaks fondly of
the same formative rock and roll experiences. The A & R person is the
first person to make contact with the band, and as such is the first
person to promise them the moon. Who better to promise them the moon
than an idealistic young turk who expects to be calling the shots in a
few years, and who has had no previous experience with a big record
company. Hell, he's as naive as the band he's duping. When he tells them
no one will interfere in their creative process, he probably even
believes it. When he sits down with the band for the first time, over a
plate of angel hair pasta, he can tell them with all sincerity that when
they sign with company X, they're really signing with him and he's on
their side. Remember that great gig I saw you at in '85? Didn't we have
a blast. By now all rock bands are wise enough to be suspicious of music
industry scum. There is a pervasive caricature in popular culture of a
portly, middle aged ex-hipster talking a mile-a-minute, using outdated
jargon and calling everybody "baby." After meeting "their" A & R guy,
the band will say to themselves and everyone else, "He's not like a
record company guy at all! He's like one of us." And they will be right.
That's one of the reasons he was hired.

These A & R guys are not allowed to write contracts. What they do is
present the band with a letter of intent, or "deal memo," which loosely
states some terms, and affirms that the band will sign with the label
once a contract has been agreed on. The spookiest thing about this
harmless sounding little memo, is that it is, for all legal purposes, a
binding document. That is, once the band signs it, they are under
obligation to conclude a deal with the label. If the label presents them
with a contract that the band don't want to sign, all the label has to
do is wait. There are a hundred other bands willing to sign the exact
same contract, so the label is in a position of strength. These letters
never have any terms of expiration, so the band remain bound by the deal
memo until a contract is signed, no matter how long that takes. The band
cannot sign to another laborer or even put out its own material unless
they are released from their agreement, which never happens. Make no
mistake about it: once a band has signed a letter of intent, they will
either eventually sign a contract that suits the label or they will be
destroyed.

One of my favorite bands was held hostage for the better part of two
years by a slick young "He's not like a label guy at all," A & R rep, on
the basis of such a deal memo. He had failed to come through on any of
his promises [something he did with similar effect to another well-known
band], and so the band wanted out. Another label expressed interest, but
when the A & R man was asked to release the band, he said he would need
money or points, or possibly both, before he would consider it. The new
label was afraid the price would be too dear, and they said no thanks.
On the cusp of making their signature album, an excellent band,
humiliated, broke up from the stress and the many months of inactivity.
There's this band. They're pretty ordinary, but they're also pretty
good, so they've attracted some attention. They're signed to a
moderate-sized "independent" label owned by a distribution company, and
they have another two albums owed to the label. They're a little
ambitious. They'd like to get signed by a major label so they can have
some security you know, get some good equipment, tour in a proper tour
bus -- nothing fancy, just a little reward for all the hard work. To
that end, they got a manager. He knows some of the label guys, and he
can shop their next project to all the right people. He takes his cut,
sure, but it's only 15%, and if he can get them signed then it's money
well spent. Anyways, it doesn't cost them anything if it doesn't work.
15% of nothing isn't much! One day an A & R scout calls them, says he's
'been following them for a while now, and when their manager mentioned
them to him, it just "clicked." Would they like to meet with him about
the possibility of working out a deal with his label? Wow. Big Break
time. They meet the guy, and y'know what -- he's not what they expected
from a label guy. He's young and dresses pretty much like the band does.
He knows all their favorite bands. He's like one of them. He tells them
he wants to go to bat for them, to try to get them everything they want.
He says anything is possible with the right attitude.

They conclude the evening by taking home a copy of a deal memo they
wrote out and signed on the spot. The A & R guy was full of great ideas,
even talked about using a name producer. Butch Vig is out of the
question-he wants 100 g's and three points, but they can get Don Fleming
for $30,000 plus three points. Even that's a little steep, so maybe
they'll go with that guy who used to be in David Letterman's band. He
only wants three points. Or they can have just anybody record it (like
Warton Tiers, maybe-- cost you 5 or 7 grand] and have Andy Wallace remix
it for 4 grand a track plus 2 points. It was a lot to think about. Well,
they like this guy and they trust him. Besides, they already signed the
deal memo. He must have been serious about wanting them to sign. They
break the news to their current label, and the label manager says he
wants them to succeed, so they have his blessing. He will need to be
compensated, of course, for the remaining albums left on their contract,
but he'll work it out with the label himself.

Sub Pop made millions from selling off Nirvana, and Twin Tone hasn't
done bad either: 50 grand for the Babes and 60 grand for the Poster
Children-- without having to sell a single additional record. It'll be
something modest. The new label doesn't mind, so long as it's recoupable
out of royalties. Well, they get the final contract, and it's not quite
what they expected. They figure it's better to be safe than sorry and
they turn it over to a lawyer--one who says he's experienced in
entertainment law and he hammers out a few bugs. They're still not sure
about it, but the lawyer says he's seen a lot of contracts, and theirs
is pretty good. They'll be great royalty: 13% [less a 1O% packaging
deduction]. Wasn't it Buffalo Tom that were only getting 12% less 10?
Whatever. The old label only wants 50 grand, an no points. Hell, Sub Pop
got 3 points when they let Nirvana go. They're signed for four years,
with options on each year, for a total of over a million dollars! That's
a lot of money in any man's English. The first year's advance alone is
$250,000. Just think about it, a quarter million, just for being in a
rock band! Their manager thinks it's a great deal, especially the large
advance. Besides, he knows a publishing company that will take the band
on if they get signed, and even give them an advance of 20 grand, so
they'll be making that money too. The manager says publishing is pretty
mysterious, and nobody really knows where all the money comes from, but
the lawyer can look that contract over too. Hell, it's free money. Their
booking agent is excited about the band signing to a major. He says they
can maybe average $1,000 or $2,000 a night from now on. That's enough to
justify a five week tour, and with tour support, they can use a proper
crew, buy some good equipment and even get a tour bus! Buses are pretty
expensive, but if you figure in the price of a hotel room for everybody
In the band and crew, they're actually about the same cost. Some bands
like Therapy? and Sloan and Stereolab use buses on their tours even when
they're getting paid only a couple hundred bucks a night, and this tour
should earn at least a grand or two every night. It'll be worth it. The
band will be more comfortable and will play better.

The agent says a band on a major label can get a merchandising company
to pay them an advance on T-shirt sales! ridiculous! There's a gold mine
here! The lawyer Should look over the merchandising contract, just to be
safe. They get drunk at the signing party. Polaroids are taken and
everybody looks thrilled. The label picked them up in a limo. They
decided to go with the producer who used to be in Letterman's band. He
had these technicians come in and tune the drums for them and tweak
their amps and guitars. He had a guy bring in a slew of expensive old
"vintage" microphones. Boy, were they "warm." He even had a guy come in
and check the phase of all the equipment in the control room! Boy, was
he professional. He used a bunch of equipment on them and by the end of
it, they all agreed that it sounded very "punchy," yet "warm." All that
hard work paid off. With the help of a video, the album went like
hotcakes! They sold a quarter million copies! Here is the math that will
explain just how fucked they are: These figures are representative of
amounts that appear in record contracts daily. There's no need to skew
the figures to make the scenario look bad, since real-life examples more
than abound. income is bold and underlined, expenses are not.


Advance: $ 250,000
Manager's cut: $ 37,500
Legal fees: $ 10,000
Recording Budget: $ 150,000
Producer's advance: $ 50,000
Studio fee: $ 52,500
Drum Amp, Mic and Phase "Doctors": $ 3,000
Recording tape: $ 8,000
Equipment rental: $ 5,000
Cartage and Transportation: $ 5,000
Lodgings while in studio: $ 10,000
Catering: $ 3,000
Mastering: $ 10,000
Tape copies, reference CDs, shipping tapes, misc. expenses: $ 2,000
Video budget: $ 30,000
Cameras: $ 8,000
Crew: $ 5,000
Processing and transfers: $ 3,000
Off-line: $ 2,000
On-line editing: $ 3,000
Catering: $ 1,000
Stage and construction: $ 3,000
Copies, couriers, transportation: $ 2,000
Director's fee: $ 3,000
Album Artwork: $ 5,000
Promotional photo shoot and duplication: $ 2,000
Band fund: $ 15,000
New fancy professional drum kit: $ 5,000
New fancy professional guitars [2]: $ 3,000
New fancy professional guitar amp rigs [2]: $ 4,000
New fancy potato-shaped bass guitar: $ 1,000
New fancy rack of lights bass amp: $ 1,000
Rehearsal space rental: $ 500
Big blowout party for their friends: $ 500
Tour expense [5 weeks]: $ 50,875
Bus: $ 25,000
Crew [3]: $ 7,500
Food and per diems: $ 7,875
Fuel: $ 3,000
Consumable supplies: $ 3,500
Wardrobe: $ 1,000
Promotion: $ 3,000
Tour gross income: $ 50,000
Agent's cut: $ 7,500
Manager's cut: $ 7,500
Merchandising advance: $ 20,000
Manager's cut: $ 3,000
Lawyer's fee: $ 1,000
Publishing advance: $ 20,000
Manager's cut: $ 3,000
Lawyer's fee: $ 1,000
Record sales: 250,000 @ $12 =
$3,000,000
Gross retail revenue Royalty: [13% of 90% of retail]:
$ 351,000
Less advance: $ 250,000
Producer's points: [3% less $50,000 advance]:
$ 40,000
Promotional budget: $ 25,000
Recoupable buyout from previous label: $ 50,000
Net royalty: $ -14,000

Record company income:
Record wholesale price: $6.50 x 250,000 =
$1,625,000 gross income
Artist Royalties: $ 351,000
Deficit from royalties: $ 14,000
Manufacturing, packaging and distribution: @ $2.20 per record: $ 550,000
Gross profit: $ 7l0,000

The Balance Sheet: This is how much each player got paid at the end of
the game.
Record company: $ 710,000
Producer: $ 90,000
Manager: $ 51,000
Studio: $ 52,500
Previous label: $ 50,000
Agent: $ 7,500
Lawyer: $ 12,000
Band member net income each: $ 4,031.25
The band is now 1/4 of the way through its contract, has made the music
industry more than 3 million dollars richer, but is in the hole $14,000
on royalties. The band members have each earned about 1/3 as much as
they would working at a 7-11, but they got to ride in a tour bus for a
month. The next album will be about the same, except that the record
company will insist they spend more time and money on it. Since the
previous one never "recouped," the band will have no leverage, and will
oblige. The next tour will be about the same, except the merchandising
advance will have already been paid, and the band, strangely enough,
won't have earned any royalties from their T-shirts yet. Maybe the
T-shirt guys have figured out how to count money like record company
guys. Some of your friends are probably already this fucked.

Steve Albini is an independent and corporate rock record producer most
widely known for having produced Nirvana's "In Utero".

this shoulda been posted in the Music Talk folder or in OS, not here in Show Reviews

Surprised? Not at all. This is why the music industry is dying. In the future, music will be made locally by locals, in cooperative environs that don't promise much except good music in a righteous atmosphere.

Yeah, top bands will tour and -- if they're like Phil Lesh, who has a 43-year history of steady-selling records and profitable tours and a great fan base-- some will be able to work on their own terms.

Otherwise, this picture of the recording industry is not much different than working at/for/with a major corporation in any field.

If you can fight your way to a position of influence, you'll game the rules to feather your own nest. And feel that you've earned it.

Next surprise, please?

I can't speak to any of the post except to point out that this particular line

>>>>>>>New fancy professional guitars [2]: $ 3,000<<<<<<<<


is pure crap.

The number would be at least twice that, if not 3 or even 5 times that.


now can someone please delete this thread or move it to other stuff or music talk?