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Bill Pere: Executive Director
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The Problem With Music by Steve Albini (producer of Nirvana’s “In Utero” ) 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 sewage. 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 sewage 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 sewage. 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 people 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 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 screwed over 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: 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 screwed. Steve Albini is an independent and corporate rock record producer most widely
known for having produced Nirvana's "In Utero".
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