I will disclose here a report on how much profit the music industry, this material
was provided by a person who does not want to be identified but who wants to help in
investigations, that person is part of the forum This is not it, and it seems
she knows a lot:
Artists are exploited daily. Any lawyer in California will tell you when asked about the music biz, "There is no such thing as a fair contract - only a contract that is less unfair than the one before it." Michael would not have been the most powerful individual in the music business by a long shot, but his holdings would have made him a big-time player, something that was frowned upon. Michael was about to become the first self-sustaining star who controlled every aspect of his career, a big problem for the traditional labels (see why below).
As for Pink and Michael saying the only way to make money as an artist is on tour, let me explain how a record contract works: There's this band. They're pretty ordinary, but they're also pretty good, so they've attracted some attention. 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 does not cost them anything if it does not work. 15% of nothing is not 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.
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 10% packaging deduction]. 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 Português. 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 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
Offline: $ 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
And the record company?
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: $ 710,000
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, will not 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.
So how does all of the above fit with making more money on the tour? Simple. Evade the tax man. Promoters are so anxious to book a major star that they will usually give the manager a certain amount of money (known as "brown paper bag money" for the mode in which it was usually handed over) under the table off the top of the ticket sales tax to prevent the man from receiving any portion of it. Usually, it's a pretty substantial amount of money, especially if the star is selling out. The manager collects the money, takes their percentage out of it, and gives what's left to the star, to go straight to the bank and evade the tax people. Think of how many grateful there are promoters out there, how many sold-out shows, and you can join the stars laughing their way to the bank. Look at those expenses above, and brown paper bag money is usually the only money they make from the tour, aside from what's legally documented.
In fact, when singer Meat Loaf went bankrupt in the Eighties and was being sued to oblivion by the labels that chewed him up and spit him out, he likes telling the story of how he was still able to make on the more meager living expenses because there was 2 grand in cash from a European tour in a safe in his basement.
One reason the big labels may have had a problem with Michael is that he was trying to change all that. Notice that by the end of his life he had managed to take control of every aspect of his career - publishing, merchandising, touring, promotion. And then he was no longer under Sony's control, and buying back the rights to his recordings. Whether he was in the hole financially or not, Michael was about to buck the trend. Like X said above, Michael was about to become the first self-sustaining star who controlled every aspect of his career, by-passing every standard procedure in the book and creating bigger holes in certain industry pockets than his own.
My question to you is: Do you think the big Kahunas would stand for that? And, the Michael frequently pointed out, all this from a black man. Racism is inherent in the industry. Would they let him get away with it?
