RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000 • Hacker News Board

Re: RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

#11

Post by cageface » Fri, Jul 08, 2011, 11:54 AM UTC

StavrosK wrote: post #10

klbarry wrote: post #9

Earlier quoted context omitted.

Programming ability has a great deal more economic value than entertainment ability.

How so, given how much money top singers/bands make?

Power law thing. Most musicians make next to nothing whereas the average programmer does ok.

Re: RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

#12

Post by StavrosK » Fri, Jul 08, 2011, 11:54 AM UTC

cageface wrote: post #11

StavrosK wrote: post #10

Earlier quoted context omitted.

How so, given how much money top singers/bands make?

Power law thing. Most musicians make next to nothing whereas the average programmer does ok.

Makes sense, thanks.

Re: RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

#13

Post by MichaelApproved » Fri, Jul 08, 2011, 11:59 AM UTC

vermontdevil wrote: post #4

I still don't understand why musicians continue to sign up with record labels? With all the other options out there, the record labels should not be the first choice for any aspiring musician.

Those other options aren't always as easy to execute for everyone as you might think. Marketing, web site building, video editing, tour scheduling, public relations, accounting, etc.

That stuff is hard work and you have to be a jack of all trades. Each band is like a little startup looking for a technical cofounder.

Re: RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

#14

Post by Confusion » Fri, Jul 08, 2011, 12:53 PM UTC

Similar: Courtney Love does the Math: http://news.ycombinator.com/item?id=1714338

Re: RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

#15

Post by mashmac2 » Fri, Jul 08, 2011, 1:14 PM UTC

MichaelApproved wrote: post #13

vermontdevil wrote: post #4

I still don't understand why musicians continue to sign up with record labels? With all the other options out there, the record labels should not be the first choice for any aspiring musician.

Those other options aren't always as easy to execute for everyone as you might think. Marketing, web site building, video editing, tour scheduling, public relations, accounting, etc. That stuff is hard work and you have to be a jack of all trades. Each band is like a little startup looking for a technical cofounder.

This. Is exactly how it works. A first-time startup gets worse terms then an established entrepreneur, right? A first-time band is the same way. You do well with your first venture, you get better terms the next time. The indie film industry is very much the same way with distribution rights.

So, VC ~= Record labels ~= Film distributers

Re: RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

#16

Post by tjansen » Fri, Jul 08, 2011, 1:16 PM UTC

MattBearman wrote: post #8

sanswork wrote: post #5

Does anyone know why he left out the $300,000 advance from the final calculation on how much the artists make? I'm not sure if that was just an oversight or if there was a valid reason for it.

Even so, for a 5 member band, assuming they took the whole advance, (no manager fees, etc) they've earned $60,000. Which considering there's usually 2-4 years between albums, and they still owe the label money, that's a pretty shitty wage of $15k - $30k P/A.

Sure, but in the meantime the label made the band famous, which is worth a lot of money. They have a much larger audience at concerts, can sell merchandise and possibly have other sources of income. And, when the record contract expires, they can negotiate better terms.

Re: RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

#17

Post by exch » Fri, Jul 08, 2011, 1:25 PM UTC

A guy named 'merethan' posted a great essay on the subject in 2010. It gives a good explanation of what the music industry is about and why it still operates the way it does, without going too much into the financial details.

The original article is in Dutch, so I translated it into English a while ago: http://site.jteeuwen.nl/misc/copy_is_my_right.html

Re: RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

#18

Post by markokocic » Fri, Jul 08, 2011, 1:25 PM UTC

seanalltogether wrote: post #7

The crazy thing to me is that the deal is structured more like a loan then an investment, and yet they are still only entitled to 10% of net income. Could you imagine a tech entrepreneur accepting that kind of a deal from a VC?

Well, tech enterpreneurs are much better with math and scepticism than your average musicians.

If a programmer is able to decipher so called business requirements and find holes there, why shouldn't he check contract for himself?

Re: RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

#19

Post by johnarleyburns » Fri, Jul 08, 2011, 1:26 PM UTC

The same is true of startup funding. Beware the VCs! They use these same tactics so that if your startup is sold for $20m you can easily end up with zero, even as a co-founder, even if the VCs made a big profit off their investment.

Re: RIAA Accounting: How To Sell 1 Million Albums And Still Owe $500,000

#20

Post by tjansen » Fri, Jul 08, 2011, 1:28 PM UTC

seanalltogether wrote: post #7

The crazy thing to me is that the deal is structured more like a loan then an investment, and yet they are still only entitled to 10% of net income. Could you imagine a tech entrepreneur accepting that kind of a deal from a VC?

I don't think that you should see it as a loan, because AFAIK the band does not need to pay the advance back.

The band sells the right to its music, in exchange for the advance. If the band's income exceeds 1000% of the advance, it will get 10% of the income as an extra bonus. And when the contract ends, the label returns the rights back to the band.

What does the band get? An advance, possibly a bonus, marketing and promotion for the brand, and usually the rights to some other forms of income (concerts, merchandise etc).