Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

techdirt.com

Post reply on HN
Print view View original

31–40 of 60 posts

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

#31

Post by maxxxxx »

MattBearman wrote: post #21
tjansen wrote: post #16

Earlier quoted context omitted.

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.

No question, any band will tell you that record sales is their least significant income source, for most merch is the big earner. What bothers me most about this situation is that musicians would exist without labels, where as labels would not exist without musicians, the balance of power is all wrong.

The balance of power is all wrong in many areas. E.g.: There would be no Wall street without Main Street but they still get all the power. Main Street could exist without Wall Street.

People with lots of money have the means to shape laws their way and to produce propaganda so everybody believes they are important. The same could be said for venture capital.

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

#32

Post by lawnchair_larry »

gallerytungsten wrote: post #28
krig wrote: post #27

Earlier quoted context omitted.

The key issue is that the advance from the label is neither a gift nor an investment; it's a straight up loan (most likely with interest) that is expected to be paid back, but the loan terms are horrendous. I get the feeling you think that the band receives a $1M investment that the label will recover at a certain rate from the generated profit, but that's not the case. After selling for $1M, the artists are still at…

The general outlook I hear from people who are signed to deals that pay advances is this: get as large an advance as you can, because you won't be getting anything else. Sure, if you go double platinum it might be worthwhile to audit the label and squeeze some more money out. Although recoupment provisions make it technically a loan, just like a VC, the label won't come after you forever if you don't recoup. At a cer…

Worth noting - non-RIAA bands actually lose money touring. Smaller bands signed to RIAA labels still do not do very well with touring.

In many smaller scenes, a successful tour is one that breaks even. They sleep on promoters floors, eat shitty food, and play in bars. I hear a lot of "fans" that download all of their music and think that they support the artist by going to their show. This is not the case.

The one way to really make money as I understand it - which is noted in the book you mention (though it is kind of dated now) - is royalties. If you are fortunate enough to have your song featured in ads and get into heavy rotation on the radio, you get paid outside of your recoupment costs (which they pull from record sales).

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

#33

Post by protomyth »

MattBearman wrote: post #21
tjansen wrote: post #16

Earlier quoted context omitted.

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.

No question, any band will tell you that record sales is their least significant income source, for most merch is the big earner. What bothers me most about this situation is that musicians would exist without labels, where as labels would not exist without musicians, the balance of power is all wrong.

Some musicians would exist without the labels, others need the push / image machine.

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

#34

Post by mikeash »

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?

The total revenue of RIAA members in 2009 was about $7.7 billion. At their peak around the turn of the century, they were doing a bit under $15 billion. And that is revenue, not profit. The entertainment industry is tiny. Top artists make a lot of money for an individual, but it's only millions, and there aren't a whole lot of them.

That 2009 music industry revenue would pay for, what, 70,000 programmers? And there are a whole lot more programmers than that earning good money.

(Note: I'm only looking at RIAA figures, and ignoring independent artists, so it's understated to a certain extent. However, I believe RIAA revenue still makes up the majority, probably the vast majority, of total music revenue.)

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

#35

Post by brown9-2 »

lawnchair_larry wrote: post #32
gallerytungsten wrote: post #28

Earlier quoted context omitted.

The general outlook I hear from people who are signed to deals that pay advances is this: get as large an advance as you can, because you won't be getting anything else. Sure, if you go double platinum it might be worthwhile to audit the label and squeeze some more money out. Although recoupment provisions make it technically a loan, just like a VC, the label won't come after you forever if you don't recoup. At a cer…

Worth noting - non-RIAA bands actually lose money touring. Smaller bands signed to RIAA labels still do not do very well with touring. In many smaller scenes, a successful tour is one that breaks even. They sleep on promoters floors, eat shitty food, and play in bars. I hear a lot of "fans" that download all of their music and think that they support the artist by going to their show. This is not the case. The one wa…

I hear a lot of "fans" that download all of their music and think that they support the artist by going to their show. This is not the case.

Well, it's not like their ticket purchases are for naught - it still offsets the cost of touring for the artist. The artists would be worse off doing the same tour with less fans attending.

What better choice do the fans have anyway? Buying the records supports the record label, not the artist.

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

#36

Post by StavrosK »

mikeash wrote: post #34
StavrosK wrote: post #10

Earlier quoted context omitted.

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

The total revenue of RIAA members in 2009 was about $7.7 billion. At their peak around the turn of the century, they were doing a bit under $15 billion. And that is revenue, not profit. The entertainment industry is tiny . Top artists make a lot of money for an individual, but it's only millions, and there aren't a whole lot of them. That 2009 music industry revenue would pay for, what, 70,000 programmers? And there…

Interesting number, thank you.

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

#37

Post by brown9-2 »

tjansen wrote: post #20
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…

If the band's income exceeds 1000% of the advance, it will get 10% of the income as an extra bonus.

Isn't this paying the advance back?

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

#38

Post by paul9290 »

lawnchair_larry wrote: post #32
gallerytungsten wrote: post #28

Earlier quoted context omitted.

The general outlook I hear from people who are signed to deals that pay advances is this: get as large an advance as you can, because you won't be getting anything else. Sure, if you go double platinum it might be worthwhile to audit the label and squeeze some more money out. Although recoupment provisions make it technically a loan, just like a VC, the label won't come after you forever if you don't recoup. At a cer…

Worth noting - non-RIAA bands actually lose money touring. Smaller bands signed to RIAA labels still do not do very well with touring. In many smaller scenes, a successful tour is one that breaks even. They sleep on promoters floors, eat shitty food, and play in bars. I hear a lot of "fans" that download all of their music and think that they support the artist by going to their show. This is not the case. The one wa…

That would mean you as the artist either wrote or co-wrote the song. As you would then be getting songwriting royalties from your music publishing company, but not royalties off the sound recording. Those recordings belong to the labels and all artists with little to no bargaining power never get a piece of those royalties.

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

#39

Post by lhnz »

lawnchair_larry wrote: post #32
gallerytungsten wrote: post #28

Earlier quoted context omitted.

The general outlook I hear from people who are signed to deals that pay advances is this: get as large an advance as you can, because you won't be getting anything else. Sure, if you go double platinum it might be worthwhile to audit the label and squeeze some more money out. Although recoupment provisions make it technically a loan, just like a VC, the label won't come after you forever if you don't recoup. At a cer…

Worth noting - non-RIAA bands actually lose money touring. Smaller bands signed to RIAA labels still do not do very well with touring. In many smaller scenes, a successful tour is one that breaks even. They sleep on promoters floors, eat shitty food, and play in bars. I hear a lot of "fans" that download all of their music and think that they support the artist by going to their show. This is not the case. The one wa…

Can I ask you your source? I'd like to be able to quote you with some feeling of authenticity the next time I discuss this with somebody.

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

#40

Post by lhnz »

klbarry wrote: post #9
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?

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

What's the reason behind that statement? Is it because it has more utility to you or that demand/wage is generally higher for a programmer than a musician?

Counter argument: what has more utility than bringing people happiness?

Post reply on HN