Different Deals that Major Labels Offer

This article I found on Tunecore’s blog lays out the details of different deals that labels may offer you. Even though I am a major proponent of remaining independent, and I probably wouldn’t sign one of these deals right now if it was offered to me, it is useful to know about them so you know what you could be up against. If you know what kind of deals they offer you might be able to work out a more beneficial deal when it comes to the time. For instance, I might want to work out just a distribution and radio deal with a label and work out some percentages that make more sense than the label owning the fruit of my labors for the next ten years.

The Full Article on Tunecore’s Blog

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Key Takeaways:

Deals, Deals, Deals

By George Howard, Read more articles at Artists House Music

The Royalty Deal Type 1: The Copyright Ownership Deal

The most common type of deal that artists were offered emerged from the era when artists needed the label to pay for the creation of their recordings.  In a pre-ProTools era it was inconceivable for an artist to make a competitive recording on his or her own dime.  Similarly, artists were reliant on labels for distribution and promotion.

Grant of Rights – The artists thus trade the rights to their master recordings in exchange for the funds needed to create a recording, and for the promotional dollars and expertise the labels offer.  Remember, the labels control the copyrights to the versions of the songs they release on the album (as signified by the (p) copyright mark); the writers maintain ownership of the songs used on the record (as signified by the ©), and license the songs to the label via a mechanical license agreement.

Term – Up until the early nineties (and, to a degree, continuing today) the vast majority of these exchanges were perpetual.  Meaning, the artists assigned the copyright to the versions of the songs (not the songs themselves) the label release to the label…forever.

The Royalty Deal Type 2: The Term Deal

One deviation from the above emerged simultaneous to the popularization of ProTools.  As artists began to be able to record high-quality masters at greatly reduced costs, the value exchange between artist and label became strained.  Artists no longer needed the labels’ money to record, and while they still needed the labels’ promotional money and expertise, the artists became increasingly unwilling to part with masters they themselves had funded.

This dynamic led to far more so-called licensing or term deals.  In these types of deals, the artist grants the label the rights to exclusively exploit the recordings for a set period of time.  At the end of the term, the rights to the recordings revert back to the artist.  The artist may then re-license them, sell them, or exploit them herself.

This deal is obviously an attractive deal for many artists, as, beyond the financial implications, it also represents a sort of moral victory for the artist who is reluctant to forever part with his or her work. The caveat, of course, is that these deals tend to have little or no advances associated with them. Beyond these differences, the Term Deals operate essentially in the same manner as the Copyright Ownership Deals outlined above; that is, there are clauses for royalty, territory, number of options, etc.

The 360 Deal

While the license deals may have represented a move towards a more balanced label/artist relationship, the 360 deal represents a decisive shift back towards labels as acquirers of all rights.

The 360 deal is a Copyright Ownership deal where the label has rights in not only the master recordings, but also in ancillary rights that artists typically kept sacrosanct; such as, merchandise, revenue from touring, and publishing.

The labels’ argument is that as a result of their exploitation of the artist’s master(s), they increase the value of the artists merch, ticket sales, and publishing, and, thus, should participate in the revenue from these elements.

The problem with this argument is that few if any labels have competencies in the area of merch or tickets.  With respect to publishing, there are a host of conflict of interest issues with respect to a single entity controlling both the master and publishing rights of an artist’s work (these are not insurmountable, and there are benefits, at times, to a “one-stop” publishing/master relationship, but such situations are not without their challenges/potential for conflict).

These 360 Deals have become de rigueur amongst the majors; if you want a major label deal, this is what you will be offered. All other deal elements are consistent with the above with respect to term, territory, and royalty.

Net Profit Share (NPS)/Joint Venture (JV) Deals

On the other end of the spectrum are deals seen with increasing frequency in the indie world, as well as between investors and artists.  These deals, often referred to as JVs, but more accurately described as Net Profit Share deals are typically perceived as more artist friendly than any of the above-mentioned deals.

In these types of deals, the artist typically delivers a finished master to the label.  The label pays a small (if any) advance, and then spends money exploiting the master.

In these deals, the label recoups all expenses associated with this exploitation (remember, in the deals above, recoupment typically tends to be limited to advances and money spent on independent promotion and publicity).  This means that every dollar spent — for postage, manufacturing, advertising, etc. — is all recouped prior to an artist royalty being paid.

Once this money has been recouped, the label splits the profit — on a net basis — with the artist.  Meaning, if the label spent $5000 to exploit the master, and they recouped this $5000 through sales, at the very next record sold, the label would divide the profit after expenses with the artist.  So, if the cost of goods sold on a per-record basis was $3 (for manufacture, marketing, etc.), and the label received $10 from the sale of the label, they would remit $3.50 to the artist and keep $3.50 for themselves.

While these deals do seem more equitable on the surface, it’s important to keep in mind that few records recoup even when limited to advances and costs of independent promotion/publicity, and thus when you factor in all the other costs associated with exploiting records it can be very challenging to recoup all of the costs.

Summary

There are infinite variations to the four principle deals presented above, and future articles will explore in more specific detail the elements associated with each, but understanding the key distinctions will allow you to make better informed decisions, whether you are offering an artist a deal, or being offered a deal.

Services: Indaba Online Music Collaboration (pt. 2)

image from creativecommons.org

Hypebot recently sat down with Indaba Music for an interview. This collaboration service now has over 500,000 users ranging from the inexperienced beginner to grammy award-winning established artists. I have checked out the service and it looks pretty useful, but I have yet to try. Maybe that is because I prefer to collaborate in person, or at least meet someone before I work with them. But the idea of being able to collaborate with a like-minded artist on another continent is appealing to me. And I feel that hip hop artists stand to benefit the most from a collaboration service like this since so much of hip hop depends upon rappers collaborating with the right producers.

Full Article: Hypebot’s interview with Indaba Music (pt. 2). This part of the interview gets more into the specific services offered by Indaba.

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Key Takeaways:

How do you provide opportunities for musicians that reward their intrinsic motivations, allowing them to behave in new ways? Are prospects advertised to musicians that would’ve been impossible previously?

Nate Lew: There is no shortage of companies in the digital music space, however, the large majority of these services, from sharing, to selling, licensing and marketing music, solve problems for musicians post-creation, and thus only serve their extrinsic motivations. So, while the commerce side of the value chain is crowded with quality tools to service music, Indaba Music addresses the other side, art, and provides a suite of tools to service musicians – tools that enable anyone with an internet connection to connect with fellow musicians, to make music and to become a better musician.

With 550,000 musicians across all skill sets and interests using Indaba Music, our core offering is fundamentally designed to reward the intrinsic motivations of musicians by providing an immersive social environment, professional creative tools and robust educational resources. The majority of the services we offer musicians would have been a pipe dream even 10 years, ago, but in 2010 they are a reality, and they’re enabling musicians to connect, create and learn in entirely new ways. Here are a few examples of what Indaba music offers as well as the intrinsic motivations (IM) that they reward:

Social Environment

– Networking tools, including personal profiles, people search and groups to meet like-minded musicians and find potential collaborators.

– Communication tools, including real-time chat and in-song commenting to communicate during collaborations and leave feedback in a song’s WAV form

IM Reward: 24/7 access to musicians around the world with whom to socialize, solicit feedback, exchange ideas. This environment is equally valuable to developing musicians who are looking for knowledge and professionals, many of whom are fragile by nature and the Indaba community provides them with a support system and sanctuary.

Creative Tools

– Online collaboration platform that enables musicians in different locations to create studio-quality music together, as well as exchange files, ideas and even rights.

– A free, web-based Digital Audio Workstation that enables anyone with an internet connection to record, edit and mix studio-quality music.

IM Reward: Anyone with an internet connection is now empowered to make music, as location and budget are no longer barriers. Musicians, once without access to qualified collaborators in their area, now have access to a global talent pool and an online platform to collaborate from the comfort of their own home. For musicians around the world who cannot afford a commercial DAW, Indaba Music provides a professional-grade alternative.

Education Resources

– 100,000+ titles of digital sheet music and tablature from all the major publishers

– 1,500+ digital video lessons

– Articles and tutorials from leading publications, including Electronic Musician Magazine

IM Reward: Musicians of all stages can learn and improve upon their craft. In just a few clicks, musicians can then apply what they learned in online collaborations or chat with like-minded musicians for further discussion.

How are these opportunities redefining the role and power of amateur musicians? Has it changed what it means to be a professional musician?

Nate Lew: Despite the fact that under the umbrella of the “music industry” there are (largely) independently operating industries for education, production, recorded sales and talent discovery, for musicians, this value chain is much more fluid. Many musicians, for example, use Indaba to make music and become better musicians, partially because they love music, but also because they have extrinsic motivations to monetize their music and establish themselves as artists with the public. As such, we’ve worked hard to provide our community of musicians with professional opportunities to further their careers and introduce their music to a world beyond the walls of Indaba.

Beyond sheer talent, getting work as a musician historically required a combination of physical proximity to opportunities (i.e. being in a major city), as well as a healthy number of industry connections. 10 years ago, the prospect of a bedroom musician in rural Canada dueting with Yo-Yo Ma and having that recording released by a major label, or a church organist in Detroit having his composition included as the theme song for a television show would have been unheard of, but, these types of opportunities for musicians are now possible through Indaba Music. In the past year alone, all 4 major record labels, as well as brands, film studios and video games have elected to bypass traditional “go to” musicians to source music for their projects, and, instead, tapped Indaba’s community of musicians.

 




Services: Indaba Online Music Collaboration (pt. 1)

image from creativecommons.org

Hypebot recently sat down with Indaba Music for an interview. This collaboration service now has over 500,000 users ranging from the inexperienced beginner to grammy award-winning established artists. I have checked out the service and it looks pretty useful, but I have yet to try. Maybe that is because I prefer to collaborate in person, or at least meet someone before I work with them. But the idea of being able to collaborate with a like-minded artist on another continent is appealing to me. And I feel that hip hop artists stand to benefit the most from a collaboration service like this since so much of hip hop depends upon rappers collaborating with the right producers.

Full Interview: Hypebot’s interview with Indaba Music (pt. 1)

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Key Takeaways:

3 Major Innovations That Made Large-Scale Music Collaboration Possible Online

According tech-evangelist Clay Shirky, there’s now a cognitive surplus, an excess of free time and talents of the developed world. When considered as a whole, this amounts to well over a trillion hours a year. Part of the reason that it hadn’t been experienced as a surplus up until now mainly because there was no possible way to pool it together in aggregate and there was no way to introduce people with disparate, yet complementary skills or interests. With the rise of the Internet, what we got was a network that was natively good at supporting social communication and participation. Thus, not only do we have copious amounts of musicians and singers, but we also have a surplus of free time, combined with a public media that enables them to pursue activities that they like and care about.

What are the steps that you’ve taken to recognize the potential of this massive cultural resource and how have you tried to understand what we can make of it? What opportunities do you foresee in harnessing it?

Dan Zaccagnino: As the Indaba Music website has evolved we have taken many steps to understand not just what musicians want to do online, but howthey want to do it. We’ve re-conceptualized the process of online collaboration several times to reflect what naturally evolved as people began seriously collaborating online more and more. In 2007 we imagined what a typical collaboration would look like and designed the Session (the central tool for exchanging ideas, tracks, and discussion) to reflect that “typical” process.

Now, in 2010, with the launch of our new platform, we addressed a number of services across the value chain that musicians have been asking for – from creative tools, like a library of over 10,000 royalty-free clips to more career-oriented ones, like iTunes distribution and royalty allocation.

Really, with a platform that spans each area of an artists evolution – education, networking, production/collaboration, distribution, promotion – the possibilities for harnessing the creative power of a community such as Indaba’s, is remarkable. By continuing to offer additional tools that make musicians’ lives easier, we can continue to foster the incredible artistic output of our community by enabling musicians to focus on making music instead of trying to remember all the passwords to the different fragmented services they use.

What developments had to occur in order for massive collaborative projects to be facilitated on a global scale and what tools for social production are needed to be created to enable these efforts?

Chris Danzig: In my mind there were three major innovations that set the foundation for large-scale online collaboration (or collaboration on any scale for that matter).

  1. The falling price of digital audio production equipment. The commoditization of digital circuitry during the eighties and nineties brought the price point for professional quality production equipment within reach of the average consumer. For the first time, independent artists and amateur musicians had the production resources necessary to produce music in the same fidelity as the major studios.
  2. The falling price of bandwidth. Throughout the nineties advances in delivery and compression mechanisms in the telecommunications sector made bandwidth increasingly inexpensive. The result is a world where media is more easily, and in turn more readily shared. The drawback of this accessibility is of course piracy- the advantage is the early simmering of collaboration through bulletin boards and FTP.
  3. The birth of the social web. The birth of the social network acclimated the public to bringing previously off-line social behavior online. For examples see dating, professional networking and gaming (among many others). Music is no exception to this rule. As an alternative (and in some cases a replacement) for the offline music experience more and more musicians are turning to the internet to fulfill their music needs which is (of course) largely of not entirely a social experience.

Dan Zaccagnino – Co-founder, Co-CEO
Chris Danzig – Co-founder, EVP Product
Matt Siegel – Co-founder, Co-CEO

DJ Premier: Where Rap Went Wrong and How to Fix It

The Villiage Voice recently did a Q&A session with DJ Premier where he gives his views on the current state of the rap game compared to where it was when he first hit the scene. Primo happens to be my favorite producer of all time. He has a giant body of work with the recently deceased Guru in the legendary duo GangStarr. He worked with New York’s elite artists like Jay-Z, NaS and Biggie in their primes on some of their best projects. And he was able to counter his work with established artists with some very impressive underground work as well. The guy has been on the scene for so long and has made so many of the classics I put on to bring me back to a better time in hip hop, so I take notice when he has something to say. In this article Primo adds to the anti label sentiment that a lot of industry insiders are feeling in the aftermath of some questionable decisions by L.A. Reid at Def Jam and labels getting in the way of artists like NaS and Lupe Fiasco making the art that they want to make.

Primo: “I’m 44-years-old so I remember when the majors had passion and cared about music. That’s gone now, which is why they crumbled so tremendously. They want to blame the internet but that’s not the main culprit–it’s the lack of passion for what you’re signing.”

djpremierinterview.jpg

Full Article on Villiage Voice

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Key Takeaways:

A few years back Papoose and Saigon were tipped as future superstars capable of re-asserting New York’s rap credentials, but their careers quickly faded. Why do you think that was?

Papoose had a million dollar deal at Jive but I knew Jive wasn’t going to let him drop all the street shit he was doing. You can’t all of a sudden convert him into a commercial artist. They’re going to force him to make those commercial songs and when they don’t work they’re gonna drop him.

And Saigon?

Same thing — they’re not going to let the grimey, ‘hood, chase-you-with-a-knife music out. They’re not releasing that shit. Sai has more of a commercial appeal, but a street artist has to be broken in the streets first and then developed in the mainstream.The street is where you want to get broken at first if you want to be a hip-hop or rap artist.

Do you think that’s something the major labels will ever understand?

They did in the beginning, just cause they were allowing people to take chances. Then when it came down to the money piling in, and it was so cheap to make, the love and passion went away. Then they see the slips in the sales and they panic, like, “Don’t do that street shit, we need more commercial stuff!” No, you don’t.

So is there a healthy underground New York rap scene at the moment?

It’s so much stuff that just doesn’t get regular radio play. Thank god you have me and DJ Eclipse, who does a similar show to me on Sundays. We don’t have a playlist — we make our own choices. If everyone was like that, hip-hop would still be a billion dollar business. Now, it’s just a million dollar business.

What has changed most about the record industry since you first came out?

I’m 44-years-old so I remember when the majors had passion and cared about music. That’s gone now, which is why they crumbled so tremendously. They want to blame the internet but that’s not the main culprit–it’s the lack of passion for what you’re signing. And there’s things like putting an age limit on rappers, like you can’t be 44-years-old and sign to a major label. Come on! When you’ve got an upcoming 18-year-old, the difference is they haven’t experienced the lifestyle of hip-hop when it was fresh and new. The kids today that are born into hip-hop don’t appreciate the history: “Those artists are old so I don’t listen to them!” But if you’re not gonna care about the history of something that’s a culture, then you’re gonna lose down the line. I see that every day. I see when they’ve gotta tour just to pay bills–I’ve been through it. I’ve had money and lost money. My experience is 23 years in the business and there’s nothing I can really be schooled on unless it’s something higher than I’ve experienced.

Trackhustle.com and More Out of the Box Promotional Ideas

Earlier today I posted something from I site I hadn’t heard of before called trackhustle.com. I would suggest that any aspiring hip hop artist check out this site. It is especially interesting to me because Trackhustle looks a lot like where I want to be with Chi Guy Entertainment in the near future in terms the services offered and the assistance they give artists.

This post takes a look at some truly awesome album cover designs. Although I am not the biggest proponent of selling physical albums, many people do still buy physical music (physical is still dominating digital in terms of revenues generated). One very impressive thing can be said: Tomorrow I will take time out of my day to go to a store and buy a physical copy of Beck’s new 4 track release.  Pictures of Beck’s-8Bit album design.

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3 INTERESTING AND INNOVATIVE CD PACKAGING DESIGNS

Beck’s-8Bit album design

Vonnegut Dollhouse’s Dollhouse CD Packaging


Moldover CD Packaging


Press Release Guide

This is a post about writing press releases I found on trackhustle.com. About a month ago I posted another guide to press releases that takes a slightly different approach.

I have yet to make a serious effort to develop my press kit, but I will be ready soon. I know that Reverbnation offers their own version of the press kit called the RPK (Reverb Press Kit) that includes things like video content, photo content, your music and your schedule. But I think I would rather post my press kit on my website. Since my website isn’t ready yet I might post my info to my RPK in the meantime. However, this service does cost $5.95 (which is equal to the cost of a similar service on Sonicbids).

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MUSIC PROMOTION 101: ALBUM PRESS RELEASE GUIDE

A well written press release is the first step in getting some attention for your new album. Use this template to help you organize your information. Note that this template was written with bands and indie labels in mind as the writers and the media in mind as the readers. PR folks and radio pluggers will want to take a slightly different approach with their press releases, and one sheets for distributors and stores should also be slightly different.

The Header: Centered at the top of your page should be the band’s name and the album name. To make sure this information draws attention, make sure you use a larger text size than the rest of your release, and also use bold and/or italics. You can also set this information apart by putting it in a box. If the album is on a label, include the label name and/or catalog number here as well.

A few optional inclusions for the header are:

– A scanned photo of the album cover
– Contact information for the person handling press for the release in the band or at the label
(labels consider having your logo along the top of the page – ideally in the top right or left corner)
– A quote from a good review of the band.
– The band and/or label’s website/MySpace page

Paragraph One: This is where you want to announce the new album. Go for a strong lead sentence, and if this is a follow-up album, make reference to previous work by the band that the reader may know about. If this is a debut album, say so, and give a few clues about the sounds of the album. This is also the place to mention any “big ticket” selling points for the album or band, such as:

– Praise from well known artist, producer, DJ, etc
– A well known guest star on the album
– A song that has received a lot of radio play
– The album was recorded in a well known studio or with a well known producer

Paragraph Two: In this paragraph, briefly expand a little bit about the band and the music on the album. This paragraph is very important for a new band with a debut album. Don’t mistake this for a band bio – which should be separate – but include some info about where the band comes from, influences, and again, any “big ticket” selling points. Keep this paragraph brief.

Paragraph Three: This paragraph is for giving your reader clear reasons why they should write about your band and review your album (and just saying because it’s a great album won’t cut it). Use this paragraph to mention things like:

– Tour dates planned in support of the new album
(if your shows planned but not confirmed, something like “shows planned for June 2010” will do)
– Reviews that you know are forthcoming in well known publications/on respected websites
– Any radio play the album has received (or that you know it will be receiving)

The Closing: At the bottom of your press release should be the contact info for the person fielding press queries for the album, even if this information is also at the top of your page. Set this information apart from the body of your press release in the same manner as you did the header – again, a box around the text works great, as does a larger type size or bolding/italicizing the text. Be sure to make clear what this information is for by saying “for more information, promo requests or to set up an interview, please contact (so and so).” Also include the band and/or label’s website/MySpace page here.

via Heather McDonald

Musical Mission Statements

I have said before that managing your social media campaigns can be like a full time job and can eat into precious time that would otherwise be devoted to writing performing or connecting with real people. This article on The DIY Musician Blog entitled “Musical Mission Statements, Sanity & You” says KEEP IT SIMPLE STUPID.

I haven’t formally worked on a mission statement before. What I have done is start a campaign called The Classical Movement, which gives praise to and shines light on the period of hip hop that I find most inspiring and what I fell in love with in the beginning. This is a time period between about 1992 – 1997 during which many of my favorite rappers debuted with their smartest, and powerful material. With The Classical Movement I aim to get back to that wittiness and achieve that raw sound that I loved from that period in time. With my material outside of the realm of The Classical Movement I aim to push the boundaries of hip hop by experimenting with different sounds and genres. I also love the idea of the concept album in hip hop. Having a story line really gives the listener a more complete vision of the artist’s vision and allows the artist to express a bigger and more complete thought. So that’s a long version of my mission statement. Working on shortening that, ha.

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Here is the article from The DIY Musician Blog from CD Baby:

Practicing. Writing. Recording. Booking. Web design. Social media. Videos. Marketing. PR.  Driving yourself mad wondering where to shift your focus? Go back to the basics.

Remember your mission statement!

Don’t have a mission statement? Make one. What would it look like? Here are some examples:

1) We are in it to win it. Fame and riches are our first concern.

2) All music that has come before is dead. We must strive to blaze our own path. Uniqueness!

3) Music is only a part of our balanced lives. We make music in order to have fun and improve our sense of well-being.

4) Music is our way of creating positive change on the planet. Social-consciousness!

5) Mystery is key. We must obscure, evade, and sidestep. Through a sense of enigma, we will forge our true connection with an audience.

Why should you state what your mission is upfront?

1) It will ensure that everyone involved in your band, group, or organization is on the same page. Your goals will be aligned, and that united sense of purpose will inspire your collective work ethic and creativity. If you make music on your own and direct your own career, you should still state your mission to keep yourself in check and better understand your goals. The better you understand yourself, the easier it will be to know how to connect with an audience.

2) For sanity’s sake. DIY artists already have enough on their plates. You can’t do it all. You’re going to have to let some opportunities pass you by. You’re going to have to let some responsibilities slip through the cracks. But which ones? Worrying about this can drive you mad. But by remembering your mission statement you can hold each decision up to that light.

-Chris R. at CD Baby


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