How To Sell 1 Million Albums & Still Owe Your Label $500,000 [VIDEO]
Mike Masnick turned us onto this great 14 minute video from lawyer Martin Frascogna entitled How To Sell 1 Million Albums and Owe $500,000. Mike dubbed this RIAA Accounting on Techdirt. But whatever you call it, its the same sad state of affairs that's existed for decades. But things are changing. In addition to providing artists the tools they need to distribute and market music, the internet is also educated them. WATCH & LEARN:
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Doesn’t this mean the lawyer is a really bad lawyer if his artist signs a contract like this?
ha!!!! this attorney is an idiot. he doesn’t understand what’s he is even saying.
http://www.google.com
Absolutely barmey. All those costs should be taken from the OTHER 90% of the wholesale fee NOT from the artist!!
I give my artists 50% of gross income on music sold. I would never dare try to tell them (for example) merchant fees are their cost just like any retailer would never dare to tell a supplier.
It’s time this whole model was put to history.
The basic idea of this is correct – label accounting is fairly obtuse and overall it is not the best deal for the artists – but I think his details are a little off, and they don’t need to be.
First 20 dollars as the base retail price for a CD. Even in the 90’s I don’t recall many single cds that were 20 dollars. 15 dollars would be a more accurate SLRP for today, while most albums are sold for less than that.
Second, Most contracts base a royalty on the SLRP not on the wholesale, so I believe he is incorrect there.
Third – Reserves are based on returns not potential spends. Labels are paid on ships, not sales, and so reserves are for the returns that inevitably come from a operating in a consignment industry as Martin states. I find it odd that he says that no one understands the point of reserves. I would say more accurately that some people are poor at incorporating the math of reserves into their projections, but I would hope that everyone who negotiated a contract with a reserve clause understands the concept.
There are several more inaccuracies and exaggerations in this video that I’ll omit to save time, and the sad thing is that he didn’t need to do that. The actual accounting is draconian to say the least, I’d like to see an actual record contract broken down not mythical norms in potential scenarios to see what would be potentially owed on either side. This is actually what artists ( or their lawyers ) should do. They should break down a model of possible scenarios under the proposed contract and see how much you would have to sell and the label would spend to end up at an agreeable numbers on both sides.
The contract is a blueprint for a financial model – why not just run the numbers beforehand.
funny how everyone is an “expert” on the recording biz. and i’m not talking about the guy in the video. not all deals are the same, but let’s all be honest…the record business has been unfair to 95% of all the artists since the beginning of commercially available music. period.
If you know anything about contracts, you know this is totally out of date and inaccurate. Only the best fact-checking from HypeBot!
Who’s gonna get an advance like was demonstrated in this day and age? I lived all this in a group back in the early 90’s and having failed to break us, we owed the label $200,000. Fast forward to 2011 and this just seems very dated. I’m not referrring to clauses in the contract, just the amount of advance an artist – even semi successful – will get.