MBUS 1100 Lecture 9

Oct 11 The Record Label

Capitol Records building

Kinds of labels

MajorUniversal Music GroupWarner Music Group

Sony

Sub-labelsowned by major but operate independently

in creative realm

sub-label Capitol Recordsowned by Universal

Virgin sub-label of UMGFormer independent bought out

Sub label of Universal Music Group

Capitol Records

Virgin Records sub label

of UMG

Independent owned labels distributed by major labels

Example Cooking Vinyl Distributed by Sony*

Indie distributed by Darla

which is in turn distributed by The Orchard which is owned by Sony

Sony

Sony Music

Sony Red Distribution

The Orchard

Darla

What’s going on here?

“White Label” really independent called 30 Tigers which is distributed by Sony

Sony

Sony Music

Sony Red Distribution

Thirty Tigers (“white label”)

Southeastern

True Independents

Merge uses a variety of independent distributors as well as directly distributes

Beggars Group “indie?”

Up to 12% market share of all recordingsHas own distribution network

What does a record company do?

Class?Discover and develop artists

But perhaps more importantly bank like functions

Funds/invests in smaller labels producers and other players in music business

Warner Music Group

Record Labels(wholly owned)

Warners(Electra)AtlanticRhino

WEA-Distribution

Sub Labels(wholly or

partially owned)Lava

RepriseAsylum

RoadrunnerFueled by Ramen

ILG / Alliance Distribution

(Wholly owned)Ryko DiscEast West Cordless

digital only artistlabel deals

RecordingsPublishing(songs)

Major Label Structureexample WMG (2011)

Independently owned labels

You can also see this as nested “investments”

Most of the following is true for big labelsincluding large independents

most small labels have little or no staffthey contract out many of their chores

Discover artistsFunds recording sessionsDevelops artistsImaging/Branding/StylingPublicity- (Press, NPR, Television and Bloggers)Promotion-(Radio, MTV and Video shows)Marketing -(Advertising, New Media, in-store advertising promotions)Distribution Distributes royalties to songwriters, producers etcLicensing TV, Movies and CommercialsFunds smaller labels/production companies*Distributes smaller labels*Risk Sharing Functions*

Artist and Repertoire or

A&R

signs and “discovers” artistsShepherds the artists career.

less than 500 big label A&R in world?

Often the label president is head A&R.

Best way to become an A&R executive?

Example. Mark Willaims. Atlanta raised.

http://www.hitquarters.com/index.php3?page=intrview/2006/April17_0_0_2.html

Another reason there are so many sub-labels

Main reason: Purchase of high performing indies

A label might purchase all or part of an indiebut want to leave it’s creative largely intact.

But…

A label will offer a high performing A&R persona joint venture label. This way the A&R participates in the

profit.(note both previous A&R people have joint venture sub-

labels)

Publicists or Press officers

intro jobbut also path to greater success.

Publicity or Promotion?

Publicity = Press Promotion = Radio

Public relationsPress relationsBiographiesPress releasesFeatures in local regional and national pressFeatures on NPR and TV appearancesBloggersNew Media Web Internet Twitter Facebook etc

best way to become a publicist?

Important Distinction. Publicists are always put in charge of public radio programs. why? probably cultural differences

between “crass” radio world and “scholarly” public radio world.

the last 30 years publicity has been dominated by women

Publicist responsibilities

Alyssa DeHayes MBUS 4300

Riot Act Media New York/San Francisco/Seattle/Portland/Athens

?

Radio promotion departmentNational.

Regional radio reps.

“sharpies”

“hit men”

(“Here’s the money, Here’s the record, Play the record, and F*** you.”)

(Not to be confused with indie promotors)

Record label promotion

Get radio airplayGet MTV and video play

Certain TV placement example “grey’s anatomy”

How to become a radio promo rep?

Al Moss was Label Promotions

then went indie

http://nodepression.com/article/my-first-non-dj-americana-promoter-al-moss

Radio Promotion: The Dark Side

A note on payolaPayola, in the American music industry, is the illegal practice of payment or other inducement by record companies for the broadcast of recordings on music radio in which the song is presented as being part of the normal day's broadcast. Under U.S. law, 47 U.S.C. § 317, a radio station can play a specific song in exchange for money, but this must be disclosed on the air as being sponsored airtime, and that play of the song should not be counted as a "regular airplay".The term has come to refer to any secret payment made to cast a product in a favorable light (such as obtaining positive reviews).Some radio stations report spins of the newest and most popular songs to industry publications. The number of times the songs are played can influence the perceived popularity of a song.The term payola is a blend of the words “pay” and “Victrola”, a trade name of early home music reproduction devices from RCA Victor.[citation needed] Payola has come to mean the payment of a bribe in commerce and in law to say or do a certain thing against the rules of law, but more specifically a commercial bribe. The FCC defines "payola" as a violation of the sponsorship identification rule that recently resulted in tens of millions of dollars in fines to cable corporations in New York.

Third-party loopholeA different form of payola has been used by the record industry through the loophole of being able to pay a third party or independent record promoters ("indies"; not to be confused with

independent record labels), who will then go and "promote" those songs to radio stations. Offering the radio stations "promotion payments," the independents get the songs that their

clients, record companies, want on the playlists of radio stations around the country.This newer type of payola was an attempt to sidestep FCC regulations. Since the independent

intermediaries were the ones actually paying the stations, it was thought that their inducements did not fall under the "payola" rules, so a radio station need not report them as

paid promotions.Former New York State Attorney General Eliot Spitzer prosecuted payola-related crimes in his jurisdiction. His office settled out of court with Sony BMG Music Entertainment in July 2005, Warner Music Group in November 2005 and Universal Music Group in May 2006. The three

conglomerates agreed to pay $10 million, $5 million, and $12 million respectively to New York State non-profit organizations that will fund music education and appreciation programs. EMI

remains under investigation.[7][8] The largest independent firm headed by Rick Hendrix of the Rick Hendrix Company was cleared of any wrongdoing and became the only promoter

reinstated with full rights.[citation needed]

A note on independent promoters.

record label independent contractors.Even crazier than record label promo repswhy wouldn’t they be normal employees?

Independent to insulate record labels from illegal activity

some

Licensing Department

Pitch songs for movies tv and commercialsnegotiates deals

Generally are lawyersor come from the publishing side of the business often film or advertising background

This is the “selling” side of licensing.The record company side.

odd note on music supervisors

Music supervisors are on “buying side”

On the “buying” side work for TV, ad agencies and film companies

They all almost come from one public radio station in Santa Monica CA

KCRW.

virtually every great hbo show.

the killingwalking dead

Stylists, Art Directors, Staff Photographers etc.

Record labels don’t really have these on staff anymore instead they hire independents as needed. Still these people were once important employees of the record label.

Sales and Distribution

itunes?amazon?

hardly and retail shops anymore

1999 there were actually traveling sales reps.they visited record stores and were key in getting new artists

“end racking” in store play and general street buzz.

in 1999 the majority of record company employees were involved in distribution

Who are the distributors now?

Back officeRoyalties

very important and lucrative part of the business

“Bean counters”

how to become a “bean counter”?

Royalties.How artists are paid.two kinds of royalites

Recouping costsWhy it’s good to be unrecouped!

Artist royalty“performer”

12-25% of retail price (with many adjustments depending on

contract and label)

royalty pays off recoupable costs first

Two Kinds of Royalties

Mechanical Royalties“Songwriter”

about 9 cents a song10 songs?

90 cents a record.*

royalty does not go towards recoupable costs**

For a lot of acts songwriter and performer are the same.Not always!

*sometimes songwriters sign a publishing deal and get a big advance. in this case the mechanical royalties go to publishing company till that advance is paid off

**particularly sleazy deals might require artists to sign away publishing royalties also

example

Artist royalty 18%9 songs$10.00 album

artist royalty = $1.80mechanical royalty = $0.81

total of $2.61

Record Advances and Recoupable Expenses

Signing Bonus $50,000Recording Advance $90,000

Tour Support $22,000Video Budgets (50% to artist) $65,000

Artist must recoup $227,000before getting artist royalties

Artist then sells 100k albums how much do they get paid?

(100,000 x 1.8)= $180,000 < $227,000artist royalty is $0

but mechanical royalty does not go against recoupable expenses

$0.81 x 100,000= $81,000if artist is also songwriter artist gets $81,000

Why is it sometimes good to be unrecouped?

In previous example artist took in $307,000The gross sales of the album were 100,000 x $10 = $1,000,000

artist share of revenue was 30.7%

the un-recouped artist gets more than their contractual 18%

As long as record company made money or lost only a little the deal is likely to continue.The artist will receive another recording advance and release another record.

I’m proud to say that I am still nearly -$600,000 un-recouped with EMI/VirginOver the course of my career, various record dealsI think my bands received nearly

50% of the revenue that our albums generated.That’s a lot better than the contractual 22% I should have received.

Advice on record deals?Ask for a big advance

Not too big otherwise you get “dropped”But never recoup.