From The Majors To The Minors
Originally published in Performing Songwriter Magazine
Issue #46, April 2000
From an artist standpoint there's only one reason to make records. In fact, there's only one reason anyone wants to be an artist. It is because, to quote Stella Adler, "There is something inside you that is too big to get out any other way." Making a record is a way for that size to get out - to escape the confines of your inner ear, and translate dreams into reality. So shouldn't making the record enough? You've taken your vision and translated it into something that will allow you to hear it someplace other than your head, and you should be satisfied.... No way!
Artists make records because they are artists, and recording is the only way to be a recording artist. It's only after the record is made that we begin to ask the grown-up questions, questions like Will anyone ever hear this besides me? or How do I get a Grammy nomination/on TV/on the radio/in the stores? In the process of recording and releasing our records, we often discover what we are made of - gold or dross.
There are two attitudes artists take when a record is finished, and I posit that these poles encompass all recording artists. Most of us sit somewhere in the middle, trying desperately to balance our egos against our humility, our greed against our altruism, and our genuine desire to make music for music's sake against the equally genuine need to make a living. We vacillate between, one day taking a gig we know we'll hate because it's a money-maker, the next day booking a benefit where we'll lose money but get to play with wonderful musicians. Most of us try to run an even course. This is particularly true of songwriters, who guard their talent anxiously and worry about "selling out", fearing that their talent will fail if the genuine impetus to creativity has to take a back seat to avarice and false ego. Here are the two poles as I see them:
The two poles
Artist A realizes that becoming a star, having a hit record, selling a million units, is the quickest route toward her ultimate goal, which is having her work heard by the greatest possible number of people. She believes he rwork communicates something important; she thinks people will enjoy it, benefit from it, be enlightened and uplifted by it. All the rest of the trappings that go with stardom are so much fairy dust to her. She'll appreciate the earning power, enjoy playing the arenas, take care to keep ticket prices down and show quality high, and be grateful for the opportunity to make another record. She'll usually be good to work for, because she's focused on her work and her music, not her sense of self-importance. . Artist A is what I would call "gold".
Artist B is dross. She wants to be famous. Period. Whether that's because she thinks life will be easier with fame, or greed will be satisfied, or that she can finally get back at everyone who made fun of her in years past, doesn't really matter. She will do anything to get famous, and more than anything to stay there. She'll fling phrases like "Don't you know who I am?!" at hotel clerks, pout when her wine's not chilled correctly, and turn in a poor show because the audience's initial response isn't overwhelming. She collects Yes-Men like flies, and rarely bats them away.
It's one of the mysteries of talent that either type of artist can produce wonderful records, write terrific songs, and become legendary, although Artist B tends to be legendary because of the size of her demands rather than the measure of her talent.
What does this have to do with independence? It has to do with your choices. Major label or independent? Do-it-yourself or let-someone-else-handle-it? To quote Stella again, "Your talent lies in your choices." Do you fight for what you perceive as fair, even to the extent of turning down a major label deal, or do you give up whatever's necessary in order to take a shot at the brass ring? Believe me, each of the choices exacts a price; not one of the choices below is perfect for anyone.
Our options are limited, although with the advent of inexpensive reproduction and the Internet, they're changing daily. Digital recording has created a revolution whose shock waves are just beginning to be felt. This column will be out of date by the time Performing Songwriter comes out, and that's a good thing for us. New technology presents new opportunities. Granted, it often presents the opportunity to be shafted more thoroughly by a label, but that's another song....
What are your choices?
For the purposes of this article, we'll define three recording/releasing choices:
- A major label contract. I include in this all of the "boutique labels" that operate under a major's umbrella. This is the quickest route to fame and fortune, if it works for you, if the luck and timing are there, if they believe in you and manage to hold onto their jobs long enough to see your record through. A top twenty record means Grammy nominations, millions of people hearing your music, worldwide touring, and perks like you wouldn't believe - and the majors are the ones who get top twenty records.
- An independent label contract - Shanachie, Red Bird et al. These are small companies with smaller staffs and funding, but they provide an outlet for us, and grass roots prospects the majors can't offer. Because they're small, they can afford to get to know you, and keep faith with you. But if you want to record with an orchestra, or spend long hours in the studio, chances are you won't be able to afford it with this scenario.
- A do-it-yourself project (DIY). You raise the funding, deal with artwork, manufacturing etc., and usually distribute only through live shows and the Internet. You control everything - and you are also responsible for everything, from shipping to returns.
I recently saw a speech by Strauss Zelnick (president of BMG), during which he said two things that impressed me. The first was "It all begins with the artist, and we cannot forget that. Without the artist, we are nothing." Wouldn't it be nice if all record companies behaved that way, instead of waiting until we're earning so much that they dare not risk irritating us, and then overfeeding us at the trough to the point of ludicrousness? The second was "We must embrace the new technology." What a concept, a record company actively embracing a new technology! It pleased me to no end (none the least because BMG is my record label) to hear those words from the head of a large corporation. Not because I think the wheels of BMG will suddenly run in reverse and get in on the beginning of Internet sales and digital audio, but because at least someone out there in a position of power is thinking instead of blindly insisting things go on the way they are.
Some sobering statistics
Here are some sobering statistics for anyone making records today:
- When Verve Forecast released my record "Society's Child" in 1966, there were 22 major record companies in New York City alone. In other words, 22 separate labels, with their own presidents, promotion departments, manufacturing factories, and distribution networks.
- As of this writing, there are five major labels in the United States. There used to be six - WEA (Warner/Elektra/Asylum), Sony, Polygram, EMI, Universal, and BMG. With the Polygram-Universal Merger, there'll be only five. If the Federal Trade Commission approves the sale of EMI to WEA, there will be four.
- According to Soundscan, there were 39,000 records released in the United States last year. This figure only includes records reported to the Valley District Database, which is the beginning of the Soundscan chain. It doesn't include the record you made to sell at gigs, or that charming "Love Songs of the Aeolian Flute" CD you see advertised on late night TV. These 39,000 records were released on bona fide labels that do business through major distributors.
- 77% of all the records released in 1999 sold 999 copies or less.
- 52 records, representing only .13% (point one three percent) of the total released, accounted for 37% of the sales volume.
What does this mean to us, particularly if we're hoping for a major label contract?
- 30,030 records released sold less than 999 copies. 8,970 sold 1,000 or more. Your chance of having a record that sells more than 999 copies is one in four. Not too bad so far.
- Your chance of being one of the 52 records that accounted for 37% of all sales is 1 in 750. Your chance of having a substantial hit is 1 chance in every 750 records released. Dismal, isn't it?
- And that's not even looking at the fact that most of those 52 records have at least three hit singles and shoot for six or seven. If you factor that in, your chances of having a hit single drop to 1 out of every 3,000-5,000 records released, because your lone single is competing with the 200-500 singles those 52 records account for through the year.
- Money is tight. With 52 records out of 39,000 accounting for 37% of all sales, the record companies are looking even harder at their bottom line - dollars. Believe me, those 52 recording artists aren't going to be leaving any extra money laying around for the likes of us. Whatever contracts they originally signed are meaningless now. They'll be busy taking huge advances, staying in bi-level suites, and in general spending every dime they can winnow out of the label. So the days of the artist-who-finally-made-it providing the funding for the artist-hoping-to-make-it are gone. This means the record companies are going to be investing in artists whom they believe can recoup their costs and make them a handsome profit; they'll be avoiding any who might require too much funding, too much time, or too much faith, to a far greater extent than ever before.
- It's easier for a record company to promote and sell a brand new artist than one with a long career history. So if you've spent the last ten years touring and building up an audience base, your chances of getting signed may actually be lower.
- Even if you have been having hits all along, it may not be worth their while to keep you. Older artists are savvy artists - they have to be, in order to survive. A new artist will sign a 10-record contract without blinking; an established artist may demand higher rates, or more control, or a shorter contract. Sometimes it's cheaper to take a gamble on the new artist, and have them locked down for fifteen years.
- Record companies make a lot of money off catalogue - the sale of old material. Particularly old material by dead artists, since they then don't have to deal with issues like tour support. It's also rare for a dead artist's estate to conduct a full audit - heirs are usually grateful for whatever they can get. There wasn't much old catalogue in the 50's; we now have over seven decade's worth to compete against. You might be better off dying first, then signing with a major label.
- The younger the artist, the more life a record company can get out of them. Youth is less likely to say "I want to have a baby and stay home for three years." Youth has less health problems, can tour harder and longer, do more press. Youth is more malleable. You'll do best being sixteen-to-nineteen years old right now.
- Record companies want long contracts. 7 albums is standard now, as it was in the '60's, but with this important difference - in the '60's, we made and released an album every 9-12 months. The pressure was enormous, but it also ensured that there'd be a steady stream of new product for our audiences, and that presented new press and touring opportunitues. A seven album contract translated into seven to ten years. Nowadays record companies insist on full control of release dates, and demand two to three years between albums. Even if you're having hits, that means your seven album contract translates into at least fourteen years, and sometimes more than twenty.
- There are no free rides any more. Verve released Society's Child three times before it became a hit; approximately every 6 months. Each release was complete with its own radio promotion and advertising programs; each release cost a fortune. They gave my single an 18 month window, during which they worked it unmercifully. Nowadays you're lucky to get six weeks. If, at the end of those six weeks, your record isn't charting, selling, and making enough noise for them to assume it will cross over/sell loads/further the next single, your record is dead in the water. After all, with each label having thousands of releases each month, they just don't have the time or resources to bank on longevity. Even the smaller labels and the independents operate like this, though their window may be twelve weeks instead of six.
So fighting for the brass ring isn't easy. Dreams of playing where you want when you want, going platinum, becoming truly independent with the money and power you can earn, are quickly dashed to earth by statistics such as these.
Then I'll just go indie!
All right, you say, I'll sign with an independent record company. Great. Just remember, most independent companies are started by people who, while they may be visionary about music, also have visions of large bank accounts. If the independent label you sign with has huge success with an artist, the majors will be clamoring to buy that label out. And most will jump at the bait. Can you blame them? Joe Shmo starts a company in his basement, selling records from the trunk of his car, driving around to local stations begging them to play his artists. This goes on for years. By the time he has a little success, the years have taken their toll. He's tired; he wants out. He wants some pay-off beyond the feeling that he's supporting the arts. Don't we all?
The majors acquiring independent labels promise self-government - you'll be a boutique label, with your own staff, your own offices, complete autonomy. Forget it, it doesn't work that way. Sooner or later the people who ran the original company leave, disheartened by the corporate world and the constant pressure to sign artists who'll make the company a lot of money rather than artists who'll make the company a great reputation among artists. The original visionaries are replaced by people coming out of Harvard Business School, whose expertise in marketing and reliance on demographic studies takes precedence over any love for music they may have had during adolescence. Your independent label, which used to release your records because they loved your music, are now saying that your target audience is a 50-year-old woman with two children in college who has disposable income because of it. Your marketing division won't take an ad out in anything but the AARP newsletter, and the promotion department informs you that no radio format exists for your demographic, so there's no point in releasing a single. At some point the A&R staff quit, because they're not being allowed to sign artists they believe in. Eventually, you're incorporated into the major label, who want to keep the old catalogue under the original imprint, but have no interest in creating new catalogue.
This sounds harsh, but it's the way of the world. Even the venerable A&M Records, arguably the last financially successful bastion of independence, run hands-on by Herb Alpert and Jerry Moss since its inception, was sold to a major eventually.
What about DIY?
What to do if the road of an independent inevitably leads to being non-independent? You can do-it- yourself, or at least you can try. The DIY world is very attractive, particularly if you intend to tour actively, maintain your own website, and can promote yourself efficiently and cost-effectively. Just think about this - a major label pays you twelve to eighteen percent of the net - that's after your album budget, your promotion and advertising costs, your producer's fee. After the deductions for packaging. After the deductions for "free goods" (are there really that many soldiers stationed in Guam?). If you have a $100,000 budget, you're going to have to sell more than 300,000 CD's just to break even. If you DIY, the instant you've paid back your recording and promotion costs, it looks like you'll be earning around $13.00 profit on every CD.
There are problems, though. The cost of the CD depends on who you know, how many you can afford to order up front, and how well you can plead for a bargain. A packaged CD, complete with cover art, runs anywhere from $1.25 up to manufacture. Can you only afford to order 500? The price shoots up; you may have to shell out $1500 for your initial order. Maybe you had no budget, recorded it in the basement - you still have to manufacture. If you want to drop the price down to rock bottom, you'll have to look at ordering at least 2,000, and often double that. Where does that kind of money come from? Can you afford to wait two years to recoup? Can you afford to never recoup? And after the manufacturing costs are paid back, and you've recouped your budget, you still won't be into that kind of profit. You'll have to deduct venue charges (nowadays 20% for clubs, 40% for larger venues - off the gross, of course), franchise taxes (a lot of venues deduct them off the top and file for you nowadays, because the tax people come after them when you don't pay), shipping costs if you don't have a vehicle large enough to take product with you. Or, if you're mailing product, the packaging and mailing costs - and the taxes.
DIY. "D" is for "do" - meaning action. You will have to do everything. That means you'll have to learn about studio prices, deal with the musician's union, mastering, storing tape safely, transferring mediums... when the album is mastered you'll be checking out costs of manufacturing, artwork, pricing, distribution ...once you "release" it, you'll be dealing with promotion, advertising, bio packages, mailings, fulfillment, newsletters, gig postcards, booking - not to mention writing and recording the next one! The "It" stands for your album, and in a DIY world, virtually no one cares about that album except you and your immediate family. And "Yourself" really does mean yourself. Three months into it, with 30 orders waiting to be filled, you just back from driving 4,000 miles to do 15 gigs you're grateful to have gotten even if they did barely pay for gas, living off pizza when you can get it, dog-tired and bone-weary, you'll find that you alone are going to be dealing with fulfilling those orders. Buying the postage and mailers; packing the CD's; addressing the labels; taking them to the post office. The exoticism will have worn off for your family and friends; you'll be on your own. Just how much time can you afford to devote to the business of being an artist, without losing the time you need as an artist to continue creating? As Tom Rush says, "How do you want to spend your time: making music or selling music?"
And another problem - distribution
Here's an additional problem with Indies and DIY projects - distribution. Distribution is the key to success in the recording field. Without distribution, no one can buy your record. And distribution is controlled by a handful (literally) of companies - most of them owned and operated by the major labels. So if you're on an Indie, your distribution may be through a major label. What does that mean? It means if Artist B is having a hit, their warehouse is going to stock her CD before yours; their trucks are going to load her CD and leave yours on the shelf; and that shelf space at Tower that might have been yours will go to her. It's only reasonable; why should anyone bank on selling 5 copies of your disc in Duluth when they know for a fact they can sell 500 of hers? Record stores operate on a narrow profit margin; the big chains have to do volume in order to break even.
I've never met a DIY artist who wouldn't love to have a major label deal - on their own terms. Therein lies the rub. If Ani Difranco signs with Sony for a million dollars, you can bet Sony will build a few clauses into the contract that tilt the scales of success (read: recoupment) their way. After all, they want their million bucks back! It's not unreasonable, it's not unfair, it's just a choice. Conversely, if a band the size of U2 sign with a small independent company, they will build in a few clauses to tilt the scales - to make sure the independent has a worldwide distribution network commensurate with their current record sales, that funding is in place for their recording and for its exploitation. Either way, both parties want to make sure they have a fighting chance. There's nothing wrong with that - it's a fair deal. It just depends on what kind of artist you are, what your long-term goals are, how good you are at business to begin with.
Obviously, I'm only scratching the surface. The alternatives are growing every day; as I said earlier, by the time this article comes out, a lot of it will be hopelessly out-of-date. I haven't even touched on the Internet, which is beginning to provide ways for us to establish careers as artists without ever having to manufacture a single CD! I haven't gone into the rare act that manages to break their recording career all by themselves. I haven't discussed Ani Difranco and the amazing job she's done staying independent while having enormous financial success. I would remind those of you using her as a role model, though, that her manager and business partner happens to be a very savvy lawyer as well!
These three alternatives have a few things in common, and it's worth noting some of them. To begin with, they are all service businesses. In other words, they serve the people who buy their product. Without a buyer, no records sell. This is as true of a DIY as it is of a major release.
These people are not your friends or family - they are your business associates. You may love spending time with them; they may stand as godparents to your children, but they're not family. At the end of the day they have their own families, their own car payments, their own responsibilities. No matter how nice they are, they have to make a living. It's rare indeed when the president of an Indie will actually lose money, over a long period of time, to support an artist they believe in. Who can afford it? In the DIY world, this advice goes for everyone from the person manufacturing your CD's to the local music store selling you your home studio. Keep friendship and family separate from business if you can; that way there'll be no disappointment when it's over.
A few of the major label benefits
- Major distribution. When your record comes out, people will be able to buy it in their local music and book stores; maybe even Borders Books and Target. It's all very well to sell at gigs and on the Internet, but you'll never go gold that way.
- Major advertising. Ads in local papers when you do shows; ads on the radio stations that might play you; after a point, ads in Billboard, in Gavin, even People Magazine.
- Major promotion, and not just from their own staff. Record companies hire "independent promotion men" (don't ask me why they're called that; supposedly they used to only pitch records they believed in, but I've always found that money is a strong incentive to belief) at @ $500-$1500 per week per "indie". They supplement the record company's own promotion staff and flog your record at radio, trading favors and various other items (tangible and intangible) to get your record played.
- Larger budgets. And believe me, $35,000 can in no way buy what $150,000 can buy. If you're not a fool who uses up the money eating out, or stuffing it up your nose, that big budget means you get to experiment a lot with your record; to stamp it with your own vision.
- Bail-out. Let's say you're in the last weeks of recording and you've run out of budget. Maybe it's your own fault, maybe it's due to uncontrollable outside circumstances. In either event, a major isn't going to invest $150,000 in your album and then refuse to give you an extra $10,000 to finish the project. They have very deep pockets.
- The support of a huge machine whose wheels will keep grinding, even if you decide to take six months off to write or visit India. While you're off the "big screen", your picture will keep appearing in newspapers, there'll be radio play and advertising. Six months is a long time in our business today.
- International standing. The majors are worldwide in a way someone on a smaller label can't conceive. When I toured worldwide with an independent label, I was lucky if I had a release in each country, much less a record company person who'd have done advertising and promotion. My new record is being released from Germany to Indonesia, and each country has an actual staff. This makes a huge difference.
- A real chance to make a difference. If my record "At Seventeen" had been released on an independent, 25,000 people might have heard it - if I was lucky, if I devoted two full years to being on the road, if the Internet had existed. Instead, it was bought by a million people in just the first year, heard by many more, and (so I'm told) actually made a lot of people feel better about themselves.
- Swag. Whether it's dinner at Le Dome or first class airfares, majors tend to spend a fair amount of money on their artists when a new record is coming out. It's still a mystery why they won't agree to the extra $400 you desperately need for mastering time, but will cheerfully take you and fifteen of their closest friends for an $800 sushi dinner, but hey, it's their money. I suppose....
- If you're lucky enough to have a big hit, you can buy time with that success and the leverage it buys you - time to write, time to think, time to grow creatively. You won't need a day job.
Downside of a major label
- Loss of autonomy. Majors, having made a huge financial investment in you, want control. They want to hear the worktapes and "help" choose the songs. They want to come to the recording sessions. Often, they make a lot of "suggestions", and they're annoyed when you don't follow through. They interfere with everything from the choice of a producer to sequencing your album, and they hold all the cards. It's rare to find a major that will actually discuss creative issues rationally with you; these folks are very busy, and if you're being a pain in the butt they'll just move on to some artist who isn't.
- Loss of freedom. If you're on a major, you can't record on someone else's record (sing harmony, play guitar) without getting permission, and permission can be withheld, or used as leverage to gain something the company wants. That's why it's called an "exclusive recording contract".You usually can't even sing backup without getting permission. If you want to record a duet with Garth Brooks, your label has the right to refuse.
- Risk of anonymity. On a big label, if you're not the favorite of someone in power, you're nothing. And I mean nothing. They may fulfill their end of the contract, but your record will die when it's released. If the person who signed you, coached you, believed in you gets fired, you may be in limbo for a long time.
- Strange financial strait jackets. For instance, there are occasions when someone at a major will sign a new artist, the company will spend $300,000 recording their album, then refuse to release it. Sometimes the person who signed you leaves, and the people remaining have no faith in the project. Sometimes you (or your manager or lawyer) will make someone mad enough to seek revenge - on you. No matter what the reason, they typically aren't obligated to release. In some ways it makes sense - word on the street is that Clive Davis spent anywhere between $750,000 and three million dollars promoting Carlos Santana's album. Add that to the album budget and you're into very large bucks. If your project isn't released, the record company can still write off the loss on their taxes, without spending an additional dime. And no, they're not going to give you the album to place somewhere else, unless that somewhere else is willing to fork over every dime they've spent - your budget, that dinner they took you to, those airfares to meet the regionals, whatever they can find. You can lose years this way, not to mention watching your best work sit on the shelf.
- Compulsory statutory rate. This is a neat little device that began when the record companies said to publishers "Hey. If we sign your artist/songwriter, and they record all their own material, our chances of having a hit are lessened because we can't choose outside material we think is a definite hit. So why don't you let us pay the songwriter only 75% of the royalty rate, instead of 100%?" This nifty clause is a part of every major label contract, and it's non-negotiable.
- The inability to sell your own product and make any sort of profit. Some majors won't even sell you your product; they don't want the local Tower Records store getting angry with them that you're diverting sales. If they do allow it the majors charge artists anywhere between $9.00 and $11.00 to purchase their own product for re-sale. Once you deduct venue costs, shipping/transporting, and franchise taxes, not to mention the ones you give away, you're actually losing money.
- Sheer greed in accounting. Majors deduct @ 25% off the top for "packaging costs", even though we all know printing and shrink-wrap don't come anywhere near that. They deduct 10-15% for "free goods", even though we all know there is no way they're donating that many records to schools, charities, and military bases. Majors wait as long as possible to pay you; why should you earn interest when they could be earning it?
- No advances, at least, not for us grunts. A major nowadays will give you money for studio time, engineers, musicians, tape, etc. What they won't give you is money to live on during the process. For some reason, they all think we can afford to take twelve weeks off at our own expense.
- Lack of creativity. People at majors want to keep their jobs, and their perks - the cell phone, expense account, company car, pension plan. As the old adage goes, "You can't get fired for saying 'No'." They're used to doing things the old way, and getting them to part with money to try something new is pretty impossible. They want the concrete and proven road, even if it's wrong for you.
- Pressure. The pressure of being on a major is enormous, because jobs depend on you and your project's success. When you're on your way up, looking like a hero, everyone wants your ear; everyone gives advice, everyone tries to make sure you're happy. This is not because they enjoy your company or even like your record; this is because they want you out on the road touring to support the album; doing radio interviews and TV to support the album; attending conventions to support the album. It doesn't leave much time for creativity, and the 6 am to midnight schedules can drop you in your tracks.
A few of the independent label benefits
- A chance to make your music exactly as you like, most of the time. Independents hang out at the studio for the fun of hanging out; they won't usually dictate to you creatively. They may make suggestions, but most of their contracts allow the artist full creative control (as opposed to the majors, who demand that song choice, producer choice, even the final master be "mutually agreed upon, Artist agreement not to be unreasonably withheld".)
- Decent distribution, at least with the ones that have been around for a while. A company like Oh Boy understands that distribution is the final key to success, and they market and make their deals accordingly.
- A larger budget than you could raise yourself, with no need to pay any of it back until you're truly earning it back out of sales.
- A much better royalty rate. Some independents even offer a 50/50 split after costs, which will never happen with a major.
- Once you have your budget, independents are a lot looser about how you spend it. Some of them don't even care, so long as you turn in your product on time.
- Speed. Fewer people, less discussion - a smaller chain of command means decisions are made quickly.
- The opportunity to sell your own product at your shows - in fact, with many independents you're required to sell your product at shows!
- The chance to buy your own product at a reasonable rate, more or less. Most independents nowadays will sell you your product for $6.00, a big difference from the major's pricing.
- Smaller staff, giving you the chance to actually get to know everyone working on your record. That means an infrastructure you can call on for everything from Can you make sure my record's available at my local coffee shop? they'll put it on the counter to How come I'm having to pay 100% of this cost?
- Freedom - to record with friends, to do CD's at your own pace, to grow creatively with the support of a team who are in this because they love music, not because they're fully vested in their pension plans.
The down side of indie labels
- A low budget, sometimes as little as $2,000. This doesn't buy much recording time, and it won't begin to buy a home recording studio.
- Low or non-existent financing. Many independents live from hand to mouth; if one or two records fail (and failure can be the difference between selling 500 CD's this quarter, or 700), the independent can go under. What happens to your product then?
- Inability to release. Again, lack of deep pockets puts a lot of independents in a cash flow bind. If your record is slated for release in September, and you've booked a tour around that release schedule, and the record company doesn't have the cash to manufacture until November, you're up against a wall.
- Lack of international distribution, sometimes partial, sometimes total. An independent will often make a deal with another independent in a foreign country, and your record will be "released" there. But that foreign independent won't make nearly as much profit off your CD's than off their own home-grown product, so guess which one they're going to promote? Many independents don't have any foreign contacts, so your CD will be a US release only. Even if you can personally place the album for release in another country, your contract may not allow you to do so.
- Lack of experience. I'm not talking about the larger Indies, but the start-ups. Many of these are begun by people who want to be in the record business and think it looks romantic and easy. This lack of knowledge can sometimes be an asset - people who don't know what's impossible often accomplish the impossible. However, most of the time it's just dangerous. People get in over their heads very quickly, and bankruptcy is not uncommon. This is not a good thing for you. Remember, your creative work is a financial asset to the company, and you can lose it to the highest bidder during bankruptcy proceedings..
- One-man shows. Entrepreneurs are, by nature, one-man shows. If the one man building that independent dies, decides to retire, or just plain screws up, you're sunk.
- Financing problems. I've seen a lot of independents begin with good financing, only to have one or more of their backers fall through or go belly up early in the game. Since the profit margin is so small, the loss of one backer can throw an independent into bankruptcy. Let's face it, Sony are not going bankrupt!
A few of the DIY benefits
- Complete and total creative control. Every single thing about that CD can be your vision, for better or worse - the arrangements, song choices, cover art, packaging, even the pricing.
- Fun without anyone looking over your shoulder, and isn't that what life is all about?
- Huge potential return for your investment. If you do manage to sell 10,000 CDs out of your trunk, and get interest from an independent or major label, they may allow you to continue doing things your way on the theory that "it worked the first time". Or, you may be able to license the product to them rather than selling it outright. Licensing is great because eventually the product returns to your ownership. Owning product is like owning a house - if it's not worth anything on the market, it's not worth anything to you. But if it is worth something somewhere, you can re-license it for a substantial advance.
- Immediate return on your investment. You sell a CD and put the cash in your pocket. If you've paid your costs up front, almost all of that money immediately belongs to you. Go have a nice dinner!
- Complete control of finances. You keep your own books, pay yourself, don't have to deal with royalty rates or contracts. You don't even have to keep inventory, unless the IRS gets interested.
- The opportunity to sell your own product at shows, without having to go through a middle man to purchase it. You can order what you want, when you want.
The down side of DIY
- You have to raise the money yourself. You can't make the record, begin selling it, and pay back costs as earnings come in. Manufacturers want cash on the barrel head.
- Lack of distribution. You may be able to get your CD into local record stores, but you'll have a hard time getting it into places like Barnes & Noble or Borders. And you won't be able to get it in there nationally unless you can build your DIY into an independent label.
- Lack of promotion. The majors can get their artists onto television shows, radio shows, into the newspapers. A major can afford to send out 2,000 bio packages and CD's - you can't.
- Huge responsibilities. If you have backers (your family, your friends), and you can't pay them back, you'll feel miserable - at least, you ought to feel miserable! If there's a bad run of CD's, fans will blame you personally, and you'll have to go through the mechanics of replacing the shoddy goods, then trying to collect from the manufacturer.
- Lack of opportunities away from your home base. For example, during my lean years in the United States I could still go to Europe or Japan and make a living. There are thousands of people like me, who were on major labels at one point and had success somewhere overseas. The overseas markets stay loyal much, much longer than the US market does. If you're DIY, chances are you won't be able to get into the market in Seattle, much less Tokyo.
- Inability to get product. If you need another 100 CD's manufactured, and the factory's just received an order for 15,000 from someone else, whose order do you think will take precedence?
- No return on your investment. I have several friends who did DIY projects and bankrupted themselves in the process. Artists are not generally good with business; we get involved in the project and spend more than we can afford during the excitement of actually making our music come alive. We over-order stock, then have no way to sell it. You can not only take a loss that way, you can find yourself working three day jobs just to keep abreast of your regular household bills. Not to mention the problems when you fund your project with credit cards, then find yourself paying 18% interest for the rest of your life.
- Lack of time to do what you do best, which is create. Little by little the business end will creep up, and the pressures may drive you to hate what you originally loved best. Isn't that silly?
How do I know what's best for me?
No one can tell you which of these alternatives is best for you. Most of us will never have three options to begin with; we'll be lucky to raise the money for a DIY, even luckier to attract the interest of an independent, and phenomenally lucky to get an offer from a major. Circumstances often dictate our choices, and there's nothing to be done about that.
Think long and hard about what you really want out of your career, not just in the next six months, but over the next six years. If you have the luxury of choosing between a DIY and an independent, ask yourself if you really have the time and business smarts to do a DIY without compromising your work. Ask yourself if complete control is worth more to you than the extra budget. Do some research on the independent; find out where their funding comes from, how much profit they've set aside for a rainy day. Try and figure out what you can put up with, in order to see your vision come to life. And be honest! It's not fashionable, particularly in the folk world, to seek fame, but if there's a little voice inside you that thinks the coolest thing in the world would be to get recognized on the street everywhere, take that into account. You don't have to admit it to anyone else.
Choose your management, agent and the like accordingly. Majors will sign an unknown who's represented by a well-known manager or lawyer faster than they'll sign an unknown who's represented by his girlfriend. Avoid being represented by your spouse; it rarely works, and business people won't take you seriously unless your spouse is already pretty powerful. Try to work with people you can trust (to whatever extent you can trust a business associate), but understand that their stake in your creativity isn't the same as yours. Their bottom line isn't your creative happiness; they want to make money. You're just the beginning of the food chain.
Remember that the people you're rude to at one record company today may be huge power mongers in another situation tomorrow. As they say in the circus, "You meet the same people going down that you met going up." Try to avoid compromising your work, but at the same time, learn to argue your case in a way that business people can understand. It's no good saying to the art director "But I like the gold cover! I hate the silver one!" when he knows the gold will add a nickel in costs to every CD. Better to go to the marketing manager and explain, with statistics, that people will tend to buy a gold cover rather than a silver. Make sure your lawyer understands your goals; if what you really want is a DIY, your lawyer shouldn't be trying to talk you into signing with someone, she should be facilitating your funding instead!
Family, friends, business associates will all have advice to offer. Listen to everyone and collect as much information as you can. Avoid the mistake of thinking "Oh, that couldn't happen to me!", but don't let yourself be talked into getting too paranoid (though a little paranoia is good for the soul). I have a friend, an excellent writer, who's never signed a publishing deal because all his friends kept saying "Keep your publishing for yourself; then, when you have a hit, you'll own 100% of it." He's been writing for decades and hasn't had a single cover. Of course, without a cover or a recording deal of his own, he can't have a hit. 100% of nothing is nothing, my friends. Sometimes it's well worth giving up some control in order to take advantage of an opportunity that may not come again.
There are no hard and fast rules, there is no one alternative that shines above the rest. As they say in New York, it's a crap-shoot. If you want to make records, you have to roll the dice.
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