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Tuesday, July 22, 2008 

Why You Definitely Don't Want A Record Deal!

By Chris Standring

Madalyn's Note: I'm passing along this great article from my friend Chris Standring. Enjoy!

There is no reason why labels can't discount merch to their artists and still keep the product royalty bearing.

I'm pretty much done with record labels. I finally learned my lesson last weekend. The playing field has finally been leveled.

Before I get into my rant, I should say that there still is a place for record companies, but they are not for most of us. If you win American Idol or even get into the top five finalists, then sure, sign a record deal. Use the machine to make you famous for 15 minutes. You're a puppet after all, not an artist. That machine is absolutely right for you. But if you are an artist or want any kind of longevity, a career perhaps, then think again.

Record companies are going out of business by the week. The question you need to now ask yourself is, "Do I want to be signed to a record company that will be out of business this time next year".

Retail stores are going out of business. We have lost The Wherehouse, Blockbuster, Tower. Who is left??? Virgin? They only have 20 stores across the USA! All other stores are small Mom & Pop stores and then there are the electronic stores and bookshops like Circuit City, Borders. Walmart etc. and most of these stores are very selective with the product they take in. So it looks like dedicated CD stores will be gone in no time. I walked into "Second Spin" in Sherman Oaks, California a few days ago, a pretty big store. The first thing I said to the girl at the counter was "Am I really the only person in this store?". She said "Yes, it's been like this for a while". Ouch!!!

But here's the real kicker that did it for me...

Last weekend I did a two day stint out of town with an ensemble I am presently on the road with called "Jazzmasters". We did a show in Sacramento, then Palm Springs the following day. Sacramento was a completely sold out show. About 1500 people who couldn't sit still. After the show CDs were selling like crazy. There were 3 artists on the bill and we all just about ran out of product. I personally sold 41 CDs. My record label were there. In fact they were taking care of selling the product.

I have to purchase my merchandise at $8.00 per CD. A ludicrous price, but believe it or not, major labels charge their artists even more than this. At that price, the labels make each unit 'royalty bearing', which basically means that all royalties will be paid to all folks who have a hand in the pie, be it a publisher or artist royalty. The way labels justify it is that they are selling the albums to their artists at wholesale price. The problem is that most artists have two other commissions to pay before money goes in their pocket. At every venue I play at, the house or promoter will usually take at least 15% and can up to 25% (occasionally 30%) of the sale. So before I have paid my manager commission on record sales (which now comes from my royalty checks, not from direct sales on the night, otherwise they get paid twice), I have been pretty much percentaged to death!

Here's how the numbers ran:

I purchased 50 CDs from the label at $8.00 per CD. That's $400. I sold 41 CDs and gave 15% to the house. $615.00 gross came in from all sales. House took $92.00. My label handed me $63.00 in cash! Actually it should have been $122 but we'll see if I see that.

So the point is, it's a joke. I said to my label rep, "You have to admit this is a total and utter embarrassment isn't it?" There is no reason why labels can't discount merch to their artists and still keep the product royalty bearing. An hour after the show signing CDs and for what!!??

But the real point is that it must stop now, and the good news is that it totally can.

I am recording a new album now and I am at a crossroads. I either sign a new deal with a label that is prepared to be respectful to the artist (good luck with that Chris) or do a 'pass-through' distribution deal with a label where they take a percentage of sale only. I become the label. I manufacture. I promote. I spend money on radio promotion and print ads but I make all the money. That's not to say that I won't be paying out a good whack of money to make it all happen but it just makes more sense to me now. If you want to play in the big leagues and compete then money is involved. You bat in the league you are comfortable with.

And with that, I suggest you ask yourself where you expect to make your money in the real scheme of things. If it is from touring, and let me tell you that at the independent level, this IS where you will make money, then make a smart decision about your future. You probably don't need a record label. Unless of course you are going for next year's American Idol contest. If so, good luck with that!

Chris Standring is the CEO and founder of A&R Online (http://www.aandronline.com/). He is also a contemporary jazz guitarist presently signed to Mesa/Bluemoon Records. The music is marketed at NAC and Urban AC radio. For more info on Chris' recording career go to his personal website at http://www.chrisstandring.com/

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YIKES! That is absolutely, profoundly, insane! (the breakdown, I mean)

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    Madalyn Sklar is a music business coach & consultant, blogger, social networks expert and author. She has spent over 15 years helping independent musicians and music business professionals achieve greater success. Her motto is: working smarter not harder. She also founded GoGirlsMusic.com, the oldest + largest online community of indie women musicians.

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