There's this band. They're pretty ordinary, but they're also pretty good, so they've attracted some attention. They're signed to an "independent" label owned by a distribution company, and they owe another two albums to the label.
They're a little ambitious. They'd like to get signed by a major label so they can have some security, get some good equipment, tour in a proper tour bus—nothing fancy, just a little reward for all the hard work. To that end, they got a manager. He knows some of the label guys, and he can shop their next project to all the right people. He takes his cut, sure, but it's only 15 percent, and if he can get them signed—money well spent.
Anyway, it doesn't cost them anything if it doesn't work; 15 percent of nothing isn't much! One day an A&R scout calls them, says he's 'been following them for a while now, and when he and their manager talked, it just "clicked." Would they like to meet about the possibility of working out a deal with his label?' Wow. It's Big Break time.
They meet the guy, and he's not what they expected from a label guy. He's young and dresses pretty much like the band does. He knows all their favorite bands. He's like one of them. He tells them he wants to go to bat for them, to try to get them everything they want. He says anything is possible with the right attitude. They conclude the evening by taking home a copy of a deal memo they wrote out and signed on the spot.
Annoying A&R Turds
Every major label involved in the hunt for new bands now has on staff a high-profile point man, an "A&R" rep who can present a comfortable face to any prospective band. The initials stand for "Artist and Repertoire" because historically, the A&R staff would select artists to record music that they had also selected, out of an available pool of each.
This is still the case, though not openly. These guys are universally young—about the same age as the bands being wooed—and nowadays they always have some obvious underground rock credibility flag they can wave. Lyle Preslar, former guitarist for Minor Threat, is one of them. Terry Tolkin, former New York independent booking agent and assistant manager at Touch and Go, is one of them. Al Smith, former soundman at CBGB, is one of them. Mike Gitter, former editor of XXX fanzine and contributor to Rip, Kerrang and other lowbrow rags, is one of them.
Many annoying turds who staffed college radio stations are in their ranks as well. A&R scouts are always young. The explanation is usually that the scout will be "hip to the current musical scene." A more important reason is that the bands will trust someone they think is a peer.
By now, all rock bands are wise enough to be suspicious of music industry scum. There is a pervasive caricature in popular culture of a portly, middle-aged ex-hipster talking a mile-a-minute, using outdated jargon and calling everybody "baby." After meeting "their" A&R guy, the band will say to themselves and everyone else, "He's not like a record company guy at all! He's like one of us." And they will be right. That's one of the reasons he was hired.
These A&R guys do not write contracts. What they do is present the band with a letter of intent, or "deal memo," which loosely states some terms, and affirms that the band will sign with the label once a contract has been agreed on. The spookiest thing about this memo is that it is a legally binding document. That is, once the band signs it, they are under obligation to conclude a deal with the label. If the label presents them with a contract that the band doesn't want to sign, the label just has to wait.
There are a hundred other bands willing to sign the exact same contract, so the label is in a position of strength. These letters never have any terms of expiration, so the band remains bound by the deal memo until a contract is signed, no matter how long that takes. The band cannot sign to another label or even put out its own material unless they are released from their agreement, which never happens.
Make no mistake about it: Once a band has signed a letter of intent, they will either eventually sign a contract that suits the label, or they will be destroyed.
Here's the Moon, Now Take It
One of my favorite bands was held hostage for two years by a slick, young "He's not like a label guy at all," A&R rep, on the basis of such a deal memo. He had failed to come through on any of his promises (something he did with similar effect to another well-known band), and so the band wanted out.
Another label expressed interest, but when they asked the A&R man to release them, he said he would need money or points or both before he would consider it. The new label was afraid the price would be too dear, and they said no. On the cusp of making their signature album, an excellent band broke up from the stress.
The A & R person is the first person to make contact with our hypothetical band and the first to promise them the moon. Who better than an idealistic young turk who expects to be calling the shots in a few years, and who has had no previous experience with a big record company?
Hell, he's as naive as the band he's duping. When he tells them no one will interfere in their creative process, he may believe it. When he sits down with the band over a plate of angel hair pasta, he can tell them with all sincerity that when they sign with company X, they're really signing with him, and he's on their side. Remember that great gig I saw you at in '95? Didn't we have a blast?
The A & R guy meeting had great ideas, and even talked about using a name producer. Butch Vig is out of the question—he wants 100 Gs and three points, but they can get Don Fleming for $30,000 plus three points. Or maybe they'll go with that guy who was in David Letterman's band. He only wants three points. Or they can have just anybody record it for 5-7 grand and have Andy Wallace remix it for 4 grand a track plus 2 points. It was a lot to think about.
Well, they like this guy, and they trust him. Besides, they already signed the deal memo. He must have been serious about wanting them to sign. They break the news to their current label, and the label manager says they have his blessing. He will need to be compensated, of course, for the remaining albums left on their contract, but he'll work it out with the label himself.
Sub Pop made millions from selling off Nirvana, and Twin Tone hasn't done bad either: 50 grand for the Babes and 60 grand for the Poster Children—without having to sell a single additional record. It'll be something modest. The new label doesn't mind, so long as it's recoupable out of royalties.
Well, they get the final contract, and it's not quite what they expected. They turn it over to a lawyer—one who says he's experienced in entertainment law, and he hammers out a few bugs. They're still not sure about it, but the lawyer says he's seen a lot of contracts, and theirs is pretty good.
Follow the Money
The drill goes something like this. There'll be great royalty: 13 percent (less a 10 percent packaging deduction). Wasn't it Buffalo Tom that were only getting 12 percent less 10? Whatever. The old label only wants 50 grand, and no points. Hell, Sub Pop got 3 points when they let Nirvana go. They're signed for four years, with options on each year, for a total of over a million dollars! That's a lot of money in any man's English.
The first year's advance alone is $250,000. Just think about it, a quarter million, just for being in a rock band! Their manager thinks it's a great deal, especially the large advance. Besides, he knows a publishing company that will take the band on if they get signed, and even give them an advance of 20 grand, so they'll be making that money too.
The manager says publishing is pretty mysterious, and nobody really knows where all the money comes from, but the lawyer can look that contract over too. Hell, it's free money. Their booking agent is excited about the band signing to a major. He says they can maybe average $1,000 or $2,000 a night from now on. That's enough to justify a five-week tour, and with tour support, they can use a proper crew, buy some good equipment and even get a tour bus!
Buses are pretty expensive, but if you figure in the price of a hotel room for everybody in the band and crew, they're actually about the same cost. Some bands like Therapy? and Sloan and Stereolab use buses on their tours even when they're getting paid only a couple hundred bucks a night, and this tour should earn at least a grand or two every night. It'll be worth it. The band will be more comfortable and will play better.
The agent says a band on a major label can get a merchandising company to pay them an advance on T-shirt sales! There's a gold mine here! The lawyer should look over the merchandising contract, just to be safe. They get drunk at the signing party. Polaroids are taken, and everybody looks thrilled. The label picked them up in a limo. They decided to go with the producer who used to be in Letterman's band. He had these technicians come in and tune the drums for them and tweak their amps and guitars. He had a guy bring in a slew of expensive old "vintage" microphones. Boy, were they "warm."
He even had a guy come in and check the phase of all the equipment in the control room! He used a bunch of equipment on them and by the end of it, they all agreed that it sounded very "punchy," yet "warm." All that hard work paid off. With the help of a video, they sold a quarter-million copies!
But the real numbers, and a bit of math, will explain just how f*cked they are. These are representative of amounts that appear in record contracts daily. There's no need to skew the figures to make it look bad, since real-life examples abound.
Band in the Hole
The band I told you about above is now a quarter of the way through its contract, has made the music industry more than $3 million richer, but is in the hole $14,000 on royalties. The band members have each earned a third as much as they would working at a 7-11, but they got to ride in a tour bus.
The next album will be about the same, except that the record company will insist they spend more time and money on it. Since the previous one never "recouped," the band will have no leverage, and will oblige.
The next tour will be about the same, except the merchandising advance will have already been paid, and the band, strangely enough, won't have earned any royalties from their T-shirts yet. Maybe the T-shirt guys have figured out how to count money like record company guys.
Some of your friends are probably already this f*cked.
This piece originally appeared on Negativland.com. Steve Albini is an independent and corporate rock record producer most widely known for having produced Nirvana's "In Utero." He was a former member of Big Black and currently plays with Shellac.
If you find out one of your children has exceptionally gifted in the area of music you have two options,
1- take them out back and break their fingers,or
2- prepare them for a life of near poverty.
This is an excellent article.
- Sherman Lee
This IS a great article, but you might want to note that it was first published in 1993 (in the punk zine "Maximim Rock & Roll"). Not that it's any less true today, but it has been around for awhile.
I'm not sure we knew that, Ironsides, in order to point it out. One of our editors found it on Negativland, and got permission from the author to run it. Nothing came up about it having been somewhere before that -- not that it matters, as long as the author, and the JFP, are cool with it now.
It's certainly gotten great feedback from our readers. I'm thrilled we could run such a "classic" piece that resonates so well in our Music DIY focus. ;-D