Some of your friends are probably
already this fucked

 -Steve Albini



   Whenever I talk to a band who are about to sign with a major
label, I always end up thinking of them in a particular context. I
imagine a trench, about four feet wide and five feet deep, maybe
sixty yards long, filled with runny, decaying shit. I imagine these
people, some of them good fiends, some of them barely acquaintances,
at one end of this trench. I also imagine a faceless industry lackey at
the other end, holding a fountain pen and a contract waiting to be signed.
   Nobody can see what's printed on the contract. It's too far away,
and besides, the shit stench is making everybody's eyes water. The
lackey shouts to everybody that the first one to swim the trench
gets to sign the contract. Everybody dives in the trench and they
struggle furiously to get to the other end. Two people arrive
simultaneously and begin wrestling furiously, clawing each other
and dunking each other under the shit. Eventually, one of them capitulates,
and there's only one contestant left. He reaches for the pen, but
the lackeysays, "Actually, I think you need a little more
development. Swim it again, please. Backstroke."
And he does, of course.

A&R Scouts

   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 NY 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 of the annoying turds who used to staff college radio stations
are in their ranks as well.
   There are several reasons A&R scouts are always young. The
explanation usually copped-to is that the scout will be "hip" to the
current musical "scene." A more important reason is that the bands
will intuitively trust someone they think is a peer, and who speaks
fondly of the same formative rock and roll experiences.
The A&R person is the first person to make contact with the band,
and as such is the first person to promise them the moon. Who better
to promise them the moon than an idealistic young turk (?-he says
turd earlier,mb) 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 probably even believes it.
When he sits down with the band for the first time, 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 '85? Didn't we
have a blast?
   By now, all rock bands are wise enough to be suspicious of music
industry scum. There is 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 are not allowed to write contracts. What they do
is present the band with a letter of intent, or "deal memo," which
loosely states some terms, and affirm that the bands will sign with
the label once a contract has been agreed on.
   The spookiest thing about this harmless sounding little "memo,"
is that it is, for all legal purposes, a binding document. That is, once
the band sign it, they are under obligation to conclude a deal with
the label. If the label presents them with a contract that the band
don't want to sign, all the label has to do is wait. There are a
hundred other bands willing to sign the exact same contract, so the
label is in a position of strength.
   Those letters never have any term of expiry, so the band remain
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.
   One of my favorite bands was held hostage for the better part of
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 the A&R man was asked to release the
band, he said he would need money or points, or possibly both, before
he would consider it.
   The new label was afraid the price would be too dear, and they
said no thanks. On the cusp of making their signature album, an
excellent band, humiliated, broke up from the stress and the many
months of inactivity.

There's This Band

   There's this band. They're pretty ordinary, but they're also pretty
good, so they've attracted some attention. They're signed to a
moderate size "independent" label owned by a distribution company,
and they have another two albums owed to the label.
They're a little ambitious. They'd like to get signed by a major
label so they can have some security--you know, 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%, and if he can get them signed then
it's money well spent. Anyway, it doesn't cost them anything if it
doesn't work. 15% 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 their manager mentioned them to him, it
just "clicked." Would they like to meet with him about the
possibility of working out a deal with his label. Wow. Big Break time.
   They meet the guy, and y'know what--he's not want 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.
   The A&R guy was full of great ideas, even talked about using a
name producer. Butch Vig is out of the question--he wants 100 g's
and three points, but they can get Don Fleming for $30,000 plus
three points. Even that's a little steep, so maybe they'll go with that
guy who used to be in David Letterman's band. He only wants three
points. Or they can have just anybody record it (like Warton Tiers,
maybe--cost you 5 or 10 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 he wants them to succeed, so 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 figure it's better to be safe than sorry and 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 their's is pretty good.
   They'll be getting a great royalty: 13% (less a 10% packaging
deduction). Wasn't it Buffalo Tom that were only getting 12% 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! Ridiculous! 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 even had a guy
come in and check the phase of all the equipment in the control room!
Boy, was he professional. 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, the album
went like hotcakes! They sold a quarter million copies!
Here is the math that will explain just how fucked they are:
These figures are representative of amounts that appear in record
contracts daily. There's no need to skew the figures to make the
scenario look bad, since real-life examples more than abound.
Income is underlined, expenses are not.

The Balance Sheet

This is how much each player got paid at the end of the game.
Record company: $710,000
Producer: $90,000
Manager: $51,000
Studio: $52,000
Previous label: $50,000
Agent: $7,5000
Lawyer: $12,000
Band member net income each: $4,031.25

   The band is not 1/4 of the way through its contract, has made the
music industry more than 3 million dollars richer, but is in the hole
$14,000 on royalties. The band members have each earned about 1/3
as much as they would working at a 7-11, but they got to ride in a
tour bus for a month.
   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 records company
guys.
   Some of your friends are probably already this fucked.

*** end figures***
Advance: $250,000
Manager's cut: $37,500
Legal fees: $10,000

Recording budget: $150,000
Producer's advance: $50,000
Studio fee: $52,000
Drum, Amp, Mic and Phase "Doctors": $3,000
Recording tap: $8,000
Equipment rental: $5,000
Cartage and Transportation: $5,000
Lodgings while in studio: $10,000
Catering: $3,000
Mastering: $10,000
Tape copies, reference CD's, shipping tapes, misc expenses: $2,000

Video budget: $30,000
Cameras: $8,000
Crew: $5,000
Processing and transfers: $3,000
Offline: $2,000
Online editing: $3,000
Catering: $1,000
Stage and construction: $3,000
Copies, couriers, transportation: $2,000
Director's fee: $3,000

Album Artwork: $5,000
Promotional photo shoot and duplication: $2,000

Band fund: $15,000
New fancy professional drum kit: $5,000
New fancy professional guitars (2): $3,000
New fancy professional guitar amp rigs (2): $4,000
New fancy potato-shaped bass guitar: $1,000
new fancy track of lights bass amp: $1,000
Rehearsal space rental: $500
Big blowout party for their friends: $500

Tour expense (5 weeks): $50,875
Bus: $25,000
Crew (3): $7,500
Food and per diems: $7,875
Fuel: $3,000
Consumable supplies: $3,500
Wardrobe: $1,000
Promotion: $3,000

Tour gross income: $50,000
Agent's cut: $7,500
Manager's cut: $7,500
Lawyer's fee: $1,000

Publishing advance: $20,000
Manager's cut: $3,000
Lawyer's fee: $1,000

Record sales: 250,000 @ $12 = $3,000,000 gross retail revenue
Royalty (13% of 90% of retail): $351,000
less advance: $250,000
producer's points: (3% less $50,000 advance) $40,000
Promotional budget: $25,000
Recoupable buyout from previous label: $50,000
Net royalty: (-$14,000)

Record company income:
Record wholesale price $6.50 x 250,000 = $1,625,000 gross income
Artist Royalties = $351,000
Deficit from royalties: $14,000
Manufacturing, packaging and distribution @ $2.20 per record:
$550,000
Gross profit: $710,000