Music is an art, nonetheless, when it comes to the records sector Songs is about revenue!

If any person or any firm feels that your popular music will not make them dollars, there might be absolutely no interest within your song. That’s it from the nut shell. Keep in mind, to generally keep in mind this. The Records Marketplace is about Cash!

There are a few sources of cash to be produced in the records company. They involve but aren't limited to:

· File sales

· Songs played on the radio

· In movies and television

· Concerts

· Song writing

· Producing

· Merchandising

· Advertising

· CD-ROMs/DVDs

If you're an artist and have to have to get into the music online business, you need to have 3 quite significant extremely fantastic individuals in your corner batting for you on a each day basis. They incorporate:

· Personal Manager – Probably the most of significant from the 3. They should have contacts during the music industry, maintain on eye on all your affairs, advise you on items to do, aid promote your music, producers to hire, who to sign with when to go on tour, etc. The particular supervisor will obtain 15% and 20% of an artists gross earnings and have good contacts with file providers A&R, Marketing / Sales, and Promotion departments.

· Music Attorney – A good attorney specializing in the records will know how to properly negotiate and structure the deals an artist makes. They have to have to have good contacts and be trust worthy. Expect to pay between 100 and 200 per hour for a rather good records attorney. If an attorney thinks you will get signed, they forego a set fee and charge a percentage of artist’s earnings. In bigger cities, you’ll pay more than in smaller cities.

· Music Agent – Book concerts and special appearances. A Particular Manager will aid the artist with selecting a beneficial agent.

If you blow up and start generating the big revenue, then a wonderful Manager / Accountant will probably be needed to handle your tax situation, review royalty statements, financing tours, offer invest advice and how to manage your cash.

Getting recognized by mailing your demo to report labels isn’t impossible, yet, 99.9% from the time your material won't get listened to. Even if you have the best song on the planet, it will not be listened to. Report labels want to limit their liability, so they do not listen to unsolicited tunes. File labels don’t desire to listen to numerous songs and then be held liable if someone claims their material was copied.

In the event you do decide to mail your CD to file label, send the “solicited” material. First get a contact, preferably an individual inside Artists & Repertoire (A&R) department. Call and first speak to someone. After sending your CD follow up to determine if the targeted individual received your material and another follow up call to determine if it was listened to. Submit 3 to 6 songs and send a bio and picture of yourself. Again this isn’t the preferred way to submit your material to major file labels.

Until you have new music business enterprise advisors within your corner trying to promote you and there is a “buzz” going around about you, your demo will not reach the decision makers at the record labels. Report firms on a daily basis receive thousands of unsolicited CDs. Most likely your CD will likely be tossed into a bin located in a remote room filled with overflowing bins of CDs.

Document labels like to deal with artists who have a history of record sales. These are artist that may have produced and sold their own CDs locally or regionally. Record labels like to deal with artists who have performed their material and there is this “buzz” going on about them. MC Hammer, before he became famous, performed his own materials and sold his own records until a major document label signed him. MC Hammer had a lot of leverage in negotiating a wonderful contract because he already proved on a local basis he could sell records.

Report firms wish to limit their liability. If you might be signed, you might be considered an investment that will require some capital and they have to have to see a premium return on their capital invested in you. The more you can prove that you can sell file, the better chance you can get signed.

For those who get signed to a record enterprise, you the artist will go into the studio and file songs for the record organization. The file provider makes copies on the master recording and ships it to a distributor. The distributor is a wholesaler who then sells the CDs to retail outlets like Best Buy, Sam Goody and Tower Records. The report organization then pumps revenue into marketing by advertising and promoting your new music with hopes of selling records, thus making you a superstar and becoming rich!

It is not as easy as it sounds. It takes a lot of hard work by a talented group of consumers. Everyone has to work together to make this happen. You'll find usually many individuals behind the scenes working to make an artist a superstar.

File companies often categorized into 4 groups: · Major label document corporations – have the recording and operating resources to complete all function to sell records. Major label file organizations are integrated in that they can handle the promotion, sales, marketing, and distribution to sell songs. Major label report organizations are Arista, Atlantic, Capital, and Sony.

· Major label affiliate labels – have special agreements with the major label report companies, where the major label may fund the smaller labels recording and operating expenses in exchange for a portion from the smaller label profits.

· Independent labels – distributes records through major labels. Independent labels have couple of employees. They tend to find talent, sign the talent, sees to it the tunes is recorded and contracts with major file labels to perform the promotion, marketing, and other functions.

· True independent labels – Has no association with a major label and distribute their audio through independent distributors.

The A&R (Artists & Repertoire) Department

The A&R department is the talent scout. They are in charge of finding new talents. They are the eyes and ears in the file corporation. Nevertheless, not because you get signed to a document label because an A&R representative likes you it doesn’t mean your CD will ever get produced and released. Executives higher during the business could cancel your deal if they feel your CD will not sell. A record enterprise will have to invest several hundred thousands of dollars to release your CD, so they shall be extremely cautious on whom they release.

The Marketing and Sales Department

This department is responsible for getting the public excited about your audio and first selling to retail stores the idea of carrying your CD. They are responsible for promotional merchandise, advertising your CD, in store displays, publicity, your CD cover, and so forth.

The Promotions Department

This department is responsible for getting your music played on the radio. The individuals in this department will visit the various radio stations to convince them to play your material. If your material doesn’t get played, no one will now how you're. Many people will look at your CD during the retail store and wonder who you are. There is also a direct correlation with CD sales vs. how many times a song for that CD gets played on the radio. More air time on the radio equals more CD sales for the report providers.

Don't forget music is art, but to the report corporations, it’s about revenue. Maintain in mind that it’s a organization. Preserve in mind everyone is out to make funds. The minute consumers believe that you won't make income for them, you will likely be dropped and these same persons will turn to seek other new artists that they believe will make them capital. Unfortunately, the document business doesn’t believe in grooming people today. If your first CD isn’t a success, you are out. You'll find rarely second chances. You'll find continually other talented people behind you who what their shot at fame.

Distribution

Most major retailers such as Tower records won't carry a CD unless the record has a distributor. A strong distributor ensures that your CD shall be available in enough places so your CD will sell to ultimately make income. Major labels use large distributors who are better able to get document stores stocked. After years of consolidation, you can find only 5 major national wholesale distributors within the US who are owned by conglomerates who also own major record labels. They are:

· BMG (distributes Arista, BMG and RCA)

· EMI (distributes Capital and Virg.)

· Sony Song (distributes Columbia, Epic and Sony)

· Universal Songs Group (distributes Interscope, Island/Def Jam, and MCA)

· WEA (distributes Atlantic, Elektra and Warner Bros.)

Distribution via the Internet Document labels and artists are increasingly using the web to distribute their records. Unknown artists can also use sites like this mZeus.com, http://www.mZeus.com, to generate buzz about their records. Yet, unknown artists will still have to work hard to get the buzz going about their songs. Ultimately, signing a contract with a major record label is the way to go. The major record labels have the financial muscle and many people to give you a great shot at becoming famous.

Let’s face it. It’s all about funds! Yes, the entertainment trade seems fun and exciting, but men and women are in it to make bucks. As an artist the most critical contract with the audio sector is the record contract. The royalty is a portion of income from file sales paid to the artist for his/her songs. The document contract which is a negotiated legal agreement between the record label and artist will state how much royalty an artist is entitled to among other items.

An artist should have a good understanding of how royalties are calculated. A rather good music attorney will assist with this process by making sure the artist is paid what he/she deserves. A 13% royalty for one artist may be a lot of cash, then again a 13% royalty for another maybe “chump change”.

So this is how the numbers work. An artist successfully signs a document contract. The artist goes to the studio and work diligently to create a CD that the document organization fully supports. The document enterprise via its distributor sells the CD with a suggested retail list price (SRLP) of $17.99 to a retailer for about $10.99. The distributor will take 10% – 14% of the $10.99. Therefore the file organization will get about ½ the SRLP of $17.99. Independent record organizations may receive less than ½ the SRLP. Major record firms will pay artist royalty as a percentage of SRLP.

Rates will vary of each artist depending on how successful their record sells. For a new artist who never had a report deal or has sold less than 100,000 albums will get a typical royalty rate of 12% to 14% with the SRLP. For an independent document label it maybe 10% to 14% of your SRLP. For established artists who have a track document of selling 200,000 to 500,000 albums the royalty rate maybe 14% to 16%. For artists who have sold over 750,000 albums the royalty rates maybe 16% to 18%. As you can see, the more successful the artist is, the higher the royalty. Additionally, royalty maybe based on how well the record sells. For instance, the file contract may state that an artist will get 12% for the first 100,000 units sold, 14% for 100,001 to 300,000 units sold, and 16% for over 300,000 units sold.

But hold your horses. When you sell 500,000 albums and have a royalty rate of 12% doesn’t mean you will get 12% of 500,000 at a SRLP of $17.98 which would equal $1,078,800. This is because as specified inside the file contract, there are deductions (expenses) that have to be deducted.

To start off the bat, the report corporation will deduct a “packaging charge” from the SRLP which is typically 20% for cassettes and 25% for CDs.

Second, more often the artist is responsible for paying the document producer a portion of his/her royalties. Typically a producer will obtain 3% to 4% of the SRLP.

Third, inside report organization, the contract may state that the artist’s only generates royalties on 85% with the unit sales. For every 100 albums sold, 15 albums sold, the artist gets no royalty.

Forth, the record company will hold a portion of the royalty funds because the distributor typically has an agreement with the retail outlets to take back and credit the retail stores dollars from unsold units. This is especially important, because a good portion of your album could be returned to the record firm if the album doesn’t sell! The revenue that’s held back is called a reserve. Reserves maybe held for 2 years before it’s paid to the artist. Typically a major record label will hold a reserve of 25% to 40% with the royalties.

Fifth, advances paid from the document company to the artist are deducted from the artist’s royalty. Advances include but aren't limited to the:

· Recording studio expenses (new artists to an independent my get an advancement of $0 to $80,000, new artist to a major report label $150,000 to $400,000

· Hiring independent promoters to support sell the albums

· Cost of making a songs video (promotions and an inexpensive popular music video can cost $150,000 to $200,000.

When funds is produced for the file sales, these costs are deducted from the artist’s royalties. This is called re-coupment. Therefore, if the artist’s record isn’t successful, the artist may never see a dime. If the royalties are less than the deductions, they artists may well owe the record provider bucks by being inside the red! This negative cost maybe carried over to the next album release. A great file contract won't allow a negative cost from one album to be carried over to another album (cross collateralization). If there isn’t another album the record company generally eats the loss.

You can find many other costs that the report corporation won't charge the artists. This includes marketing and in-house promotions (free CD give away, etc.).

So how much does an artist make for a gold album (500,000 albums sold).

Check out the math:

CD (suggested retail list price SRLP) = $ 17.99 Less CD Packaging of 20% = $ -4.50 NET = $ 13.49 Times: Net artist royalty rate (12% – 3% to producer) = X 9% Gross royalty per CD (9% of $13.48) = $ 1.21 Times 500,000 albums = $ 500,000 SUB TOTAL = $ 605,00 Times: Royalty bearing % (15% o = no royalty) = X 85% Gross Royalty = $ 514,250 Less advances: Recording, promo, music video, tour = $ -350,000 TOTAL ROYALTY TO ARTIST = $ 164,250 – Reserves (35%) returned by retailer) = $ -57,487.50 (1) ACTUAL ROYALTY PAID TO ARTIST = $ 106,762.50

(1)Reserves shall be paid to artist in 2 years if no CDs returned by retailer

Bear in mind the artist still has to pay TAXES! Don’t forget Uncle Sam has to get his cut! Also, don’t forget the Personal Manger, the Attorney, the Accountant, the Agent and other numerous expenses.

However, you will find many other royalties that an artist can acquire. They include, Record Clubs, Compilation CDs, Samplers (low-priced albums in which a couple of artists are featured), Premiums (albums sold with other products, such as cereal), Film Soundtrack Album, Music Video Sales, Greatest Hit’s Album, Foreign Royalties (song played in some foreign country radio stations pay royalties, unlike the US), Master Use License (music used in a movie, television, commercial, the Internet, CD-ROM and DVD), and so on.

Of course because of the Internet, the rules royalties are changing. Many people now buy their music via the Internet. Just think, no packaging required and no distribution to traditional retail stores needed. Some websites allow customers to buy individual songs as oppose to an album. Changes are currently taking place on how royalties are calculated because of the Internet. Many attorneys are pushing to have royalties be based on each song sold as oppose to each album sold. So stay tuned!