Let's break it down:
- If you're signed to a label, most new acts will have a deal that will give them about 15% of the net sales revenue. Now this isn't as good as it sounds, since the label has a variety of ways to make it seem like they've never made a profit even though your record might've went Gold (500,000 sales), but for now we'll assume they're straight up about everything (which only happens in your dreams).
- In the case of this chart, the band had a deal before and still owes the previous label money. Maybe they can get out of this and maybe they can't. In this chart, it looks like it amounts to about 1 point (percent) of your 15. You're down to 14 points. (I don't know why the agent is on this chart since he only gets paid on gigs, not record sales.)
- The band didn't have any money, so it made a "spec" deal with a studio that really believed in them. Spec means speculation, which means that they agreed to pay the studio probably another 1 point if the album sold. You're down to 13 points.
- The normal producer deal is 3 points, although it may be as high as 4 if the project was on spec. You're now down to 9 points.
- The manager is making 20% of your gross, which means he takes another 3 points, and you're down to 6.
- You didn't have any money to pay an attorney, so he did a contingency deal with you, meaning that he makes 5% of the gross of any deal that he negotiates. 5% of 15% is another .75 of a point. If you also have a business manager that has the same deal, that's another .75 of a point. That means 1.5 points of your remaining 6 and you're down to 4.5.
- That means that if there are 5 people in the band, each one gets .9% of the income from the record.
Still feel good about the music business?
Of course, if you were a songwriter, you made money on mechanical and performance royalties, and the band may have made some money on gigs and merch.
But you're not going to get rich even under the best of circumstances, and they hardly ever happen these days.
That's why the only reason to be in this business is because you love the music. You've got to do it because it's what you live for, and you're willing to make the sacrifice in lifestyle that it will take to pursue the dream. If you're worried about the money, go back to school and get your MBA.
Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.