Nirvana's Original Contract

Here's a great piece of music history. It's part of the original recording agreement between Nirvana and the indie label Sub Pop. There are a number of interesting things here if you take the time to read it:

1. There are 4 people on the agreement, and drummer Dave Grohl isn't one of them, since he didn't join the band until a year after the deal was signed. Jason Everman had originally paid for the sessions for the band's first album Bleach (a grand total of $606.17), and was kindly included on the deal.

2. The deal is only for one year with two option years, which is pretty short when compared to a major label deal, who usually try to hold onto an artist for at least 5 to 7 years.

3. The advance for the first year was $600! The first option year was $12,000 and the the second was $24,000. The option year advances turned out to be blessing and a curse. Bleach sold about 40,000 copies the first year (a pretty good amount for an indie), but Kurt Cobain was dissatisfied with Sub Pop's promotion of the album and wanted off the label. The advance amount for the second year was too much for most indie labels to absorb, so they were forced to look for a larger record label, which turned out to be David Geffen's DGC, a label that was distributed by Warner Bros at the time.

The rest, as they say, was history, as the band's second album Nevermind blew up and sold 25 million.

----------------------------------

Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

Follow me on Forbes for some insights on the new music business.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

So You Want A Label Contract

Here's a great article recently posted by Apryl Peredo on Music Think Tank that's worth reading. I don't agree with everything in the article because there are exceptions, but it's pretty much on the money for the most part.

Artist's and bands that have just recently formed sometimes get the feeling that they're the next best things to sliced bread, and maybe they are, but the "recently formed" can be a stop sign for many many labels. Apryl talked to a number of label execs and here's what she found.
-------------------------

"So, what do label reps have to say when it comes to considering a band/musician? Here are some of their informational nuggets:

1. We don’t sign “newly formed” bands.

Labels do not want to sign a band that just formed last week, last month, or even six months ago. Labels want to know that the band has been together long enough to have developed a good working relationship. The members can handle internal problems on their own. They have learned each others’ quirks and know how to write music together. Time together gives the label some intangible evidence that the band isn’t going to break up right after signing and receiving a possible advance.

Check a band’s bio: you will usually see that the band was together for 5-7 years prior to being signed. The few times a band is signed after only 1-2 years together, most

times the members were “together” longer than that as they were school or university class mates.

2. We don’t sign undeveloped bands.

Ah, the innocence of a newly formed band! “We just need to get signed and then we can start making great music!” or “When we get signed, then we can play some cool gigs/live shows.”

If you do not already have great (“greatness” evaluation is subjective, of course) music written, you won’t get signed. Labels no longer have a huge development budget, and cannot afford to sign the garage band they heard practicing last Saturday, with the idea that they can be developed after signing. To get signed, you need to have at least 10 well-written original songs, already in your band’s catalog. You need to have gotten your “live performance chops” from performing at every bar, festival, event, and house party that will let you play. The label hasn’t the time, desire, or money to sign you and then wait for you to learn.

3. We don’t sign unknown bands.

What counts as “known” depends a bit on size of the label. A major label may want to see that your band can draw at least 200 people to your shows, on a regular basis. They may want to see that you have self-sold 10,000 units in the past 18 months. Perhaps they want to see that you were able to get enough fan votes to get yourself on a major “indie artist” stage at SXSW. Possibly they want to see that your streaming music sites are getting 500 plays a week.

A sub-label or independent label may feel that you are “known” if you can regularly draw 40 people to your shows, self-sell 500 units in a year, you got good write-ups the past 3 years running for your excellent performances at the state fair, and you average 15 new fans each week on your reverbnation profile.

4. (a) We don’t sign people/bands we meet at parties.

One executive stated, “When I’m at a social function, I’m at a social function. Don’t come up to me and tell me you’re in a band and try to give me your demo. I might take it to be polite, but your band’s name will be noted, and the demo will go in the trash can. Submit your demo the right way.”

4. (b) We don’t sign based on oral “favors.”

Ah, it must have been great to live in the 1960s-1985! Pretty girl with a certain skill – recording contract!! Sorry, no more – there is no unlimited budget for signing and maintaining artists. Labels have to sign based on music quality or the perceived saleability of that music, not on “favors.”

Actually, I was rather surprised that this was even mentioned, but girls still try to gain meetings, demo reviews, and signings based on sexual favors. The two reps who brought this topic up said that 85% of the “executives” who accept such a favor are not even in a position to make a signing choice."

Remember that it takes time for any artist to get their act together, and in most circumstances, labels respect an artist that takes the time. Putting in your 10,000 hours really does make a difference. Read the entire article here.

----------------------------------

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for daily discussion of music, recording, and production tips and tricks.

Sell A Million, Make Zilch - Part 3

I've been giving examples of how recording contracts are stacked against you in recent weeks (other articles here and here), and here's yet another good example that comes from none other than Courtney Love. Like her or her music or not, in this Salon rant she is extremely cogent and describes what happened after her very brief flash of music stardom. Oh, and by the way, it's from 2000, but the basic premise still holds today.
----------------------

"Today I want to talk about piracy and music. What is piracy? Piracy is the act of stealing an artist's work without any intention of paying for it. I'm not talking about Napster-type software.
I'm talking about major label recording contracts.

I want to start with a story about rock bands and record companies, and do some recording-contract math:
This story is about a bidding-war band that gets a huge deal with a 20 percent royalty rate and a million-dollar advance. (No bidding-war band ever got a 20 percent royalty, but whatever.) This is my "funny" math based on some reality and I just want to qualify it by saying I'm positive it's better math than what Edgar Bronfman Jr. [the president and CEO of Seagram, which owns Polygram] would provide.

What happens to that million dollars?

They spend half a million to record their album. That leaves the band with $500,000. They pay $100,000 to their manager for 20 percent commission. They pay $25,000 each to their lawyer and business manager.

That leaves $350,000 for the four band members to split. After $170,000 in taxes, there's $180,000 left. That comes out to $45,000 per person.

That's $45,000 to live on for a year until the record gets released.

The record is a big hit and sells a million copies. (How a bidding-war band sells a million copies of its debut record is another rant entirely, but it's based on any basic civics-class knowledge that any of us have about cartels. Put simply, the antitrust laws in this country are basically a joke, protecting us just enough to not have to re-name our park service the Phillip Morris National Park Service.)

So, this band releases two singles and makes two videos. The two videos cost a million dollars to make and 50 percent of the video production costs are recouped out of the band's royalties.

The band gets $200,000 in tour support, which is 100 percent recoupable.

The record company spends $300,000 on independent radio promotion. You have to pay independent promotion to get your song on the radio; independent promotion is a system where the record companies use middlemen so they can pretend not to know that radio stations -- the unified broadcast system -- are getting paid to play their records.

All of those independent promotion costs are charged to the band.

Since the original million-dollar advance is also recoupable, the band owes $2 million to the record company.

If all of the million records are sold at full price with no discounts or record clubs, the band earns $2 million in royalties, since their 20 percent royalty works out to $2 a record.

Two million dollars in royalties minus $2 million in recoupable expenses equals ... zero!

How much does the record company make?
They grossed $11 million.

It costs $500,000 to manufacture the CDs and they advanced the band $1 million. Plus there were $1 million in video costs, $300,000 in radio promotion and $200,000 in tour support.
The company also paid $750,000 in music publishing royalties.

They spent $2.2 million on marketing. That's mostly retail advertising, but marketing also pays for those huge posters of Marilyn Manson in Times Square and the street scouts who drive around in vans handing out black Korn T-shirts and backwards baseball caps. Not to mention trips to Scores and cash for tips for all and sundry.

Add it up and the record company has spent about $4.4 million.
So their profit is $6.6 million; the band may as well be working at a 7-Eleven.

Of course, they had fun. Hearing yourself on the radio, selling records, getting new fans and being on TV is great, but now the band doesn't have enough money to pay the rent and nobody has any credit.

Worst of all, after all this, the band owns none of its work ... they can pay the mortgage forever but they'll never own the house. Like I said: Sharecropping. Our media says, "Boo hoo, poor pop stars, they had a nice ride. Fuck them for speaking up"; but I say this dialogue is imperative. And cynical media people, who are more fascinated with celebrity than most celebrities, need to reacquaint themselves with their value systems.

When you look at the legal line on a CD, it says copyright 1976 Atlantic Records or copyright 1996 RCA Records. When you look at a book, though, it'll say something like copyright 1999 Susan Faludi, or David Foster Wallace. Authors own their books and license them to publishers. When the contract runs out, writers gets their books back. But record companies own our copyrights forever.

The system's set up so almost nobody gets paid."

There's more to the article. Read it in its entirety here.

----------------------------------

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for daily discussion of music, recording, and production tips and tricks.