Courtney Love does the math

[Dusty Ayres]

With all the news about ISP's throttling downloading of music, movies, and TV, I thought that it was time to revisit what Courtney Love had to say about downloading music nine years ago;

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.

Courtney Love Does The Math

​

 

[Cky]

What's she going to do about it? Murder our husbands?

<puts pen in mouth, detective style>

 

[Dusty Ayres]

Where did you hear that shit, and why do you believe it? Kurt killed himself, not Courtney. Try addressing the topic of the post, please.

 

[Rii]

Steve Albini offers a more detailed version of the above rant here.

 

[john titor]

Thanks for that article. The music industry really is a big scam (like most of life).

 

[Cky]

Where did you hear that shit, and why do you believe it? Kurt killed himself, not Courtney. Try addressing the topic of the post, please.

I'll believe it when hard evidence comes out.

But on topic, she makes a good point. Where is the incentive for new bands to start if ultimately, they're going to be back in normal jobs within 12-18 months of starting.

 

[Marc]

Where did you hear that shit, and why do you believe it? Kurt killed himself, not Courtney. Try addressing the topic of the post, please.

I'll believe it when hard evidence comes out.

But on topic, she makes a good point. Where is the incentive for new bands to start if ultimately, they're going to be back in normal jobs within 12-18 months of starting.

But these days a new band has an option - the internet and no-one wonder the record companies are scared shitless of it. Advertising and distribution taken out of the record labels hands which is where they control has lain in the past.

There's another point that needs looking at. The record companies give away 1000s of copies to radio stations etc etc which they can claim as an expense. In the media time those copies get out into the wild which can hit sales so while the record company has claimed it's expenses the artist hasn't seen a penny from all those copies.

For all the claims from the RIAA about piracy hurting the artists, with friends like the record companies they don't need enemies.

 

[john titor]

Despite the coolness factor of the internet its doesn't yet rival record company clout, simply because its anarchized topology (if you will) doesn't allow for the approach of having a few radio stations reaching millions all at once.

 

[Marc]

Despite the coolness factor of the internet its doesn't yet rival record company clout, simply because its anarchized topology (if you will) doesn't allow for the approach of having a few radio stations reaching millions all at once.

Sure if you're Britany Spears but how much music is released that gets bumpkiss when it come to promotion?

Unless you're in to mainstream stuff that makes the charts you've got a better chance of hearing about a new release on the internet than you do of seeing it in the general media.

 

[john titor]

That's true to an extent but I still think you need to attract established organizations that have significant reach, regardless of the media. I don't agree with it and I would like to see it change. I was impressed by Courtney Loves article, she seems to have some considerable intellectual depth beyond the primadonna antics.

 

[Marc]

That's true to an extent but I still think you need to attract established organizations that have significant reach, regardless of the media. I don't agree with it and I would like to see it change. I was impressed by Courtney Loves article, she seems to have some considerable intellectual depth beyond the primadonna antics.

So I wasn't the only one who thought she was remarkably succinct given her reputation.

still maintain you can have the organization and they don't give a toss. Rick Wakeman has never been overly mainstream but has a loyal following around the world. Anyway he released a follow up to his 1974 album Journey To The Centre of the Earth a few years back. Despite it being on big label (EMI Classics iirc) they didn't both with a release anywhere in South America. The album was pirated and it sold over 250,000 copies. Okay it's not Madonna sales volumes but still would of been some extra earnings for Rick and Emi. The label's response when the matter was raised? didn't give a toss.

The last time I saw Tangerine Dream mentioned in the a record review (let alone anything else) was 21 years ago and they've release 20 albums since then.

Mike Oldfield got coverage in 1993 with TBII.

Steeleye Span? forget it.

Only reason I know they still release is from the Internet.

 

[Dusty Ayres]

Thanks for that article. The music industry really is a big scam (like most of life).

You're welcome, I aim to please.

There's another point that needs looking at. The record companies give away 1000s of copies to radio stations etc etc which they can claim as an expense. In the media time those copies get out into the wild which can hit sales so while the record company has claimed it's expenses the artist hasn't seen a penny from all those copies.

Exactly the opinion of Billy Bragg's made many years ago when he was talking about the so-called negative effects of downloading on the music industry.

That's true to an extent but I still think you need to attract established organizations that have significant reach, regardless of the media. I don't agree with it and I would like to see it change. I was impressed by Courtney Loves article, she seems to have some considerable intellectual depth beyond the primadonna antics.

Nice to see that someone can look beyond her substance abuse issues.

So I wasn't the only one who thought she was remarkably succinct given her reputation.

Still maintain you can have the organization and they don't give a toss. Rick Wakeman has never been overly mainstream but has a loyal following around the world. Anyway he released a follow up to his 1974 album Journey To The Center of the Earth a few years back. Despite it being on big label (EMI Classics iirc) they didn't both with a release anywhere in South America. The album was pirated and it sold over 250,000 copies. Okay it's not Madonna sales volumes but still would of been some extra earnings for Rick and EMI. The label's response when the matter was raised? Didn't give a toss.

That's the way The Big Four are now these days, and that's probably why, for example Paul McCartney left after 40 years with EMI, who he once referred to as 'being like the Beeb' (BBC)

The last time I saw Tangerine Dream mentioned in the a record review (let alone anything else) was 21 years ago and they've release 20 albums since then.

Mike Oldfield got coverage in 1993 with TBII.

Steeleye Span? Forget it.

Only reason I know they still release is from the Internet.

Mostly because radio (in North America) doesn't give a toss, either these days; too much ownership of most stations by conglomerates like Clear Channel, Infinity Broadcasting, etc., who force out the DJ's that had an ear to the ground and replace the old format with a cookie-cutter format agreed upon by media consulting firms. It also hurts new artists who are just like Tangerine Dream, Mike Oldfield, and Steeleye Span.

 

[Alidar Jarok]

I'm not a Courtney Love fan, but she has very good points here. It's pretty much clear that bands make their money through touring, not record sales and, unless you are a major band, you're not going to be successful at this (but at least you hopefully get to have fun).

 

[Aragorn]

At first glance, I thought this said "Courtney Love does the meth."

 

[Marc]

I'm not a Courtney Love fan, but she has very good points here. It's pretty much clear that bands make their money through touring, not record sales and, unless you are a major band, you're not going to be successful at this (but at least you hopefully get to have fun).

Though there's no guarentee of the band making a profit on tour

Emerson Lake and Palmer lost a shitload on their U.S tour in the mid 70s (then again you look at the what they toured with...).

And the story goes that Rick Wright was the only member of Pink Floyd who made any money on The Wall tour in 1982. Waters had fired him as a band member but he went as musician so got paid even though the tour lost money.

 

[Star Wolf]

Where did you hear that shit, and why do you believe it? Kurt killed himself, not Courtney. Try addressing the topic of the post, please.

I'll believe it when hard evidence comes out.

But on topic, she makes a good point. Where is the incentive for new bands to start if ultimately, they're going to be back in normal jobs within 12-18 months of starting.

Back when I was in my high school band, and we were not the stars like the band in Drumline or the cheerleaders in Bring it On, we had groupies. The fun and joy of playing is the reward. forming a band with the thought that you will make that superstar status or the thought of anything more then having occasional paying jobs and maybe teaching someones child so that they can show a fully rounded education to college acceptance boards is no different then all the boys playing basketball right now who are sure they will be a NBA lottery pick when they finish high school.

 

[Level 2 Diagnostic]

I have no real sympathy for bands who get all their royalties taken away by record companies. If a steady paycheck is all they're after, then they should become accountants. I'm sure accountants get paid a lot more on average than wannabe rock stars.

The love of the music should be all the incentive people need to create music. Becoming a rock star has always been a dicey proposition. The music buying public is fickle and always has been. Even back in the '60s and '70s, how many bands singing record contracts actually had any major chart success?

The odds of success in the music business have become worse, but only in the sense that 1:10,000,000 odds are worse than 1:1,000,000 odds.

If the record industry is becoming unprofitable, bands should do what lots of musicians do: make music for friends and family while working a job that gives a steady paycheck. Oh, you can't make a million dollars for doing something you love? Boo-frickin'-hoo, welcome to the real world.

 

[Jayson]

At first glance, I thought this said "Courtney Love does the meth."

She proably did that when she was done doing the math.

Jason

 

[Australis]

Thought for today: why can't there be a record company that makes a modest profit? Granted, one of the requirements would be that their acts at least do reasonable business, or doesn't tank. That's the thing - they takes risks with acts that break up or produce crap, and that's where the profits go. But from those acts spring others, new bands or solo artists, that do turn a dollar, and are therefore an investment. So they have to have money to invest. I dunno, it's a two edged sword - no new bands without big profits from establishing/estblished bands. And it would be a little hypocritical of those acts that are turning a doillar not allowing new acts to get the break they had.

--Australis, downer specialist.

 

[TheBrew]

I have no real sympathy for bands who get all their royalties taken away by record companies. If a steady paycheck is all they're after, then they should become accountants. I'm sure accountants get paid a lot more on average than wannabe rock stars.

The love of the music should be all the incentive people need to create music. Becoming a rock star has always been a dicey proposition. The music buying public is fickle and always has been. Even back in the '60s and '70s, how many bands singing record contracts actually had any major chart success?

The odds of success in the music business have become worse, but only in the sense that 1:10,000,000 odds are worse than 1:1,000,000 odds.

If the record industry is becoming unprofitable, bands should do what lots of musicians do: make music for friends and family while working a job that gives a steady paycheck. Oh, you can't make a million dollars for doing something you love? Boo-frickin'-hoo, welcome to the real world.

Yes, they should be doing it for the love of music, but if a band makes it big, don't they deserve to profit from it instead of the pencil-pushers from the recording industry?