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4s00th wrote in alt.fan.prettyboy on Thursday 13 August 2009 03:41 in
Message-ID: <ksu685pomlaae9eku26m3h7rhs4uk0br1l@4ax.com>:
> On Sun, 02 Aug 2009 21:11:53 -0400, NP-f31 wrote:
>
>> Dear Kittens and Tungboy,
>>
>> I can see both sides of the issue on this matter. And here is why:
>>
>> First, I absolutely believe in rewarding hard work and talent. I am
>> one of the few people who still buys CDs. If I like an artist, I get
>> all of their CDs, and I go see their concerts. Neil Young alone has
>> almost bankrupted me.
Based on what I understand, concerts are how most artists make their money
these days. Here's an insider's view of the record business:
http://www.salon.com/tech/feature/2000/06/14/love/
Courtney Love does the math
The controversial singer takes on record label profits, Napster and
"sucka VCs."
Editor's note: This is an unedited transcript of Courtney Love's
speech to the Digital Hollywood online entertainment conference,
given in New York on May 16.
By Courtney Love
June 14, 2000 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.
[...]
> However, I resent the hell out of the big record companies getting
> together and conspiring to artificially keep CD prices too high. And
> yes, the US Court of Law found them guilty of doing just that.
Yep, and they don't get even so much as a slap on the wrist.
> It might be a little different if the artists were actually getting a
> reasonable amount of the sales -- but they get pennies per CD, which
> now costs pennies to produce, leaving the record companies to make $15
> pure profit from sales. The companies were ordered to allow the price
> of new CD's to come down to a more natural Supply-Demand type price,
> and yet I never really saw the prices come down.
That's because you're dealing with monopoly profits; rules of the so-called
'free market' do not apply, for the most part. The record companies still
have enough political influence, for example, to have the bankruptcy
legislation changed, to remove filing for bankruptcy as a way out of one-
sided recording contracts.
> Sure, you can get shit CD's for next to nothing, and older CD's for a
> reasonable price -- but then they come along and throw a few bonus tracks
> on an old album and charge you full price to buy it despite the fact that
> you already had the original version!
What else is new? Complaints have even filtered into popular culture--I
remember the scene from one of the "Men in Black" movies, where one of the
main characters is shown a new recording medium, and they complain that,
"I guess I'll have to buy the White Album again."
> I buy Libera CD's. And sometimes I'll buy a used CD. Hell, I even
> ordered the Hard Romantic CD with Liam O'Kane from Japan -- the
> shipping cost more than the CD! And the CD was over $20 US. But I'm
> through letting the record companies screw me.
I can't say that I blame you. The record companies had an opportunity in
the late '90s, when Napster burst on the scene, to take advantage of an
entirely new distribution medium. If they had done so, they could have
maintained control of the market, and enjoyed sustained profits. However,
they didn't, and a few years later, Apple setup their iTunes service.
iTunes has proven so popular that Apple is now in the driver's seat, and is
able to dictate terms to the record companies. The world changed; the
record companies didn't, and now they're paying the price for it.
> -- 4s00th@hushmail.com
Baal <Baal@Usenet.org>
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- --
"Sed quis custodiet ipsos Custodes?" -- "Who will watch the Watchmen?"
-- Juvenal, Satires, VI, 347. circa 128 AD
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