Sara answers a question from her Yahoo chat group…and here’s the answer!
Effects of MP3s on recording profits
Posted by: “elizabeth.markoff”
Wed Oct 7, 2009 4:25 pm (PDT)
Fellow Pumpkin Heads-
I’m curious to see if anybody knows what the effects of MP3s have been on overall recording profits. Judging from the ease by which they can be
copied, I have a feeling Sara and others must be aching terribly unless some savvy lawyers are helping them out. Anybody care to opine? EM
Good question for this group….and thank you for thinking to ask it!
I’m happy to answer it, and if it sparks more questions or dialogue, hooray! because it
sure has been quiet in here for a lo-o-o-ong time. Mostly my bad, I suppose, because I guess
I need to instigate more enthusiasm, but if others (cough cough) wanted to follow Elizabeth’s lead and ask ANY sort of questions
related to the music industry, production, art/publicity/marketing, distribution, etc…or even about creating music or cds, in general,
just pop that question in here and VOILA! I’ll respond.
So, back to the question at hand. Yes, MP3s have had a shift in how I, an artist, receive royalties.
BUT LET’S START AT THE BEGINNING: A PRIMER IN THE MUSIC INDUSTRY
You see, in the OLD days, a record was made, and the artist had to pay back on the costs of that creation
(everything of the recording costs :musicians, engineers, studio, producer, AMPEX tape, mastering, replication,
artwork, publicity, promotional items (posters, inserts, tabletops…) any travel/hotel expenses if the artist was flown
to NY or LA, and, of course, tour expenses). Let’s say an album cost $100,000 to make, all inclusive of above
(which, ha ha, seldom happened on a MAJOR label), then you would think the artist could pay that back out of
selling the cd at $15—or by selling roughly 6,666 albums. Then, anything over that would be 50/50, right?
Wrong. A typical artist (not Madonna or U2, who’s lawyers bargain higher points/rates on return for the artists),
but the typical artist might make .82 per sale of cd, and THAT is where the recouping of costs would be derived from.
So, say you went to a store, and bought my album “Shortstop” when it first came out (1990), you would have paid $15,
the store itself made $2-3, the distributor (WEA=Warner/Elektra/Atlantic) made $2-3, and then Elektra made the rest
(about $8.91) . I would get the .82 cents.
I had to pay back the full $100,000 out of .82, so, I would have had to sell 1, 219,512 cds BEFORE I saw MY first .082.
And since “Shortstop” cost over $300,000 to make, and I sold approximately 60-75,000 cds, I have NEVER made a dime off that cd. Nor will I ever.
However, Elektra would have made, on the low end of the scale selling 60,000, they would have made at least $534,600,
so they at least made their money back , plus a profit, plus they own the master recording in perpetuity, so say someone
wants to use a song from the cd for tv/film, they go through Elektra, and license through them.
Also, at that same time, I did a publishing deal with MCA, then a huge, respected company, for the songs on
“Equal Scary People” and “Shortstop”. I got what was called an advance (a lump sum of money), and then MCA was to
push those songs as part of their catalogue…to film and tv. (MCA is now called Universal, by the way.)
So, I don’t own the master to “Shortstop”, nor do I own those songs. I will always own the copyright, but I co-own
the publishing with MCA/Universal. This means when a song was in a movie, it was licensed through MCA/Universal,
as well. And until I paid down the advance, I didn’t see any money. Do I still owe on the advance? Yes.
Will I ever own these songs outright? Not likely, unless I can someday pay down what I owe, and then
ask/negotiate to buy my catalogue of songs back.
HOW DO I MAKE MONEY, THEN?
Well, used to be, I could buy “Shortstop” at $7 a pop, and then sell it at my shows,
and keep the $8 profit I made off of it. If I bought 100 cds, you see, I was $700 in the hole,
but I would make $1500 after selling them, so an $800 profit to support myself.
Although Universal owns the publishing on my first two cds (and a few other songs because
when I was making demos in the MCA studios, which they offered for free!, it was later I found
out anything recorded in that studio became instant property of MCA. So, “False Pretenses” and “Joy”
are two of those examples. I don’t own those songs, either)….I do, as I said, still own the copyright as the songwriter….
So, when my songs are played on the radio/on TV/used in films, dependent on whether I own them or not,
I get paid varying rates. If you hear “I Couldn’t Help Myself” in the grocery store, money goes to Universal, but I still
get paid a percentage of that play. If you hear “Pursuit of Happiness” in MUZAK form (instrumental) in the elevator,
I get paid 100%, both as the songwriter AND the publisher because I own that song completely.
As for cable/satellite music of mine you hear, that has been a battle that BMI/ASCAP (collection agencies for
songwriters/independent publishers) have been going through with Congress to get these companies to
compensate creators a higher percentage.
For example, if you hear “Radiation Man” on satellite radio, sometimes I see on my BMI statement, 128 plays,
but I get paid .03!!! Other times, I might make $2.40. There is probably some related logic to this, but whatever it is,
it was created by a lobbyist for satellite radio, I can guarantee you.
Lately, some of my songs have started being paid for use on JetBlue, AirTran, Frontier and ExpressJet airlines.
That’s exciting! However, let’s look at Frontier. On my royalty statement for 1rst quarter 2009, “Radiation Man”
was played 64 times, and I received $1.14.
From this same time period, “Bowl Full of Stars” (which I own completely and was never approached by MUZAK
for permission to cover, but, hey, I’m not complaining), 3698 plays of the song resulted in $19.72.
As for downloads….which was your original question, it seems there are two sources to discuss.
not downloading the song to keep, but to hear, as on digital audio services….so, for example, again,
“Radiation Man” was played 175 on XM Satellite Radio (most likely XM Kids) and I was paid $96.70.
But…wait! On Sirius, this is wierd…”Radiation Man” was played 128 times, and I made $190.97!!!
So, you see, there is no consistency, nor control as an artist/publisher, to what I am getting paid per these things…
iTunes and all the other sources where you download my song to keep, and many people then rip to
share with friends (which means I don’t get paid at all). Well, that is a detailed and odd world. If you pay
.99 to download one of my songs, again, if I don’t own it, I’m making very, very little on it
(as the songwriter, none if little for the publishing)….If I own it AND the publishing, you’d think
I’d make something….like, oh, I don’t know, 85 cents a song? No, I think after all is said and done,
I might make .30 a song. It’s all very nebulous, and those checks come from the connextion, which
oversees my digital distribution….so, after, let’s say iTunes takes their cut, and then the connextion takes their cut,
i get my monthly check (which I appreciate the connextion doing), and there’s the mulah. I have to go
online and read out all the info pertained to the breakdown of that check because there is no
longer any paperwork attached.
Also, and I forgot to mention this, but if I co-write, then I get 1/2 of a song. If I write a song
with someone and THEY have a publishing deal, then I get 1/2, they get 1/2 of their 1/2 because
1/2 of their 1/2 is going to their publisher. It all becomes very tricky.
Am I am fan of digital downloads? No. Why? Well, looking at “Comfort’s Sigh” and seeing hundreds
of downloads of that song and making .40 cents (in TOTAL) makes me, certainly, disillusioned.
You see, I make a living off of what I do. I bring home my family’s paycheck via:
Sale of cds/dvds at shows
Sale of my merch via my website
Sale of my merch via other websites (Amazon.com, cdbaby, etc)
Sale of my merch at mom & pop stores (Waterloo records, children’s specialty shops)
Now, someone like Amazon.com only pays, say, $7.65 per cd. Mom and pop shops pay a much
higher percentage. Land of Nod pays $8. One of the distributors I use only pays 5.98 per cd.
If you were still able to buy my cds in Barnes and Noble, if it was through WEA, it would take
upwards to a year to see a check. If I was in Barnes & Noble via an independent distributor, I’d make 5.98.
I have to negotiate with all sorts of different vendors for all sorts of different avenues. Sometimes,
like Tower Records, they go out of business, and if I can’t get my cds back before the doors are locked,
I lose all those cds, thus possible income I could have had, selling those cds from the stage,
where at least I make 100% of that sale.
WHO REPLICATES WHAT?
Here’s a breakdown for you of how a few cds were created and paid for:
Equal Scary People: I don’t own the songs completely, as discussed earlier,
but, fortunately, I do OWN the master. My manager from 1989-1995, Kevin Wommack,
was smart enough to license that cd to Elektra (now defunct, by the way). This means I own it,
not Elektra. ESP started as independently released by me in 1988 on vinyl, (which I paid for with
the help of five friends and ended up costing about $5600 to create!) then licensed to Elektra and my
friends got paid back IN FULL right away—very satisfying feeling, I must say!—
(on vinyl and cd for the first time and as a new industry, which they paid to replicate), then
when the license was up with them, it came back to me and I licensed it to Discovery (for five years),
also in the WEA network, so same distribution, which was nice since I already knew all the folks
(who were all very nice, by the way). After that license was up, ESP, again, came back to me,
and now I am in charge of paying for and keeping up with replication/distribution.
Newborn/Toddler/Big Kid….I own the songs 100% (that I wrote on each) and I own the masters 100%.
I paid for all the production costs (engineering, musicians, studio time, mastering) and we did the
artwork (Stingray, our little company of 5), so that saved money there. I pay for all the replication
and try to stay on top of gathering/accounting for funds. If I run out of a title, I put it on my credit
card to create another run, resend licenses out to the songwriters/publishers of the songs I licensed,
and sell them to the general public in hopes of repaying myself and making a profit.
Motherlode—This was paid for by 7 different people—The Hudsons, The Stewarts, Gene Cowan,
Judy Wisch and myself. I went into a joint venture, maintaining full ownership of the masters, with
a group in California to get distribution through Fontana/Universal, a large independent group,
but the people in charge of handling the deal did not follow through on their end of the bargain,
and thus, MOTHERLODE stagnated, although I had paid for independent PR, and, thankfully, she did
an excellent job and MOTHERLODE received a huge response of positive, glowing reviews around the
country in print/magazines. However, with little or no tour support, and already in the hole,
I did my best to go out and tour and take care of my family while paying down what my friends
had generously invested in helping to create. These friends have been ANGELS, who believe in MOTHERLODE,
who loved all aspects of it, and who have been incredibly patient as I fought a legal battle with said company
in Los Angeles, which resulted in eventual parting of ways and my buying the remainder of my MOTHERLODE
cds back from them for $500.
So, anyway, there you have it. It’s not an easy job. You can see why someone like Lucinda Williams
might take 6 years between making cds, and she has management/PR/booking/label to run all this
for her. She just has to mull over creating new material.
I am doing the job of all these folks AND mulling over creating music.
You may ask yourself: why don’t you get a manager?
Managers = 15-20%
Booking agents = 15%
Labels = no ownership, co-ownership or licensing and a lot of
headache because they want to control EVERYTHING. My best experience was
with Shanachie, who allowed me the opportunities to create “Spiritual Appliances”
and “Two Kinds of Laughter” as I saw fit. I now OWN those two masters because I was
able to buy them back from the label.
So, thanks to Charlie Dahan for helping to negotiate that deal.
Publishing—my experience is you might get money up front, but unless you
are a Lady Gaga and the hottest thing on the planet, your catalogue sits and
languishes in vaults without someone pushing it to tv/film. That’s why networking is so important.
PR—I hire PR on independent basis’. It can cost about $1500 a month/three month
minimum + for really good ones.
Independent Radio promoters (these are folks that call radio programmers
and hassle them to play my latest release)—They cost about the same as PR.
So, you see, unless I am touring non-stop, or have some magical thing happen virally
(i.e., a video I create takes off, which, as you know, is no money there, but good free PR),
making money as a musician is a continual, daily checklist, and with the digital
world overtaking product (hard) sales, it is getting more and more convoluted to keep up with it all.
I hope this music lesson has been interesting and enlightening, and exposes you
to the reason you may come to a show and think, “Why doesn’t she have
18 billion new songs to sing for me?” Well, don’t think I’m not writing.
It’s just with a family to play with/care for/grow with, and travel, and trying to
keep up with getting paid, I don’t always have time to practice and really absorb new songs.
That takes time and space and the ability to stretch and grow, and like my song says,
I don’t have a room of my own….one of these days I will, and there I shall paint and
practice new material, and blow your minds with the outcome.
Until then, I thank you for your continued compassion, understanding and
purchase of my cds through my website, at a mom & pop shoppe, or at my live shows
because you can be assured that money goes towards my family, my dream, and creates a happy heart.
Texas Parent 2 Parent….