ABC’s of the Music Industry

Music is an art, however, when it comes to the music industry Music is about money!

If anyone or any company feels that your music will not make them money, there will be absolutely no interest in your music. That’s it in the nut shell. Remember, to always remember this. The Music Industry is about Money!

There are a few sources of money to be made in the music industry. They include but are not limited to:

· Record sales

· Songs played on the radio

· In movies and television

· Concerts

· Song writing

· Producing

· Merchandising

· Advertising

· CD-ROMs/DVDs

If you are an artist and want to get into the music business, you need 3 very important very good people in your corner batting for you on a daily basis. They include:

· Personal Manager – The most of important of the three. They should have contacts in the music industry, keep on eye on all your affairs, advise you on things to do, help promote your music, producers to hire, who to sign with when to go on tour, etc. The personal manager will receive 15% and 20% of an artists gross earnings and have good contacts with record companies A&R, Marketing / Sales, and Promotion departments.

· Music Attorney – A good attorney specializing in the music will know how to properly negotiate and structure the deals an artist makes. They should have good contacts and be trust worthy. Expect to pay between 100 and 200 per hour for a good music attorney. If an attorney thinks you will get signed, they forego a set fee and charge a percentage of artist’s earnings. In bigger cities, you’ll pay more than in smaller cities.

· Music Agent – Book concerts and special appearances. A Personal Manager will help the artist with selecting a good agent.

If you blow up and start generating the big money, then a good Manager / Accountant will be needed to handle your tax situation, review royalty statements, financing tours, offer invest advice and how to manage your money.

Getting recognized by mailing your demo to record labels isn’t impossible, however, 99.9% of the time your material will not get listened to. Even if you have the best song on the planet, it will not be listened to. Record labels want to limit their liability, so they do not listen to unsolicited music. Record labels don’t want to listen to numerous songs and then be held liable if someone claims their material was copied.

If you do decide to mail your CD to record label, send the “solicited” material. First get a contact, preferably an individual in the Artists & Repertoire (A&R) department. Call and first speak to someone. After sending your CD follow up to determine if the targeted individual received your material and another follow up call to determine if it was listened to. Submit 3 to 6 songs and send a bio and picture of yourself. Again this isn’t the preferred way to submit your material to major record labels.

Until you have music business advisors in your corner trying to promote you and there is a “buzz” going around about you, your demo will not reach the decision makers at the record labels. Record companies on a daily basis receive thousands of unsolicited CDs. Most likely your CD will be tossed into a bin located in a remote room filled with overflowing bins of CDs.

Record labels like to deal with artists who have a history of record sales. These are artist that may have produced and sold their own CDs locally or regionally. Record labels like to deal with artists who have performed their material and there is this “buzz” going on about them. MC Hammer, before he became famous, performed his own materials and sold his own records until a major record label signed him. MC Hammer had a lot of leverage in negotiating a good contract because he already proved on a local basis he could sell records.

Record companies want to limit their liability. If you are signed, you are considered an investment that will require some money and they want to see a premium return on their money invested in you. The more you can prove that you can sell record, the better chance you can get signed.

If you get signed to a record company, you the artist will go into the studio and record songs for the record company. The record company makes copies of the master recording and ships it to a distributor. The distributor is a wholesaler who then sells the CDs to retail outlets like Best Buy, Sam Goody and Tower Records. The record company then pumps money into marketing by advertising and promoting your music with hopes of selling records, thus making you a superstar and becoming rich!

It is not as easy as it sounds. It takes a lot of hard work by a talented group of people. Everyone has to work together to make this happen. There are usually many people behind the scenes working to make an artist a superstar.

Record companies often categorized into 4 groups: · Major label record companies – have the recording and operating resources to complete all function to sell records. Major label record companies are integrated in that they can handle the promotion, sales, marketing, and distribution to sell music. Major label record companies are Arista, Atlantic, Capital, and Sony.

· Major label affiliate labels – have special agreements with the major label record companies, where the major label may fund the smaller labels recording and operating expenses in exchange for a portion of the smaller label profits.

· Independent labels – distributes records through major labels. Independent labels have few employees. They tend to find talent, sign the talent, sees to it the music is recorded and contracts with major record labels to perform the promotion, marketing, and other functions.

· True independent labels – Has no association with a major label and distribute their music through independent distributors.

The A&R (Artists & Repertoire) Department

The A&R department is the talent scout. They are in charge of finding new talents. They are the eyes and ears of the record company. However, not because you get signed to a record label because an A&R representative likes you it doesn’t mean your CD will ever get produced and released. Executives higher in the company could cancel your deal if they feel your CD will not sell. A record company will have to invest several hundred thousands of dollars to release your CD, so they will be extremely cautious on whom they release.

The Marketing and Sales Department

This department is responsible for getting the public excited about your music and first selling to retail stores the idea of carrying your CD. They are responsible for promotional merchandise, advertising your CD, in store displays, publicity, your CD cover, etc.

The Promotions Department

This department is responsible for getting your music played on the radio. The individuals in this department will visit the various radio stations to convince them to play your material. If your material doesn’t get played, no one will now how you are. People will look at your CD in the retail store and wonder who you are. There is also a direct correlation with CD sales vs. how many times a song for that CD gets played on the radio. More air time on the radio equals more CD sales for the record companies.

Remember music is art, but to the record companies, it’s about money. Keep in mind that it’s a business. Keep in mind everyone is out to make money. The minute people believe that you will not make money for them, you will be dropped and these same people will turn to seek other new artists that they believe will make them money. Unfortunately, the record business doesn’t believe in grooming people. If your first CD isn’t a success, you are out. There are rarely second chances. There are always other talented people behind you who what their shot at fame.

Distribution

Most major retailers such as Tower records will not carry a CD unless the record has a distributor. A strong distributor ensures that your CD will be available in enough places so your CD will sell to ultimately make money. Major labels use large distributors who are better able to get record stores stocked. After years of consolidation, there are only 5 major national wholesale distributors in the US who are owned by conglomerates who also own major record labels. They are:

· BMG (distributes Arista, BMG and RCA)

· EMI (distributes Capital and Virg.)

· Sony Music (distributes Columbia, Epic and Sony)

· Universal Music Group (distributes Interscope, Island/Def Jam, and MCA)

· WEA (distributes Atlantic, Elektra and Warner Bros.)