Independence for Bands: 101 Part 1

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Article written by Rich Huxley and originally published on his blog. Rich is an independent musician, member of Hope and Social (nee Four Day Hombre), a blogger, a music industry consultant, a mentor and coach, a prolific proponent of social media, a recording engineer, an enthusiast for the “honesty box”/pay what you want model, a guitarist for hire, a mix engineer, a founder of Alamo Music – the UK’s first fan-owned record label, a producer and a generally over-excitable English chap.

“Want a record contract?” No, not really.

The good old rock ‘n’ roll myth of the perfect record deal is dead.

9 out of 10 (major label) albums cost more to produce than they make.

Of all acts signed in 2007, 70% didn’t have their album released.

The point at which an artist has many fans and is proving profitable is when labels show interest in signing an artist, and is exactly the point when an artist doesn’t need a record label.

Traditional record deals, as outlined below by Chris Healings, break down to around 15% to the artist, 85% label (there are even more aggressive and all encompassing 360 Deals). Assuming a dealer price of £5 per album, that means that for every record you sell, your band gets £0.75, the label takes £4.25. With your 75P per album, you have to pay the record label for every recoupable expense ever levied against you:

The money the label gave you to live off – The money spent recording your album (and if  for example Sony were to put you in a Sony studio, this money just moves from one arm of Sony to another) – Advertising – PR – Plugging – The limo that picked you up for the awards ceremony that it was good to be seen at – The cost of the video – Artwork costs – The train/taxi/plane fare for the conference that your A&R man had to go to to promote your record – the money loaned to you to live off whilst on tour.

So, say on record one, the label spends a meagre £100,000 on making and promoting your record (nowhere near enough to fund say a major TV campaign for example), that means that before you see a penny from record sales, you have to sell more than 133,000 albums; a massive total, especially for an emerging band. During this time, the label has taken the full £5 per unit, so at the point your band breaks even, your record has generated £650,000 of income for your label, and over £1/2 million pounds net profit.

The artists I happen upon who are happy with their financial deal are almost exclusively those who are independent, have their own label, connect directly with fans and just want to make new fans. How? We’ll get onto that. There’s never been a better time to be an independent artist, but for now, let’s deal with why your shouldn’t sign a 15/85 split label deal.

At the recent UnConvention Swansea, session two of day one was “Don’t Throw The Baby Out With The Bathwater.” Made up of professionals from the independent and traditional sectors, panel two was supposed to show what it is that the old school do that’s worth keeping, what works and how to apply that to today’s music industry. Fascinatingly (and in alarmingly car crash, it’s not how the panel played out. Even supposed proponents, with major label deals behind them, bemoaned their own deal, their own label and the rewards:

“We’ve never made any money on the sale of a record, ever”,

“They’re not the best label” and

“A million pound  deal which is an absolute load of bollocks. It’s probably the amount of money that the whole record company spent on themselves” – Chris Healings of Hybrid

I wonder if their label knows.

Even the most successfully exposed international superstars, with millions of album sales, say that they aren’t making money from record sales. It can’t be because they’re not selling enough records. If my band had sold half a million records since we formed our label, it’d have made a return of millions.

For me, the unanswered questions remained: How do record deals benefit the artist? “ How many artists do you know personally who have a record deal that they’re happy with?”

The notion of the ideal record contract may still be living in the minds of some, but there’s little evidence of it existing outside of the minds of artists who don’t have a deal.  There is however a growing, and strong community who believe, as I do, that there’s never been a better time to be an independent musician. Today, musicians have the best opportunity ever to connect with and build their own fan base, to be artists making the music they want to make, and to make making music a viable part of their life. I’ll be moving onto that in Independence for Bands: 101 Pt. 2.

4 thoughts on “Independence for Bands: 101 Part 1

  1. 2008 had 115,000 albums released and only a few hundred made the big money….

    Been reading your stuff, MusicThinkTank and a few others [there are very little out there] and only just realised it was you Rich and that’s after about reading this site for 5 months.

    Am doing my final year project on self managing bands, interactive website and your posts are always a great insight in to the ins and outs.

    All i ever get is “do you think you will get signed” and many other sentences along them lines. The fact is, i DON’T want to be signed…

    I’ll chuck you a link to my project in a few months which i hope has some things missed out on all the resources for independant/self managing bands.

    My sister is Claire by the way, that’s why i find this rather funny :]

    Keep it up! and thanks.

  2. Hey Hux,

    That’s good information to share about record label contracts, especially for musicians who are just beginning to want to market their music and need to be told about the truth of contracts with labels. I take it that you are writing this from personal experience?

    My question is: you point out that most artists who have successful contracts with major labels don’t make any money from *record sales*. I think this is the most important point in the post, and also the basis for the whole “saving the music industry” argument that is going on right now. It’s interesting that you pointed it out, but a question pops into my head: from what then, do these artists get their income from, if not from their multi-platinum selling records? Touring? Endorsing? Merchandise? Would you have an estimation of the percentages from these income venues that constitute their entire income? Just an estimation would be nice.

    Thanks for the insights and ideas. Hope Hope and Social get even more funky!

    Cheers,

  3. Great article! I’ve always assumed that I’d never be picked up by a label, and never had any interest anyway, but this is the nail in the coffin…

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