How does the music industry work?

[SiGh]

How does it actually work? I'm curious and obviously a noob to it.

Take example when 50 Cent got signed, he said it was for $1 million. Is that his money? Who's gives him that money, whats it for? For keeps and ish, or is that the budget to work on his album from producers and guest appearances? If that's his money, how much does he get per album? radio play? and etc. What is like an example if nobody knows.

Who sets the budget on the album for production and guest appearances? Who pays for the promotion? The videos? They get paid for every radio interview/tv show (ie: 106 & Park) and ish they do?

Like how does the artist actually make the money? We got a few artists up on this forum--signed/unsigned--so if they could drop knowledge and ish, it'd be dope.

 

[Confucius87]

Take example when 50 Cent got signed, he said it was for $1 million. Is that his money? Who's gives him that money, whats it for? For keeps and ish, or is that the budget to work on his album from producers and guest appearances?

That was a advance, I believe. If I'm not mistaken, a advance is a amount of money that's given to a artist to cover living expenses before their album comes out. The label he is signed to would be the one who would give him the money. The budget is the amount of money the label gives you for recording costs - producers, studio time, guest appearances, etc. I think it's the advance that you have 2 pay back.

Who sets the budget on the album for production and guest appearances? Who pays for the promotion? The videos? They get paid for every radio interview/tv show (ie: 106 & Park) and ish they do?

The label sets the budget on the album and they also pay for promotion and videos. But as of recent years, people like Juelz Santana and Kanye West have been coming out of their own pocket to finance their videos. I'm quite sure they get paid for all public appearances, unless the artist volunteers his/her time.

Like how does the artist actually make the money?

The artist makes their money off of record sales and tour shows. For example, I think Camron gets $8 a album sale. So for every album he sales, he makes $8. People on a major record label don't usually get that much, but Cam is on Koch. As far as the tour money, the bigger a artist is, the more he/she makes on tour. And of course, artists also make money through ringtones, endorsements, shit like that.

Hope it helps.

 

[ARon]

Dont everyone think artists make $8 an album please. A lot of artists, the ones who get no shine make hardly anything.

Also on Koch it is a 50/50 thing so $8 is about right.

 

[PuffnScruff]

record labels, the major ones, don't pay for anything. all that studio time, advance money, all that shit gets paid by the artists usually. when an artist gets thrown record release party or whatever and the label throws it, the artist usually pays for that too. limo rides, bar tab, food, everything. they get an invoice and the majors take it out of their album sales.

 

[Casey]

Nobody makes jack shit from CD sales anymore, unless you hit platinum. The vast majority of my income comes from touring and royalties (i love those fucking royalty cheques, woo).

Touring is where the money's at though, for sure.

 

[Pittsey]

Quick Roundup....

An artist gets an advance... Which has to be paid back... But a Million advance is good in a way, as the record company will work harder to promote the artist and his album to recoup the money.

Every single little payment made by the label is recorded though. Including the expensive dinner to take out the head of the distribution company. And it all gets charged back to the artist... (This is called "Getting well and truely butt fucked" - Industry term)

The artist negotiates to keep a percentage of his royalties (if he has a brain) and the album is created. The artist is obviously charged for any studio time and for every person on the payroll during the recording process.

The album is promoted... Charged again....

Album is sold. Artist gets small, small percentage of each units sale. Label gets a small, but larger percentage. Distributor takes a percentage. Retail outlet takes a larger percentage.

Artist pays back advance... Also usually paying for rented Car/house/jewellery.... Etc....

Artist pays bills for promo and album creation.

Artist is still broke, but went platinum.

Artist goes touring and cashes in on merchandise. Most labels have large cut of profits as negotiated into contract before advance was paid.

Artist is getting a little money.

Artist works on second album, as tied into 3 album deal.



^^^ Very, very basic and not the same for every artist. Would be nice if the un-named artist Ruk has lined up for StreetHop would write on this in his blog.... From his experiences....



Also to speak on Cam'ron.... Koch is a distributor... So they take only that cut... He has to promote and pay album creation costs himself....

And in all actuallity another label probably pays all promotion and creation costs and bill him. So he isn't really getting $8.

 

[Casey]

Quick Roundup....

An artist gets an advance... Which has to be paid back... But a Million advance is good in a way, as the record company will work harder to promote the artist and his album to recoup the money.

There is such a thing as a non-refundable advance. I wouldn't sign a contract if the advance wasn't non-refundable. Most noob artists are so quick to wanna sign a contract which is the main mistake they make.

You gotta read the small print and have a good lawyer. I gave a guest lecture to the music industry class at Birmingham University the other day and was talking about this.

Every single little payment made by the label is recorded though. Including the expensive dinner to take out the head of the distribution company. And it all gets charged back to the artist... (This is called "Getting well and truely butt fucked" - Industry term)

Again, you can be smart and not deal with them on their terms. I've never owed shit to a label and I don't intend to. But I have a good lawyer

The artist negotiates to keep a percentage of his royalties (if he has a brain) and the album is created. The artist is obviously charged for any studio time and for every person on the payroll during the recording process.

The album is promoted... Charged again....

Album is sold. Artist gets small, small percentage of each units sale. Label gets a small, but larger percentage. Distributor takes a percentage. Retail outlet takes a larger percentage.

See, we record and pay for the albums ourselves, and then license them on an individual basis to the majors. It's a better way of doing things. Plus you own the masters. Fuck a label trying to own our shit.

Artist pays back advance... Also usually paying for rented Car/house/jewellery.... Etc....

Artist pays bills for promo and album creation.

Artist is still broke, but went platinum.

Artist goes touring and cashes in on merchandise. Most labels have large cut of profits as negotiated into contract before advance was paid.

Artist is getting a little money.

Artist works on second album, as tied into 3 album deal.

Again, I would never sign a long term contract with a label. Also, we have a touring agent that gets us our gigs. Gigs are supposed to have JACKSHIT to do with the label and they certainly aren't getting a cut....again, READ YOUR CONTRACTS people!!! If the label wants a cut of gigs, tell 'em to fuck off and sign with someone else.

 

[PELLA]

make 16 year olds happy. Thats it.

 

[S O F I]

The rap game like the crack game.

 

[ARon]

Just cus Cam has to pay for all his own shit doesnt mean he doesnt make that much per album. He has to recoup his own losses but its not like Koch is taking anything more cus of that.

 

[Rukas]

Yeah, album sales are jack shit. On a major you'll be lucky to make a buck a CD sold and before you get any of that you first have to pay back the advance and any production, recording and marketing costs the label forks out for your album.

In that regard, artists really are slaves.

Mixtapes are so popular for artists because it puts money directly into their pockets as it doesnt go through the major label set up and it helps build their buzz, and thats where the money is, hype, buzz.

The more buzz and hype you have, the more people will come to your shows. The more people come to your shows, the more you can charge for a performance.

Jay Z for example, charges $300,000 per performance. His label situation is obviously better being the President of Def Jam, but if he was an average artist, say making $1 per sale, he would need to sell 300,000 copies just to see that; and it would STILL be short of his advance.

Most popular artists charge from $20k to $50k though. The likes of Jay Z, 50 Cent or Eminem of course charge more. T.I charges $75k, etc.

Big namers pretty much have to go platinum to get clear with the label. So most of the money comes from tours; which they keep the majority of the paycheck from. The only people getting money from tours are the artist and his manager/booking agent who takes about 15% nowadays. All promo and organization fees are paid by the promoter; as are all traveling expenses, food, accommodation, etc etc.

If you think about all that, it is no wonder artists will do ANYTHING for hype.

I dont have a product on the street, but because of the hype my crew and I have for putting on such a dope live show, and for touring with Ying Yang Twins and DMX, we could live off of shows and pocket a couple thousand a night each; basically the modern artist has to look at their album as a promotional tool for their concerts and tours, not as a money maker.

 

[Rukas]

For the record, producers have it a LOT better than rappers because all they have to do is sell beats. People like Kanye West and Dr. Dre have the best of both worlds.

Selling 16s isnt as lucrative or common as selling beats because there are only so many albums you can feature on in a year; you dont want to oversaturate yourself. But a producer can hustle beats all the time as long as his style remains fresh and current.

So kids, if you're reading this and you want to be rich off of hip-hop, my suggestion to you is put down the mic and pick up the MPC.

 

[ARon]

Remember Kanye saying he still owed like $600,000 2 weeks after Late Registration dropped cus of all the samples he used, funny shit.

Also, we all know most rappers make shit, thats why KRS still to this day is trying to make it so they get a minimum of $1 per sale. Not sure how he is trying to go about it but he wont shut up about it. Even at the show of his I went too he talked about it.

 

[Rukas]

Yeah I think the average is 60cents. I used the dollar sample to be generous and for the sake of simple funds .

 

[ARon]

Yeah.

So how many shows are you doin? You got anything lined up or what. Since we're talkin about the business, how do you personally go about it? Are you your own promoter and so forth, what kind of venues are you doin and all that.

 

[Pittsey]

Just cus Cam has to pay for all his own shit doesnt mean he doesnt make that much per album. He has to recoup his own losses but its not like Koch is taking anything more cus of that.

That's because koch is a distributor... Although they have about 50 labels created by them... And that's a realistic estimate... God knows why?

So Cam gets all the headache, Koch just ship it to stores, and they split the money. Happy times for both.

Isn't cam also signed to Columbia or something though? Don't they do his promotions?

 

[Rukas]

Yeah.

So how many shows are you doin? You got anything lined up or what. Since we're talkin about the business, how do you personally go about it? Are you your own promoter and so forth, what kind of venues are you doin and all that.

Right now we're taking time off to work on the album; you have to balance it like that.

We were playing crowds of a couple thousand before. Opened for Ying Yang Twins and DMX last year and did some other shows along the way. Probably wont start touring again until October or so...

 

[sniper]

That's because koch is a distributor... Although they have about 50 labels created by them... And that's a realistic estimate... God knows why?

So Cam gets all the headache, Koch just ship it to stores, and they split the money. Happy times for both.

Isn't cam also signed to Columbia or something though? Don't they do his promotions?

i think he's signed/was signed to asylum, thats kind of like the major labels alternative to going indy. but he has been at a few labels, so over the years hes been promoted and he is known.

 

[Casey]

basically the modern artist has to look at their album as a promotional tool for their concerts and tours, not as a money maker.

Exactly. Hence the need for a good live show. We put a lot of effort into our live show and have been called one of the best live acts in the country by some big names - thats what led to us supporting the Beastie Boys etc.

 

[Rukas]

This was a good thread. Props to all.