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Basics to doing
music business: Resources page
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Business Basics
By Wendy Day
of Rap Coalition
I never thought
I’d have to devote a column to this topic, but apparently it
needs addressing based upon feedback to me from major
labels, distributors, artists, and indie labels themselves.
Here are some basics:
1. Set up a phone for business calls, KEEP the phone in
service, and return phone calls. Changing your phone number
every few weeks may be the way you normally operate, but
when people can’t reach you for business you lose money,
opportunity, and momentum. No one could possibly imagine how
many calls I get from retail stores, radio stations, and
distributors asking me if I know how to find a certain label
because all the numbers they have are disconnected. My
tolerance for this is very low. I’m not talking about
artists and labels who expand from one office to another and
transfer their calls to a new number, I’m talking about the
hoards of folks who have even placed ads in this magazine
with numbers that have been disconnected even before the
magazine hits the streets. I understand the value of
disposable cell phones with free chips, but can we please
spend the $25 a month to have a voice mail service or a
phone line dedicated just to business that remains in
service! One of my favorite rappers, KRS-1, has changed
numbers (business numbers) so much in the ten years I’ve
been running Rap Coalition, that about 5 years ago, I
stopped keeping track of him and to this day don’t even try.
It has become a joke in the music business about Kris’
numbers changing. When people call me with opportunities for
artists, and many do, I call those I know I can find.
This is a small industry. Word spreads very quickly. Major
labels know which small indie labels are unprofessional and
hard to work with, and rarely do the better major labels
approach these unprofessional indies for deals--it makes
sense really, they just don’t need to. You’d be surprised
what is said behind closed doors about indies. In a perfect
world, an indie would have many distribution opportunities
from which to choose, but with some distributors not making
offers because of an indie’s reputation the choices are
severely reduced to mediocre distributors, especially with
the amount of labels competing in today’s marketplace. I got
a call last week from one of my favorite A&R Research guys
(a major label’s frontline to find new artists to sign) who
told me about a label that I’ve worked with on and off in
the past few years. He explained how he left a message at
the label, twice, and never got a return call. He had
pitched the president of the major label he works for, why
he thought they should sign the indie label from the
Midwest. Meanwhile, no one called him back. Go figure! Gee,
who’d want a deal from Def Jam anyway!
2. Pay your artists. It amazes me how someone who thinks
they have a good business mind could be stupid enough to not
pay the artists who have made them money, but somehow this
happens enough that I have to mention it. Pay your artists.
They signed contracts with your label, and in those
contracts it stipulates when and how much. This ain’t rocket
science. For every unit sold, your artist gets a cut. It
isn’t much to begin with, and if you mismanage your money,
or spend it elsewhere, you STILL owe them what you owe them.
So set enough money aside EVERYTIME you receive payment from
your distributor, retailer, or customer, etc. You owe them a
percent of sales (usually around 12% AFTER they recoup what
you spent making the record and on advances) and mechanical
royalties (roughly seventy cents for every album sold).
We’ve all heard the alleged rumors of No Limit and Cash
Money not paying their artists and the artists leaving;
don’t let this happen to you. Contracts keep your artists
there; paying them keeps them happy and keeps their lawyers
from breaking their contracts. If you’re selling units, it’s
because of the music and the artist, NOT because of your
logo. A logo brand may help, but a record without a logo
still sells, a logo without a record does not. Pay your
artists. Get the point?
3. If you don’t know what you are doing, seek help and
information from those who do. The music industry can be a
very expensive place for trial and error. I’ve seen labels
waste $50,000 to $75,000 in a few weeks time learning this
business. It’s not worth the aggravation. Find someone who
has done it before, preferably successfully, and ask
questions. Or hire an experienced consultant. Or work with
another label to learn the way it is done, or hire someone
COMPETANT who has. This game is full of people skilled in
the art of hype, however, so do extensive research before
hiring anyone!!! I also believe the majority of folks in
this business to be inept, so make certain you hire someone
competent. Ask for references and check them--every single
one.
This is a business, and although it would be nice to have
your boys around you since you trust them, that’s not smart
business. Hire the best person for the job. You will make
more money and then you can hire your boy to do whatever
he’s good at, which will hopefully make you even more money.
The earliest lesson I learned was to not try to fit a square
peg in a round hole: this means don’t put someone into a
position they are not right for, just because they are
available.
Thanks for reading this far, I know it was the basics but I
see these mistakes being made everyday in this business.
Since I started in this industry in 1992, there are less
than 50 people still doing something worthwhile ten years
later. People come and go quickly, and although to outsiders
this looks like easy money and an easy game, that is so far
from the truth. Labels who were at the top five short years
ago, don’t even exist anymore. A true case of killing the
golden goose.
Past Articles:
Getting
More Press Reviews
by Tim Sweeney
Motivation
by Tim Sweeney
Who's
on Your Mailing List?
by Tim Sweeney
How To Generate
More CD Sales In Record Stores by Tim Sweeney
Being in Control of Your Music
by Tim Sweeney
How to
Put Out Your Own Record by Wendy Day
Business Basics by Wendy Day
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