Too Much Joy, Not Enough Cash

As AC/DC once sang on "'74 Jailbreak,"

You learn to sing
You learn to play
Why don't the businessmen
Ever learn to pay

That's show business (Show business)
Show business (Show business)
Show business
That's the way it goes

Common complaint, of course, but two recent posts really put things into perspective. If you think getting signed to a major label is your entry to Easy Street, think again. For most bands, its anything but.

Tim Quirk, of the band Too Much Joy, recently posted his royalty statement with some very pointed (and knowledgeable) commentary. If you're interested in the music industry at all, you should read then entire post. Especially revealing is Quirk's explanation of how the majors use creative accounting to make sure their investment is covered at the expense of the artist.

While our royalty statement shows Too Much Joy in the red with Warner Bros. [for about $400,000], this doesn’t mean Warner “lost” nearly $400,000 on the band. That’s how much they spent on us, and we don’t see any royalty checks until it’s paid back, but it doesn’t get paid back out of the full price of every album sold. It gets paid back out of the band’s share of every album sold, which is roughly 10% of the retail price.

So, using round numbers to make the math as easy as possible to understand, let’s say Warner Bros. spent something like $450,000 total on TMJ. If Warner sold 15,000 copies of each of the three TMJ records they released at a wholesale price of $10 each, they would have earned back the $450,000. But if those records were retailing for $15, TMJ would have only paid back $67,500, [or $1.50 a unit] and our statement would show an unrecouped balance of $382,500.

Of course, things are different now that it's all digital downloads, right? Well, according to some sources, the artist gets 12% of what the label receives from the 99 cent iTunes sale -- which is about 70 cents (credit card processing gobbles up 25 cents, BTW). Which means the artist makes a little over 8 cents per song (and yes, the same accounting rules about recouping investment apply).

But the majors forced iTunes to variable pricing, and now many new songs cost $1.29. So out of the dollar the labels now receive, what does the artist get? Many have contracts with fixed residuals, which means they still get 8.5 cents per song.

If the songs are noted in the account process, which was the primary subject of Quirk's post.

AC/DC recorded "Show Business" back in 1974. Sad that it's still relevant.

- Ralph