18% percent royalty - FAIR?

Why do some "independent" record companies in NZ have such
predatory royalty rates ?

Forums: NZ Music,

Dunno much about rates but that seems pretty low... dont' the majors take WAY more? Considering they put up money for production/distribution/advertising/promotion etc

well i've seen contracts for five album deals - with major record companys in NZ ...

... with a royalty rate of 16% .... so .... i guess i'm saying that .... it seems weird that some

"independent" record companies here are not being very independent as far as their artist

royalties are concerned.

Fair enough i guess, if you've seen such contracts. What would be in it for the bands then, to go with indie labels? I suppose they might not have a great choice available to them, or they prefer the relative freedoms, or perceived image...

the point is ..... some people are not being fair .... because they are charging super high

percentages for very little work or investment ... this is explotation .....................as i see it .

shit i mean ....... explotation

they do some work though right? and without it there wouldn't be a release. does the performer get the remaining percentage? i doubt it. i don't think that selling albums, as an independent, on an independent label, is any way to make cash dollars

No one is forcing a band/artist to sign with any label. If the band chooses to sign with a label, it's the band's responsibility to ensure they are getting a fair deal.

This is the thread of the century - please continue.....

haha, glad your amused by all this. Any thoughts from the perspective of someone in the music industry or is the desire for this to continue much too strong? ;)

Curious by the way though, anyone in this thread (minus tomble) actually 'involved in'/knowledgeable of how the music industry 'works' in this respect.

Cause I sure as hell don't know if these kinda numbers are 'typically fair' or not and was just wondering what experience is backing up these perceptions/opinions/comments etc. Cheers.

I don't know, but it does seem kind of greedy. After all, a record company is basically a specialised finance company, who loan you the money for recording the album and making a video etc and don't pay you a cent til you've paid them back in record sales. Are you telling me that, once you've paid off all your debts and you're making profit, you only get 18% of that money?! Shit, that's tough.

But I don't know, it could be wrong or over-simplified somewhat - maybe someone from the industry could enlighten us?

rumour is that anika moa owes her record company 1 million - poor gurw

independant labels still need to survive - also just cause they're small doesnt meean they cant be bastardos

Its quite sad & ridiculous really..especially in our under priviledged country with minor involvement on a worldly level. NZ should be more onto it & finance musicians & put their money where their mouth is. We are the best we just got to have more resources available for us. C'mon look at the amount of posters we have on line & undergroung artists, local all in their own genres & own aspects of music. NZ really need to start focussing on whats popular on the world agenda & bring it up the next level & levels after that in order to claim our spot on the atlas for sure. Everyone hears about us but always forgotten until someone brings up our nation. NZ sux in terms of making a living as an artist. You've either got to have the hookups or just be a genius & plan out your own pavement.

// rumour is that anika moa owes her record company 1 million - poor gurw

sucks to be a solo act. You can't disband.

$$$

Yay yayeee!

Signing with a major is like being raped

Signing with an indie is like being date raped.

Both indie's and majors enjoy and manipulate the fact that musicians (On the whole) do not care and have no interest in contracts and the tedious jargon which surrounds a recording deal.

This is how bands keep getting fucked - And yes it is their fault and responsiblty but it is not 'Fair'.

That is not to say there aren't people in both indie's and majors who care about music and want to do right by the artists but they are the exception rather than the rule.

// Signing with a major is like being raped, Signing with an indie is like being date raped.

haha....wonder who this could be :)

Yes indeed Blink of the FBB - but do you agree?

The thread started with the most valid question - Why are indie label royalty rates essentially the same as major label royalty rates??

Because both Indie and Major labels are after the SAME thing - To make a profit from the artist.

There are very little differences between Indies and Majors - It's mostly just fashion.

Most indies are owned by Major labels/corporations and are then subject to that structure and their method of establishing 'Worth' and 'Performing for the bottom line' for shareholders - The royalty rates reflect this.

Everybody is owned by somebody else these days. Even when you get to the top of the pile of record companies, those companies are all owned by massive parent corporations with a couple fingers in every pie; recording, publishing, multimedia, marketing... Which is part of why it's so difficult to be both successful and innovative: Viacom owns fucking everything.

All the major publishing houses are owned and operated by the same people too, with one objective in mind: fuck the writer raw. And self-publishing is just an exercise is debt-accumulation. Ah well. I know what I'm in for, and I go ahead with it anyway.

I've signed contracts with two labels in my time. Never got any royalites. 18% is pretty standard these days, major or independant. In the early ninetees and eightees it was 22% - 25%. Current levels don't seem good but when you consider that many artists would never qualify for get the kind of advance (bank loan) from any other source so you can see labels take quite a big risk. Look how untogether the Stone Roses were, took them 5 years and shitloads of money to record a substandard album.

Whether or not its a bad deal for artists depends on the expectations of the artists. These days many artists get excited about signing and have high expectations. Well frankly, if they care that much about the deal then are they musicians or businessmen? Starts to blur. Concentrate on the music and be thankful for any percentage.

Essentially the main gripe is that record companies absolutely clean up if an act is succesful and make far more than the artists. That does seem unfair, But look. They are gettng their karma for overpriced CD's. Law courts around the world are throwing out all the cases that being brought against file sharing networks. Ha! Nothing for the record company yet as an artists popularity spreads so does their ticket sales! Artists 1 Labels 0.

Someone mentioned NZ being hard to make money from music. Its the same everywhere dude. Try London where the competetion is so fierce, you can be a genius and get ignored your whole life.

//Concentrate on the music and be thankful for any percentage.

To me that means stick your head in the sand for the benefit of some rather astutue salesmen - Ignorance is easy and people in every aspect of the music business rely on this attitude in order to line their pockets with ease.

//Ignorance is easy and people in every aspect of the music business rely on this attitude in order to line their pockets with ease

Can it still be considered unfair when ignorance is 'chosen'? Is it really a choice? At what point does ignorance convert to apathy?...

The questions get bigger (often considered less relevant in the 'bottom dollar' kinda way, isn't that what this is about though?), but fuck it. Can't let them jade or make you turn a blind eye to the whole contract aspect and so on. Not giving a shit means 'they' win by the sounds of it.

Head in the sand...fastest way to drown.

a lot of bands are opting for distribution deals rather than full contracts. I have a friend on a major label earning $3 an album & he owes them shit loads, & that comes straight out of his royalties. Another friend paid for his album himself & got a distribution deal, & he earns $9 an album.
I guess not everyone wants to record an album on the cheap - but why get hundreds of thousands of dollars in debt when chances are you'll never make that money back, specially in little o' nz? A life times worth of debt is a bit of a gamble for the sake of using a "top producer" & pretty cover art.

actually, distribution deals piss me off more then record deals....especially so called "indie distributors"...i mean, taking 20-25% of the COST price...for what?? because they have a list of all the fax numbers of music retailers in NZ?

I had planned to set up a true independent distribution company....and it is still a distant dream. A company where somehow..i can set up channels, which bands can just take over and do the work themselves...with simple quality control systems, so not every tom, dick and harry with their CD-R demo is hassleing supportive record stores.

A NZ band ( i will not name) was HUGE on channel Z, like several hits etc..etc and released their album. They sold heaps in Akl, Wlg, and Chch...but FUck ALL (seriously) outside of the main centres. If you can secure releationships with a large number of retailers in these main centres and support from a smattering of stores nationwide, like 1 good store in each decent sized city and with good presence on the internet.....there is no reason why you can't distribute your records yourself.

I see the Internet as spelling the end for distribtion companys sooner then retail stores. I mean, if you have your catalouge online, and retailers can order online, and you have processes involved where there is little to no paperwork, then there is no reason why you can't offer very competitive deals...

If there is someone who is seriously interested in setting up a good honest indie distribtuion company, please come talk to me about it. I have already established relationships with many stores nationwide, but I'm trying to get a magazine off the ground and have no time to set this up as well.

"Inmusic" are good cats as far as NZ goes....but I still feel that nobody cares for their music as much as the artist themselves...so i believe the artist should have a direct say in the promotion and distribution of their music.

Dude I'm interested in being involved - not in a major way as yet of course. Just keep me posted.

True, but still think distribution is the better of two evils. Distribution isn't just putting cds in a box, it's convincing retailers that they should take a punt on, whats usually, an unknown/small selling artist.
It's a hard road setting up a distribution company - most music stores don't deal with independents, unless they're an independent themselves. Who wants to deal with invoices/sale or return on small selling cds when you can concentrate on something that's a certain seller & has the security of a major label "hooking you up" should it flop. In music has suceeded because the guys that run it use to work for festival & have decades worth of relationships built up. Loops doing well, but then they kinda snuck in the backdoor by beginning as a magazine. Apart from them, & a couple of electronic distributors, nobody has really made any impact. I guess it's a combination of who you know & having fuckin' good releases.

// it's convincing retailers that they should take a punt on, whats usually, an unknown/small selling artist.

exactly! and why would someone who doesn't care about your band do this?

It can be done. I have established relationships with important retailers throughout the country...and like i was saying, for speciality items, such as cds by independent artists, you don't need to be in "karori music" or crappy stores, you just need to be in stores, where fans of your music go.

There are good distributors about, but i think an improved business model which incoporates more input and direct involvement from the artist would be very beneficial.

//There are good distributors about, but i think an improved business model which incoporates more input and direct involvement from the artist would be very beneficial.

True. In every sense. Not an easy solution to tackle, but re-wroking the business model may be one way of achieveing a fairer deal both for the band and distribution in general. Where do you start though?
Well, you'd look at the way you are doing things now, and remove all the factors that are not moving units whatsoever. Take at look at other business modelas and see how they work.

Get information from Statistics, and see how and where you can throw your net out to a potential group of interested parties. Faith doesn't always conquer the vison. Be realistic about it all. If the band needs to work harder, than there are no shortcuts. Less about the talk sometimes and more about the practical involvement in hand.

that blink
is why i look up to you
you music promoting machine!!!
fuck NZ is lucky to have dedicated people like you...

steady on.

Im definitly interested Blink. im also keen to shift my own product without any reimbursment for the gun-runners, drug pushers and pornogrophers who call them selves "record labels".and why Ive got the head o' steam why dont music instrument shops play local product? arnt we the people buying their wares?

18% fair? mmmmmm...

How much have they invested? What have you invested? What is your time worth? How long before you break even? What financial position will you expect to be in by then?

It'll be a different story for everyone of course. It's obviously a problem for you because it's not adding up. But if I was in your shoes I'd be considering at whatever your 'next step' is, or at least asking for some qualified legal/buisness advice (more $$$).

Is that 18% the artist rate? I thnk thats what you meen...anyhoo I know at least one indie label in Welly gives their artists 50% and I know of another one (with a rep for being dodgy, but i think they are ok) that has given some artists 60%.....the things to look out for are ....is the label putting the effort to get their cut of the cash? an artist works on the music through writing-gigging-demoing-recording-selling themselves for years-doing crappy interviews etc. those cheeky arse labels have to know that fronting 10 to 15 grand to pay for cds and posters aint enough. they have to passionately sell your product.

I reckon it is bloody essential to use a proper label and proper distribution for many reasons.....your an artist not a salesperson...you should never,ever ever ever think about your music in terms of sales, but someone else has to...if you want to be professional musician that is, and quit that job at the Cafe.
secondly Blink my man...I think you are so wrong about distribution.....get thoise CD's in every fucking shop you can....you must make your product as easily available as possible...57 year old woman hears Straight And Narrow on Homegrown, she loves it...it reminds her of Donovan or some shit...its a pretty song after all, so the lady goes into Karori Records and says "Have you got any Ghostplane?" "No we dont" it leaves her mind, sale gone .......your out of pocket by 30 or 40 cents....dont let this happen.

odd quirky music?...don't think big...think broad....find the people who will love what you do

Get your contarct right....be fussy, use lawyers
do not let indy labels have any control over your publishing...you must retain control of the 'master' ...they are license this for manufacture and sale (unless they paid for the recording..

I go to bed now ,....going to see QOTSA in Sydney tomorrow yay

//going to see QOTSA in Sydney tomorrow yay

lucky bugger

yeah man....ghostplane is getting full on distribution..cause it can have that effect and its a fucken great record. however, that isn't the case for alot of music.

I dunno....just from what I've heard...and had experience from...from working on 3 different small suburban music retail stores...people don't buy local independent music from you, even if you have it, unless the store pushes you...and for that they generally need to know you personally or know the record...so they can make the effort to order.

do you guys know how mnay record sales you have out of the main centres? or how many stores have stocked your record?

for speciality records you need to sell alot more to break even. For example, with "Volume" I need to sell 330 through my own distribution or 450 through a nationwide distributor....i weighed it up and figured that i was not going to sell 120 extra records by having it availiable to "taihape records"...unless the songs were playlisted on a station in Taihape, there is kinda no point. Especially if you have it availiable for online purchase.

I also decided to leave the national distro of it until after xmas, so it wouldn't get lost in the xmas best-ofs.

You gotta weigh up the pros and cons of it all.

come in and talk to me Mr. D. Rider....i'll let you in on the full monty of my distro ideas/plans and you can let me know what you reckon.

are you back in the country yet?

blinky rinky dinky dinky..blinky rinky do..I love you

yeah i come home today...lets do coffee

i'm sure your distro policie is right..i just allways go crazy over ghostplane issues coz i love that fckn band so much (i have been balbing about them to these ozzie folk....who all seem to luuurve ejecot, who i also think are great, but less in my immediate realm of taste)

Royalty Rates differ from company to company and from artist to artist, as a rough guide 18% is around the rate most artists could expect on any record deal. Depending on how the contract is negotiated and with whom will determine the rate and clauses a artist can attract/expect from a label – irregardless of them being a major or an indie.

As well as royalty rates there are a multitude of other considerations to take into account I would suggest before you start slinging mud at the evil corporates and them dodgy indies.

A recording contract is a complex document and one that any artist who is offered one should read thoroughly and understand before they sign – something that is often overlooked/not done by artists and those artists must take some share of the responsibility for the situation they find themselves in. This is the real and contrary to popular belief the Music Industry is a business and thus needs to generate profits for the music companies to remain in business. No profits, no businesses and no one gets signed.

Now consider this, some of you infer Indies should pay a higher royalty rate than the majors – yes? Why would this be? Because the Indie has less capital and resources at their disposals thus should pay more?

Or is it that indie recording artists deserve more because again the indie company that decided to sign them has smaller resources than the major who didn’t sign them?

Well that seems fair

If one considers that the indie will generally be paying more for every aspect of the recording and manufacture of the artists album than the major – due to economies of scale and the prices a major international corporate can and does command. Its hard to fathom how a indie could be expected to pay higher rates than the majors, even though as a rough rule they do (file this under the reasons for being a label / passion).

Distribution is a different kettle of fish altogether when considering margins/%, again distributors need to make money to do the job they do – real world stuff!! There is a lot more than having a few fax numbers to stores to distributing music. It’s the distributors job to make sure that an artists title is represented to all the stores a distributor sells to, ensuring those that can sell a title stock it (and those that can’t don’t – sales is about mutually beneficial relationships) and sales is but a part of what a distributor does.

In a NZ context the major companies are more distributors/marketing branches for their parent company/head office than record labels per se – that is they distribute what their head office(s) demand/decide into NZ rather than have a policy of investing and signing artists within NZ as the basis of their business (in major land that’s for other territories to do, i.e USA, UK, Aus etc.) – there are some exceptions but very few, considering the number of acts out there signed and un-signed

I always find it amusing and sad that record companies are often so reviled by the very people that generally are so passionate about music.

If you’re one of these people might I ask what your thoughts are on other industries – who can we trust?

//A recording contract is a complex document and one that any artist who is offered one should read thoroughly and understand before they sign –

Get help from someone if you need it. Legal advice is free (see link)

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