When a reputable record company releases your CD, you may feel that you have “arrived” as an artist. In actuality it is just another starting point. What will the company do for you? What will you do for the company? Welcome to a partnership.
It all starts with a contract. This is where you will formalize your relationship with the label, and the choices you make in signing will impact you for years to come.
Before getting into the nuts and bolts of drawing up contracts, let’s be honest about where the record business stands today. For a newer artist, unless a minor miracle occurs, very little money will change hands. Practically speaking, not much is at stake, so the contract will have minimal verbiage and the negotiating parameters will be limited. Still, it is important to make wise decisions. Here are the key priorities:
*Will you own your publishing?
*Will the label license or buy your master recording?
*Will the label supply any up-front money to record?
*How many free CDs will you get, and how much will you pay for a box of CDs subsequent to that?
The publishing issue is of great relevance. It is common knowledge that the only real money artists receive today, absent of substantial performance fees, is publishing income. Therefore, you want to own as much of those rights as possible.
Owning your music is critical. Some labels will offer you up-front cash and in return ask for, say, 25 to 50 percent of your mechanical royalties. You must then ask yourself if you believe the amount they are offering will exceed what you will make over your lifetime through royalty payments.
To license your work or sell the master? Many of the smaller labels only do licensing agreements these days. This means that they are essentially leasing the music for a period of five to seven years. You give them the rights to use the master to generate income. After the term expires you can go back to having full ownership, but you will more than likely choose to extend the license so that your work will remain in the label’s catalog-but only if you feel the label has done a good job presenting your music, of course. No one takes much risk in the licensing scenario.
If you sell your rights to your master recording, someone else will permanently own your music. When the amount you are being paid is substantial (unlikely), this can be an acceptable path. If you are the rare artist whose career takes off, though, what happens years down the road when someone is interested in rereleasing your back catalog? The label will get the money, not you. There is no right and wrong here, but I can say that few artists I know sell permanent rights to recordings nowadays. Furthermore, few labels are interested in investing the kind of money that the purchasing of a master would entail. A favorable position can be selling the rights to the master for a limited period of time, a “best-of-both-worlds” situation.
How much will you be paid for units sold? Typically the artist receives between 9 and 12 percent of each sale. If you are getting cash up front for recording purposes, the label may wish to pay a slightly smaller royalty rate. Understand that the label will insist on making back all of their costs before you see any money. Typically this means you will not see any royalties for a long time-if ever. The phrase used here is “recoup.” When a CD sells enough copies to cover all the label’s costs, it recoups. For plenty of artists that day never comes. Should you choose to simply license your work, the sales income will commence more quickly.
The issue of how much you pay the company for your own CDs seems insignificant, but it isn’t. More than one label has told me that their best customers are their own artists. I was disheartened to hear this, but that’s the reality. Selling from the bandstand for an artist who tours a lot is one of the only sure income streams left. Even established jazz artists may only sell between one and two thousand CDs in any given year, and of those, 300 may be purchased by the artist him or herself. An optimal situation is that you receive several hundred free copies and then pay around $6 apiece for the rest. Of course, if you are willing to pay your own manufacturing costs, you can have as many CDs as you like. Again, this is an area for negotiation, so keep a calculator handy. Purchasing 500 CDs for $6 apiece, which is relatively low, adds up to $3,000, which, as they say, “ain’t nothin’.”
Finally, you want to be clear about what the label is capable of in the PR department. Hiring a publicist for your own project is expensive. If the label employs someone who is dedicated to getting your CD to the press and, most important, following up as many times as necessary, it can be invaluable. The amount of human resources that a small label can bring to this task will vary widely.
It may seem like I am casting aspersions on jazz record labels with some of this information, but that’s not my intention. What I’ve learned is that it is terribly hard for any label to survive when selling excellent creative music. We musicians are in this together with the labels. No one is getting rich off our backs as far as I can tell, and when the labels cut back they do so because they have to.
So, then, why not just release your own CD, as so many artists now do? The most obvious benefit is that you keep all the revenue. You also have complete control over content, timing of release, etc. However, if you are an unknown artist, odds are your CD will do poorly in the marketplace. There are multiple advantages to working with a label that have less to do with profit and more to do with building your career.
If you visit the offices of publications such as the one you’re reading, you’ll see big plastic containers rolling in every day with CD submissions. A magazine, website or freelance journalist will be more likely to check out your work if it is attached to a respected label. Also, it is extremely hard to penetrate the remaining distribution outlets without a label. Yes, you can get on iTunes, but it is still useful to have someone advocating for you to prevent your work from getting buried. A label can help you with European and Japanese distribution, which will be all but impossible on your own. There are other finer points. For instance, some non-interactive streaming services will try to bypass money they owe you through the performance-rights organization SoundExchange without a label keeping an eye on them. This happens more than you would imagine.
The issues around streaming are many and merit another article. For our purposes, simply consider this: Some labels allow streaming on any and all platforms, others almost none at all, and some utilize only selected outlets. Whether you put out your own music or partner with a company, be aware of this playing field. As always, things are not black and white and the landscape is changing all the time. I’ve spoken to one label head who found that the visibility provided by streaming services actually improved his CD sales, while other companies believe streaming undercuts their business.
If you are lucky enough to find someone to release your music, they will do so because they appreciate your artistry, and because they think you have a bright career ahead of you. Carefully contemplate how you wish to proceed, knowing that both parties will have to give in order to get.
Guitarist-composer Joel Harrison’s most recent CD is Spirit House, on Whirlwind Recordings. He will be presenting the seventh Alternative Guitar Summit on May 9, 11 and 13 at National Sawdust and other New York City venues. See Alternative Guitar Summit for more details.Originally Published