How Money Works For Major Labels, Indies, DIY Flashcards
Split of the CD’s income - What’s A PPD
Published Price to Dealer, it is the wholesale price of a recorded work. This is the list price that a distributor would sell an album or EP to a record store.
RRP - What does it stand for and what is it?
Recommended Retail Price - This is the recommended price that a seller ‘suggests’ that the retailer sells their album. The reason that is only ‘recommended’ or ‘suggested’ is that it is illegal to do otherwise as it would be in breach of the Trade Practices Act (1974).
Usual PPD Percentage of the RRP
In music, the PPD is usually around 63.5 - 64.5% of the RRP
Independent Deals - What is the Major Type Deal
Work same as the major deals but are just as tough if not tougher but with less money.
Potentially same creative restrictions as a major.
However, they usually don’t have the same industry clout or marketing push.
Old Fashioned Indie Deals - name them and how does it work?
The artist pays for the masters and maintains ownership. They license them to the indie for a certain time who paid for manufacture and limited marketing and released them.
Virtually no chance of commercial success
Artist did maintain total creative control
Did allow artist to develop career at natural sustainable pace
Could become big in the independent world overtime
Joint Venture Deal
Basically a DIY deal, created since recording costs are much cheaper & ability to market the release is no longer impeded by lack of access to radio play. It’s made for bands/artists who want to do it for themselves. Artist pays for the recording, all of the other costs such as marketing etc come out first and then all profits are split 50/50
Distribution Deal
The distributor gets artist CD’s/music into record shops and also onto iTunes, other streaming platforms. The artist is responsible for the cost of manufacture of the CD’s and all promotional aspects. Distributors commonly charge 25%
Working With Major Labels - Direct Signing Deal
traditional record deal & is the deal you do when you are signed to a major record company. The actual nature of the deal is actually a ‘services’ agreement.
Working With Major Labels - License Deal
A license allows an intellectual rights holder to make money from an intervention or creative work by charging a user (license for its use). the artist (licensor) allows the record company (the licensee) permission to exploit their master recordings for a set period of time, for an agreed territory, for agreed remuneration (money paid for work/service)
Major Deals - P&D Deal
Refers to a pressing and distribution deal.
The pressing used to refer to vinyl but now means that they pay for the manufacture of CDs. Sometimes now referred to as a manufacture and distribution deal (M&D).
When they do the manufacture - they often charge a markup to around 20%
What is an advance
Is an advance on future royalties - NOT A LOAN
As long as you comply with the terms of the agreement you do not have to pay unrecouped balances back at the completion of the agreement
Recoupment
Whenever the record company advances the artist money they recoup it from your share of the royalties
Recoupment means simply recovering their cost from your share of the earnings
The artist does not receive any royalties until the label has recovered all of their advances or recoupable expenditure as per the contract
Common Major Deal Deductions - Tour Support
Bands might not be able to do a tour to the extent desired by the label so the label offers tour support to enable the band to do so
Tour support usually only paid on the shortfall of the tour ie. on the amount that the cost exceeds the revenue. They also usually require receipts/invoices.
Tour Support is 100% recoupable
Common Major Deal Deductions - Packaging Deductions
To do with the royalty base. The standard packaging deduction rate is 25%
Common Major Deal Deductions - Video Clips
Video clip expenditures are treated as an advance
They’re usually 50% recoupable
However, in recent times, they tend to be 50% recoupable from recording royalties & 50% recoupable from any income derived from videos
