CLIMBING THE RECORDING INDUSTRY LADDER

by Todd A. Myers

The following is an outline and summary of the various recording deals typically offered to musicians in America by the music business for the production and distribution of music. The concept of "levels" is, of course, somewhat arbitrary.

Level One. No record deal is offered; but the Artist writes and arranges the songs, self-produces the recording master by paying for studio time and pays for the artwork, packaging and pressing of the album. The Artist then self-markets and self-distributes the record. The Artist bears the entire risk of the project which may or may not get noticed by the music business. One variation to this level is where the Artist forms his/her own record company so as to increase the potential to market the record (e.g. Ani DeFranco.) Rarely, however, will the record be widely distributed. However, if the Artist later becomes successful, it may be re-released by an independent or major record company. The Artist may not get noticed by the music business until a self-distributed album is released locally and the Artist starts to develop fans and causes a "buzz." Since every Artist is from some hometown this option should be considered if no interest is generated for Level Two or above.

Level Two. No record deal is offered at first; but the Artist is approached or approaches an independent producer who offers, at the Artist's sole expense and risk, to produce or co-produce a master recording which the producer, through his contacts, then shops to either an independent record company or one of the six major record distributors. The "Majors" are WEA (Warner Brothers Records, Elektra and Atlantic); Polygram (A&M, Island and Motown); Sony (Columbia and Epic), BMG (RCA and Arista); Uni (MCA and Geffen) and CEMA (Capital, Virgin and EMI). This is a demonstration project ( "Demo Deal") or Development deal. The master recording may be rough or a finished masterwork depending on the budget. The producer may work on a flat fee or hourly fee; but more frequently will want a percentage of the profits if the product is successful. An interested recording company may agree to release it as is or have all or some of the cuts re-recorded or remastered or both. The record company recoups the cost of the demo out of royalties paid to the Artist (mechanical royalties, publishing royalties and performance royalties) unless the Artist can negotiate with the producer/record company that all or a portion of the cost of production is repaid prior to release. The Artist's negotiating power depends not only the Artist's track record or reputation; but on the quality of the demo master. The producer must be well-respected and knowledgeable and must have sufficient industry contacts with various record companies so that the demo can be shopped to other interested record companies if the target or intended record company passes on the deal. If the producer fails to procure a recording contract after an agreed period of time the Artist is free to shop the demo.

Level Three. A record deal is almost certainly offered at this level when the Artist is approached by an independent producer who offers, at the record company's expense, a budget for the production of a demo master for which the record company has the first right ("option") to press, market and distribute. The cost of the pre-production, production and post-production of the master (the" budget") is repaid out of mechanical royalties owed to the Artist and sometimes the record company. Variations to this Production and Development Deal ("P & D Deal") involve the Artist, producer and Record Company sharing in the budget costs and thereby sharing the project risk. This arrangement is more equitable for the Artist; but is offered less frequently than Level Two because the producer and record company must feel virtually certain that the resulting record will not only have sufficient market interest to recoup the production, pressing, marketing and distribution costs; but will make a profit for the record company in the long run if not in the short term. The producer's reputation is on the line with the record company which takes the risk; but fails to successfully recoup the costs and to make a profit on the product.

Level Four. The Artist is approached, not by an independent producer; but by a record company representative directly for consideration of a recording contract for which the record company either recommends an in-house producer or an independent producer. Record companies, large and small, independent or major, have various internal departments. The department that first makes contact with the Artist or vice versa is the Artist and Repertoire Department or "A & R." An A & R representative may hear of an Artist by chance or may listen to a tape or compact disc forwarded from a music attorney or from a producer or other music industry contact. (Because of Artists claiming copyright infringement, most major labels will not listen to unsolicited tapes or compact discs.) Many A & R representatives from smaller independent record companies do listen to unsolicited tapes/compact discs, if only briefly, trying to find the diamond in the rough to launch their careers or improve their position with their company. The record company may then pay for either a rough demo or a finished master and then release it. A successful record may lift the Artist to Level Five. (As an aside, the preferred recording format for the submission of a demo is on compact disc with no more than four cuts. Put your best song first and keep the entire demo to under 15 minutes and count yourself lucky if 25% of the material is actually listened to by the label.)

Level Five. The Artist, because of reputation in the music business and past track record, or because of perceived market potential, is offered a multi-record contract by a record company. Here, the Artist may shift from one label to another after fulfilling contractual obligations. Several future records may be guaranteed; but the label may require that certain sales levels be reached or the record company may have an "out" clause to drop the Artist. Unless the Artist is trusted with production, a producer affiliated with the record company may produce the album.

Level Six. The Artist is a star or has such a reputation in the music business that s/he can dictate the terms and conditions of the record contract and the record company is more than willing to sign the Artist who will increase the record company's reputation. The Artist will be able to command the maximum royalties and will be able to self-produce the record if s/he wishes. At this level the Artist may have his/her own production company or publishing company. S/he might even be an owner or part owner an independent or major record company or an affiliate.

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