Band Payout?

[LooknGlass]

This is a pic I found on a random site. Any thoughts about the truth of this?

 

 

 

 

[Just1L]

While I have no clue to the "truthiness" of it, it doesn't seem to cover an amount for the actual "songwriter". While I would be interested in making a little money off of my songs, I'd pass if this was the offer presented to me. 

Edited December 10, 2013 by Just1L

[john]

They haven't included the songwriter in the same way they haven't included a publisher, because it deals entirely with the label / band branch of income from a recording

 

but you are right in that it doesn't show licensing fees (which includes both songwriter's share and publisher's share) or how that relates to the assertion about for every thousand dollars spent....the musician gets $23 is rubbish based on that alone! LOL

[john]

Also not included are manufacturing costs, promotion costs, graphics, fixed costs, admin costs, video creation costs, photography and publicity... all of which gets a slice of that $1000. Also not clear is how much of the label "share" is actually the band paying back their royalty advance or the costs laid out by the label that the band are liable for

[john]

oh and session musicians, recording engineer and studio hire and a ton of other costs.

[writeandwrong]

I'm not sure how it all works outside of the US, but the songwriter's share usually doesn't come from the "band payout". That belongs to members of the band after all the expenses are paid (costs above that John noted).

 

The songwriters get paid from performing rights agencies like ASCAP, BMI, SESAC and also from the publishing company. I don't take anything from the band when they get paid. My cowriter gets his share because he is the guitarist. He doesn't get extra for being a songwriter when the band gets paid for a performance from a club, bar, festival or wherever they are getting paid for their performance.

 

The performing rights agencies get their money to distribute to their publishers/writers from licensing fees they get from users of music (radio, cable and network TV, bars, clubs, shopping malls, concert halls, airlines, etc.). The value of the payout to the publishers/writers has several different factors, including how much they received in licensing fees from where your songs were performed.

 

These agencies will pay the songwriter directly for the performance, not the club that the band has performed at. As a rule, what the agencies collect, the publisher gets 50% and the writers split the difference of the other 50%. If you self-publish and you are the sole writer, you get 100% of the royalties. 

 

This is why it "pays" to have multiple "jobs" in the music industry. Band manager, publisher, publicist, web designer, writer, performer, photographer, videographer, studio musicians...as many jobs as you can fill on your own especially when you are starting out. It keeps more money in your own pocket.

 

The agencies pay for performance royalties. Songwriters also collect mechanical royalties from the sales from downloads, CD sales and other sales containing the musical compositions. Mechanical royalties get paid to the record companies who pay the publishing companies (or representatives like the Harry Fox Agency) or if you self-publish, directly to you. The publisher shares these royalties with the writer (the amount being whatever is in the contract between the publisher and writers).

 

The statutory rate for mechanical royalties is 9.1 cents per song and so much more per minute over for a longer song.

 

Hope this makes sense and helps you understand a little bit from this end of the songwriting process. This is fresh in my head as this is the step I've been working on a LOT over the past several months. It pays to be be as knowledgeable as possible in every step in the song process regardless if you have a separate publisher or have been signed by a record company because you do not want to be ripped off.

 

P.S. Just because you register your songs with a performing rights society doesn't mean you can skip registering your songs with the copyright office...that's a whole other topic in itself...

 

Cheryl

[john]

I'm not sure how it all works outside of the US, but the songwriter's share usually doesn't come from the "band payout". That belongs to members of the band after all the expenses are paid (costs above that John noted).

 

The songwriters get paid from performing rights agencies like ASCAP, BMI, SESAC and also from the publishing company. I don't take anything from the band when they get paid. My cowriter gets his share because he is the guitarist. He doesn't get extra for being a songwriter when the band gets paid for a performance from a club, bar, festival or wherever they are getting paid for their performance.

 

The performing rights agencies get their money to distribute to their publishers/writers from licensing fees they get from users of music (radio, cable and network TV, bars, clubs, shopping malls, concert halls, airlines, etc.). The value of the payout to the publishers/writers has several different factors, including how much they received in licensing fees from where your songs were performed.

 

These agencies will pay the songwriter directly for the performance, not the club that the band has performed at. As a rule, what the agencies collect, the publisher gets 50% and the writers split the difference of the other 50%. If you self-publish and you are the sole writer, you get 100% of the royalties. 

 

This is why it "pays" to have multiple "jobs" in the music industry. Band manager, publisher, publicist, web designer, writer, performer, photographer, videographer, studio musicians...as many jobs as you can fill on your own especially when you are starting out. It keeps more money in your own pocket.

 

The agencies pay for performance royalties. Songwriters also collect mechanical royalties from the sales from downloads, CD sales and other sales containing the musical compositions. Mechanical royalties get paid to the record companies who pay the publishing companies (or representatives like the Harry Fox Agency) or if you self-publish, directly to you. The publisher shares these royalties with the writer (the amount being whatever is in the contract between the publisher and writers).

 

The statutory rate for mechanical royalties is 9.1 cents per song and so much more per minute over for a longer song.

 

Hope this makes sense and helps you understand a little bit from this end of the songwriting process. This is fresh in my head as this is the step I've been working on a LOT over the past several months. It pays to be be as knowledgeable as possible in every step in the song process regardless if you have a separate publisher or have been signed by a record company because you do not want to be ripped off.

 

P.S. Just because you register your songs with a performing rights society doesn't mean you can skip registering your songs with the copyright office...that's a whole other topic in itself...

 

Cheryl

Absolutely. Well said.

The 1000 dollars spent, from the diagram, is not the bands' share, but the breakdown thereafter is on the recording side completely ignoring that rather large share of the profits. Songwriters and publishers do get a share of the original 1000 based on license fees.

The other bit the diagram misinforms about is that balance point whereby the label outlays all the cash, and the band has to pay that back before they actually make a penny more than their advance. Meanwhile if the band record sales don't pass that point the loss is the labels'. True contracts usually contain a section about what they can recoup and claw back from artists in the event that sales are that poor, however bands don't usually end up directly paying that back... Though if the band signs a new contract with another label you can bet it comes into negotiations.

So the risk is really the labels. That is also why they get some of what they get. They have stumped up the money to pay for the party, including what the band lives on. If the record sales are poor, they lose the money.

That said, because they tend to arrange many of the contributing services from graphics to videos to recordings and they do so through arrangements with external service providers or in-house people, they do stand to make large profits as it is more or less a closed market. So the label is the investor. They are also the main services provider. The band is the business. The liability belongs to the band.

Sorry I haven't explained that very well, I am still shattered after all that server fixing lol

[writeandwrong]

Absolutely. Well said.

The 1000 dollars spent, from the diagram, is not the bands' share, but the breakdown thereafter is on the recording side completely ignoring that rather large share of the profits. Songwriters and publishers do get a share of the original 1000 based on license fees.

The other bit the diagram misinforms about is that balance point whereby the label outlays all the cash, and the band has to pay that back before they actually make a penny more than their advance. Meanwhile if the band record sales don't pass that point the loss is the labels'. True contracts usually contain a section about what they can recoup and claw back from artists in the event that sales are that poor, however bands don't usually end up directly paying that back... Though if the band signs a new contract with another label you can bet it comes into negotiations.

So the risk is really the labels. That is also why they get some of what they get. They have stumped up the money to pay for the party, including what the band lives on. If the record sales are poor, they lose the money.

That said, because they tend to arrange many of the contributing services from graphics to videos to recordings and they do so through arrangements with external service providers or in-house people, they do stand to make large profits as it is more or less a closed market. So the label is the investor. They are also the main services provider. The band is the business. The liability belongs to the band.

Sorry I haven't explained that very well, I am still shattered after all that server fixing lol

 

No, you explained it well (tho you should be getting some rest...caught you!! ;-)

 

They should have had this put into more circles rather than just two to do it properly, which would have had the person creating the circles easily see the pieces to their pies that are missing... Largest circle...obviously...the record company going down in size to the smallest circle, the songwriters. If they had done that, they would have seen the band members would be receiving less than 18%, and it would also show just what tiny portion the songwriter gets...but it could also show the different avenues a songwriter can make money as well as a band rather than just from the song. Okay. I'm shutting up now because I'm gonna be compelled to create all these yummy circles of pies and...I need to watch my weight. The holidays are  upon us 

[LooknGlass]

Just for some perspective.  

 

http://www.techdirt.com/articles/20100712/23482610186.shtml

Hey..part of that is the pic I found on another site!...I didn't have the article

Edited December 17, 2013 by LooknGlass

[john]

The article on the root covers more of those categories Cheryl and I mentioned above. The amount mentioned paid to a songwriter and publisher on a per recording basis may seem small, but not really when you consider downloads, for example, selling for 79 cents to 99 cents. In other words the combined amount going to the songwriter and publisher from the sale of a single song is about 10%. That is 10% based on the gross figures.

The diagram still doesn't explain where this percentage is in relation to the $1000 of music spend, which as the songwriter and publisher share is based on gross, it really should. Equally the diagram still doesn't explain or assign the costs. According to the diagram:

Of $1000 spent, 13% goes to the band ($130) and 18% of that goes to the musician ($23.40). There is no wiggle room here. For $1000 spent to turn into $23.40 the band had to get $130, which is exactly 13% of $1000.

I should point out my argument with the chart is less about the accuracy of what the band is paid but more about the in accuracy of what happens to the money in the top circle. The top circle should have costs, which include the license they pay to use the song, so costs should at a minimum be 10%, more likely closer to 50% of that top circle could be eaten by costs depending on digital downloads versus physical media. After costs are deducted the split may well be as indicated in some cases.

The book the article refers to by Donald Passman is indeed absolutely excellent, however the illustration and conclusions used in the example for the article is definitely flawed. My guess is that the percentages used in illustration are put together by the root site interpreting Mr Passman's book. I don't see Donald making that sort of fundamental flaw in a million years.

What it does show us I think is close. They tried to demonstrate real world numbers when really it illustrates the division of profit. In reality the band as a whole may get 13% (an individual member getting 2.34%) of net while the songwriter gets 4.5% of gross to himself / herself (unless they collaborated) is closer to the mark yet still I think the share isn't quite right. In essence this translates to something closer to the band getting In the region of 6.75% gross and the individual member getting something like 1.17% gross. The band then doesn't see a cent until they have paid their advance back.

Where labels make money hand over fist is in the provision of in house services, or in the servicing of debt. For example, the label advances band members money to live on, which they then have to pay back before they see a single cent, is just one form of debt. If the label pays for a new video to be made, kerching the band, as a business, owes another $200k +. That debt has to be serviced. As mentioned in a previous post, the label may, like a bank, add to your lending by pushing you to borrow more, but the push the artist to spend that money with businesses they get a kick back from, or in some cases they own, or with in house services. In other words they lend you the money to spend with them!

So the label makes money from the money they advance you.

They keep advancing you money, which apart from the personal share used by band members to live on, is largely spent with the label, it's subsidiaries and it's partners, associates and affiliates. This keeps you in debt, which works FOR the label in several ways.

Yes they take a risk with the initial investment.

But then they use that and as a money making machine that they stoke with just enough that the band grows, and so does the level of debt the band owes. Meanwhile the label creams off the profits, an ongoing and increasing skim of the profit made. Meanwhile the band are in more dept, working lots and desperate to do more, to record a new album and get a new advance.

By keeping you in debt they keep you mailable, pliant, easy to manipulate. A band is a commercial entity, and thinking commercially does not come naturally to most musicians. Keeping you in debt also helps keep the band focused on making money, on making commercially sound choices. Most labels don't give a toss about artistic merits, they want hits. To make more hits they want you focused. To keep you focused they want you owing them. They want you grateful.

They do take a risk by investing in bands, but thereafter they get the band to take the risk and bear the costs.

[JosieRose]

That's mental. When I play a gig, I get paid and that's it. I suppose this is because I am not well known and so things are much simpler.

I wonder how much truth is in this and where writers would come into the equation, I guess I really have very little knowledge on how record labels work! I'd like to have more of an understanding. So many people needing to be paid and all under the name of one artist or band! It seems like a different world to me. Maybe I am just silly. 

Edited December 18, 2013 by JosieRose