To sign or not to sign…that is the question! As we roll into summertime, most artists are gearing up to hit the road and looking forward to the next leg of their tour schedule and if they're wise, they're also thinking about the next leg of their career. One of the biggest career decisions an artist will make is whether or not they should pursue a record deal, so lets shed some light on what a record deal REALLY is.
I know the thought of having a record deal sounds very glamorous and gives us all delusions of grandeur, but in reality, record labels essentially function as a bank. If they are interested in you and have the capital, they may offer an advance or bonus upon signing; but it is rarely, if ever, a gift. Then, the record company will front the money to pay for your record, music videos, publicist, marketing efforts and anything else they feel you need in order to make you successful enough that you begin to generate revenue. They package you and they pay for it. Sounds great, right? Just don't forget to read the fine print…
Remember: labels are banks, and you will be required to pay back your advance and any other monies spent on developing you to the point that you are now a revenue-generating commodity. In the past, this was easy to accomplish. The revenue generated from record sales was easily above and beyond any money that was initially invested into you; so the label made their money back, the artist had their career launched without spending any money out of pocket and both the label and the artist made royalties on the record sales. Everyone was happy.
Today, record sales are almost a figment of the imagination; a novelty of a bygone era…what's a record label to do? Develop 360 deals, that's what! If you're unfamiliar with this term, let me acquaint you: A 360 deal is the new fad in record deals. Because the labels can't expect to make any money off of an artists' record sales anymore, they are now signing agreements where they take a percentage of everything an artist does that is income producing. That means publishing, licensing, tours, appearances and merchandise; all in addition to your record sales and the list could go on.
What does this mean for you, the artist? It means that you could be spending a lot more time working and not making any money. For those of you that are Dave Ramsey fans, you know that the borrower is slave to the lender and if you've "borrowed" upwards of $100,000 dollars (the typical amount it takes to launch a new artist) it may take you a long time to see any income for yourself; especially when the label is dipping into every income-producing opportunity you have.
So, think long and hard about your quest for the Holy Grail record deal. In most cases, it is nothing more than an opportunity to go into debt or wind up in a legal battle trying to get out of a bad deal. Keep your eyes wide open, especially with smaller labels and record companies, invest in legal counsel and educate yourself as much as possible.
I hope you enjoy reading this month's newsletter! I am excited to start a new series on songwriting and hope you'll check out the article on my dear friend, Natalie Hemby. Also, congratulations to Todd Seale for winning a spot in our New Music Exclusive. Thanks Todd for taking the time to take our survey last month!
As always, I am here for you artists and look forward to getting to know more of you. Hopefully I will see some of you at the Indie Ignite conference here in Nashville July 7th and 8th!