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Courtney Love on the Music Industry

Tuesday, June 7th 2005

(2 comments)

This is really odd. Nothing from me complaining about copyright law and the RIAA for months, and now I find all this stuff within a few days.

I know next to nothing about Courtney Love, aside from the fact that she was in the movie Trapped. But she wrote an article about 5 years ago on Salon.com that I've just found, and it's worth quoting.

Courtney Love does the math

by Courtney Love

Today I want to talk about piracy and music. What is piracy? Piracy is the act of stealing an artist's work without any intention of paying for it. I'm not talking about Napster-type software.

I'm talking about major label recording contracts.

I want to start with a story about rock bands and record companies, and do some recording-contract math:

This story is about a bidding-war band that gets a huge deal with a 20 percent royalty rate and a million-dollar advance. (No bidding-war band ever got a 20 percent royalty, but whatever.) This is my "funny" math based on some reality and I just want to qualify it by saying I'm positive it's better math than what Edgar Bronfman Jr. [the president and CEO of Seagram, which owns Polygram] would provide.

What happens to that million dollars?

They spend half a million to record their album. That leaves the band with $500,000. They pay $100,000 to their manager for 20 percent commission. They pay $25,000 each to their lawyer and business manager.

That leaves $350,000 for the four band members to split. After $170,000 in taxes, there's $180,000 left. That comes out to $45,000 per person.

That's $45,000 to live on for a year until the record gets released.

The record is a big hit and sells a million copies. (How a bidding-war band sells a million copies of its debut record is another rant entirely, but it's based on any basic civics-class knowledge that any of us have about cartels. Put simply, the antitrust laws in this country are basically a joke, protecting us just enough to not have to re-name our park service the Phillip Morris National Park Service.)

So, this band releases two singles and makes two videos. The two videos cost a million dollars to make and 50 percent of the video production costs are recouped out of the band's royalties.

The band gets $200,000 in tour support, which is 100 percent recoupable.

The record company spends $300,000 on independent radio promotion. You have to pay independent promotion to get your song on the radio; independent promotion is a system where the record companies use middlemen so they can pretend not to know that radio stations -- the unified broadcast system -- are getting paid to play their records.

All of those independent promotion costs are charged to the band.

Since the original million-dollar advance is also recoupable, the band owes $2 million to the record company.

If all of the million records are sold at full price with no discounts or record clubs, the band earns $2 million in royalties, since their 20 percent royalty works out to $2 a record.

Two million dollars in royalties minus $2 million in recoupable expenses equals ... zero!

How much does the record company make?

They grossed $11 million.

It costs $500,000 to manufacture the CDs and they advanced the band $1 million. Plus there were $1 million in video costs, $300,000 in radio promotion and $200,000 in tour support.

The company also paid $750,000 in music publishing royalties.

They spent $2.2 million on marketing. That's mostly retail advertising, but marketing also pays for those huge posters of Marilyn Manson in Times Square and the street scouts who drive around in vans handing out black Korn T-shirts and backwards baseball caps. Not to mention trips to Scores and cash for tips for all and sundry.

Add it up and the record company has spent about $4.4 million.

So their profit is $6.6 million; the band may as well be working at a 7-Eleven.

This is just the first of six pages - I'd quote the entire article here, but Salon probably wouldn't be happy. You can find the rest of the article here, on Salon.com.

Here are some other quotes from throughout the article. Keep in mind that this was 2000.

There were a billion music downloads last year, but music sales are up. Where's the evidence that downloads hurt business? Downloads are creating more demand.
Somewhere along the way, record companies figured out that it's a lot more profitable to control the distribution system than it is to nurture artists.
Since I've basically been giving my music away for free under the old system, I'm not afraid of wireless, MP3 files or any of the other threats to my copyrights. Anything that makes my music more available to more people is great.
Major labels are freaking out because they have no control in this new world. Artists can sell CDs directly to fans.

Before today, Courtney Love was just another name I'd hear and think tabloid, rolling my eyes. Now I've got some respect for her.

Comments on Courtney Love on the Music Industry
 
Comment Wednesday, June 8th 2005 by Greg
Update: I don't like her music, but I like her article.
 
Comment Tuesday, June 21st 2005 by lindy
Courtney Love was married to Kurt Cobain. Remember him?
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