record company guide

The

Complete Guide toStarting aRecord CompanyThird Edition – Revised and Updated

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Keith Holzman

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The Complete Guide to Starting a Record CompanyThird Edition

Copyright © 2004, 2007, 2008 and 2012 by Keith Holzman.

Published by Solutions Unlimited, 11500 San Vicente Blvd., Suite 407, Los Angeles, California 90049.

Manufactured in the United States of America. All rights reserved. No part of this book may be reproduced

in any form or by any means, electronic or mechanical, including photocopying, recording, or by any

information storage and retrieval system, without permission in writing from the author, except by a

reviewer, who may quote brief passages in a review.

ISBN 978-0-9746580-2-5

Library of Congress Control Number: 2011914825

Acknowledgments

I’d like to acknowledge the assistance and advice of a number of people who helped me through the task of

writing this book. Four colleagues kindly checked and added choice portions to chapters on their particular

expertise for the First Edition: Cary Baker of Conqueroo for publicity, Andrew Halbreich of Trace Elements/

Shrub Music for music publishing, William Hochberg of High Mountain Law for artist agreements, and

Denny Stillwell of Mack Avenue Records and Artistry Records for distribution and marketing. My brother

Jac Holzman, founder of Elektra and my cohort in music during our years together at Elektra and Discovery

Records, made valuable suggestions. Kurt Triffet, Triffet Design Group, designed the web site.

My daughter, Rebecca Holzman, the editor of the Second and this Third Edition, has assisted me in many

ways.

Feedback from my former UCLA Extension students, and from the schools using the book as a text, have

been instrumental in making several improvements.

Finally — and most important — I’d like to thank my wife Jo, who held my hand and listened to me

grumble whenever I’d complain about writer’s block, software or other problems, who read this book in

various stages and provided numerous cogent comments. She is my significant editor for the book, and in

life. Most of all I want to express my gratitude to her for being my best friend and soul mate during our

many years together.

Note to the Reader

This Third Edition has been written to provide the reader with substantial information on how to start a

record label. While it’s impossible to be completely comprehensive and inclusive, it strives to provide as

much up-to-date information as possible to help you succeed. Numerous revisions and updates have been

included throughout.

Although I’ve been in the music industry for more than forty years, I’m not an attorney or accountant

and I don’t intend to replace legal, accounting, or other professional advice. Many aspects of creating a

label require the assistance of such competent professionals familiar with the current record industry and

common-business practices.

In certain chapters, books and publications on the record industry are recommended. Reading some of

these may be essential to understanding how the industry works. Therefore you’re encouraged to read as

much additional material as possible in order to be knowledgeable and up to date.

Note: when I make reference in this book to “he” or “him,” it might just as well be “she” or “her.” This

language is used to avoid the awkward “he or she” and “him and her” phrasing.

Any service marks, trademarks, and product names mentioned in the book are assumed to be the property

of their respective owners.

The ideas and opinions expressed here are my own and may not apply to all start-up labels or in all

circumstances. And since customs and situations change in these fast-moving times, certain aspects may

be out of date by the time of publication. You might wish to check the book’s web site from time to time

where updated information will be posted.

http://www.recordcompanystartup.com/updates.htm

I recommend you subscribe to Manage for Success, my free monthly email newsletter that deals with how

to solve independent record label problems by emailing:

mailto:[email protected]/

or by visiting the Solutions Unlimited web site and clicking on the “subscribe” button on most pages.

Note that the names on this list will not be lent, rented, or sold to anyone.

http://www.HolzmanSolutions.com/

Absorb and make use of as much of this book as you can. And above all, use your common sense, have fun,

and bring forth great music!



http://www.HolzmanSolutions.com

Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1. First Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2. The Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

3. Raising Start-up Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

4. The Art of Acquiring Talent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

5. Understanding Artist Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

6. An Introduction to Music Publishing . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

7. Staffing Possibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

8. Setting Up Your Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

9. Planning the First Recording Project . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

10. Recording the First Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

11. The Ins & Outs of Pre-Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

12. The Lowdown on Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

13. The Complexities of Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

14. Post-Production Basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

15. Follow-up Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203

16. Ancillary Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

17. It’s a Wrap — Almost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

Recommended Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229

About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239

Introduction | 1

Introduction

My four plus decades in the record industry have been alive with an abundance of wonderful experiences working with outstanding artists and colleagues, many of whom became lifelong friends. There are countless memories of late nights in the studio, untold meetings huddling over seemingly endless possibilities for cover art, and innumerable conferences with artists, managers, and attorneys. It’s all been richly fulfilling.

After twenty exciting years with Elektra and Nonesuch Records, I took a sabbatical, and although remaining involved with music, I missed the excitement. So I subsequently started my own label, ROM Records. And I’m glad I did because I learned what it’s like to run my own business and be responsible for everything. These numerous lessons have resulted in the writing of this book as an attempt to help other entrepreneurs fulfill their own dreams of starting an independent record company.

Thus, this book is a primer of what you need to know, and what you must do, in order to start your own label. It contains the important facts you’ll need and points you to other resources you can access to help get your label off the ground. This third edition has been revised and updated to include more about the digital aspect of our business and the world of the Internet.

Before digging in, however, I think it’s important that you look deep inside yourself to be sure you’re aware of what you’re getting into, and why you want to do it. You must be committed life and soul to the process, because it’ll be totally time-consuming and exhausting. It can also be exhilarating and life-enriching. You’ll need passion and desire for both music and business in order to have a reasonable shot at success.

From your own standpoint, you must enter into this venture with your eyes (and wallet) wide open, because it will be extremely tough on your energy, financial resources, family, and life. It’ll be fraught with pitfalls, but many rewarding opportunities.

If you’re considering starting a label for the money you think is in it — don’t! Unless you’re extraordinarily brilliant or extremely lucky, you won’t be making much — if any — in the early years. Later on, however, as you acquire experience and build a catalog, the opportunity exists to earn a respectable, and possibly even substantial income, not to mention priceless knowledge.

Most important, you must love the music you want to release, no matter what genre or style it may be. I assume you do or you wouldn’t have picked up this book, but your passion for music has to be so pervasive that it’s in your blood and under your skin. After all, the music is what counts and that will ultimately guide your efforts.

You should have, or develop, a thick skin because you’ll encounter lots of negativity and rejection, sometimes from surprising corners, and frequently from those closest to you. Train yourself to turn “No” into “Yes!”

2 | The Complete Guide to Starting a Record Company

Above all, stay focused. Don’t let events sidetrack or derail you from your goal. As Yogi Berra said, “You’ve got to be careful if you don’t know where you’re going, because you might not get there.”

Whether you’re a musician who wants to build a label that releases your own performances, or an entrepreneur who loves music and wants to bring the creations of others to the public, you will have much legwork and research to do. You’ll need to become familiar with copyright law; artist, publisher, and distributor contracts; how to make a recording, market, distribute, and sell it. You’ll need to know a lot about music, and about business. This does not mean that you have to have a conservatory degree or an MBA. That’s what this book is for — to guide you from conception to realization of your very own record company.

There are different kinds and sizes of record labels. Some are very small, operated by just one or two people, and issue only a couple of releases a year. Others have extensive staffs and ship anywhere from twenty to forty or more titles annually. And then there are those in between — probably the majority of independent labels today — with modest-size staffs, releasing half a dozen to a dozen titles per year.

Some labels that were started by musicians for the purpose of forwarding their own careers have thrived and now offer music by other artists as well. Such a label is Alison Brown and Garry West’s Compass Records, a successful and thriving purveyor of Bluegrass, Americana, and Celtic music. Another is Ani DiFranco’s Righteous Babe label, which DiFranco started because she didn’t want to sign with a major and wanted control over her recordings and their marketing. It’s been extraordinarily successful.

By the way, when referring to “records,” I mean all forms of recorded music — be it compact discs, cassettes, LPs, DVDs, or downloads.

Who Should Read This Book

This book is primarily geared to the solo entrepreneur or to someone who, with a few associates, plans to build a small to moderate-sized independent label. However, there’s a lot of information included for those who have more ambitious plans or who just want to know how larger labels deal with certain functions.

Note that although this book is written in a linear fashion, many of the activities discussed will vary a great deal in their timing and many events and actions will undoubtedly overlap or may occur in a different sequence.

As you begin the process, it’s vital that you bear in mind a number of things. First, educate yourself to the fullest. I will recommend many books and other resources that will be important, if not essential, in order for you to become fully knowledgeable. This is all a part of what I call “doing your homework,” for without it, you’re likely to stumble over unnecessary obstacles and waste time and

Introduction | 3

money. Second, stay on track to your goal and don’t allow yourself to be easily steered off course. Third, carefully detailed planning will be essential if you’re to succeed. It’s another part of doing the homework. Fourth, keep things simple. You’re embarking on a major venture, so when in doubt, “less is more.” Fifth, watch your cash flow and spend as little money as you can, particularly at the outset. Finally, and above all, think positive. Remember, this is an experience you’ll never forget. It’s changed my life for the better, and hopefully will do the same for you.

A Little History

The last few years have seen an incredible insurgence of small independent labels that were started by music lovers or musicians. This is partially due to the availability of comparatively inexpensive recording equipment and the use of desktop computers as digital workstations for post-production, editing, and CD burning. It’s also due to the Internet as a means of making the public aware of new releases from indie labels, as well as a way of selling from label-owned websites, online retail sites such as Amazon.com and CD Baby, and other locations where downloadable music can be legally purchased — Apple’s iTunes Music Store, for example.

Some interesting facts — according to Billboard and Nielsen SoundScan, there were about 75,000 new “albums” released in the U.S. during 2010, compared to about 105,000 new releases. during the peak year of 2008. Of the 75,000 titles in 2010, the bulk — 60,000 — disappointlingly sold between 1 and 100 units, an average of only 13.3 units per title. At the other end of the scale, new titles that sold 500,000 or more had almost 18% of those sales as digital, the balance of course being CDs. The more popular a title, the higher the ratio of CD to download sales.

Of the 105,000 titles sold in 2008, about half were digital-only releases. However, these 50,000 titles were responsible for only about 1.8% of sales of all new release albums sold in 2008. The number of actual “physical” titles was up about 3% from the previous year. Album sale of new titles equaled 149 million units in 2008, down 17% from 2007. This was about 150 million fewer (basically half!) the sales of new releases in 2001, just seven years earlier.

In 2008 only about 950 titles sold 25,000 or more units, and these 950 titles accounted for 153 million sales, or about 82% of all new release titles. Also during 2008, only 1515 titles sold more than 10,000 units. In 2009 only 1319 sold more than 10,000, and in 2010 only 1215 sold more than 10,000.

Up until 2008, the sales from new releases distributed by Indies had been consistent (about 37 million) even though the number of titles increased drastically. In 2008, Indie new release sales dropped 27% to 27 million units.

The primary reason is the consolidation of much of the music industry into a handful of huge, multi-national conglomerates that control the bulk of the business. These companies are Universal Music Group, Sony Music, Warner Music Group, and EMI of Britain (in the process of being sold, as of late


2011.) Music from these corporations is distributed all over the world, from Alaska to Zanzibar, and because they spend billions to advertise, market, and sell their music, they get the primary attention from the media. And the conglomerates not only distribute the music of their own wholly owned labels, they also handle printing, manufacturing, and distribution (so-called “P&D deals”) for some of the larger independents — those they’ve not already swallowed up by acquisition.

Parenthetically, a P&D deal is one in which a major label handles all aspects of manufacturing and distribution for an independent label, but the label is responsible for all the other aspects of its operation. There’s more information on this subject in the chapter on distribution.

As a result of this consolidation, musicians who have been dropped by the majors, who had contracts that were not renewed, or who decided they were fed up, have frequently taken control of their destinies by starting their own labels. Dolly Parton is one example, with her Dolly Records.

A decision you’ll have to make fairly early on is whether or not you intend to align yourself with a major — either by making a P&D deal, or just having them handle your distribution. Many entrepreneurs with a more modest approach may prefer a “do it yourself” method, and that’s my recommendation in most circumstances.

Whichever way you decide to proceed, you should be aware that you’re about to begin one of the greatest, but probably one of the most rewarding, challenges of your life.

This is not the first time the industry has looked somewhat muddled and offered both challenges and opportunities for entrepreneurship. In the early fifties, there were just a few large domestic record labels in the United States — Columbia, RCA Victor, and Decca principal among them. The “Lp”™ had just been invented and the majors had excess pressing capacity, making it possible for fledgling upstarts to enter the business. Thus Elektra, Vanguard, Folkways, and Atlantic, etc., began what became a long and eventful life for some of these labels.

It was a lot easier then because getting started required relatively little capital. In fact, Elektra was started by two people, and with just $600! At that time, there were many independent distributors dotted all over the country that sold records only in their own regions. If one distributor didn’t sell what you thought they should, it was relatively easy to replace them with another. And the distributors had their own local promotion and publicity staffs to supplement the label’s efforts. Their salespeople intimately knew all of the retailer’s buyers, and they usually paid within thirty days! It was not unusual for a label to have twenty to thirty distributors, just for the U.S. As a result, all of its eggs were not kept in a single basket.

Introduction | 5

Initial Decisions

Before you get started doing such things as hiring an attorney and accountant or building an infrastructure, there are a number of questions you need to answer for yourself. These include:

• What kind of music do you plan to offer?• Is there a sufficiently large public for your music to make it economically feasible?• What size company do you want it to be?• How will you finance the company?• Will you be doing this alone, or with one or two partners?• What will be the legal structure of the company (corporation, partnership, etc.)?• Will you be working out of a home office, or renting space?• If renting, how much space are you likely to need initially, and then for the first few years?• How big a staff will you need — one or two assistants, or a staff of a dozen or more?• How will you distribute your music? Will you be linked to a major, or work with an independent distributor, or will you “go it alone”?

Part of making the size determination is to do a thorough analysis of the kind of music you’re going to release and what it will take to promote and market it. For example, country, rock, and alternative music require considerable financial resources since radio promotion, a key factor in marketing these genres, is extremely cutthroat, and money talks. Those with the deepest pockets talk the loudest!

This is also true for marketing, because listening posts and display space in the few record retail locations that still exist have become almost prohibitively expensive — don’t expect to get them for free! And don’t forget the resources it takes to provide tour support to keep your artists working in venues where they can be seen and can start establishing their audience awareness and following.

To achieve a substantial marketing presence, you’ll need a fair number of experienced employees, and this in turn will determine how much and the kind of space you’ll need to house them. Frankly, I don’t suggest you even consider building this big a company unless you’ve had a considerable amount of both music industry and general business experience. On the other hand, if your interests are in folk, jazz, or classical music, for example, your marketing can be more modest, the staff quite small, and your requirement for funds appreciably less.

You also have to consider the size of the company that seems ideal for your purposes. For example, do you want it to be a small, vest-pocket label with just one or two employees and whose essential purpose is to promote your own music with an occasional CD release? Or is this intended to be a venture with wide potential appeal that will require a staff of three to ten (or more) people and appropriate office space to support five to twenty releases over the first couple of years?

A larger company will necessitate a substantial infrastructure. Office space requirements will have to be calculated based on the number of departments and the people you’ll need to staff them.


You’ll have to have enough desks, phones, computers, printers, faxes, office copiers, etc., to handle the load.

“Virtual” Staff

For many years, I’ve been a firm believer in what I refer to as a “virtual” staff. What this means is that you don’t have to hire a lot of full-time employees — especially not during the early days — but can make use of the talents of as many experienced freelance contractors as you may need and can afford. For example, do you really need an art department when you’re starting up? Instead, why not make use of the services of a skilled independent art director or a small team of graphic designers to come up with the “look” for your packaging and marketing print materials. The same can work for publicity and promotion. Use your network to find qualified people.

The advantage is that you’ll have the skills of clever people at your disposal on a “pay as you go” basis. An additional plus is that you don’t have the overhead and payroll of a large staff, meaning you also don’t have to pay social security or health benefits. In fact, you might think about hiring one or two high school or college students as part-time interns. They’ll get to learn about the music business and you’ll get inexpensive, or possibly free, labor.

A Few More Thoughts

Should you decide to begin with a small label, you might be able to finance it with your own money or with additional help from family and friends. This will be discussed in more detail in Chapter 3 — Raising Start-up Money.

For a larger company, you’ll need to work up a comprehensive business plan (a wise idea for a venture of any size, and I urge you to do one even for a small label). The intention is that you’ll be looking outside your immediate circle of relatives, friends, and associates not only for necessary funding, but also to businesspeople and venture capitalists who might be willing to invest in order to support the label for a period of at least three years. Your carefully thought out and budgeted business plan will give you a good idea of how much money you’ll need to provide a solid foundation for the early years. See Chapter 2 — The Business Plan.

As I stated earlier, I’m a great believer in planning ahead, and the business plan is but one of the many plans you’ll need to deliberate on while starting and building a label. In fact, careful planning is essential at almost each phase of what you’ll be doing.

Once you’ve pondered all the questions and issues previously cited — many of which we’ll cover in detail further on — you’ll want to get started! The following pages deal with what needs to be done.

Chapter 1 – First Steps | 7

Chapter 1 – First Steps

Building a successful record label requires many pursuits, especially during the early “set-up” days. There are certain things you’ll just have to do to stay on top of it all to build a solid foundation. First, you need to become as knowledgeable about the music business as possible, which requires a committed study of the recommended books and other resource materials. There’s a lengthy list of titles in the “Recommended Reading” section at the end of this book, and updates are occasionally posted at: http://www.cgsrc.com/updates.htm

Read such industry publications as Billboard and CMJ New Music Report — commonly called the “trades” — whenever possible. Subscriptions are expensive (though tax deductible) so make frequent visits to your local library. If the library doesn’t carry these publications, urge them to do so.

http://www.billboard.com/http://www.cmj.com/

It’s also a good idea to stay on top of news about music and the recording industry in the daily newspapers. In particular, I recommend The New York Times and The Wall Street Journal, both in print and online.

http://www.nytimes.com/http://online.wsj.com/home/us/

There are also quite a few online publications and websites you might find helpful, such as:http://digitalmusicnews.com/http://musicthinktank.com/

Last, but certainly not least, I suggest you subscribe to my free email newsletter Manage for Success. It’s chock full of sound advice and music industry news that helps with the day-to-day problems of managing a label. Send an email:

mailto:[email protected]/or visit my website and click on the “subscribe” button on most pages. Note that I will not lend, rent or sell the names on this list to anyone. It’s used only for the newsletters or occasional special messages from me.


The business has been changing rapidly during the last few years, so you must keep informed in order to be knowledgeable about the latest activities.

Second, network. Networking means staying in regular touch with friends and colleagues. Make them aware of what it is you’re doing in the event they have other friends or colleagues who may be able to help you. It also means attending as many industry events as possible where you may be able to meet other like-minded people to add to your network. The larger your network grows, the more effective

http://www.cgsrc.com/updates.htm

http://www.billboard.com/

http://www.cmj.com/

http://www.nytimes.com/

http://online.wsj.com/home/us/

http://digitalmusicnews.com/

http://musicthinktank.com/


http://www.holzmansolutions.com/


it becomes. For example, in reviewing over sixty pages of notes that covered the first six months of building my own ROM Records, I was surprised to see how well I utilized my network to gain valuable information. Frequently, this intelligence covered the kind of things not readily found in books.

Third, I can’t emphasize enough that you plan ahead. The more you do it, the easier it becomes. Everything about establishing a successful start-up involves extensive planning. So get used to it.

Fourth, you’re going to need to set up a simple office for yourself. It could be a small rented facility or a part of your home. This is where you’ll work on the preliminaries of building a label. If you decide to work at home and are unable to dedicate a room as an office, try to find a corner of a room that can be devoted to these activities. It’s not a good idea to have to clear off the dining table every time you want to work on business!

For inspiration, you might want to glance ahead at the chapter on setting up your office and read about some of the things you may need in way of furniture, communications, computer gear, and software.

Before you go any further, take a look at the website of the Small Business Administration (SBA). It has all kinds of very useful information about developing a start-up company.

http://www.sba.gov/

Look particularly at the sections on starting and managing a business, the different types of business entities — a subject we’ll be dealing with shortly, and the section on business plans, which we’ll address in the next chapter.

Professional Advice

Legal

First, and most essential, you should obtain the services of a good entertainment industry attorney, specifically one with lots of music business experience. No matter what you’ll be doing in the early stages, it will involve legal matters. And since this will be the first major decision you make, you’re going to want to do it the right way. Be sure to ask for recommendations from as many of your colleagues as you can. Then interview the candidates who seem most appropriate and compatible. Not only will an attorney guide you in setting up the legal aspects of your business, but he can also assist you in handling your artist negotiations, write your artist contracts, and advise you on all other contractual and legal affairs. In fact, it’s best that you have your attorney handle negotiations directly with the lawyer representing your artists and distributor. The attorney will be a lot more experienced at it, and he has the advantage of saying to an opposing lawyer, “Well, I need to consult with my client about that.” Such comments give both you and the attorney time to ponder a decision. It may cost you more initially in attorney fees, but this expense will save you a lot of money and grief later on.

http://www.sba.gov/


Try to find a lawyer who has a personality compatible to your own, since you’ll be spending a lot of time with him, both in person and on the phone. It’s also important that he’s known for returning calls promptly. One well-known music business attorney is notorious for not returning calls! It’s also beneficial if he enjoys music, especially the kind of music you plan to release. When I had my own label, I would frequently run into my attorney at my artists’ local gigs.

A good lawyer doesn’t come cheap, and this is one area where you should be prepared to spend some money. A partner in a large law firm will have to charge you more than a senior associate in his firm, so you might consider working with the associate. But ask first if one of the partners supervises him and looks at the contracts he drafts. This was the case with the attorney I hired for my label, ROM. I had the advantage of working with a young lawyer who had a fair amount of experience, but I was also aware that the managing partner, who I’d known for some years, would be keeping an eye on things.

Many attorneys bill by the hour, or fraction thereof. Sometimes the fraction is quite large — as much as a quarter! For example, a five-minute phone call might be billed as a quarter-hour rather than the actual one-twelfth, so ask at the interview stage how the billing works. Other lawyers want a negotiated retainer per month, which they request be paid in advance. This retainer will probably be based on the time they project spending on your behalf. Ask if you can get a flat fee, or at least an estimate, for such things as drafting the standard artist agreement for your label, or for setting up a corporation, if that’s what you decide to do. (More about that shortly.) Also, be aware that some firms charge a lot for sending faxes. Find out up front what these kinds of supplemental charges will be.

Again, I cannot emphasize strongly enough how important your attorney will be to you, so chose one wisely and well.

Accounting

Next, you’ll need the advice of a very good accountant, preferably a C.P.A. (Certified Public Accountant) with music business experience. His role will be to advise you, along with your lawyer, about how to decide on your legal entity. This will be determined in part on your financial assets, plus other factors such as the expected size of the staff and the amount of business you realistically expect to do.

Later on, he should suggest how to set up your financial books and records, discuss the most appropriate accounting software, tell you what reports to file and when, and determine the taxes you’ll have to pay.

It would also be a good idea to review your budgets with your accountant before putting them into your business plan, as I’ll discuss in the next chapter.


Legal Books for Study

In addition to the input you’ll receive from your lawyer and accountant, you should personally become familiar with the complexities of the law as it pertains to the music business, particularly in regard to contracts for artists, distributors, etc.

Therefore I suggest you get your hands on one or more of the following books, either at your local library, bookstore, Amazon.com, or Barnes&Noble.com.

http://www.Amazon.com/http://www.BarnesandNoble.com/

Donald S. Passman’s All You Need to Know About the Music Business, 7th Edition (Simon & Schuster). This is an absolutely essential guide to the legal and financial aspects of the record industry. If you have time to read only one book about the business, this should be it. Passman has a relaxed, conversational style of writing about what is usually a very dry subject. He updates the book about every three years or so, and there will probably be a new edition soon. You should buy your very own copy of this one, and not borrow it from the library, because you’ll be referring to it frequently.

Peter M. Thall’s What They’ll Never Tell You About the Music Business: The Myths, the Secrets, the Lies (& a Few Truths), Revised and Upodated (Billboard Books). This is one of the most recent of the books and although it’s intended primarily for artists considering signing with a label, it has great insight into the talent-signing process.

Richard Schulenberg’s Legal Aspects of the Music Industry: An Insider’s View (Watson-Guptill). This book covers almost every aspect of music business law, particularly contracts, breaking down legalize into readily understandable language.

Jeffrey Brabec and Todd Brabec’s Music, Money, and Success: The Insider’s Guide to Making Money in the Music Business, 7th Edition (Schirmer Trade Books). Directed more to songwriters, composers, and those interested in music for film and television, this is a good supplement to Passman, but is not as essential. It’s updated every few years.

M M M

Now read as much of the above as you can. You won’t get quizzed, but the more carefully you read and understand what’s written, the fewer problems you’ll have when dealing with contracts and the other arcana of the business of music. It’ll make things much easier for you, and you’ll be a lot more knowledgeable when you start interviewing for an attorney to represent you and your fledgling label.

http://www.Amazon.com/

http://www.BarnesandNoble.com/


Your Legal Structure

You’ll need to consider your label’s legal structure. I won’t go into this in detail, but your options include Sole Proprietorship, Partnership, Corporation (S-Corp or C-Corp), and LLC (Limited Liability Corporation) — and these are just some of the possibilities. However, no matter what you decide, papers will have to be filed with an appropriate governmental agency.

In addition to the Small Business Administration (mentioned earlier), an excellent source of information on legal structures for businesses, and on the law in general. is Nolo.com. I find this site to be wonderfully helpful on many subjects, particularly business and law. You might also look at LegalZoom.

http://www.nolo.com/http://www.legalzoom.com/

Briefly, a C-Corporation is a legal entity and is the most complex and the most expensive business to set up. It might not be the appropriate choice if you’re going to be predominantly self-financed, are flying solo, or have only one or two partners. On the other hand, other than fraud, it provides you the greatest protection from liability. You establish a corporation at the state level, but the rules vary with each state. Because it’s a business entity, a corporation files its own tax returns.

A Subchapter S-Corp is also a legal entity, is somewhat easier to establish, and will shield you to a certain extent from personal liability. It requires that regular reports be filed with your state. Profits and losses from an S-Corp flow through proportionately to the personal tax returns of the shareholders who control it. It also requires that if the shareholder works for the company, and if there’s a profit, he must pay himself wages that are comparable to normal such salaries for the position, the type of business, and the geographical region. And since the corporation is an entity and not a person, going bankrupt doesn’t affect the personal assets of its officers.

A Partnership is a business with more than one participant that has not filed formal papers with a governmental agency. It’s simple to construct and maintain, but the business owners are personally liable for debts, lawsuits, etc. Although it’s not necessary to have a contract between the partners, it’s a good idea that there be one specifying responsibilities and ownership, what happens if there’s a major disagreement between the partners, and how to divide the assets if the partnership is dissolved.

A Sole Proprietorship is the cheapest to set up and the easiest to organize. You are free to make your own decisions or mistakes, receive all income to keep or reinvest, and profits flow through to your personal tax return. Typical employee benefits such as health insurance are not directly deductible from your business income. The biggest drawback is that it offers no protection from liability, and going bankrupt will affect your personal credit status.

A Limited Liability Corporation (LLC) is somewhat similar to a partnership. It can be established by one or more shareholders and has certain tax advantages. Most important, it provides the liability protection of a corporation. It’s somewhat more complicated to establish than a sole proprietorship,

http://www.nolo.com/

http://www.legalzoom.com/


but is a lot easier than an S-Corp or C-Corp, and currently appears to be the most prevalent legal structure for start-up labels.

As discussed earlier, your lawyer and accountant will advise you on the best type of legal structure for your purposes. The choice is likely to be based mostly on the extent of personal liability you’re willing to be exposed to and the tax advantages or disadvantages that best suit your unique circumstances.

Label Name

While you’re doing all of the above, you should be thinking of a clever and euphonious name for your label — something that communicates the essence of the records you plan to issue. In the future, this may become one of your company’s most valuable assets, so spend some time on the name, and chose it carefully. Aim for making the name easy to remember, and it’s always a good idea if it relates to the music you’ll be releasing. For example, I’ve always thought that Folkways was a great name for a label because it clearly indicates the label’s devotion to folk music. Lost Highway is another, more recent label whose name cleverly evokes its music.

On the other hand, naming a label after yourself is not usually a great idea, unless your name is Geffen. Actually, David told me one August day in 1974, when we were discussing moving Elektra/Asylum/Nonesuch to the West Coast, that he’d never start another record label, and certainly not name it after himself! He obviously changed his mind.

It also helps if the first letter of your label’s name is early in the alphabet. When distributors decide to pay their suppliers — a seeming rarity in itself — they commonly look at their accounts payable starting with A and ending with Z. The earlier you are in the alphabet, the likelier you are to be paid!

Trademark & Domain Name Checks

After you’ve decided on the ideal label name — and hopefully you’ll have a few alternates in mind in case your bright idea has already been taken — you should do both a trademark search and check Internet domain availability. This is to be sure that your chosen name is not already taken.

You can do a “quick and dirty” check on the web using a search engine such as Google but not finding a name already in use doesn’t mean there may not be an existing legal trademark.

http://www.google.com/

You can then do a domain name check at one of the “whois” databases:http://www.internic.net/whois.htmlhttp://www.whois.net/

http://www.google.com/

http://www.internic.net/whois.html

http://www.whois.net/


If you haven’t found someone already using your preferred name by utilizing the above tools, I recommend having a trademark service such as Thomson CompuMark do a more thorough label name availability search on your behalf. Their fee is well worth your peace of mind.

http://compumark.thomson.com/

Thomson CompuMark have described themselves as “the global leader in trademark research and brand protection.” They can explore key music industry and copyright sources to identify the existence of names in current use. Their coverage includes the U.S. Copyright Office for records since 1978, their own proprietary database of music-related sources, U.S. Federal and State trademarks in entertainment-related classes, and all domain names with .com, .org, .edu, .net, and .gov suffixes. They can be reached on the web and at Thomson CompuMark, 500 Victory Road, North Quincy, MA 02171, phone 1-800-692-8833. They also have offices in many major cities. You can call them for a copy of their Rates and Services Guide.

You might also do a check at the website of the U.S. Patent and Trademark Office’s Trademark Electronic Search System.

http://www.uspto.gov/smallbusiness

However, I suggest you read their “How To…” pages first.http://www.uspto.gov/main/howdoi.htm

By the way, although you can and should use it, you can’t actually register your label name and logo until you’ve shipped your first commercial release through interstate commerce. You can then protect your logo, which will become the registered trademark, after filing some paperwork and paying fees. You can do this yourself, but it’s advisable to have an attorney who’s familiar with trademark registration handle it for you.

Once you’ve received governmental approval of the trademark, you should be sure to place a ® (register mark) next to the logo, denoting its registered and protected status. This registration is only valid for the U.S. Note that until you become a large company, it would be prohibitively expensive to register around the world.

Domain Name Registration

Register your label name as an Internet domain with a domain name registrar as soon as possible. There are many such registrars. I’ve heard good things about GoDaddy who claim to be the world’s largest registrar, and may be one of the least expensive: http://www.godaddy.com/

So many names have already been registered that “dot com” domains are becoming harder to get. It’s also a good idea to register likely variants on your name to protect your future. If your preferred

http://compumark.thomson.com/

http://www.uspto.gov/smallbusiness

http://www.uspto.gov/main/howdoi.htm

http://www.godaddy.com/


“com” domain is unavailable, consider using a “biz” domain. Since this type of domain has been available for a much shorter time, more names will be available.

As a matter of fact, I’ve registered my business with a number of different domains, all of which are active links to my site:

http://www.HolzmanSolutions.com/http://www.Holzman-Solutions.com/http://www.KeithHolzman.com/http://www.SolutionsUnltd.com/

and evenhttp://www.ManageForSuccess.com/

When I wanted to register a domain for marketing this book, I discovered that most of the names I wanted were already taken by various start-up ventures. Therefore I registered both “RecordCompanyStartup.com” and its variant “RecordCoStartup.com” as domains, as well as the leading initials of the book’s title: http://www.cgsrc.com/

Email Address

Once you’ve registered your label’s domain name you should assign it to an ISP (Internet Service Provider) or leave it with the domain registrar, many of whom can provide web hosting and maintenance of your own domain’s email addresses for very little extra cost, if any. ISPs are available all over the country and include Earthlink, COVAD, and many others.

http://www.earthlink.net/http://www.covad.com/

One of the nice things about having your very own domain is that it can make your email address be distinctive to your business, such as “[email protected].” For example, I’m “[email protected].” This is much more professional than using an AOL, Gmail, or Yahoo address.

Your D/B/A (Fictitious Business Name)

Talk to your attorney about the advisability of creating a D/B/A, which stands for “Doing Business As.” Depending on your local or state law, most businesses that operate under a fictitious name are required to complete a fictitious business name statement, publish the statement in a newspaper of general circulation, and then record this information with the County Recorder where the business is located. Corporations are generally exempt, as are businesses that use the individual proprietor’s own name. If you are “doing business as” (d/b/a), generally you need to comply with your local fictitious business name rules. Your attorney can advise you of the appropriate offices to contact.


http://www.Holzman-Solutions.com/

http://www.KeithHolzman.com/

http://www.SolutionsUnltd.com/

http://www.ManageForSuccess.com/

http://www.cgsrc.com/

http://www.earthlink.net/

http://www.covad.com/


Business Licenses & Tax Registration Certificate

Your lawyer may also advise you to take out a business license with your local city or county, as might be required by local statute. In any event, you’ll probably have to get a Tax Registration Certificate and a Reseller’s License, which can be obtained through your state’s taxing agency.

Logo & Business Stationery

By now, you’ll need some sort of business-like, professional-looking letterhead. This is a good time to have a qualified graphic artist design your logo. Try to find a designer who’s experienced at logo design, which is a highly specialized field. A graphic artist who may be great at laying out CD covers, advertisements, and posters, for example, may not be skilled at creating a unique and eye-catching logo.

Your logo should try to express the nature of the music you’ll be working with, and it should be attention-grabbing and attractive. Be sure that it reproduces well when reduced to tiny sizes, as is frequently necessary. In some cases, a designer will create a logo for regular use, and a variant with thicker lines when it has to be greatly reduced.

If you simply can’t afford a professional designer, try a local art school. An enlightened instructor, working with seniors or graduate students, may make designing your logo into a class project. You can then award an appropriate, but modest cash prize to the winning entry, or give a cash gift to the school.

A temporary alternative, while you’re putting your company together, is to use a simple “type only” letterhead. Although a bit cheaper, it won’t create as good an impact on people you might want to impress. The letterhead block can be printed “on the fly” by your laser printer at the time you write correspondence, prepare faxes, etc.

When you have your designed logo and other elements in hand, I suggest you print only as much stationery (letterhead, envelopes, business cards and mailing labels) as you think you’ll need initially. You’re liable to have to make changes due to relocating your office, changing phone numbers, etc. Most important, be sure your firm’s email address is on the letterhead and business cards, and when the time is appropriate, include the URL for your website as well.

UPC Bar Code

It’s probably not too early to obtain your label’s unique number for your UPC bar code. This will be the first five numbers of your catalog number (not including the small leading prefix digit). And it will be part of the bar code on the back of your CD.


It’s absolutely imperative that you bar code all your releases. Without it most — if not all — distributors will not carry your label. Used to track sales and inventory, the bar code is essential if you’re interested in getting your sales counted by SoundScan. And it’s SoundScan numbers that will determine your chart positions in Billboard, the leading industry trade paper. More important, it provides extremely valuable information to you, the label owner. So if you can afford it, I suggest you subscribe to their service for an important release. Be aware that not all sales are scanned, particularly in small retailers, but SoundScan has developed algorithms that attempt to account for locations without capability for scanning or reporting.

http://www.nielsen.soundscan.com/

You should apply for your UPC Number from GS1.US. Detailed facts and an application are available online. The minimum (and likely) fee for a new label is currently $760. Their phone number in Dayton, Ohio is 937-435-3870. http://barcodes.gs1us.org

They will supply you with your leading and next five digits and you will supply the rest of the catalog number. Let’s say, for example, that they supply you with 099999. Your first release might then be 09999-91001-29.

Note that in the above example the catalog number (5 digits) begins with the last digit that you are given — a nine. The next four numbers can be anything you want, but it’s best that you create a sequential set starting with 1001. The number after the second hyphen used to be the product configuration number. For example, 1 stood for LP, 2 for CD, 4 for cassette, 7 for vinyl singles, etc., but this no longer applies. The final number, a small 9, remains as a check digit and is usually created by the bar code software that you or your designer should have. The very first number, in this case a zero, is a number system character, and is supplied by the folks at GS1.

If you buy one of the bar coding programs, you won’t need to order special film for each new release. Look for software that draws bar codes in the “UPC-A” format which is the one used by the record industry. Computalabel International has an excellent website that provides a great deal of information about bar codes and their usage. Their MBC4 for the Macintosh is an excellent program. For the PC, you might look at B Coder Pro from TalTech.

http://www.computalabel.com/http://www.taltech.com/

0 99999 10012 9

http://www.nielsen.com/us/en/links/Soundscan-BDS.html

http://barcodes.gs1us.org

http://www.computalabel.com/

http://www.taltech.com/


There are limitations to how the bar code is displayed on the inlay card, which we’ll cover later on in the graphics design portion of the chapter dealing with pre-production. By the way, note that the sample bar code above is full size and not truncated or reduced. You should also be aware that the music industry might change to a 13-digit number in the next few years, so try to buy software that anticipates such a change and can handle it.

Bank Account

Open a business checking account at a conveniently located bank, particularly one that might have a start-up, entertainment, or entrepreneur’s division. The account should be in the corporate, partnership, or other official name. Even if you decided that your label should be a sole proprietorship, I still suggest you have a separate bank account for the business, and that you keep all of its financial records and accounts completely separate from your personal ones.

Try to establish a close relationship with your banker. He can be very helpful during the capital acquisition phase, and even after you’ve started rolling, so choose your bank and banker carefully.

You’ll probably be spending a lot of your and/or your partners’ own money until you’re fully funded. So your checking account, not to mention your credit card account, will help you keep track of the details of what you’ve spent during the preliminary stages. In fact, it’s a good idea to get a simple accounting or checkbook program at the earliest possible stage in order to keep track of your expenses. Examples are Quicken and QuickBooks, both of which exist for PC and Macintosh. More sophisticated programs include AccountEdge for Windows, and AccountEdge for the Mac. You can also use a spreadsheet program such as Microsoft Excel, but it won’t be quite as easy.

http://www.intuit.com/http://www.accountedge.com/

Be sure to save all your business receipts for tax purposes. And when it comes to taxes, be sure your accountant takes deductions for expenditures such as this book, and depreciates all necessary capital expenditures such as computers, furniture, software, etc.

Insurance

Discuss possible kinds of insurance with your lawyer and accountant, including at what stage of development you should have some. Moreover, they can probably recommend qualified insurance brokers that they’ve worked with.

You’ll want to be certain that your office equipment is insured. It may already be covered by your homeowner’s or renter’s policy if you have one. However, these things are sometimes explicitly excluded if used for a business, which means you’d have to purchase such coverage separately.

http://www.intuit.com/

http://www.accountedge.com/


If you’re using your home and have part-time or full-time employees working there, be sure you obtain sufficient liability insurance. And as soon as you have employees, you should also get a worker’s compensation policy. Once you’re established, you might also consider a business interruption policy to cover what happens if an earthquake or other disaster should keep you from operating for a period of time.

A good insurance broker can advise you as to all that’s necessary.


First Steps Check List

Read the “trades.” ______

Read the recommended legal books, especially Passman’s All You Need to Know.... ______

Network at all opportunities. ______

Set up a basic “starter” office. ______

Interview and hire a music business attorney. ______

Interview and hire an accountant. ______

Decide on your legal structure and set it up. ______

Choose a label name. ______

Do a trademark and domain name search. ______

Register your domain. ______

Get an email address for the label. ______

Establish a “D/B/A” if necessary. ______

Get a Business License and Tax Registration Certificate. ______

Design a logo. ______

Get your business stationery printed. ______

Apply for a UPC bar code number. ______

Open a business bank account. ______

Buy insurance, if necessary. ______

Keep planning ahead. ______

Chapter 2 – The Business Plan | 21

Chapter 2 – The Business Plan

I believe it’s essential that you write a comprehensive business plan. First, it will be one of the key tools you’ll use to raise investment capital or to secure a loan, if necessary. In addition, the plan should be complete enough to be useful as an operating manual, or road map if you will, for your label’s first years. The operating manual should provide a clear direction and vision for your label, yet be sufficiently flexible so you can course-correct as dictated by the releases, marketing conditions, and prevailing circumstances. Furthermore, an honestly constructed business plan is an important reality check for the entrepreneur. In summary, it’s both a tool to attract investment capital or secure loans, and a vital management and planning device.

Cover all the bases in the plan, but write it simply, avoiding industry buzzwords or business jargon. Be realistic in your financial projections so you can see and identify potential snags, and whether any problems can be solved.

There are a number of books on this subject as well as a great deal of software to assist you. A Google search for “business plans” revealed many thousands of websites on the subject, many with sample plans and outlines. If you decide to purchase business-plan writing software, be sure it conforms to your particular business and what you want to achieve with it. Not all “canned” plans will work for the record industry; in fact, probably very few will. Make use of the ideas and formats, not the content.

Whatever tools you decide on, be sure that you cover your subject extensively — yet not exhaustively. Some business plans are extraordinarily lengthy, detailing every conceivable circumstance of the company’s operations. Although I think your internal operating plan should be comprehensive, the business plan shouldn’t be so long that it’s unlikely to be read thoroughly by potential investors. Fifteen to thirty pages should be more than enough and, in some circumstances, ten to fifteen may be sufficient.

Also, bear in mind that the document will vary depending on the type and size of record company you want to build. For example, if you’re not planning to ask for outside funding, it’ll primarily be used as your road map and can be fairly brief. However, if you’re planning to raise money from family, friends, or independent investors for a somewhat more substantial label, it’ll need to reflect more of the business and mechanical aspects of the label’s operation. Finally, if you need to raise substantial capital, it’ll have to be considerably more comprehensive.

As you create your business plan, don’t be afraid that someone’s going to steal your ideas. Other than talent, very little has happened in the last few years as to how independent record companies operate. So you’re unlikely to be ripped off by showing your business plan to interested parties. Chances are nothing you’ve come up with will be enormously revolutionary.


A Model Business Plan

There are many different formats you can use for a business plan. What follows is my suggested model, with the parts that I recommend you include in yours.

1. Executive Summary

This summary is the single-most important part of the plan and should contain all the salient facts — who you are, the type of music you’ll be releasing, what you’re trying to achieve, and who your audience will be. You’ll want this info all at the beginning of the plan. Organize the summary in order of importance, and try to keep it to one page.

Write this section first, as it will help you crystallize your thinking and make the rest of the document easier to draft. It’s essentially your entire plan in miniature and should be succinct, logical and, most important, fascinating — if not seductive! If a reader goes no further, he should come away with a good idea of what you plan to achieve. Ideally the summary should be so engrossing as to encourage reading all the way through to the end. The point is to capture a potential investor’s attention.

Some professionals suggest you write the executive summary after you’ve written everything else, making it truly a compact version of your plans. That’s O.K. too. Whichever approach you decide to take — writing it first or last — is entirely up to you.

2. Products and Mission Statement

This section describes the type of music you’ll be releasing and what makes it special. Make it so engaging that the reader will want to hear the music for himself.

Explain the timeline of events, such as when you plan to put out the first — and then subsequent — releases.

Should you decide to develop a music publishing division, or other related adjunct as part of the company, ideas on that should be included here.

Then write about what you’re trying to achieve, and what your long-range goals are. You don’t need a comprehensive five- or ten-year plan; however, you should be clear about the label’s first two to three years, with a vision of what you’d like to achieve once the label is established on a firm footing.

3. Management Plan (Company Overview)

Include information about your legal structure, such as a Sole Proprietorship, Partnership, Limited Liability Corporation, S-Corporation, C-Corporation, etc. You might want to include information about any special licenses or affiliations (American Federation of Musicians, AFTRA, ASCAP, or BMI,


for example) that you may have or plan to obtain. We’ll discuss the above-mentioned unions and performance rights organizations in later chapters.

Touch on your infrastructure and operations, such as the kind and size of office space you’ll require, where it’s likely to be located, and whether it’s leased or purchased.

Discuss staffing. For example, mention how many people you’ll need, and when you’ll need them. Personally, I’m a great believer in hiring as few people as possible, utilizing non-salaried freelancers as necessary, and bringing on salaried personnel only when essential to the daily operation of the business.

Write about your plans for manufacturing, if applicable. Almost every independent label outsources this function, utilizing the services of independent printing and manufacturing plants. You’ll probably be purchasing print materials, CDs, possibly LPs and cassettes only as needed, since judicious and savvy inventory management is vital to keep costs manageable and under control.

4. Market Analysis and Competition

The music business is a multi-billion dollar industry, so don’t exaggerate the potential market for your product. Be sure to explain your musical specialty or niche, what makes your music unique and sales worthy, and what percentage of the market it may take. For example, jazz and classical each represent only about 4 to 5% of the entire industry; so if you’re going to be a jazz-only label, for example, your market segment is but a small portion of the whole. All the labels releasing jazz music will share this segment’s potential, so be realistic here. This is not the time or place for hype.

Write about your likely customers — who they are and what their musical preferences may be. Where are they most likely to purchase your products?

Discuss the competition, if any, for the music you’ll be issuing, and how your music may differ from theirs. What will differentiate your label from all the others?

5. Marketing and Sales Strategy

Explain how you’ll go about marketing and selling your music, including how you will distribute, publicize, and promote the releases. Do so in general terms without going into excessive detail. At the same time, don’t give away any unique or proprietary ideas that could be copied or used by others before your recordings reach the market.

You might want to discuss your pricing strategy — whether you’ll be full line, medium, or budget. Consider what’s happening in the music industry currently, and decide if you’ll be pricing in the same category as the majors, or if you’re going to try something different. For example, if your competition is priced at $14.98 or $16.98, perhaps you’ll price your front-line releases at $11.98 or $12.98. This assumes you’ve worked out the numbers and can be profitable at a lower suggested list.


Discuss your approach to online sales. Will you be using an aggregator (see Chapter 12) or will you do it yourself? What percentage of your total business do you anticipate will consist of online sales?

6. Management Team

This section describes who you and your associates (if any) are, stating music industry or other business experience and education. It should also incorporate projected job titles and responsibilities. Don’t go into long biographies here. Just list the high points that project you and your staff as industry professionals.

7. Financial Plan

This should include simple and clearly delineated spreadsheet “top sheets,” with realistic costs and potential sales projected for the first two or three years. By “top sheets,” I mean the summary pages, although you should go through the entire process of generating all the underlying pages that won’t be included in the business plan, but that will include all of the minutiae of a comprehensive budget.

You should enumerate projected income from sales of each release, and all the costs of operating the business for a period of time — the first two years, for example. This way, if a potential investor wants to see more detailed numbers, they’re available — just not included in the plan for sake of simplicity and brevity.

Be sure to include everything in your underlying budget that you can possibly think of. Consider all the possibilities in your planning, but settle on those that seem most appropriate for your purposes.

You’ll want to include an ROI (Return on Investment) statement and when such a return is expected to occur. Include Break-even Analyses and Cash Flow Projections. I strongly urge you to enlist the aid of your accountant in preparing this data, which will help insure accuracy as well as the customary formatting.

Sidebars on budgeting, and suggested items to include in the budget, appear later in this chapter, and should be very helpful as you draft your projections.

8. Potential Risks and Opportunities

Once again, be realistic in this section. The music industry has always been a calculated gamble, so be sure to indicate this by expressing what pitfalls could occur. This section is, by its nature, always a negative but needs to be there to keep you honest! On the other hand, you can express what upside potential there may be when a release strikes the public’s fancy, becomes a big hit, and how that may benefit the company and its investors.


9. Exhibits

This could include information about your first artist signings, and additional spreadsheets such as a typical Recording Budget, etc.

10. Capital Requirements (optional) & Exit Plan

Some business plans include the specific dollar amounts that management is trying to raise. If you want to do that, include the number in this section. However, some business plan gurus recommend that you not state the capitalization amount at all in the plan, presumably for reasons of both fund-raising flexibility and a desire not to scare off potential investors.

Also, some plans include a suggested exit strategy so that investors will know how and when they might be free to withdraw their investment and share of profit. This would be at such time that the company has become well established, is operating on an even keel, and is in a profitable position. This is a statement from management that specifies the anticipated timing of such an exit, or other variants that they might deem appropriate.

As part of the exit strategy, you should indicate whether you, or any other senior managers, plan to stay on to run the label if the company is sold or after the investors recoup — or whether you plan to run all the way to the bank!

Budgeting

You should start the budgeting process by creating a new spreadsheet, using a program such as Excel. Estimate all the releases you’ll put out in the first year, figuring out when you expect each one to hit the street. Approximate how many units you’ll sell during each of the remaining months of the year.

Here’s an example. The Doorstops, a new rock band with a fanatical local following, will ship in March. Estimate your pre-release expenses for that project in the months prior to street date; also estimate sales by month in units, and in dollars (based on when you think you’ll actually receive funds from your distributor). Then factor in the marketing expenses for this project for the months in which they’ll occur.

In addition, in June you expect to ship a new CD by Suzy Troubadoura, an exciting, young singer-songwriter. So plug in the estimated costs of recording and marketing, followed by sales income for the months in which you expect to receive payment.

Continue in this fashion for each new release.


Next, estimate all of your other costs of sales, and all general and administrative expenses, which include staff salaries, fees for independent or casual help, rent, phone, fax, Internet, website, and all other customary and projected overhead items.

Total all the above.

Will you be able to survive? In other words, will there be sufficient income from sales to cover the costs of making and marketing the recordings, and for running the label? If so, great! You’re on the right track. If not, you’ll have an excellent idea of how much capital you’ll need to raise so that you can stay afloat until the numbers start showing a profit.

Once you actually begin operating the label, you should update the budget by replacing estimated numbers with actual costs and income as they occur, keeping the “road map” up to date. Or, course-correct if necessary, making whatever changes you need that will keep you alive and in business.

For the second, and each succeeding, year, you’ll add to your new release estimates all your projections for catalog sales — by month, as above. (Your catalog will consist of all prior years’ new releases.) The result will give you a good idea of projected sales income over a period of time. Also, add any licensing income that is anticipated.

This comprehensive detailing is the essence of effective budgeting, and it should be applied to all aspects of your operation.

Prepare budgets for each new recording project, and when the master is completed, compare the actual numbers to those budgeted. How well did you estimate? Use this experience in preparing the budget for the next project.

Do the same with all marketing expenses (radio promotion, publicity, advertising, etc.) on a project-by-project basis. But most important, keep track of the actual numbers and compare them regularly to the projections.

The more you do this, the better you’ll be at creating new budgets, and the more effective you’ll be as a label manager.


Typical Budget Items for the Business Plan

Note that many of the items listed below may not apply to a small start-up, but they’re included as a guide to be sure you’ve not forgotten something. Typical Start-up Expenses

LegalAccountingOther Professional FeesOffice RentLicenses/PermitsTalent AdvancesSalaries/WagesPayroll ExpensesOutside Services (Freelance Staff)Supplies UtilitiesInsuranceCapital Equipment PurchasesCapital Equipment Leases

Income Projections (Profit & Loss Statements)Income projections show whether you’ll be in a profit or loss position for selected periods of the year. They should preferably include a three-year summary, detailed by each month for the first year, and by quarters for the second and third years.

Income (or Revenue)Sales

Domestic SalesForeign SalesOnline Sales (both Domestic and Foreign)Mail OrderArtist Sales

Licensing IncomePublishing Income (if applicable)

Operating Budget (may be separated into fixed and controllable expenses)Fixed Expenses

Office RentEquipment LeasesDepreciationInsuranceUtilities


Controllable ExpensesCosts of Goods Sold

Graphics ProductionPrintingPressing & DuplicationRoyalties (projected)

ArtistProducerMechanical

FreightReturns Processing

Recording CostsArtist AdvancesProducer AdvancesStudio & EngineeringProducerEngineerMusiciansInstrument RentalTapeMastering

Salaries/WagesPayroll ExpensesEmployee Benefits (Health Insurance)Outside Services (Freelance Staff)Sales & Marketing

PublicityPromotionAdvertisingMarketing AidsPromotional CDsConventions & MeetingsTravel

Loan PaymentsBank ChargesLegalAccountingDues & SubscriptionsFeesInsurancePhone, FaxMessenger & FedExPostage


InternetWebsite Design & MaintenanceEntertainment ExpenseTravelPrinting & StationerySuppliesRepairs & MaintenanceJanitorialUtilitiesTaxesMiscellaneous Expenses

Balance SheetCurrent Assets

CashAccounts Receivable less Reserve for ReturnsRoyalty AdvancesDeferred Production CostsInventoryPrepaid Expenses

Fixed AssetsMaster Recordings (Note: some labels treat Masters as a fixed asset; others as a

capitalized asset subject to amortization.)ArchivesCopyrights & TrademarksFurniture & FixturesOffice EquipmentComputer EquipmentSound EquipmentLeasehold Improvements

Total Assets

Liabilities & EquityCurrent Liabilities

Accounts PayableRoyalties Payable

EquityCapitalRetained Earnings

Total Liability & Equity


Cash Flow ProjectionsCash flow projections illustrate how you’ll be spending and receiving money in a given time period. It’ll show whether you’ll have cash on hand, or how much “in the hole” you might be. Do projections for each month for the first year, and for each quarter for the second and third years. Once you’re operational, it’s essential that you do a cash flow analysis every month.

Break-even AnalysisThe purpose of this is to show what you’ll need in monthly income to stay afloat.


Business Plan Check List

Do your homework by looking at the existing plan-writing software. ______

Make sure that your writing is simple and straightforward. ______

Thoroughly work out all details on paper before you write. ______

The Executive Summary is the most important part of the plan. Make it that way! ______

The Product & Mission Statement should describe your genre of music, timeline, etc. _____

The Management Plan should explain the type of company, infrastructure, and staff. ______

The Market Analysis & Competition section should position you in the industry. ______

The Marketing & Sales Strategy section should discuss pricing, distribution, and

market philosophy. ______

The Management Team section should cover key personnel. ______

Your Financial Plan should project income and expenses in a clear-cut form. ______

The writing of the Potential Risks & Opportunities section should be candid. ______

The Capital Requirements & Exit Plan sections (both optional) should be frank. ______

Budget the entire operation thoroughly for the first two years. ______

Chapter 3 – Raising Start-up Money | 33

Chapter 3 – Raising Start-up Money

Once you’ve completed your comprehensive business plan, it can be used to raise the money needed to get you in business. While you were in the process of writing and refining the plan, you should have been thinking about who you might approach to invest in your new venture. Hopefully, you’ve already made up a good list. Obviously you’ll first tap close — and not so close — family members, friends, and associates, as they’re the most likely candidates. They know you and may want to help you get started, especially if the investment units are not too expensive. In their own minds, they may even consider it a gift and not an investment.

You and your accountant will decide what shares should cost, based on what you need to raise to operate for a substantial period of time. Too many start-ups — not just record companies — undercapitalize themselves by not raising sufficient funds to see them through the first couple of years of limited cash flow. You’ll need that time to build an artist roster and to establish the foundations for a solid business.

Should you decide to seek a P&D (Production and Distribution) deal with a major label — we’ll discuss this in more detail later in the chapter on distribution — you may need less start-up capital. The major may supply much of the infrastructure support, as well as some seed money. However, this only applies to someone with extensive music industry experience, who’s become well known in the industry and has developed a name for himself.

Surprisingly, sometimes it’s easier to raise a couple of million than just a few hundred thousand!

Be aware that, unless you have substantial personal assets, you’re unlikely to be able to obtain a bank loan. Banks tend to frown on the record business and see it as too risky a venture.

You might enlist the help of your attorney, accountant, or other professional adviser in the raising of capital. They have many useful business contacts and may be able to introduce you to someone with deep pockets that could be interested in what you’re trying to achieve.

Unless you’re experienced in the music industry and have substantial business experience, it may be difficult to be taken seriously by professional investors. Take the advice of Guy Kawasaki, CEO of Garage Technology Ventures, a boutique investment bank for high technology ventures, and “stick with the 3Fs: Friends, Fools, and Family.” Because friends and family know you, they’re the most likely to be interested in what you’re trying to do and will want to support you in achieving your goals.

http://www.garage.com/

Kawasaki also suggests that if you decide to seek professional investors, you should surround yourself with a board of directors or advisers — “people with grey hair, no hair, and stents instead of nose earrings.” It will be much easier to be taken seriously. (Stents are devices inserted in blood vessels of heart patients to aid blood flow.)

http://www.garage.com/


Before you look to professionals, however, seek out local businesspeople whose operations might be compatible with yours. Determine who is supporting cultural activities locally. You may just find someone in your own town who’s interested in what you’re doing and who’s willing to invest.

However, should you decide to go the route of typical business investors, such as venture capitalists, do so only if you need to raise a lot of money — $2 million or more. A search of the web or local telephone directory will give you the names of venture capitalists or associations in your local area such as The Los Angeles Venture Association. You might also investigate resources available at the VC Fodder website. Be aware though that professional investors are unlikely to put money into a record label unless the principals are highly experienced music industry professionals with an existing and highly credible track record.

http://www.lava.org/http://www.vcfodder.com/

Companies that tend to successfully raise venture capital have the following characteristics in common, per Vcapital:

1. Real likelihood of achieving a significant ROI (Return on Investment) of 50% or more in three to five years,

2. Exit strategies that are clearly defined, and within an attractive timeframe,

3. A management team experienced in the industry, in growing a company, and in exiting successfully,

4. Great potential in a growing market,

5. A unique product,

6. A demonstrated, clear path to profitability, with substantial revenue growth,

7. Management willing to share ownership and control in exchange for capital.

A recent development is something called “fan-funding” or “crowdfunding,” which invites fans and followers to pitch in by investing modest amounts and getting something in return — a free CD, their name in a song, free tickets to a show, etc. Examples are Artist Share and Kickstarter.

http://www.artistshare.com/home/default.aspxhttp://www.kickstarter.com/

If neither venture capital nor fanfunding work for you, another — but more risky — alternative is to try to secure a personal bank loan — only be very sure you can pay it back. And be realistic about the likelihood of success. Don’t be looking through rose-colored glasses.

http://www.lava.org/

http://www.vcfodder.com/

http://www.artistshare.com/home/default.aspx

http://www.kickstarter.com/

Chapter 3 – Raising Start-up Money | 35

A Quick Take on Raising Money

Decide on how much money you need to raise.

Start with family, friends, and associates.

Consider angels, venture capitalists, and fan-funding.

Secure a risky bank loan.

Chapter 4 – The Art of Acquiring Talent | 37

Chapter 4 – The Art of Acquiring Talent

While you’re trying to raise money, and even as you write your business plan, you should be working on bringing artists to your label. That is unless you’re building a label around your own talent.

How do you find great artists? — by networking and talking to friends in and out of the music business. I signed a few artists because I heard about them from colleagues, from artists I’d already signed, or from producers and engineers who were working with unsigned talent. Music business attorneys also know a lot of good, available talent. By the way, a lot of potential “artists” use MySpace.com to get their name and music out there. People may go to their site, hear the music, add them to their “buddy” list, and then receive notices about gigs, releases, etc. This might be one way to find an artist, but I have my doubts about this approach.

You should also be going to clubs and other places where performers do their thing. Go often and visit as many venues as possible that feature the kind of artists whose music you like.

Label owners typically spend a great deal of time in music clubs in their local areas to assess the abilities of artists who they’d like to work with and who they deem worthy of a larger public. Be sure that you see any artist you’re interested in perform many times before you seriously consider signing them.

And before you contemplate signing an artist, you should answer the following questions: • Is this someone I’m willing to spend a lot of time with, and effort on?• Is this a “nice” person, or am I likely to regret extending myself to this artist?• Is the artist talented not only as a musician, but as a good songwriter, and also as a performer with an exciting stage presence?• Is the artist’s ego in check?• Does the artist perform frequently in front of an audience?• Does the artist have depth both as performer and writer? If the artist is not a writer, is there access to vital new material?• Will this be someone who is cooperative to work with?• Is the artist willing to be involved in the marketing of the album?• Is the artist willing to tour, do lots of gigs, and help promote the album by doing many interviews and phone calls?• Does the artist have an active manager and/or agent?• Does the artist have a day job or other means of financial support? You don’t want to give an artist the impression that the label will be able to offer financial support.

Positive answers to these questions are essential to the future success of your label.

As I write this, I’m reminded of the late Harry Chapin. Shortly before, and long after, his first record came out, he worked tirelessly at sales meetings, did lots of radio and press interviews, called program


and music directors, DJs, etc., and always graciously and sincerely thanked those that were playing his music. And it wasn’t easy getting stations to play the seven-minute plus “Taxi,” which became his first hit. (No one seemed to notice that the timing on the label said 6:70!)

By the way, let me caution you against signing under-age artists — those under 18. They’re a great hassle legally, despite so-called “ironclad” contracts, and you not only have to deal with probable immaturity, but parents as well.

Draft Your Standard Artist Contract

This is an excellent time to be working with your attorney to have him draft a standard artist contract for your label. If he is primarily a record or entertainment industry attorney, he’s probably written, or certainly negotiated, many such agreements, but it’s important that the agreement works for you. Many of the terms in the agreements that the majors have been using for many years are out of date, and although legal, may be ethically questionable.

And I strongly urge that you adopt a straightforward, simple, artist-friendly document rather than what has been industry custom. I also believe it should be written in plain English so that an artist can clearly understand it.

Although there are many “canned” contracts available, I think it’s best that you have your attorney prepare a short document that fairly represents the tone of your label. Above all, be fair to your artist.

We’ll discuss this in a lot more detail in the next chapter.

If you haven’t yet read Donald Passman’s All You Need to Know About the Music Business — suggested in the “First Steps” chapter — read it now. This book will give you a thorough understanding, not only of essential legal terminology, but also of how the business traditionally works. After reading it, you may decide to work around the system rather than within it, and since the business is going through such major changes at the beginning of this century, you’ll want to be sure you know what you’re doing.

Negotiate the Deal

O.K., so you’ve done your homework and have read all about the legal aspects of the music industry. You have a solid draft of an artist agreement, have been assiduously club hopping, and have lined up talent that you’d like to be the very first artists signed to your fledgling label. Now is the time to enter into contract negotiations.

Chapter 4 – The Art of Acquiring Talent | 39

A lot of talent will be flattered by a positive approach from you, but will want to know more than just what kind of deal you might offer. They’re going to want to know specifics about your plans — what’s attractive or special about you and your label, what kind of experience you have, how good your distribution is, and how you will go about marketing their release. These are not unreasonable requests from talent, and this information is vital to their careers and well-being. Be sure you can answer them confidently, and if you can’t answer them, you’re probably not yet ready to sign artists.

Some label owners discuss the terms of a proposed deal soon after general agreement with an artist that they’d like to work together. Many artists are not too knowledgeable about these terms and may not understand what’s being offered.

An alternative is for the label to draft a “deal memo” in which the key terms of the offer are listed. The advantage to both parties is that the artist can discuss the memo with an attorney representing him who will be able to explain the terms further. Frequently the artist’s attorney or manager will respond with a counter-proposal requesting what they believe to be more favorable terms. You’ll give or take as you and your attorney think best, trying to find common ground so that both sides are comfortable with the offer.

Once both sides agree on the basic terms of the deal, the label, or most likely the label’s attorney, will draft the agreement, using your pre-established standard form, with insertions pertinent to the specifics of the offer. This will probably prompt further negotiating by both sides until that magic day when all parties actually sign the deal.

By the way, be sure that your artists obtain their own legal counsel. You don’t ever want an artist to think you or your attorney has bamboozled or pressured him. In fact, many contracts have a clause stating that the artist has been properly represented, and requiring such an acknowledgement.

Demo Deals

Some labels might be interested in a given artist but may not be willing to commit to a lengthy contract. In this case, they may negotiate a simple demo or development agreement. Usually the agreement states that the artist may record a certain number of songs which will be paid for by the label up to an agreed upon cost. The deal also grants the label a first right of refusal for the artist’s services. The signing of the demo agreement by both parties then gives the label a subsequent chance to sign the artist to an extended agreement.

The label, if it likes what it hears within a certain amount of time — usually about sixty days — has a right of first refusal to sign the artist under mutually acceptable terms. This locks out competitive labels from signing the artist before the label that has the demo deal can complete a more comprehensive agreement.


Acquiring Talent Check List

Attend as many artist performances in clubs as possible. _____

Network with friends and associates asking for artist recommendations. _____

Draft a standard artist contract. _____

Before deciding to sign a particular artist answer these questions: _____

• Is the artist special?

• Is this artist a good musician, songwriter, and performer?

• Does the artist perform frequently?

• Does the artist’s talent have depth?

• Does the artist have a manager or agent?

• Is the artist willing to tour?

• Are you willing to spend a lot of time with this artist?

• Is this artist a good person?

• Is the artist’s ego in check?

• Will this artist be cooperative?

• Is the artist willing to help market the music?

• Does the artist have a job or financial support?

• Does the artist expect your label to offer financial support?

Negotiate a deal. _____

Be fair in what you plan to offer and ask for. _____

Consider a demo deal where appropriate. _____

Chapter 5 – Understanding Artist Agreements | 41

Chapter 5 – Understanding Artist Agreements

There are many kinds of artist deals, and they vary considerably in complexity. In fact, it’s not unusual for artist contracts with some of the majors to run in excess of a hundred pages! Of course, the big labels are protecting themselves every which way, but I don’t see the need for such length. I prefer agreements that are simple, clear, and straightforward, and above all — fair to both sides. Labels that treat their artists with respect will reap respect — and probable success — in return. What follows are provisions found in most artist contracts.

360 Deals

In recent years the major labels, and some independents, have turned to negotiating so-called 360 Deals wherein the label seeks a porton of the artist’s income from touring, merchandising, endorsements, licensing, publishing, etc. as partial recompense for the label’s work in building the artist’s career. The majors need this additional income to help offset the drastic decline of sales of physical product.Why 360? Because there are that many degrees in a circle, and it’s the circle that encompasses all of an artist’s potential earnings. I’m not a fan of such deals, particularly for indie labels, since I think it’s inherently unfair to artists. However, this is one of those items you should discuss with your attorney. You do have an attorney, don’t you?

Exclusivity

A typical artist agreement calls for the label to have the exclusive use of the artist’s talent, and frequently in all media — not just for records. This keeps an artist from recording for other labels. In many cases, they will allow for a “sideman” clause, which permits the artist to record in the background as a non-featured musician or singer, provided the artist’s label is given a courtesy credit. This is a common practice for jazz and classical artists. Name and likeness (i.e. the use of an artist’s identity in promoting and marketing) will usually be exclusive during the term, and non-exclusive afterwards.

Territory

Artist agreements always state the territory for which the agreement applies. This is frequently for “the world” and not infrequently for “the universe” — sometimes even parallel universes! Sometimes it’s just for the United States, or the U.S. and Canada. Labels often allow a so-called “territorial reversion” clause, so that if two consecutive albums are not released in a specified territory, say Australia, the artist can get the contract to no longer apply in that territory. However, these clauses usually provide many hoops for the artist to jump through in order to make it work.


Term

This is the length the agreement runs over time, and is usually for a year, or in case of a first album sometimes a few months more than a year. This time allows for the project to get recorded, released, and marketed, and to give the label a chance to see how well the artist’s career may be progressing and whether or not it may wish to exercise its first option. Options (see below) may be used to extend the term. However, if an artist is late in delivering a recording, the label will extend the term by the amount of time of the lateness. This should be specified in the agreement.If the artist is expected to deliver a completed project in the latter part of a year — say after mid-August — it’s likely that the label will not want to release this new project until at least the following mid-January. If so, there will be extra months provided in the agreement for the additional time.

Many agreements state that the term of each option period (see below) will be a specified length of time — from six to nine months — after the delivery of the artist’s last album required for that period, but no less than some other agreed upon time period — perhaps eighteen to twenty-four months.

An artist may want the right to enter into a new recording agreement during the last option period, but will of course still need to render services in support of the marketing of the last album under the term of the original contract. This point is hard for an artist to get without much leverage, but would be well worth it to him. Labels will naturally discourage it.

Artist Delivery Requirements

The agreement will stipulate when the label expects the artist to deliver the project. Such a clause was added some years ago when artists started exercising greater creative control over the recording process. Should the artist fail to deliver on time — whether due to writer’s block, problems in the studio, illness, etc. — the term of the agreement will be extended by the amount of that extra time. Some majors tack on a financial penalty for late delivery, but I don’t recommend you do it.

If an artist completely fails to deliver a project, the label’s recourse is to sue for breech of contract — obviously a step both parties would prefer to avoid.

Commitment

A label will not always commit to releasing a project, but if it does, it will commonly commit to only one album by the artist, assuming that it’s deemed technically and/or commercially acceptable to the label.

An aggressive artist representative, on the other hand, may try to get the label to make a “two album firm” commitment with options, each of which would contain two albums. This provides the artist with “pay or play” protection, because if the label wishes to drop the artist before the second album


of any two-project option, it must pay a penalty based on a formula or previously agreed-upon “kill fee.” You probably won’t want to do agree to it.

Sometimes an artist can get a label to make a firm commitment for two or more albums, but that usually applies only to established artists. For example, it was necessary that Elektra give a three-album guarantee to The Doors in order to clinch their deal.

Try to avoid this.

Options

Most agreements grant the label — not the artist — a specified number of options for the artist’s services. These options, if exercised by the label, will require the artist to deliver an additional album within a specified time, which is usually one year, or sometimes ten months to one year following delivery and acceptance of the prior album.

Deals by major labels may call for six or more options, whereas independent label deals usually call for just two to three.

Options for new artists will generally be fewer and shorter than for established artists, because the label wants to have a longer time to work with successful talent.

As mentioned in the Commitments section above, artist’s representatives may try to get a label to commit to two albums per option period. Labels will want to avoid such multi-album commitments.

Artist Advances & the Recording Budget or Fund

Typical larger label deals call for an artist advance that can vary considerably in amount depending on the artist’s fame, if any, and reputation. Sometimes the advance is considered to be a “recording fund” which allows for a certain amount of money to be spent on making the project. This fund is almost always controlled by the label and doled out to recording studios, musicians, etc. as the recording progresses. Any money that is left over goes to the artist. In some cases, the label will remit the entire fund to the artist.

For an artist with proven reliability, it may work better to advance the recording funds to the artist. For example, the label and artist agree that the album should come in at no more than $30,000, and the label advances that amount — frequently in two or three portions as defined in the agreement (more on that in a moment) — and the artist controls the expenditures. If the recording comes in under budget, the artist gets to pocket the difference, creating an incentive for the artist to keep the cost of making the recording under tight control. In fact, I recall an occasion when a well-known, highly


respected and established artist actually returned a large portion of the fund because he was able to bring in his recording at a low cost. I guess he felt guilty about keeping the substantial difference. And as right would have it, the project turned out to be very successful for both the artist and the label.

When doling out such a fund, the parties usually agree on something like the following formula — one-third just prior to the start of recording; one-third on completion of Basic tracks (just prior to mixing,) and the balance when the recording is delivered to, and accepted by, the label. The fact that the artist has delivered what he deems to be a completely finished project does not mean the label will automatically accept it — that’s “accept” in the legal sense. The label, by way of the agreement, may have retained the right to determine the work’s artistic, technical, and sometimes even commercial worthiness. This is how some agreements got to be very lengthy. If ultimately a label doesn’t like what an artist delivered, and they can’t come to agreement on a solution, it might be willing to turn the masters back to the artist after reimbursement for all costs, and an override if the artist is able to place the master elsewhere. This is what happened to Wilco some years ago when they left Warner Bros.

In other cases, the label may prefer to give the artist a simple cash advance, say anything from $2,500 to “the sky’s the limit!” Seriously, the advance is tendered so that the artist will get paid at least something for his effort. The amount is highly varied and is based on the artist’s career position — whether just staring out, or established. It may also vary if there’s signing competition with other labels. Generally, but not always, an artist will sign with the label offering what appears to be the best deal to the performer, manager, or lawyer. This might include large cash advances, a lavish recording budget, commitment to one or two videos, and a specified amount for marketing and tour support. Such a generous offer is not something you should be considering as a start-up label.

The label will determine the amount of the recording fund or budget, usually after lengthy discussion with the artist and producer. It’ll be based on what the label feels it can afford, on the number of musicians needed to meet the artist’s and label’s mutual artistic goals, where the recording will be made (such as a modest studio in a small town or a large facility in a major city,) and how much studio time may be required, etc.

In some circumstances, there will be a contractual agreement for a budget of a specific amount for the first recording, with escalations for each additional recording. For example, a budget of $20,000 may be contractually agreed upon for the first project, $30,000 for the second, $40,000 for the third, etc.

In any event, whatever the size of the advance and the recording budget or fund, they will almost always be chargeable against the artist’s future royalties.

Some recent deals call for no advance and no recording costs to be paid up front by the label. The artist pays all recording costs, owns the masters, and splits any profit 50/50 after the label’s costs are recouped. These costs typically include cover art, all manufacturing, marketing, independent promotion and publicity, advertising (including co-op), and distribution fees. In this, and some other cases, the label licenses the master from the artist for an agreed upon period of years, splitting the profit evenly, or pays a negotiated royalty.


Producer

Sometimes the label and artist will agree that they need a certain producer to work with the artist in making the recording. Some producers, especially for small jazz or classical projects, receive modest fees and perhaps a modest royalty.

Star producers may receive large cash advances and up to four royalty points (i.e. 4% of the suggested retail list price). It’s also common for producers to be paid royalties retroactively from “record one” — in other words, once the label has recouped its costs, the producer is paid a royalty retroactive to the first unit sold. This differs from the artist who is only paid “prospectively” after the label recoups its recording costs — that is, the artist is never paid royalties on the albums sold prior to the point of recoupment. This is a rare provision that’s granted to only the starriest of producers who’ve already achieved a notable track record.

It’s common practice for the label to deduct the amount of the producer’s royalty from the artist’s. For example, let’s say that an artist we’ll call “Zee” has an eleven-point deal, but the producer is getting two points. In this case, the producer’s two points will be deducted from Zee’s eleven, netting the artist nine points.

Also, the amount of the producer’s royalties will be “crossed” (i.e. cross-collateralized) against the artist’s, reducing the artist’s income by that amount, since it comes out of his share.

Ownership of Masters

The agreement will specify who ultimately owns the master recordings. It’s most commonly the label. However, some agreements stipulate that, should the label go under or be in default for not paying royalties, ownership of the masters will revert to the artist.

Work for Hire

Most agreements, until recently, stipulated that a recording made by the artist was considered to be a “work for hire.” This meant that the label became the “author” of the work and the ownership of the copyright rested with them, not the artist. It’s a matter of who owns the copyright — the artist is still entitled to negotiated advances and royalties.

This became a point of contention by the Recording Artists’ Coalition, which lobbied successfully to remove language from legislation in California that would have automatically defined a recording as a work for hire, regardless of language in the contract, or factual circumstances. The significance of the “work for hire” designation is that normally a creative work reverts to the author 35 years after it was created per the Copyright Act of 1976, but this legislative protection does not apply to works for hire.


Check with your attorney about this, but if in doubt, and in the interest of being artist-friendly, do not consider the recording to be a work for hire.

Royalties

Most deals call for the label to pay its artist a royalty in addition to advances. The amount varies widely and is, once again, based on whether the artist is new and untried, or well established. An unknown artist will not get as high a royalty as an established artist may receive.

Note: much of the following royalty information is patterned after standard industry agreements and terms that were developed by the majors and large, well-established independent labels over many years. It need not apply to artist contracts for a small independent label. It’s here for historical purposes, and to assist you in determining how you might want to have your own artist agreements structured.

1. Basic Domestic (U.S.) Album Royalty

An “album” or “record” is considered to be a full-length CD or cassette. The words “album” and “record” (and many others in current usage) date back to the days when an album consisted of a single LP (331/3 rpm long-playing vinyl disk for the uninitiated or young ones among you) or, even further back, to a group of five or six 12-inch, 78 rpm records which were fabricated into a heavy, bound album with each disk placed in its own separate sleeve — much like a photo album. In fact, many agreements still use the word LP rather than CD, even though the CD has existed for more than thirty years! An album will usually contain ten or more songs (or “masters”) and be 45 or more minutes in duration. The length of an album is frequently one of the items negotiated in the contract, and many agreements call for no less than, and sometimes no more than, a specified amount of recorded time.

By the way, a CD can hold up to 80 minutes of music — primarily classical works — and 60-minute CDs are quite common for other genres.

New artists may get a royalty of from 8–12% per album, whereas well-known artists on a positive trajectory may be able to get upwards of 18% from one of the majors. This “basic” rate will be stated as X% of 100% of the SRLP (Suggested Retail List Price.)

More recently, royalty rates may be based on a percentage of the wholesale Published Price Per Distributor — or Dealer (PPD) rather than the SRLP. In this case, the rates will be doubled. The advantage to the label is that calculating royalties on the wholesale price may be a lot less complicated than on retail, and the artist feels that the percentage is larger. It’s really a matter of perception, because the actual amount earned will be about the same.


For years, many labels paid the royalty on 90% (rather than 100%) of net sales. This is a continuing recent practice despite the fact that the 10% was originally intended to be a breakage allowance due to the high fragility of 78 rpm shellac records. I strongly discourage you from continuing this tradition.

The 90% clause was part of the Elektra contract during the Sixties. My brother Jac’s argument was that the royalty should be taken from only 90% of the list price, since approximately 10% of that price was the royalty paid to the artist. This argument worked every time, but is out of date in the current musical environment.

Sometimes an agreement will call for an escalation of royalty percentages, starting perhaps at 10% and then increasing 1% for each additional album. More common though, an escalation is based on the accumulated sales of the preceding album. Such a deal might increase the royalty for the new album by 1% for sales between 50,000 and 100,000, with an additional 1% for sales in excess of 100,000. This is a good process, and one that might work well for you. Just adjust the numbers to what seems fair.

The rate at which these royalties rates can escalate is based on the previous success of the artist or whatever the artist’s attorney and the record label can agree upon.

2. Foreign Royalty

Most labels reduce the royalty rate for records sold overseas due to the additional costs of marketing internationally. Such common terms might be:

75% of the U.S. rate for major territoriesThis usually includes such countries as the United Kingdom, France, Germany, the Netherlands, Japan, etc. Sometimes it will include all major countries in Western Europe, which would add Spain, Portugal, Belgium, Luxembourg, Austria, Switzerland, and all the Scandinavian countries. In negotiating, it’s important to know which countries have strong markets for the genre of music being marketed For example, Spain is not a good market for American country music, but Germany has a growing interest in the genre.

It’s also important that the agreement specify the countries that are considered to be “major.”

60% of the U.S. rate for minor territories or R.O.W. (rest of the world)This would include all countries not considered to be “major.”

Many independent labels pay 50% for all non-U.S. territories.This is a great deal easier to keep track of and, considering industry economics and modest international sales, is not unreasonable.


3. Singles

Singles are essentially a fiction these days and exist as individual tracks made available as downloads. Singles used to be two tracks on a CD or cassette, which were sold as such in commercial release. The term derives from the days of two sides of one 78-rpm lacquer disk, subsequently replaced by two sides of one 45-rpm vinyl disk — you remember, the one with the big hole in the center.

A typical royalty rate for singles was 8–11% of the suggested retail list price, where the basic rate (discussed earlier) might be 8–13% or higher. Remember that the parties involved negotiated all of these rates. In some agreements, singles royalties were paid at 75% of the Basic Rate, rather than being based on the SRLP.

4. EPs

EP stands for “Extended Play” and refers to a project that is not as long as a standard album, but not as short as a single. For example, it might contain five or six songs that total 25 to 30 minutes of playing time. A typical royalty for EPs is 75% of the Basic Rate.

5. Club, Premium and “Flat Fee”

This is a royalty rate for record club sales, special premiums, and for licensing deals where a flat fee is negotiated. This rate is usually between half and two-thirds of the Basic Rate, or 50–66.6% of net earned receipts, whichever applies.

Actually, I don’t recommend a club deal, should you be in a position to be offered one, unless the advance is so high that you just have to accept it. It’s doubtful that you’ll ever receive anything beyond the advance.

6. PX

Royalties for sales to large-scale buyers for the military, such as the Army and Air Force Exchange Service (AAFES), are sometimes at the Basic Rate. More frequently however, they are reduced proportionately if the selling price is below your customary wholesale amount — a common occurrence.

For example, if you sell to the military at 75% of your standard distributor wholesale price, the royalty for these sales would be 75% of the Basic Rate.

7. New Technology

Many labels specify a reduction of royalty — as high as 25% — for what they consider to be newly developed technology. This applied to CDs when they were first issued during the early Eighties, and


now may apply to the next big thing that comes along. In fact, some majors still consider CDs to be a new technology and take the 25% deduction, despite the fact that CDs have been around for more than two decades! Such a new technology rate might be 80–87.5% of the otherwise applicable rate due to what labels expect could be high start-up costs for a new configuration.

8. Downloads

Some labels consider downloads to be “new technology” and pay their artists accordingly. I think this is unfair and suggest you pay 50% of your net receipts as an artist royalty after deducting for mechanicals.

9. Controlled Compositions

A controlled composition is a song or work written by the artist who you’ve chosen to record. It’s considered “controlled” because, in theory, the artist — who is the songwriter — has some control of the publishing.

The usual rate is 75% of the minimum “statutory” for the year the agreement is entered into. For example, the statutory rate as of January 1, 2011 is $.091 (9.1 cents) for a work up to five minutes long. For songs over five minutes, the rate is $.0175 per minute or fraction thereof. On January 1, 2013, the statutory rate will likely increase, but had not been established at the time of this book’s publication. Check this book’s website for updates.


The rate referred to above is for the payment of “mechanical” royalties, which is the amount labels pay to the publisher of the recorded copyrights. This is in addition to the royalty the label pays to the artist for his performance.

For many years labels put a cap on the total of mechanical royalties they would pay to the artist/songwriter for controlled compositions. This isn’t fair to the artist who writes his own music. The cap is commonly ten times 75% of the statutory rate, which means the label only plans to pay for ten songs, and at a reduced rate. If the artist decided to record twelve songs, or some compositions by other writers that are not “controlled,” the label has hedged its costs by placing the cap.

For example, in such a case in 2011, where an artist has recorded twelve of his own songs, the label would still pay only 681/4 cents per album for mechanicals — 10 songs, times 9.1 cents, times 75% (10 x 9.1¢ x .75 = $.6825).

In a slightly different circumstance, where an artist records eight of his own songs, and four songs by other artists that are not controlled, the label would still pay a total of 681/4 cents. It would pay 36.4 cents (four times statutory) to the publisher of the four uncontrolled songs, but only 31.85 cents to its own artist’s publisher, because of the 681/4 cents cap ($.6825 – $.36.4 = $.3185).



Congress periodically sets the statutory mechanical rate ceiling (9.1 cents as of 1/1/11). Your contract should specify whether the applicable rate is locked in as of the date of manufacture, initial release, or even signing of the contract, since the rate could rise between these events.

Reserves

Most agreements have a provision for holding royalties in reserve in anticipation of returns. For the record industry, and commonly the book industry as well, an item is not considered sold until a customer actually pays for it at the cash register, and the retailer pays the distributor and/or the label. Thus retailers have a 100% return privilege. This is not unlike what’s customarily considered to be consignment sales.

At the time a label has to account for royalty payments to its artists, it may not know how many units have actually been sold. There may be a lot of inventory throughout the chain of distribution — at the distributor, at retailers’ warehouses, or sitting in retailers’ bins. The label will only know what it shipped to its distributor(s).

Holding reserves protects the label from paying an artist for more records than have actually been sold to consumers.

For example, a label may have shipped 6,000 CDs to its accounts. Perhaps only 3,500 may have been sold. Thus there’s a return liability of 2,500 units. The only way for a label to know how many CDs have actually been bought by consumers is to wait until all unsold inventory has been returned through the chain of distribution to the label.

Some labels rely on SoundScan numbers and pay royalties based on their reports. SoundScan compiles highly detailed accounts of sales as a result of a unit getting scanned at the point of purchase in selected retail stores.

Parenthetically, for those labels that can afford it, a subscription to SoundScan is extremely worthwhile because of the incredible detail of information they can supply.

http://nielsen.com/us/en/industries/media-entertainment/music.html

The actual amount of the reserve percentage — which can be as high as 30 or 40% — and how it will be accounted for, will be specified in the artist agreement. The accounting of reserves is very complicated since they’re liquidated in specified accounting periods and then may be reapplied in succeeding periods.

This adds to the complexity of royalty accounting, which is rightfully considered by many to be one of the black arts. It may take an experienced C.P.A. to understand the royalty statements from some labels.



Packaging Deductions

Packaging deductions exist in most industry deals because labels say they want to pay royalties only on the actual musical recording and not include the cost of the container or package that it comes in. In reality, it’s a way for labels to reduce the royalty they will actually pay an artist.

The deduction is commonly 20% for cassettes and 25% for CDs.

I don’t recommend such a deduction because it looks like you’re taking money away from the artist, and because it complicates the royalty statement. However, you might factor in an amount when calculating the royalty you intend to offer.

Free Goods

When a label is trying to do a concerted “push” on a new release by an artist it’s got a lot of faith in, it may give away a certain quantity of CDs as a sales incentive. It’s essentially a form of discount. For example, it may give away ten or fifteen out of every hundred units sold in such a campaign. Therefore, these ten or fifteen CDs are considered to be “free goods” and the label will not pay royalties on them. It’s another way for a label to pay less in royalty.

The amount of allowable free goods is usually specified in the artist agreement. Be aware that an artist’s representative may try to cap free goods at no more than 10% of manufactured or shipped product.

Cross-collateralization

Many of the costs involved in making a recording are considered by the label to be recoupable against an artist’s total earned royalties. This includes artist advances, all recording costs, any tour support provided by the label, and frequently some, or a percentage, of the costs for independent promotion or publicity.

In the case where the artist makes more than one recording for a label, the label usually requires that all of the recoupable costs be maintained in a single account, rather than separate accounts for each release. This allows the label to recover the costs from a release that may be in deficit (the recoupable costs are higher than the artist’s royalties) when the artist may be in an earned status from other releases.Let me explain this further. In our example on the next page, the first release of the artist Zee has the following recoupable costs attached to it:


First ReleaseArtist Advance $5,000Recording Costs 30,000Other Chargeable Costs 25,000Total Chargeable $60,000

Royalties Earned -20,000

Unrecouped Balance (due to Label) $40,000

Zee is unearned to the tune of $40Gs.

Now let’s review the costs of Zee’s second release, an album that’s done very well:

Artist Advance $10,000Recording Costs 40,000Other Chargeable Costs 40,000Total Chargeable $90,000

Royalties Earned $120,000

Amount in Artist’s Favor $30,000

Note that Zee is earned on the second release. However, he shouldn’t be looking for a check in the mail any day soon, because he’s still in debt to the label for $10,000.

Unrecouped Balance Release #1 $40,000Earned Amount Release #2 -30,000Unrecouped Balance (due to Label) $10,000

Zee won’t have to pay this amount, but it shows what the label has spent on behalf of the artist.

Tour Support

All artists need to perform in front of the public — preferably before paying audiences — in order to hone their craft and to promote the sale of their work. This isn’t always easy to achieve, and at the beginning of an artist’s career may cost some dough. Of course, most artists can’t afford it and so they seek financial assistance from their label.

Many labels are willing to assist their artists by granting them a certain amount of money to help with touring, thus these funds are considered to be “tour support.” The amounts forwarded on behalf of the artists’ performances are usually recoupable against the artist’s royalties.


Most small labels simply can’t afford such funds, so they try to assist the artist by providing other, non-financial assistance. This might be through help getting performances dates and providing tour publicity.

Sometimes an agreement will stipulate how much the label is willing to help out with tour support funds, usually after lots of heavy negotiating on both sides. Commonly labels will refuse to put specific tour support funding commitments in writing, but assure the artist that “off contract” monies might be available, depending on prevailing circumstances such as cash flow, and the artist acting reasonably and responsibly.

Music Videos

For some artists and genres, music videos can be an effective promotional and marketing device. But since videos are not cheap to produce, particularly for “name” acts, part of the amount spent in making videos is generally recoupable against the artist’s royalties — usually 50% of the cost. Bear in mind that producing a video — even a very good one — is not a guarantee of exposure.

Sometimes there will be a contractual commitment to make a video. Alternatively, many labels will try to avoid making such a commitment, even though they might intend to shoot a video.

In the case of an artist with a distinctive or glamorous visual appeal, and when the music is selling well, the label and artist may decide to sell these videos to the public in the form of DVDs. In this case, all of the cost of making the video will be chargeable against the artist’s video royalties, or half of the costs may be chargeable to the artist’s audio royalties, in which case only the remaining half would be charged to the video side. Again, be fair to your artist and don’t double-dip.

A common video royalty is between 10–18% of the wholesale price with no deduction for packaging.

An artist on a major label will try to get a commitment to produce and release a video for each of the first two singles (with production costs 50% recoupable only from the record royalties with no cap) and at least one video per each additional album. Artist approval, or at least mutual approval of all creative elements — director, producer and concept or script, is often negotiated. Yet rarely do artists get approval of the budget or video marketing plan.

Independent Promotion

For certain musical genres, a label may decide to use the services of one or more independent promoters to work the record at radio. In the case of jazz, for example, these costs tend to be reasonable, but for “pop” or rock music can run deeply into six figures at a major label. Most labels will charge 50%


of these costs to the artist’s royalties, sometimes with a “not to exceed” cap negotiated by label and artist.

Re-Recording Restrictions

Most agreements include a re-recording restriction that states that the artist may not re-record works that have been released by the label, until a specified time. Frequently, the duration will be expressed as the later of the date five years after delivery (sometimes release) of the last album in a contract, or two years after expiration of the contract.

Approvals

Some labels may automatically grant an artist approval of the producer and cover art. Others may give limited approval of the producer, but frequently will not grant cover art approval, or may grant approval “not to be unreasonably withheld.”

It seems to me that an artist must, at minimum, have producer approval since the choice of producer is such a critical part of the creative process of recording. As for cover art, although I’m a firm believer in artist input into the look of the package, I don’t go along with granting actual approval. I’ve seen too many cases where a difficult artist has caused a project to be delayed due to unnecessary and unreasonable demands in what the cover should look like.

Unions

Most independent labels are not signatories to the agreements of the two principal unions involved in the making of recordings — The American Federation of Musicians (AFM) and the American Federation of Television and Radio Artists (AFTRA). AFM is the union for the musicians who play instruments on a recording, and AFTRA is the union for vocalists.

The majors are all signatories and must pay at least union scale for all recording sessions, and must abide by the union rules as to how much actual music may be recorded in a session, how long sessions may run, and when musicians must take breaks, etc. Self-contained groups will frequently disregard the rules, but larger ensembles such as orchestras, or musicians used in “sweetening” sessions, may insist on it. Violation of the regulations can result in fines and additional and unnecessary cost.

To simplify the recording process, and to keep a lid on costs, I recommend that start-up and independent labels not sign with the unions.


Warranties and Representations

This is some of the “legalese” and boilerplate that attorneys put in contracts, usually to protect the label, and not the artist. However, some of the language will be necessary and important to both sides. Your attorney will know how to protect you.

Group Provisions

When the artist is a group, additional provisions may prevail that protect the label if a member of the group leaves, or if the group breaks up. Such a provision will usually keep a departing member signed as a soloist, at the label’s discretion, and also provide options to keep the other members as well.

Reversion of Rights

Labels rightly consider their master tapes to be of considerable potential value and are a significant asset of the company. However, some artists request a provision in their contracts that tapes be returned to the artist under certain circumstances — for example, if an album has been out of print for a specified period of years, or if a label is going out of business.

Key Man

Occasionally labels will grant a “key man” clause to an artist, that will allow the artist to terminate the contract if a key person, such as the head of the label or the signing individual, should depart. Clive Davis successfully used his key man clause with Whitney Houston to force a new label deal with Bertelsmann after he was removed from Arista.

Artist & Mechanical Royalty Statements

Agreements should specify when the label will render royalty statements to its artists — typically twice a year, ninety days after the end of a calendar half. In other words, a label will render statements on or about September 30th for the period ending June 30th (the first six months of the year) and on March 31st for the period ending the previous December 31st.

Additionally, labels are supposed to render Mechanical Statements (those sent to music publishers) quarterly, typically forty-five days after the end of each calendar quarter — in other words on the 15th of February, May, August, and November.

I also think it’s in everyone’s best interest that a label render its royalty statements in as clear and


straightforward a manner as possible. Artists are not accountants, so the simpler the statement, the easier it can be understood, the fewer calls to label management for clarification, and — extremely important — the easier the royalty accounting will be.

Miscellaneous Provisions

Many labels, particularly start-ups, protect themselves from being raped by another label that wants to acquire their contracted artist. So they require that if an artist wants to jump to a larger label, that the original label to which the artist was contracted will receive a royalty override of 2–3% from the sale of the first unit. It’s also likely that the original label may try to recover from the acquiring label any unrecouped costs from prior releases by the artist.

With the high degree of “sampling” (incorporation and/or reworking of short snippets of other music) used by some artists such as in hip-hop, labels make the artist declare that either no samples were used, or that any samples of other copyrights have been cleared with permission, stating what royalty percentages might be involved. These royalties of course would come out of the artist’s share, since samples are a part of the artist’s “performance.”

Because labels usually want to include photographs or illustrations of the artist in the package or promotion materials, permission to use the artist’s likeness is provided for in the agreement.

Since you should have advised your artist to seek assistance of an attorney, there is usually a statement in the agreement that indicates that the artist has been professionally counseled.

The contract should state that it cannot be changed except in writing, and signed by all parties.

Furthermore, don’t consider a deal to be completed until you have the agreement in your hands with the artist’s signature on it. It seems obvious, but I know of a label that thought it had a completed deal, and released two CDs that were extensively marketed and supported. But when the senior executive who made the deal left the label, the support staff discovered that the contract had not been signed — either by the artist or his representatives. This was a mess that was years in litigation.

Definitions

In order to keep an agreement reasonably simple, some attorneys put all of the definitions, and certain other boilerplate, in a discrete part of the contract. These are items that will usually remain standard for all of a label’s agreements and simplifies the negotiating person’s work and reduces the amount of typing by an assistant or paralegal. The definitions will include all of the standard words that require strict explanation so that there will be no confusion over terminology.Such a definition might include “Phonorecord,” an all-purpose term derived from days of yore but


which remain valid today in these days of CDs, DVDs, and music videos, where LPs, cassettes, and 8-track tapes are things of the past. “Phonorecord” is also a word defined in the U.S. Copyright Act.

Love and Affection Clause

During the flower-child era of the late Sixties, my brother Jac placed the following clause in all Elektra Records’ artist agreements.

“We agree to treat artist with love and affection. You in turn agree to treat executives of company with a modicum of respect. Although a breach of this paragraph by either party shall not be a material breach of this agreement, bad karma resulting therefrom is the responsibility of each party.”

More than four decades later, I still see this paragraph occasionally pop up in agreements from labels completely unaffiliated with the Elektra of years ago, but I believe the intent remains extremely valid.

General Comment

Remember that all of these contractual terms are considered to be negotiable.

Smart attorneys, or managers worth their salt, will fight like the devil to make the best deal they can for their artist. On the other hand, the label, which is responsible for acting as the “bank” for the artist, as well as for marketing, merchandising, publicizing, and selling the artist’s music, will fight like hell to protect its interests and cash. After all, the label has overhead in the way of staff salaries, rent, etc., to pay for, and it’ll want to control all costs to make maximum use of its resources. So the label will try to make the deal in such a way that it will have a reasonable chance of earning back its costs, and eventually making a profit.

Fairness

It’s my personal bias and strong belief that a label should make as fair a deal as possible when signing an artist. After all, this should be like a partnership where both artist and label share any bounty. Agreements should be just that — an agreement between both parties that is fair and equitable, creating a win-win situation for all. In short, don’t be greedy.


Summary of Deal Points360 Deals

Exclusivity

Territory

Term

Artist Delivery

Commitment

Options

Artist Advances, Recording Fund

Producer

Ownership of Masters

Work for Hire

Royalties

Reserves

Packaging Deductions

Free Goods

Cross-Collateralization

Tour Support

Music Videos


Re-Recording Restrictions

Approvals

Unions

Warranties and Representations

Group Provisions

Reversion of Rights

Key Man

Artist and Mechanical Royalty Statements

Miscellaneous Provisions

Definitions

Love and Affection

Fairness

Chapter 6 – An Introduction to Music Publishing | 59

Chapter 6 – An Introduction to Music Publishing

A key adjunct and potentially considerable asset of a record label is its own music publishing company. Not every start-up label establishes one, either through lack of expertise and experience, or insufficient time to deal with it.

In fact, when I started my own ROM Records some years ago, I decided to forego the publishing aspect. I knew relatively little about it then, thought I didn’t have the time to deal with it, and didn’t want to be distracted from the A&R, marketing, and other aspects of running a start-up. It reduced potential income and was a big mistake that I regretted for years.

Setting up a publishing company is not very difficult, but is beyond the scope of this book. Specifics for doing so can be found in some of the books on music industry law. Such titles include The Plain And Simple Guide to Music Publishing by Randall D. Wixen, and those by Donald Passman and listed earlier in the “First Steps” chapter and in “Recommended Reading.”

An Overview

Briefly, the role of a music publisher is to create, exploit, administer, and collect royalties for its copyrights, with the object being to maximize their value.

Administration involves the filing of a notice of copyright (Form COd) with the United States Copyright Office in Washington for all of your copyrights, the issuing of licenses, collecting of royalties, and paying of writers and co-publishers.

http://www.copyright.gov/

Bear in mind that, since January 1, 1978, a copyright remains valid for the life of the author plus 70 years. Prior to 1978, a copyright was valid only for 95 years from the date of publication.

It’s also important to index your copyrights with the Performing Rights Agencies — ASCAP, BMI, and SESAC. (These agencies are addressed later in this chapter.) Exploitation entails getting other performers to record your copyrights, and extends to getting your copyrights used in films, television, radio, and commercials.

Creative publishers — those with songwriting savvy — work with their writers to help them to improve their craft and ultimately their output. This is an unlikely goal for a start-up label, and unless you have a lot of songwriting experience, is an area you should probably avoid.

A music publisher acquires rights to songs from songwriters, lyricists, and composers. Assuming you’re a record label that wants to have a publishing division, you should try to acquire publishing rights to the material written by your artists when you negotiate their recording contracts. Although

http://www.copyright.gov/


the publishing contract is completely separate, it’s a good idea to acquire publishing rights when you enter the negotiations for the recording side, as the two are intimately tied together. Often labels will pay advances to their artists for co-publishing rights in addition to any advances for recording.In some cases, an artist may not want to give total publishing rights to you, but may agree to a co-publishing deal. Your label, as co-publisher, wouldn’t get to acquire as large a piece of the pie, but it’s still more than it might otherwise be able to obtain, and can be quite lucrative. It’s then the label’s responsibility as co-publisher to administer the copyrights.

Always keep in mind that the copyrights you own will in time become an extremely valuable asset of your business.

Had I set up publishing when I started ROM Records, and co-published my artists’ songs, I wouldn’t have had to write such large checks to their publishers every quarter. I would have been able to use some of the saved co-publisher’s share for investment in future projects. In addition, I would likely have been better equipped to develop the publishing assets than the artists were able to do on their own. Note that although most artist contracts require that a label render two royalty statements per year, publishers generally require four per year. A label is supposed to issue statements within forty-five days after the close of each calendar quarter — therefore by February 15, May 15, August 15, and November 15.

On the other hand, this means, as a publisher, that you should receive statements, and presumably checks, soon after the above dates from those who’ve licensed your copyrights. In turn, you’ll have to render statements to your co-publishers and songwriters shortly thereafter.

There are various kinds of publishers — administrative, co-publishers, and sub-publishers, and people use these terms differently. Therefore, if you’re interested in this subject, I suggest you investigate it further by reading one of the books mentioned at the beginning of this chapter.

Term

By the way, recent changes to the copyright law have extended the ownership of a work to the life of the author, plus seventy years. Alternatively, a copyright that was written as a “work for hire” lasts for ninety-five years.

Statutory Rate

The statutory rate as of January 1 of 2011 remains $.091 (nine and one tenth cents) per song of less than five minutes, or $.0175 (one point seven-five cents) per minute or fraction thereof for songs longer than five minutes. These rates have been the same since January 1, 2006 and will hold until


December 31, 2012. The Copyright Rotalty Board is expected to establish new rates some time during 2012, presumably to be effective on January 1, 2013.

Publisher Rights

Until recently, there were four rights involved in music publishing — Performing Rights, Mechanical Rights, Synchronization Rights, and Print Rights. In addition, there now exist Digital Print rights. Let’s take a closer look at these five types.

Public Performance Rights

If you decide to set up a publishing company, be sure to get affiliated with one of the performing rights societies — ASCAP, BMI, or SESAC. These agencies collect royalties for radio, television, and live public performance spaces such as nightclubs, hotels, and discos, and for use in retail stores and other establishments that use pre-recorded music in an effort to enhance their business. If your songwriters are already affiliated with any one of these agencies, then you should be as well. Many publishers affiliate with two or more societies because of their songwriters.

Not only must you register your new copyrights with the Copyright Office (see above), but you should also notify the appropriate performing rights society of each work you own as you acquire it. Keep in mind that some of these agencies are for-profit companies; others are non-profit.

ASCAP (The American Society of Composers, Authors and Publishers) has offices in many of the same cities as BMI. Their principal office is at One Lincoln Plaza, New York, N.Y. 10023; phone: (212) 621-6000.

http://www.ascap.com/

BMI (founded as Broadcast Music Inc.) has offices in Miami, Los Angeles, Nashville, Atlanta, London, and Puerto Rico. Their principal office is at 320 West 57th Street, New York, N.Y. 10019-3790; phone: (212) 586-2000.

http://www.bmi.com/

SESAC (founded as the Society of European Stage Authors and Composers) has offices in New York, Los Angeles, and London, with headquarters at 55 Music Square East, Nashville, TN 37203; phone: (615) 320-0055.

http://www.sesac.com/

The above organizations are for the United States. Foreign countries have similar organizations, frequently government-controlled. They include SOCAN (Society of Composers, Authors and Music Publishers of Canada), PRS for Music in the United Kingdom, SACEM (Société Mutualiste des Auteurs, Compositeurs & Editeurs de Musique) in France, GEMA (Gesellschaft für Musikalische Aufführungs-Und Mechanische Vervielfältigungsrechte) in Germany, and JASRAC (Japanese Society for Rights of

http://www.ascap.com

http://www.bmi.com

http://www.sesac.com


Authors, Composers and Publishers) in Japan among others.http://www.socan.ca/http://www.prsformusic.com/http://www.sacem.fr/http://www.gema.de/http://www.jasrac.or.jp/ejhp/

Mechanical Rights

The Copyright Act provides that once a piece of music has been recorded and publicly distributed, anyone else can record that work on a phonorecord (an audio-only recording) provided they pay the current statutory rate (discussed earlier). This is called a compulsory right.

Not surprisingly, mechanical rights are the rights to reproduce music via mechanical means, and dates back to the early days of piano rolls and, later, the phonograph. Permission is required to mechanically reproduce a licensed work. Thus a publisher issues licenses to those who request the right to record a work already mechanically reproduced. The issuing of such licenses is one of a publisher’s many responsibilities. And the money paid and collected for such licensing is what we call a mechanical royalty.

Many publishers prefer to have someone else issue licenses and keep track that payment is received for such licensed works. The largest firm that handles such matters is the Harry Fox Agency, Inc. (HFA), also known as “Fox,” and as the National Music Publishers Association (NMPA). Fox, per their website, “was established in 1927 as a musical copyright information source and licensing agency for the music industry. They currently represent more than 27,000 music publishers and are the premier licensing resource for the mechanical use of music reproduced in all formats and media.” Thus Fox enables record labels to write fewer checks as it represents so many separate publishers. Their fee is 4.5% of the money they collect.

HFA “conducts royalty compliance examinations of licensees utilizing in-house staff and outside accountants to verify the accuracy of royalty statements reported and payments remitted by licensees. Royalty compliance also verifies that mechanical licenses have been obtained for all phonorecords released by the licensee.”

The Harry Fox Agency, Inc. 711 Third Avenue, New York, NY 10017, Phone: (212) 370-5330. http://www.harryfox.com/index.jsp

CMRRA, the Canadian Musical Reproduction Rights Agency, is the Canadian counterpart to Harry Fox. Their address is 56 Wellesley St. W. #320, Toronto, Ont. Canada M5S 2S3, Phone: (416) 926-1966.

http://cmrra.ca/default.htm

http://www.socan.ca

http://www.prsformusic.com

http://www.sacem.fr

http://www.gema.de/

http://www.jasrac.or.jp/ejhp

http://www.harryfox.com/index.jsp

http://cmrra.ca/default.htm


Locating the Copyright Owner

To find out which publisher owns a copyright you want to use, check the websites of BMI, ASCAP, and SESAC. If the song you want is not listed by one of these agencies, try contacting Songfile on the Harry Fox website.

Synchronization Rights

In addition to income from recordings of your copyrighted music by artists signed with other labels, you might have songs and copyrights that are of interest to film and television producers (to use as background or source music in their productions), and also to those involved in commercial advertising. This can be extremely lucrative. As a publisher, you would negotiate and subsequently issue a “synchronization” license so that the copyrighted material can be used in timed synchronization to a visual. And in the case where, as the label, you also own the recorded performance that’s used, you would issue a “master use” license for the work as performed on your recording.

Thus there are two copyrights and therefore two licenses and two fees involved — one for the written copyrighted music, and one for the recorded performance. In the case of feature films, each license can range upwards from $20,000 to well into six figures, so there’s a lot of potential income. As you see, it pays to be a publisher! Which reminds me of Mel Brooks’, “It’s good to be the King!”

Print Rights

Traditionally, music publishers issued sheet music of all of their copyrights. This was a huge undertaking for it required the actual printing of copies of all of its copyrights and then the maintenance of inventories of varying versions based on instrumentation, etc. Such extensive printing is rare these days, but large publishers occasionally issue printed folios of works by major songwriters who they represent. And, of course, these print rights are very valuable.

Digital Print Rights

Digital print rights have become a millennial addition to the previous four. It’s now possible for publishers to make available digital versions of songs and sell them online. This can be done as digital representations of printed sheet music, such as Adobe Acrobat PDF files, as MIDI (Musical Instrument Digital Interface) files and in versions for the iPad and similar tablets. The advantage of this is that a publisher need not actually print and subsequently maintain in inventory versions of all of its copyrights, but can instead have every single one digitized and be available indefinitely on a centralized server. Thus they can be made available and sold on a 24/7 basis. And there are no warehouses full of dusty print materials!


Miscellaneous Rights

You’ll not likely have much to do with miscellaneous rights. However, just for background purposes, these rights include music boxes, lyric reprints, electronic games (a form of synchronization right), etc. A colleague calls these “eccentric” rights.

Deal Terms

Deal terms for publishing agreements vary considerably. For more information, look into Passman and Thall, as mentioned earlier. There is no longer a standard deal; however, it’s common that a publisher takes 50% of all income and turns over the remaining 50% to its songwriters. In Europe, general practice has one-third going to a lyricist, one third to a composer, and the final third to the publisher.

With the exception of very large publishers who can set almost any kind of terms they want, I think you, as a small label and probable neophyte publisher, shouldn’t be greedy. You should be fair and reasonable to your writers with a simple, straightforward deal where you share the benefits. For example, an artist might not just retain their normal 50% writer’s share, but might be willing to grant you half of their publishing share, giving them a total of 75%. Thus you, as co-publisher, would control 25% of their copyrights.

Getting Help — Publishing Administration

As you see, music publishing is a huge responsibility. Thus, in many cases, small publishers may opt to have a larger publisher handle all of the administrative work — for a fee, of course. This makes a lot of sense if you don’t have the time or experience to handle the volume of work. And as your catalog of copyrights becomes substantial, you’ll find quite a few companies willing to handle the responsibility on your behalf.

Although there are really too many possible administrators to list here, you might look into one of these:

Wixen Music Publishing, Inc., Calabasas, CA. Their website has an excellent publishing primer and free advice page.

http://www.wixenmusic.com

Bug Music. They’re headquartered in Los Angeles and have additional offices in New York, Nashville, London, and Munich.

http://www.bugmusic.com/

You should also consult with friends in the business to see who they might recommend.

http://www.wixenmusic.com

http://www.bugmusic.com/


Once you’ve decided on an administrator, be sure they do their job, not only to issue licenses and collect funds, but also that they work to properly exploit your copyrights. As we’ve discussed earlier, there’s a great deal of ancillary income to be obtained by having other artists record your copyrighted music, and from getting the material employed in other media.

Foreign Subpublishing

Since it’s a big world out there, not only do you have domestic rights to consider, you’ve also got foreign rights. That’s where a foreign subpublisher comes in. Most governments overseas use quasi-governmental agencies (such as PRS and GEMA) to automatically collect mechanical royalties, so you may as well get paid your share if you’re selling product overseas that contain your copyrights, or if you’ve licensed your copyrights to others who are releasing outside the U.S. Therefore you should retain a subpublisher in each territory where your copyrights might appear, assuming there’s sufficient volume to make it worth their while. Take into account that it works differently in each country, so do your homework.


A Quick Take on Music Publishing

Music Publishers create, exploit, administer, and collect royalties for their copyrights.

Copyrights are an extremely valuable asset.

Term of copyright:

Life of author plus 75 years

Works for Hire – 95 years

Public performance rights via ASCAP, BMI, SESAC for the U.S.; SOCAN – Canada; PRS – U.K.; SACEM

– France; GEMA – Germany; JASRAC – Japan; etc.

Mechanical Rights are for the mechanical reproduction of copyrighted music.

Synchronization Rights are for timed synchronization with visuals.

Print Rights are for printed music.

Digital Print Rights are for digital representations of printed music.

Statutory Rates:

Year Less than 5 minutes Per Minute

Starting 1/1/2006 $.091 1.75¢

Starting 1/1/2013 to be established in 2012 to be established in 2012

Chapter 7 – Staffing Possibilities | 67

Chapter 7 – Staffing Possibilities

Part of building your label will be the hiring of essential staff. For those not starting with their own recordings, staff considerations will probably be addressed after you’ve signed more artists. Just how many — or how few — people you will need will vary considerably and be determined by the size of the label, available capital, and your ambition.

I suggest however, that you start modestly, bringing in only those people you absolutely must have in order to function; hire additional staff later as events require and the budget allows. As I’ve mentioned previously, I’m a firm believer in a “virtual” office, which means using appropriate freelance talent as needed, thereby creating the effectiveness and appearance of a larger company than actually exists.

For self-funded start-ups with negligible cash, and this is most beginning labels with a maximum of zeal and energy but limited financial means, I suggest only the barest minimum of staff. What this implies is that the founder — or founders if there are two or more — will, for all intents and purposes, be the entire staff, perhaps with one or two part-time assistants.

This means you’ll be putting in long fun-filled days handling all of the functions and all of the responsibilities that many staffers would do in a larger label. You’ll need to be extremely hands-on, and what you don’t know at the outset you’ll have to learn quickly. Thus you’ll likely perform all the tasks necessary to run a label — A&R, banking, bookkeeping, business affairs, marketing, etc. This will even include stuffing envelopes and handling routine mailroom functions.

Running such a small-staffed label is an enormous responsibility and undertaking. However, many now-thriving major and independent labels were started by someone with large ideas and a small wallet, who learned the business by doing it all.

Note that when you hire staff you’ll need to get an Employee Identification Number (EIS) from the IRS, will have to take out Workers Compensation Insurance, and that you’ll have to comply with various governmental regulations, such as the completion and retention of an I-9 (Employment Eligibility Verification form) stating whether or not the employee is a U.S. citizen.

http://www.irs.gov/businesses/small/article/0,,id=98350,00.htmlhttp://www.ice.gov/sevis/faqs/information_employers_nonimmigrant_students.htm

Traditional Staff Functions

The pages that follow are provided so you’ll have an idea of how large record companies are structured. This will help you determine what to add as your label becomes successful and needs to grow. A mid-to-large sized label will consist of many departments and employees, falling under two groupings — General and Administrative (G&A) and Sales & Marketing.

http://www.irs.gov/businesses/small/article/0,,id=98350,00.html

http://www.ice.gov/sevis/faqs/information_employers_nonimmigrant_students.htm


General and Administrative

I’ll first briefly discuss those employees who would fall under the heading of G&A on a Profit and Loss (P&L) Statement. Note that there’s no attempt to place these in a hierarchical position.

The Top Dog

This is probably you, and when your company grows, your title might be President, CEO, Managing Director, El Supremo, or Chief Cook and Bottle Washer. You’ll be the banker and fundraiser and will have the responsibility for major decisions, the label’s A&R direction, and the general well-being of the label.

General Manager

As companies get larger, they may need someone to take part of the load off the label head. That’s where a general manager — COO, executive vice president, whatever you might call him — comes into play. Most of the staff will report to the GM, with the GM reporting to the top dog. Sometimes a GM will double as head of marketing in midsize labels.

CFO, Accountant, or Bookkeeper

The bookkeeping or accounting function is a highly critical one. This person will be responsible for the maintenance and handling of all financial data, including invoicing, accounts receivable and payable, sales data via a spreadsheet or database, royalty reporting, and preparation of such internal documents as P&L statements and all the other financial reports that a businessperson needs to analyze the financial state of his company.

The person you employ for this position will be directly involved in all financial matters. He will oversee the financial welfare of the label, will do financial projections, and either keep the books or supervise that function. Due to its importance, this is one of the most critical hires you can make; so when the time comes, be sure you’ve thoroughly researched your needs and the work history and background of the candidates. It’s a sensitive position, so hire with care and discretion. You might even have your outside accountant interview the final applicants to help in this critical hiring decision.

How highly qualified the candidate has to be will be determined by your needs and budget. If you require a high-powered individual with lots of knowledge, you might hire a C.P.A. with years of accounting experience. But sometimes it’s a good idea to bring on a person with less experience but who shows great ability, potential, and honesty. Then let this individual grow on the job. If, at a later time, the label requires someone with substantial knowledge and experience, you can then hire a more highly qualified person, knowing that the original employee will be the one who knows the financial ins and outs of the label, and where any “bodies” may be buried.


Accounting data must always be kept safe and protected, up to date, and be backed up to a secure off-premises location. The staff must also keep track of all capital purchases and leases.

Business Affairs

Business Affairs takes care of all the legal aspects of a label and negotiates all of its deals. In larger labels, a staff attorney usually fills this role. However, in small companies, the head of the label will often handle the bulk of this function, leaving the tougher aspects of negotiations to an outside attorney experienced in negotiating music-business contracts. Business Affairs should also maintain a suspense or tickler file that keeps track of when contracts need to be renewed and options exercised.

Some labels arrange to have someone in this department handle the filing of mechanical copyright licenses for all new releases.

Artists and Repertoire (A&R)

Artists and Repertoire (A&R) people deal with the scouting and signing of artists, advise on song selection, and may sometimes produce recordings. A label stands or falls on the quality of its music, so this is another one of those critical functions. A&R personnel spend lots of time in clubs looking for and listening to new talent, listening to demo tapes, and auditioning performers.

Some labels may utilize A&R stringers who live in different cities throughout the country. These are people who frequent local clubs and know what’s happening musically in their region. They don’t get paid much, but they should receive all of your releases, and one or two royalty points if they introduce an artist who you subsequently sign to a contract.

A&R Administration

Some labels have a person whose primary job it is to keep track of all recording budgets and actual expenses. This person will work with the producer and artist to establish the budget, then authorize the work by placing purchase orders for studio time, hiring of musicians, instrument rentals, etc., and should keep careful track of all expenditures as they occur. It’s this person’s responsibility to notify management should it appear that a project may go over budget.

Art Director

The art director (sometimes called Creative Director) is responsible for the visual “look” of a label and all that entails. The AD works with a photographer and/or illustrator and a designer (if he doesn’t do the design himself) to achieve the desired image most appropriate to the artist and the music. The AD may also be responsible for the design of a label’s logo and letterhead, as well as for all marketing materials and advertisements, and frequently will oversee music videos.


Production

Production takes care of all the nuts and bolts involved in getting the recording produced as a physical entity. This means seeing the project through from birth to release, gathering all materials for use in the booklet and inlay card (song titles, writers, publishers, album credits, etc.), coordinating graphics design, seeing that mastering is accomplished, ordering print and manufacturing runs, and controlling all inventories. This job requires someone with great attention to detail.

Product Manager

This job is similar to and may replace that of the A&R Administrator at some companies. Large labels have a staff of such people whose job it is to work with the artists during recording sessions, explain the artist and the music to the rest of the label, most particularly the marketing staff, and guide the artist’s career from the label’s standpoint. It’s kind of like being the artist’s ombudsman.

At some labels, this is a function of the marketing department.

Office Manager

An office manager takes care of routine office functions and the supervision of the infrastructure, sometimes — in very small companies — including personnel matters.

Personnel (Human Resources)

Labels with a large staff will probably have a special department that deals with personnel and their issues. They will be responsible for maintaining personnel records and may deal with health insurance matters. The head of the department will be responsible for writing an employee manual and seeing that it’s signed by all staff members. Federal laws require that all employers, regardless of size, have written policy guidelines. The manual should cover all employee policies, benefits, and responsibilities including terms and conditions of employment.

Mailroom

This department sorts the incoming mail and packs and sends out promotion disks, etc. They may also be responsible for maintaining a samples inventory of all current releases. They’re frequently called upon to run errands and handle other miscellaneous office functions.


Sales and Marketing

This grouping falls under the P&L heading of “Sales and Marketing.” The fact that I address it after “G&A” does not detract from its importance to the effectiveness of a label. In fact, there’s an entire chapter later in the book devoted to this crucial function.

Marketing Head

This person will determine how you’ll go about letting the public and the industry know about the great new music you’ll be releasing. Your head of marketing will be responsible for distribution, sales, publicity, promotion, etc. and will be the principal designer of your marketing plans and their execution. It’s another critical position and requires someone who not only loves your music, but also is intimately familiar with all aspects of what it takes to market music in this time of complex retail distribution and online music sales. This individual needs to be industrious and highly creative, and must know how to accomplish a great deal with very limited budgets.

Unless you’re prepared to run the label and also be head of marketing yourself, be sure to hire someone who’s not only on your wavelength, but is also a person who can add to the “look and feel” of the label.

Sales

As its name implies, the salesperson or sales team is responsible for all aspects of selling, working with distribution and retail accounts to get the label’s message across about each new release. This person needs to ensure that your product is well spread throughout the marketplace in quantities appropriate to each account and geographical region.

International

Once a label has developed artists with potential for significant overseas business, it should consider hiring someone to handle all the aspects of international sales and marketing. It’s a complex task because your music will have more appeal in some territories than others, and you’re likely to end up with a different distributor or licensee for each country. Keeping affiliates informed of new releases, supplying them with samples, and motivating them is difficult. All this is made more complicated by language barriers and disparate customs.

Publicity (aka Public or Media Relations)

This person is responsible for getting news and information about the label and its artists to national and local press, as well as to such national radio magazines as All Things Considered, Morning Edition, and Fresh Air. The publicity person also attempts to place artists on local community and college (and in some cases high school) radio stations for on-air interviews and/or performances. She may also be responsible for interaction with social media such as Facebook, Twitter, etc.


Radio Promotion

Radio airplay is an essential need for most labels. The head of promotion will oversee the efforts of all those involved in getting local and national radio stations to play your music. This individual may make most of the necessary calls, but many labels farm out these functions to independent promoters who specialize in the genre of music your artist most closely approximates.

Indie promoters range from relatively inexpensive in the case of jazz or classical music, to mega-dollars for rock and pop airplay. The latter is in a period of flux as I write this in late 2011 since radio play is no longer as effective a sales tool for independent labels as it used to be.

Advertising

Once an artist or his music has attained a certain amount of “buzz,” taking out ads in certain media may be advantageous. I suggest you only consider spending money and effort on advertising after a significant buzz has started. Don’t even think of wasting funds on advertising for an unknown or unproven artist.

This function will in all likelihood be the responsibility of the head of marketing until such time as the label has sufficient budget and personnel to have a full-time advertising person on staff.

Artist Development

Some years ago, many large labels had a department devoted exclusively to furthering their artists’ careers — helping them get gigs, guiding them to be more stage-worthy and exciting as performers, etc. These people would also advise the artists on how to look good and be effective when performing on stage or on television.

This is still an important function of a record label, and I encourage you to do as much artist development as you can with a minimal operating staff. Later, when finances permit, you can add a development department.

Media

Labels that require many music videos may have a full-time person to coordinate all aspects of making them as well as getting them broadcast on TV and online outlets that routinely play them.

Additional Support

Assistants

Large companies may have many assistants in each department. However for a start-up (and, of course, depending on the initial size of your staff), one or more assistants will probably be necessary.


For example, if a label is started with just one, two, or three key people, it’s likely that you’ll need at least one helper — if only part-time — to deal with the myriad of tasks and details.

Interns

Bright and motivated older high school or college students can make great interns. They can be effective in many different roles, depending on their individual abilities and interests. They’re usually unpaid, getting school credit for their work. Others receive modest hourly wages and copies of all new releases. It sure beats working at the local fast-food emporium!

Virtual Staff

And here is where what I term “virtual staff” comes into play. These are freelance professionals who provide services and handle certain responsibilities on an “as needed” basis. A label can be particularly effective in outsourcing such functions as graphic design, publicity, promotion, etc., for specific projects or for a specified period of time. It’s absolutely essential in very small companies.

Most start-up labels begin with the barest minimum of staff — frequently the founder and perhaps a part-time or full-time assistant. This is not due to the fact that there’s little work to be done — in fact, the contrary — just that there’s usually not enough money to support anyone else.

However, where sufficient funds are available, I suggest there be at least:• A Label Head — you;• A Bookkeeper or similar financial person — to do spreadsheet projections, pay the bills, and keep the books; can be a part-time function;• A Marketing Person — to be brought aboard sufficiently before the first release to effectively handle the first and subsequent projects.

When you’re just beginning, the head of marketing may be sufficient for your marketing needs, as this is where the “virtual” staff comes in. For example, outside professionals could handle the functions of public relations and radio promotion. There’s a lot of such talent available, particularly as a result of recent layoffs in the music industry. These can be individuals or small firms — whatever makes sense for your label and music. I’ve known a number of labels who’ve worked very effectively with such experienced people, hiring them for certain projects for a limited and specified period of time. This also protects cash flow since you know at the outset of a project just how much you’re committed to financially.

The following pages show sample organizational charts that suggest staffing for very small, medium, and large record labels. Again, these are suggestions, since every company sets themselves up differently.


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A Quick Take on Staffing

General & Administrative (G&A)

Top Dog

General Manager

CFO, Accountant, Bookkeeper

Business Affairs

Artists and Repertoire (A&R)

A&R Administration

Art Director

Production

Product Manager

Office Manager

Personnel Manager

Mail Room

Sales & Marketing

Marketing Head

Sales

International

Publicity (Public Relations)

Radio Promotion

Advertising

Artist Development

Media

Assistants

Interns

Virtual Staff

Chapter 8 – Setting Up Your Office | 79

Chapter 8 – Setting Up Your Office

This chapter deals with the realities of creating a physical “home” for your new label and attempts to include everything you’ll likely need to address. Of course, what you need, and how much, will be dictated by the size of your company.

The Office Space

Early in the label’s development, you’ll need an office. Presumably you’ll rent space somewhere, unless you have a large home where you can work, or sufficient resources to buy office real estate. However, I don’t recommend that you tie up cash buying space. Renting preserves capital and affords much greater flexibility for future growth.

It’s a given that your requirement for space must be appropriate to the number of people needed to staff the label. But here’s a word of advice from years of choosing office space — try to get about 20–30% more space than you think you’ll need at the outset. The reason is that most people underestimate future growth, and with any reasonable success, you’ll probably want to hire more people and will need some place to put them! Leasing sufficient space initially may save you from an expensive and time-consuming relocation.

Locality may or may not be important to you, depending on the label’s size, nature of the music, staff, image you wish to project, etc. If you’re in a big city, consider accessibility to public transportation. If you’re in a locale where most people drive to work, consider the access to major roads and thoroughfares and, even more important, adequate parking. You’ll need a parking spot for each employee and extras for visiting artists and guests. Will additional parking spaces be available if you add to the staff? Such space may not always be available, so this is an item that needs to be checked. Also the parking site should be brightly lit as well as safe and secure for any late-working employees.

In the previous chapter on staffing, you will have determined the optimal size of your staff and their responsibilities. Now, as you consider the space, think of the need for adjacencies — who needs to be close to you or other key people, and who may not. Consider the size of various common office spaces you might want, such as a mailroom or conference room.

Try to find space that’s already wired for telephones, computers, and the Internet. If not, ask the landlord to provide such wiring as part of your inducement to sign a lease. You might also be able to get the landlord to pay for whatever partitioning may be necessary to house your operation, or at least to provide some financial consideration toward construction. Such requests are quite customary, and you’d be amazed what you can get from an agreeable landlord through the gentle art of persuasion.


Private Offices

Private offices may not be possible in the very early days of a label’s existence, but they’re extremely conducive to getting work done, particularly in a music company. They don’t have to be large or lavish, but they need to be utilitarian. You may occasionally need to close a door just to think, or to have private meetings with staff, artists, managers, etc. You’re also going to want to play music — sometimes very loud — so being able to close a door becomes a necessity.

Conference Room

You may not think you need a conference room, but it’s a great place for staff meetings and for those who may have cubicles or small offices to meet with artists, suppliers, etc. You might fit it out with a good sound system (maybe even with surround sound), a television, DVD, and VCR for viewing videos, and even with a piano if that’s appropriate to your artists’ music — whatever amenities your budget can handle.

Mailroom

A mailroom is highly recommended as the place where incoming mail can be sorted, where outgoing mail can be assembled and stamped, and more important, as a storage space for the CDs, DVDs, etc., you’ll be releasing. You’ll also need space for storage of mailing and packing materials. Provide as much shelving as possible, as well as a large work counter for sorting mail and assembly of “mass” mailings. You may be able to store materials under the counter, if you provide shelving or cabinets there.

Kitchenette

A small kitchenette is also a valuable and staff-friendly convenience, particularly if you’re not located near a coffee shop or fast-food restaurant. It may be equipped with nothing more than a coffeemaker, small refrigerator, and microwave oven, but will surely repay its cost in staff convenience. The further you’re located from an outside source of food, the better equipped the kitchenette should be. It’s also a good location for a water cooler, or even one that supplies hot water as well as cold.

Storage Closet

A closet is great for storing office supplies, although they can be placed in the mailroom. A lockable, air-conditioned closet is ideal for storing safety-master tapes, special materials, and expensive office supplies.

Archive

Many labels forget about a valuable future resource that costs nothing other than space, and that’s an archive of every record you release — in all of its configurations. Keep a minimum of five copies


of each title in each configuration, and don’t let them leave the premises! You should store extra CD booklets and inlays, cassette J-cards (folders), and archive all printed catalogs, mailing pieces, promotional items, and selling materials. Keep it well-organized so you can easily find what you need. You’d be amazed how often you’ll go to the archive to check something.

The archive should be maintained in a locked, highly secure space, with access provided to only the most trusted staff. If it is climate-controlled, the space might also be a good location for temporary storage of master tapes. (Ideally, masters should be stored off-site in a secured, climate-controlled location. More about this in a later chapter.)

Facilities Closet

A lockable space is important for key equipment such as telephone switching gear, computer network server and backup storage, and the wiring and hubs for these critical infrastructure items. Be sure it’s accessible for repair and maintenance and not located anywhere that will make it difficult to get into.

I almost put all of this on top of somebody’s office once, which would have necessitated climbing a “pull-out” ladder and crawling over a catwalk to get to it. And in the summer, it was extremely hot up there. I was very glad that, in a sleepless 3:00 a.m. moment, it occurred to me that I had an ideal location for such a suitable space that was extremely accessible, and even air-conditioned. It saved countless climbs, since that’s where we put the network server with its backup tape drive, routers, and patch bays, as well as the telephone and voice mail control computers and their cabling.

Soundproofing

Since you’re a music company, you’re going to want to play a lot of music in your space, so try to soundproof it as much as possible. Of course, you won’t want to annoy your neighbors, so consider placing any room where you may need to play loud music — such as your conference room — in the center of the space, or some other location whose walls are not adjacent to the neighbors. Where possible, build offices for principal personnel with extra layers of sheetrock and separate the studs between office walls so that they don’t touch. This will reduce noise considerably, as will solid-core doors, thick wall hangings, carpets, etc. Add as much soundproofing as you can afford.

Decor

You don’t need to spend a lot on decor. Paint comes in all kinds of colors that don’t cost any more than plain old white. Consider letting all the infrastructure “hang out” — something I learned from Frank Gehry when he was showing me office space he’d designed years before becoming one of the best-known architects in the world! This means you may not need to cover or otherwise disguise ducts, cable, etc. Creative use of posters and other inexpensive materials can make an office feel very warm and welcoming. In fact, there’s nothing wrong with funky or shabby chic, and you can even make “cheap” look good through cleverness.


Furniture

You’ll need desks, chairs, file cabinets, etc. You may be able to lease them, but it will probably cost you more in the long run. Look for used desks and file cabinets at stores that specialize in second-hand office furniture, or at charity thrift shops. You can always upgrade later when you’re profitable.

When it comes to office chairs, however, look for ones that are “ergonomic,” providing good back support for the many long days you and your staff will be sitting in them. Seating is one item not to do on the cheap.

Your desks needn’t be fancy. For years, I’ve been using a large solid-core door placed on top of a couple of two-drawer file cabinets. I put a few coats of polyurethane on the door and have been using it for about twenty years — a very inexpensive solution to a common need.

Don’t be concerned with “image” in furnishing the office. Amazon.com’s early offices, for example, were noted for their inexpensive office furniture.

Before you acquire the furniture, draw up a simple diagram or floor plan for the entire office, and figure out just what you’ll need for each space. Then put all of this into a list, or ideally a database by person and department. This will provide a total of all the desks, chairs, file cabinets, etc. that you’ll have to get.

Furnishing Your Office

Private OfficesDeskDesk ChairCredenza – for each office, where affordableFile Cabinet – for each office, plus some for the company at large. Those in open or public spaces should be lockable.Shelving for Books, CDs, etc.Optional:

Visitor Chairs – at least one or two in each closed or private officeSound System

CubiclesDeskDesk ChairOptional:

Visitor Chairs?Credenza?File Cabinet?


Conference RoomTableChairsOptional: Sound System with Speakers, a Television, VCR, a Piano

Office Equipment & Services

Communications

Phone System & Phones

You may decide to let the local phone company supply all of your phone equipment, which might be a good idea at the outset. Later on, you’ll probably save money by purchasing your own equipment or working out a lease-purchase plan.

Consider carefully how many lines you’re likely to need. A staff of six, for example, doesn’t mean you’ll need six lines, although you might. Ask your phone company rep or other telephone adviser for their guidelines, keeping in mind that record labels are more phone-intensive than many other businesses. Just be sure that you provide for flexibility in your equipment so if you need to add staff and additional lines, the equipment can handle it. You may also need a dedicated line for a fax machine.

The phone company may be your best consultant initially, but there are a number of communications specialists who are excellent at estimating telephone needs and can supply or guide you to the equipment most appropriate for you.

Think about who will be handling incoming calls. Will it be an “automated attendant” — a device that automatically forwards calls to the appropriate person — or a live person? Or will each person or department be responsible for their own calls that come in via direct dialing? If by one person, you’ll need some kind of switchboard or phone that can handle all the lines and be able to transfer them to the appropriate person without a lot of key-clicks, hassle, and inconvenience.

Try to get some sort of “conferencing” feature so more than two people in the office can be talking to the same person simultaneously, or to enable you to conference-in two outside parties.

Be sure there’s some kind of intercom or paging feature on the system. Yelling down the hall may work, but it’s hard on the lungs, doesn’t impress visitors, and is unprofessional (although I’ve been known to do it).


Answering Machine or Voice Mail

Get an answering machine or voice mail feature — either in on-premises hardware or the phone company’s — that can handle all the lines for those hours the office is closed.

Long Distance Carrier

You’ll be making a tremendous amount of long distance calls — more than you ever thought possible. So it’s best to shop around in order to get the most comprehensive, cheapest, and most favorable deal available to you. Check with friends and associates to see who they’re happy, or not happy, with. Also look for a plan that bills in fractions of minutes. Many long distance carriers round up to the next minute, which might not seem like much, but really adds up when you use the phone a lot, which you will.

Look into a good long-distance carrier, such as Sprint, whose rates may be a lot cheaper than what the local phone company may charge. Shop around for the most favorable rates for small businesses. There are also a number of companies that use the Internet for long distance calls, such as Skype or TruPhone, but they tend to be complex and may require special equipment.

Get long-distant calling cards or company-owned cell phones for anyone who travels frequently on company business, but be sure to occasionally audit the bills to ensure they’re being used legitimately. However, when you’ve sent someone on the road, I think it’s reasonable that they be able to keep in touch with their family on the company dime.

Toll-free Number

Be sure to get an “800” (toll-free to the user) number. It’s important for your distributors, customers, etc., as it provides extra incentive for them to call, and keeps you from looking like a cheapskate! It’s also useful for traveling staff to call in on, saving expensive toll calls from hotels in distant cities.

Your local phone company and long-distance supplier (who may be the same) will itemize their bills, so it’s important that you check them carefully from time to time to be sure the phone company, or your staff, is not cheating you.

Online Access

Since the Internet has become such a vital part of our lives, online access is a necessity. Get as much capacity as you can afford, based on the number of people who need it for business purposes (as opposed to accessing the net for online shopping during company time).

I suggest at least a DSL (Digital Subscriber Line). This comes in varying bandwidths, from 144 KBytes to 1.5 Mbps (megabits per second), depending on your location and the ISP you choose. Since it uses regular phone lines, you’re not likely to be able to obtain the higher speeds unless you’re very close


to the local phone node. ISDN, which stands for Integrated Services Digital Network, has been pretty much phased out in favor of DSL.

DSL uses a special modem or router that’s frequently supplied free by the ISP you sign up with. They sometimes even provide free installation as an incentive, and the company may offer you as many as five or six separate email accounts. Of course, you can buy more if they’re needed. As a DSL subscriber, you’ll also have your own unique “static” IP (Internet Protocol) address.

Larger labels might look into a T1 line for much greater bandwidth. This, too, comes in varying sizes up to 1.5 megabits, but you can get a “fractional” T1 if your needs don’t require the higher speeds.

If you plan to host your own website — that is have it accessed from your own server — you’ll definitely need an always-on DSL or T1 line with its own IP address, although I encourage you to have one of the many companies that specialize in hosting websites handle it for you. Costs start at no more than about $25 a month, and with their redundancy, it’s unlikely that technical problems would bring down your website, a much more likely occurrence if you host it on your own server.

Some offices may also be able to access the Internet using Digital Cable. The availability of this option depends a great deal on the cable company licensed for your location, and what your landlord may permit, since cable systems are not always allowed in conventional office buildings. However, despite their wide bandwidth capability (as high as 36 Mbps), you’re actually sharing the line with others in your neighborhood, so access speed will vary considerably. And you won’t get your own IP address, but a variable one, so it can’t be used for a web server.

But the best thing about DSL, T1, or cable is their “always-on” capability; 24/7, there’s no need to wait for a modem to dial, connect, and handshake — a remarkable convenience and time-saver.

Computers

You’ll need to decide at the outset if you’re going to be a “PC” or Apple Macintosh office (or both). PCs are made by Hewlett-Packard, Dell, and many others.

http://www.apple.com/http://www.hp.com/http://www.dell.com/

I prefer the Mac since I’ve been an Apple owner since 1979 and like their computers and the company, and because Macs tend to be easier and more intuitive for us “creative” types. They’re particularly adept at graphics, music, and video work. All recent Macs not only run their own native MacOS (operating system) but are also capable of running Miscrosoft’s Windows.

Once you’ve made your decision, buy as much computer power as you can afford, being aware that whatever you get will be technologically obsolete in two to three years!

http://www.apple.com/

http://www.hp.com/

http://www.dell.com/


It’s particularly vital to buy additional RAM (random access memory), since it’s a lot more important for day-to-day work than CPU speed (central processing unit — the heart of the unit). Word processing programs and email don’t require a lot of CPU power. However, if you use a number of programs throughout the day, the additional RAM will save you from having to repeatedly open and close programs that you’re not using this minute, but might use again a few moments later.

In fact, once I open a program, I don’t close it until I shut down at the end of the day. I’m likely to have all of the following programs open simultaneously — word processor, spreadsheet, email, web browser, Acrobat Reader, various utilities, and frequently such design-related programs as Illustrator, and Photoshop (a real memory hog).

It’s also helpful to have, at the least, a built-in CD burner, and if you intend to do videos, a DVD burner.

There’s an exception to the above comment about CPU speed — be sure that anyone on staff who deals with graphics, sound, or video processing has a computer that’s as fast as your funds can provide, since these are functions that require very fast computers.

Network

Networking your computers is one of the most effective and efficient things you can do — in even the smallest office. For example, I have two computers in use virtually every day, a laptop and a desktop. And they’re networked! It makes backing up very simple. Each day’s work on one machine is backed up to the other — daily! (Not to mention also to an outboard hard drive and removable media that are stored off-site. See the section below about backups.)

A LAN (Local Area Network) requires nothing more than a simple Ethernet® hub and cables or a Wi-Fi (Wireless) device. My hub cost all of $35 a few years ago. If you get a DSL line, it may have an Ethernet® hub and even WiFi built right into it. Most computers and many printers sold today have both Ethernet® and WiFi capability, or it can be added with an adapter card.

This also allows a number of computers to share a single printer.

In addition to backing up your work and sharing a printer, the network will allow you to access files on each other’s computers. That is, provided you’ve set them up so that those certain files can be shared. Macintosh computers allow you to share only those files you permit to be shared, and then only by those people who should have access, via use of a secure password.

A network can reduce the use of what we used to call “sneaker net” in those days before networking computers became easy. This was simply taking a floppy disk down the hall with a copy of the file to be shared. Doesn’t that floppy disk date this scenario?


The larger your staff — the more computers you’ll have — the greater your need will be for a well-functioning network.

Network Server

Related to the network is a server — cleverly called a network server. This is a special computer (sometimes rack-mounted) with a very large hard drive that’s used to store the many essential company files that need to be accessed by more than one person, sometimes simultaneously. For example, an accounting department might use a server to maintain the financial files that the entire department uses. These files are password protected so that only those who require access are able to use them.

A server may also contain such vital data as a company-wide contact list and/or calendar and other key databases. For example, one of my clients with about ten employees used their server to store all of their vital company and production information in a sophisticated database using FileMaker® as the engine. All of the data was on the server, but could be accessed only by those who had a reason to view or to update it.

Printers

You’ll need at least one printer, and depending on the company size, perhaps additional ones. I recommend at least one black-and-white laser printer with an Ethernet® connection so it can be shared by many people. The more who share it, the more heavy-duty it should be. If it’ll be used for any graphics programs which make use of Adobe Postscript, be sure it has Postscript built in, preferably not via emulation. This will enable you to create professional-looking documents. And if the budget allows, you might want one that has additional paper trays as well as the capability for printing on envelopes, and 11 by 17 inch paper.

Such printers are available from Hewlett-Packard, Brother, and GCC, among others.http://www.hewlettpackard.com/http://www.brother.com/http://gccprinters.com/

Color laser printers, should you require that capability, are available from Xerox and HP. A less-expensive option is an ink-jet printer from Epson, Canon, Hewlett-Packard, etc. I think business correspondence from these doesn’t look as good as that from a laser printer and it appears less professional. Still, it may be acceptable at the outset if, like most of us, you’ve got limited funds. Large-format models are particularly useful for graphic design.

http://www.epson.com/http://www.usa.canon.com/

http://www.hewlettpackard.com/

http://www.brother.com/

http://gccprinters.com/

http://www.epson.com/

http://www.usa.canon.com/


Scanner

A scanner is not an essential item unless you do a lot of in-house graphics. Scanners are now available at prices about a fifth of what they were some years ago, with quality many times better. Many major manufacturers make them.

Software

You’ll have to supply your staff with a fair amount of software. Not everyone needs to have all that’s available, but most of the staff will need certain standard products to be able to function. Be sure you buy or license separate programs for each person. Do not pirate software — not just because it’s unethical, but because doing so could bite you in the tail.

What follows is a description of an essential group of software that almost everybody needs.

Word Processor

Microsoft Word has become the industry standard and is a totally cross-platform program. That means a document saved in MS Word format can be read as easily on a PC or a Mac, and although other programs are available for both platforms, it has, by the might of Microsoft, become the de facto standard — like it or not.

Spreadsheet

Microsoft Excel is the standard for financial planning, budgets, and number crunching, and it is also great for creating tables, charts, and graphs.

I used to keep track of all aspects of production in a large Excel file, and I’ve also known it to be used for royalty accounting. It can also be used for lists, and for small “flat-file” databases.

Excel is cross-platform, a great convenience when sharing files with accountants and consultants.

Both Word and Excel are “bundled” as part of Microsoft Office on both platforms, along with PowerPoint, which you might find useful later on. Get the latest version for your operating system.

http://www.Microsoft.com/

Email Client

Qualcomm’s Eudora and Microsoft’s Outlook Express (or Microsoft’s Entourage for some operating systems) are available for both platforms and in common use in many businesses and industries. Email is by nature cross-platform, so pick a program that allows you a lot of flexibility in the way of storage “mailboxes,” to use Eudora’s terminology. For example, I have mine set up with many

http://www.Microsoft.com/


separate business mailboxes — such as one box for each client, prospective clients, in-work projects, etc. — and personal boxes for mail that I might want to refer to later.

Eudora is pretty much obsolete these days, but it was a great program in its time and many of us still use it.

http://www.eudora.com/products/

Email programs from Microsoft usually come “bundled” free with their Windows operating system or may be available as part of Microsoft Office.

Apple’s Mac OS X operating system comes with its own free email program, appropriately called Mail.

Web Browser

The two standards are Microsoft’s Internet Explorer and Mozilla Firefox, and they are available for both platforms. They’re free, but be certain to use the most recent version for your computer.

http://www.mozilla.com/en-us/firefox/new/

Apple bundles its own free browser called Safari, and is the fastest on the Mac. There are other browsers available, free or at modest cost, such as Google Chrome, Opera, and OmniWeb, should you prefer them.

Database

Microsoft Access for PCs is one option. A better bet, though, might be Panorama or FileMaker Pro, which although an Apple product, is cross-platform. It’s a relational database and comes in a number of “flavors” depending on your needs — shorthand for saying you can make it do almost anything. It’s become the current standard for database work.

http://www.provue.com/panorama/http://www.filemaker.com/

You’ll use either of these to keep track of all kinds of vital and not-so-vital company information such as your artist roster, product line as it grows, your history of airplay by artist and title, etc. Some labels use it to massage sales data. I had a client that maintained its entire production schedule and detailed data in FileMaker, making it available for all the staff to access so they’d know what was happening in real time, with input of data only accessible to the people who handled production.

Some databases are “flat file,” such as looking at data in Excel. More sophisticated ones are relational in that they “cross index” data between relevant files. For example, you might have all of your radio stations listed in a file that “relates” to separate files containing airplay information by catalog number. Thus, if you want to know which stations played the last release by The Doorstops, you’d

http://www.eudora.com/products/

http://www.mozilla.org/en-US/firefox/new/

http://www.provue.com/panorama/

http://www.filemaker.com/


merely query the database to get the answer.

Contact Database & Calendar Program

There are many programs that handle these functions. Although Microsoft’s Outlook for PC and Mac is an email program, it can also keep track of contacts and calendars. Many Mac users prefer Apple’s Address Book and iCal. An additional advantage is that they can be synchronized with iPhones and iPads.

Anti-Virus Software

The Internet is rife with viruses that are frequently carried by email, or files and documents you may receive from others. Anti-virus software will tend to vaccinate you from such nasty bugs, but be sure to update the virus definitions (usually free or by subscription) on a regular and frequent basis. Typical programs are Norton Anti-Virus from Symantec and McAfee’s Virex.

http://www.Symantec.com/http://www.McAfee.com/

Firewall

One of the few disadvantages of “always on” Internet access is that your computers can conceivably be the recipients of a hacker attack. These attempts try to find out what you may have on your computer, or even more malicious, aim to destroy some or all of the computer’s contents. A firewall program puts a software wall between your computer and the Internet, enabling you to get out through it, but keeping would-be intruders at bay. These utility programs are inexpensive, but essential. An example is Norton Personal Firewall for the PC and Doorstop X for the Macintosh, available from Open Door Networks.

http://www.opendoor.com/

http://www.Symantec.com/

http://www.McAfee.com/

http://www.opendoor.com/


Accounting

A good accounting system for the record industry, and just about any other business, needs to handle all of the following functions:

• Invoicing of Sales• Crediting of Returns• Accounts Receivable• Customer Statements

• Purchase Journal• Accounts Payable

• General Ledger• Trial Balance• Income Statement• Balance Sheet• Profit and Loss Statement (P&L)• Cost of Sales• Product P&L (by Artist/Title)• Cash Flow

• Payroll (plus W2s and 1099s)

• Customer Order Entry (optional but very helpful)• Inventory Management (optional but extremely helpful)

Most accountants recommend that you operate on an accrual rather than a cash basis. Using the latter, you account for income when you receive checks, and you account for expenses (outgo) when you write checks. This is sometimes called “cigar box” accounting because it’s like keeping your money in a small box — putting it in and taking it out.

Accrual accounting, on the other hand, keeps track of everything as it occurs. For example, as soon as you ship an order to a customer, you generate an invoice, which posts the amount to an accounts receivable journal and tells you, based on information in the invoice, or due to a prior account set-up, exactly when you should be receiving payment. In other words, if you send an invoice on June 20th and have given 60-day terms, you will expect to receive payment on or shortly after August 20th. (Being in the record business however, you won’t be holding your breath, and will probably be delighted to receive payment by the end of October!)

In addition, the sales information entered earlier in invoices — or even prior to that, in your order entry journal, if you’re using one — can be used to construct a sales report, by catalog number, quantity, customer, etc.


When you make a purchase by use of a purchase order, you would enter the purchase information into a purchase journal, noting when payment is expected to be due; for example, 30 days after receiving the goods and receipt of an invoice from your supplier. The accumulation of all purchases will generate an accounts payable ledger or “aging” which will tell you what you’ll have to pay out over the next week, or 30 days, 60 days, etc.

The more detailed you make your entries (and you only have to do this once per event), the more information you’ll be able to extract. For example, at any given time, you should be able to know exactly what you’ve spent thus far on making your newest hit — in studio costs, musician fees, print graphics, etc. You’ll also know how much business you’ve done with your key accounts for each month and in aggregate since the beginning of the year, including how well they’re paying you, and what you can expect to receive in payment during the next month, and so forth.

With a good Double-Entry accounting system, you should be able to maintain all the information a label needs to survive and prosper — Accounts Receivable aging, Accounts Payable aging, Income Statement, Balance Sheet, Project or Release P&Ls, Cash Flow data, etc.

In double-entry accounting, every transaction has two sides — where the money comes from, and where it goes. For example, when you pay a bill, you’ll be deducting money from your checking account but also applying it to your supplier’s account, reducing the amount you owe that company.

M M M

There are lots of accounting systems available. Some of them are very good, and some rather poor. Some are over-simplified, others way too complicated. You’ll need to do research to find out which one’s just right for how you want to operate your business.

Will you be using PCs or Macs? Will more than one person be needed to handle maintenance of your accounting? If so, you’ll need a LAN (local area network) so that two or more people can be entering data or running a report at the same time.

Don’t get a system that’s too elementary. Although a simple package may seem right for a start-up, be sure it can grow as your business grows. You certainly don’t want to have to change accounting software in a year or two, conceivably having to re-enter all of your data! That’s a nightmare, but I’ve seen it happen many times.

On the other hand, don’t get a package that’s too complicated for you and your staff to handle. Think like Goldilocks — it’s got to be just right! Be sure the software you buy is from a well-established company — one that looks as if it’ll be around for years to come. You’ll likely need tech support from time to time, and you don’t want to find the company has gone out of business and your new software is unsupported.


In addition, before you settle on a particular system, consider using an accounting software specialist to assist in the installation and set-up. This may save you lots of grief. But be sure the specialist will be available for the first few months you’re using the new package to answer questions and troubleshoot problems. And be sure they know your chosen software cold!

Although I’m not recommending accounting software for your particular needs, you may want to look into one or more of the following before you settle on your purchase. It’s likely that one of these will work for you.

Quicken from Intuit might be the simplest system, but is not flexible or sophisticated enough for a growing company, is not double entry, and doesn’t provide an audit trail. A slightly better choice is QuickBooks, available for both PC and Mac. There are lots of different versions, at varied prices.

http://www.intuit.com/http://www.quickbooks.com/

There’s also AccountEdge as well as MoneyWorks Accounting Software (Cognito Systems). Both programs exist for Macs and Windows, and either of these will probably work well for a start-up that plans a few years of solid growth. You’ll have to buy separate licenses for each additional user, but that’s at considerably reduced prices.

http://www.accountedge.com/products/http://www.cognito.co.nz/

In addition, there are some PC-only offerings, but be sure the software you choose is compatible with the type of Windows operating system and/or server you have.

Peachtree Accounting has a number of modules and versions depending on the complexity of your needs and the number of users.

http://www.peachtree.com/

There are also web-based versions for some of these (QuickBooks and Peachtree), but I don’t recommend them. The reason? If your ISP (Internet Service Provider) network is down, you won’t be able to get to your data.

Lots of research material is available on the web. So be sure to thoroughly review all available options. But it’s imperative that you discuss these with your accountant before you make a purchase. It’s also a good idea to check with your friendly competitors to see what they’re having success with, or listen to horror stories about their experiences so you’ll know what to avoid.

http://www.intuit.com/

http://www.quickbooks.com/

http://www.accountedge.com/products/

http://www.cognito.co.nz/

http://www.peachtree.com/


Royalty Accounting

You can use a spreadsheet program during the first years for a label with few releases and few royalty accounts. Larger labels with more sophisticated needs will require specialized software for royalty handling that’ll be discussed in Chapter 14 on post-production.

Backup

Of course, you’ll want to back up your accounting data (and all other vital databases and business information) on a daily basis, rotating your backups and keeping them off-site. Backing up is an absolutely essential task.

You can do simple backups to an outboard (external) hard drive, especially one you might take home at night. I used to use such removable media as Zip disks and Jaz cartridges. Now we can use miniature USB devices called “thumb” drives. Others back up to DVDs or CD-Rs.

It’s best to have a routine regimen for this vital task. For example, once a week, you might back up the entire network, including a server if you have one, to DVDs or special DAT Data drives used for computers, or to other common backup media. Then, each night, do incremental backups to a separate tape. This can be programmed to happen automatically. Once a week, the previous week’s backups should be moved off-site. Some companies alternate the responsibility between one or two trusted employees. This helps provide redundancy. Others put their backups in a fireproof safe deposit box once a week. By the way, backing up to “The Cloud” is not advised due to the volume of data.

Check online for more information about backing up, and for the most appropriate solution for your specific needs.

Additional Programs of Great Value

There are many more programs that you’ll find can be highly helpful and utilitarian. The following, although used primarily by designers, will be of great benefit to you if you’re already familiar with them or can find the time to learn them.

Adobe InDesign and QuarkXPress are page layout products. They can be used to design anything from a one-page black-and-white flyer to a multi-page full-color brochure, magazine, or book.

Adobe Photoshop can manipulate photographs and illustrations in almost any conceivable way.

Adobe Illustrator can be used to design logos, complex type, and as its name implies, illustrations of great complexity.

http://www.adobe.com/http://www.quark.com/

http://www.adobe.com/

http://www.quark.com/


Website design can be accomplished using Adobe’s Dreamweaver or GoLive. The Adobe products are available in a series of complete packages called the Adobe Creative Suite.

http://www.adobe.com/products/

There’s no end to great music creation and editing programs available, but they’re quite sophisticated and I think are beyond the scope of this book. A quick scan of the web using Google can provide the latest information on what’s available.

Fax

A fax machine used to be an essential item in virtually every business. But with the emergence and subsequent heavy use of email, faxing is less essential, although very convenient. The least expensive machines use rolls of carbon paper to create a print image; others use ink-jets; and the most expensive use laser print technology. Thermal paper, which had been used for many years, is now all but obsolete, replaced by standard inexpensive “multipurpose” paper.

If you can afford it, get a machine with memory storage capability. That way, if the machine runs out of paper, any incoming faxes get stored in memory until additional paper is installed and the fax can be printed.

Almost all fax machines have some kind of fax number storage capability, and the more you’re willing to pay, the more numbers can be stored. Some have a “broadcasting mode” which allows you to send a single fax to many numbers with the push of a single button. It’s a great way to let your affiliates know about your airplay, etc.

With appropriate software, you can also send and receive faxes from your computer. However, this means it has to be powered on 24/7, which is not always desirable.

Copier

At Elektra in 1965, I signed one of the first leases for a Xerox 914, the earliest readily available laser copier. The machine took up a significant part of a room. Nineteen years later, when I was leaving Elektra, my wife wondered why in the world I was buying a copier for my home office. In point of fact, she ended up using it for her landscape design business almost as much as I did. The copier had become another essential of our normal work process.

These machines vary considerably in size, capability, and price — and you get what you pay for. Buy one, at minimum, that can copy to both letter size (81/2 by 10 inches) and legal (81/2 by 14). “Tabloid” size (11 by 17) is particularly helpful for large spreadsheets and for graphics layouts. Be sure to get a printer with an automatic document feeder. Also, a collator, if within your budget, is a mighty time-saver.

http://www.adobe.com/products/


I like copiers that reduce to 50% and enlarge to 200% of the original, in varying increments, allowing great flexibility. I also prefer machines that use very fine toner, which provides higher-quality reproduction.

Manufacturers include Xerox, Canon, Minolta, Sharp, etc. You can purchase or lease from them, or any number of suppliers in your city. One advantage of leasing is that if something goes wrong a serviceman should be available to quickly fix or replace it.

Small copiers can also be bought from large office stationery and equipment suppliers such as Staples, Office Depot, etc., but they’ll be less elaborate in capability and speed.

Postage Meter

If you’re going to be doing a fair amount of day-to-day mailing, a postage meter becomes a time-saver and keeps you from having to worry about the quantity and value of stamps you need to keep in the office. These meters also come in varied size and capacity. Some have motors that slide the envelopes through quickly, some have scales that couple to the meter, and almost all allow postage to be printed on paper labels that can be easily applied to packages.

You’ll probably be doing frequent publicity mailings about new releases, and will also be sending lots of samples CDs to reviewers, radio stations, etc. That makes a postage meter almost a necessity.

You can download postage from Pitney Bowes and add it to your meter as needed, saving frequent trips to the post office.

http://www.pitneyworks.com/

It’s a good idea to keep the meter locked when not in use, or maintain it in a secure location.

Post Office Box

Are you working out of your home and don’t want to divulge your address? Or are you in a temporary rented space? In either case, a P. O. Box at a conveniently located U. S. Post Office can be extremely practical, and you can keep it for years at minimal cost. I don’t recommended boxes in “convenience” stores because they don’t offer the protection of the U. S. Government, are usually no cheaper, and may go out of business when you least expect it.

http://www.pitneyworks.com/


Office Set-up Check List

Office SpacePrivate Offices _____Conference Room _____Mailroom _____Kitchenette _____Storage Closet _____Archive _____Facilities Closet _____Soundproofing _____Decor _____

FurniturePrivate Offices

Desk _____Desk Chair _____Credenza _____File Cabinet _____Shelving _____Visitor Chairs (optional) _____Sound System (optional) _____

CubiclesDesk _____Desk Chair _____Visitor Chair (optional) _____Credenza (optional) _____File Cabinet (optional) _____

Conference RoomTable _____Chairs _____Sound System (optional) _____Television w/ VCR (optional) _____

Office Equipment & ServicesCommunications

Phone System _____Phones _____Answering Machine or Voice Mail _____Long Distance Carrier _____Toll-Free Number _____Online Access _____

Computers for each employee (PC, Apple Macintosh, or both) _____Network _____Server _____


Printers _____Scanner _____Fax _____Copier _____Postage Meter _____Post Office Box _____

SoftwareWord Processor _____Spreadsheet _____Email Client _____Web Browser _____Database _____Contact Database & Calendar Program _____Anti-Virus Software _____Firewall _____Accounting _____Royalty Accounting _____Backup _____Design (optional)

Page Layout _____Image Manipulation _____Web Design _____

Chapter 9 – Planning the First Recording Project | 99

Chapter 9 – Planning the First Recording Project

By now, you feel you’re ready to get started with your very first recording project as a new label. You’ve presumably familiarized yourself with the studio process, and have attended as many sessions as you can, through friends or colleagues in the business.

But before you go into the studio to enjoy the fun part of being in the music business, you must do that one thing that seems to be anathema to too many entrepreneurs, and that’s plan, plan, and plan some more! You get the idea.

Sit down with your artist or group and discuss in detail just what the artistic goal of the project should be. It’s vital at the outset that artist and label agree as to the nature of the recording, the material to be recorded, the size of any ensemble and use of assisting musicians, and specifics about the overall sound. Once there’s artistic agreement, the nuts and bolts aspect of the planning can begin.

For example, will the basic tracks be recorded in your artist’s home or home studio, if he has one, or will you have to rent time in a local professional studio? If the latter, you’ll need to find out what professional studios are charging for rental — either by the hour or day. What equipment is normally included as part of that charge? Does it make sense to negotiate a “lock out” — a provision that only your act will be using the studio during the agreed-upon dates? It usually costs more and is not advisable unless you need a lot of studio time — something I don’t recommend.

Which brings me to another point. Be sure that the core musicians (those that are part of a signed act) are fully rehearsed before they step into a studio. Although major acts might be able to afford weeks or months of expensive studio time, that’s not likely to be possible for you and your artists. The better rehearsed they are, the fewer hours of studio recording time will be required, and the better the result should be. Knowing the notes cold will allow for those ineffable nuances to make their way onto the recording. And even if you have to rent inexpensive space where musicians can rehearse, it’ll still a lot cheaper than doing it in the recording studio with the meter running.

Who will be the producer? Will it be you, or someone you hire? An experienced producer can bring out the best in an artist or group, helping them shape the material and advising on arrangements, etc. A great producer can earn his fee many-fold. Think of the role of producer as you would the director of a great movie. He’s frequently that single person who turns raw material into magic, or base metal into gold! The producer is a creative talent in his own right who can mold an artist’s performance into greatness. He’s also frequently a skilled analyst, capable of dealing with the artistry, emotions, and flaws of many a great musician.

Ask colleagues for producer recommendations. Also, look for the producer credit on the liner notes of CDs that you think were particularly well made and whose music is in the same genre as what you plan to record.


The Studio

Before you look at studios, talk to your friends and colleagues in the business to get their recommendations.

Visit as many studios as you can in order to find out what kind of facilities they have. Some rooms, no matter the size, have a great recordable sound — others aren’t worth the money they might charge. Does the room have a warm, spacious sound, or is there hardness or brittleness? Determine how large the room will need to be to accommodate your musicians and their instruments.

You’ll also need to consider the kind of music you’re recording. Rock musicians usually require a room that’s got a lot of isolation between instruments, whereas a small classical ensemble might prefer a large room with a warm, spacious ambiance. For classical music, there’s a preference for no artificial echo. A small jazz ensemble might also prefer the latter, whereas a large jazz band might not. There are countless variables.

Does the studio have the type of microphones you’re likely to need? Some have a wide assortment of all kinds of mikes to solve most any problem, and for almost any instrument. Does the studio have a good piano or other large instrument that you might need? If not — and if you require it — you’ll have to budget for a rental. Are there isolation rooms where you can put a soloist, string bass, etc.? This provides for separation and reduces sound leakage between instruments.

Then consider the control room. Does it have all the equipment you’re likely to need? Is there a lot of available outboard gear? Is there a decent producer desk or place where the producer can hear well and be close to the engineer?

Does the studio supply good engineers? Most will provide a primary engineer — who is in charge, and a second engineer — who handles tape machines, records track information, etc. Are the engineers included as part of the rental fee? Will the studio’s engineers be able to work well with your producer? If you supply your own primary engineer, be sure to get references from your network of associates, and be sure that he will be compatible with your producer.

Does the studio have a good mix-down facility, with computerized automation if you think that’ll be helpful? If not, but it’s got a great sound, use it for tracking, and mix elsewhere.

How flexible will they be with their prices? Will they provide a discount for a portion of payment up front, and in fact, do they require a deposit before you start recording? By the way, unless they know you well, many studios require payment in full before they’ll let you remove your tapes or hard drives.


Will you have to rent any musical instruments or special electronic gear, and will you need to have them, or anything large and heavy, carted to the sessions, resulting in cartage fees?

You also have to decide whether to record analog or digital, multi-track or two-track? These decisions will also your costs.

There are many digital recording systems for both semi–professional and studio use available these days. An advantage is that they allow for recording onto computer media, providing great flexibility and control. The disadvantage is that they may be too complex to be used by an inexperienced engineer (which I don’t recommend in any event.) And the equipment used may not be available in the future when you want to release your music in the then prevailing predominant medium — whatever that may be!

I’m a great believer in an analog backup if you’re recording digitally. Nowadays we can usually play back analog masters or multi-tracks from forty or more years ago. But try to find or use one of the first multi-track digital recorders, such as 3M’s Model M81 Digital Audio Mastering System, to play back multi-track session tapes from 1981, for example! Digital systems come and go, but analog tape decks tend to be around for years.

Determine what kind of tape or other media, hard drive for example, you’ll be recording to, and mastering on. And no matter what you pick, don’t consider that a DAT is appropriate for your final master. DATs are all right for reference purposes but may have too many potential dropouts to be used for the final master.

Will the studio let you supply your own tape or hard drives? Most studios have a high mark-up when they sell tape, so you can save if they let you bring your own.

Recording Budget

Now that you’ve decided on a studio, it’s time to start putting a budget together. The process will require that you look carefully at all aspects of the recording process, and as a result, it will help you determine just what may or may not be affordable.

I suggest that before you start, you decide on a “not to exceed” cost for the project. That’s a number that you’re willing to commit funds for and that you feel you can afford. Which is not to say that you must use all that money since it’s always a good idea to spend as little as possible.

Now start a new spreadsheet similar to the one on the next page.


Number of Songs Fee per Song Estimated Cost Actual CostFEES

Arranger = Num of Songs

times Fee per Song

Producer Negotiated Fee "

RECORDING & SWEETENING SESSIONS

Musicians Scales Fee per ScaleNumber of

Sessions Estimated Cost Actual Cost

(list each name)

= Scales times Fee times Num. of

Sessions

"

"

"

"

"

"

Vocalists(list each name) "

"

"

CopyistPiano TuningTapeEngineer (Hours) (Days)

= Hours times Days

Studio (Hours) (Days) = Hours times

Days

Equipment RentalInstrument RentalCartageFoodMiscellaneous

MIXING SESSIONSTapeEngineer (Hours)

Studio (Days)

Equipment RentalFoodMiscellaneous

MASTERINGStudioTapeTravel

MISCELLANEOUS

Total

RECORDING BUDGET

© 2007 Keith Holzman, Solutions Unlimited


Note there are rows on the left for each item and category, with columns across the top for incremental amounts and their costs. There’s also an “estimated” column for the totals of each row, and a final column where you can post the actual costs as you receive and pay your bills. You can even add a column that calculates “unders” and “overages.”

Fees

These include independent producer advances, if any, and fees for arrangers if required for the project.

Recording Session Costs

Musicians. List the artist or band members and other musicians — either by name or instrument — how many sessions they’ll be recording, and the fee for each session. If they’re union (AFM) members, and you’re agreeable to paying union wages, calculate the number of “doubles” involved. For example, someone who plays both clarinet and flute in a single session would count as a double. Additionally, under union rules, one musician has to be declared as “leader” and that person gets paid for two scales, one as a musician and one as leader.

Vocalists. List as required. Many professional vocalists are union members affiliated with AFTRA. That can add a lot to the cost of making a recording, so you might consider choosing non-union singers.

Copyist. If an arranger is hired, a music copyist may also be necessary to copy all the parts. They’re usually union members, so be aware of the high cost involved.

Piano Tuning. If you plan to use a piano, be sure it’s tuned before each session. The studio may have a preference for whoever maintains their instrument, so consult with them on it, and be sure to budget for it.

Tape or Hard Drives. Estimate the type and quantity of tape or size of hard drives you’ll need for multi-tracking. Try to provide your own if the studio will allow it.

Engineer. This is the fee per session for any outside engineer you might hire.

Studio. Calculate the number of hours or days multiplied by the per hour or daily rate.

Rentals. Allow for any instruments or equipment you might need to rent and multiply by the cost per hour/day, etc.

Cartage. You may need to pay to have large instruments or equipment moved into the studio. Don’t forget to double the cost because you’ll have to pay for moving them out as well!


Food. Many artists and musicians expect the record company to pay for lunch, dinners, or snacks during recording sessions, so calculate that cost here should you be willing.

Mixing Session

Tape or Hard Drive, as aboveEngineer, as aboveStudio, as aboveFood, as above

Mastering

Check with your colleagues and shop around for the best mastering facility available to you. Since this is such a critical part of the creative process, it’s one area where you should plan to spend a bit more than you might think necessary in order to get the best person and facility for the job. Budget for it. I’ll discuss mastering in more detail in the next chapter.

Contingency

Something always seems to come up that you haven’t been able to plan for, so this is where you allow for the unexpected, but necessary, expense. You might add 5–10% of the total budget as a hedge.

Total

Calculate all costs and total them. The result is what you’ll need to spend on the project. If it adds up to more than you bargained for — a common occurrence — then now’s the time to find that out. Then try to see where you can eliminate unnecessary or less important items.

Once you’ve got a budget that works for you and your artist, be sure to follow it, revising as necessary should costs or circumstances require changes. I find it very helpful to post the actual costs alongside the budgeted costs as they’re incurred. It’s not only helpful for this project, but for when you plan future recordings.


Planning the First Recording Check List

Work out the artistic goal of the project in detail. ______Choose the producer. ______Research the studios appropriate to the project. ______

What does the studio charge per hour or per day?What microphones are available?Are isolation booths available?Is the control room well equipped?Does it have necessary outboard gear that you might require?Does the studio supply a primary engineer and second engineer?Check the mixing facility.Is there an automated mixing capability if you need it?How flexible is the pricing?Can you provide your own tape or hard drive?

Choose the engineer if not supplied by the studio. ______Are you going to record analog or digital? ______Be sure the musicians are thoroughly rehearsed before going into studio. ______Prepare a comprehensive recording budget, including:

Fees for the producer, arranger, etc. ______Recording Session costs:

Musicians ______Vocalists ______Copyist ______Piano Tuning ______Tape/Hard Drive ______Engineer ______Studio ______Rentals ______Cartage ______Food ______Misc. ______

Mixing Session costs:Tape/Hard Drive ______Engineer ______Studio ______Food ______Misc. ______

Mastering ______Contingency ______

Chapter 10 – Recording the First Project | 107

Chapter 10 – Recording the First Project

Now comes the “fun” part — making the actual recording. How you go about it varies considerably based on the artists, genre of music, etc., all of which has been covered many times in a slew of good books, some of which are listed below. I won’t attempt to duplicate their efforts here. (Also see the “Recommended Reading” section in the back of this book.)

Sound Recording Practice edited by John Borwick, Assoc. of Professional Recording Services. Professional Microphone Techniques by David Miles-HuberThe Recording Engineer’s Handbook and The Mixing Engineer’s Handbook both by Bobby OwsinskiTemples of Sound: Inside the Great Recording Studios by William Clark, Jim Cogan, Quincy Jones.Sound Recording Advice for the Home Recording Studio by John J. Volanski.Off the Record: The Technology and Culture of Sound Recording in America by David Morton.

There all also several magazines such as Electronic Musician, and Mix that you may find helpful.http://www.emusician.com/http://www.mixonline.com/

M M M

Depending on the type of music, you may first lay down basic tracks with the core musicians. Later, you might “sweeten” the music by adding additional instrumentation such as percussion or strings for color.

Some producers or engineers like to separate the musicians from each other in order to isolate them sonically, giving them great creative control in the subsequent mix-down process. It’s a matter of the kind of music you’re recording and the final sound desired.

For example, in rock sessions, the drums and bass are almost always kept well isolated from each other in order to provide separation between them and from the other musicians in order to reduce “leakage” into their microphones. And a somewhat dry sound is desired because echo and reverb will be added in mixing.

On the other hand, in classical music, a real ensemble feel and a warm, natural environment is desired. The engineer will go to great extremes to record in a rather live space that provides as “real” a sound to the instruments and their environment as possible.

The producer will usually try to create a warm and friendly atmosphere while the musicians are recording, enabling them to be comfortable and to work well together. Some producers have been known to make a studio feel much like a living room, bringing in rugs, candles, or other soft lighting. The theory is that the more at ease the musicians are, the better recording they’ll make.

http://www.emusician.com/

http://www.mixonline.com/


Before you begin, you’ll have to decide whether to record analog or digital, and if you’ll be using such digital audio workstations (DAWs) as ProTools, Logic, or Digital Performer

http://www.avid.com/us/products/family/Pro-Toolshttp://www.apple.com/logicstudio/http://www.motu.com/products/software/dp/

Later, when all the tracks are recorded, the producer and engineer will mix down to a two-track, stereo master, and if you’re affluent and into the latest technology, perhaps make a “5.1” mix immediately thereafter for surround sound recordings released as DVD-Audio or SACD discs, although these formats seem to have fallen to the wayside.

How many tracks you’ve used in the recording session will determine in part how difficult the mixing may be. Obviously the more tracks you have to deal with, the longer the process will take. Most engineers start with the drums, setting their internal balance and equalization. Then he’ll add any other rhythm instruments, such as a bass, one at a time, slowly building up the architecture. Lead instruments will come next, and finally a lead vocal if it exists.

Some engineers and producers swear by (and at) automated mixing boards. Using automation should save time, but I’ve known it to take more, or at least seem to take more. The decision to use automation is up to the producer, the engineer, and the budget.

When the mixes are finished, you’ll have to “sequence” the release. This is the ordering of songs into a final playback order, and is so critical a process that it can make or break the project. The best way to do this is thematically if there is a theme to the project, or in some way that compels and draws the listener through to the end. Vary the tempos and keys in such a way that the music flows freely.

The sequencing of songs, and the intervals between them, will greatly impact the impression made on the listener. Too many slow songs in a row, for example, will impede a natural flow. I’ve known otherwise good records that have been spoiled by a poor arrangement of the order of songs. Many producers like to place one or two key tracks up near the beginning.

Apple’s iTunes program, available for both Macintosh and Windows, makes testing the sequencing of songs very easy. You can listen to different versions of a project merely by changing the order of songs in the iTunes window.

I suggest you come up with a first draft and then record it (using iTunes if you wish) onto a CD-R. Let it rest for a day or two and then try to listen to it with fresh ears, perhaps in your car or office. If the first sequence doesn’t work, then re-sequence it as many times as necessary until it works for you, and perhaps a few trusted people whose opinions you respect.

http://www.avid.com/us/products/family/Pro-Tools

http://www.apple.com/logicstudio/

http://www.motu.com/products/software/dp/


The Mastering Process

Mastering is one of the most aesthetically creative and technically important parts of making a record. You might think you can do a good job on your own computer using ProTools, BIAS Peak, or a similar program, but it’s best by far to have someone with great ears and who’s well respected in the industry put the finishing touches on your project. You’d be amazed at what a Bob Ludwig (Gateway Mastering, Portland, Maine), a Doug Sax (The Mastering Lab, Los Angeles), or a Bernie Grundman (Bernie Grundman Mastering, Los Angeles) can do to bring out hidden depths in the recording that you may not even know are there. In addition, they also provide fresh, objective ears for a project they’ve not previously heard.

http://www.gatewaymastering.com/http://www.themasteringlab.com/http://www.berniegrundmanmastering.com/

Be careful in choosing your mastering engineer, and be prepared to spend some money because you pretty much get what you pay for. An experienced engineer might make a pretty-good record sound a lot better, possibly even great; but a poor one can make a great record sound much less than it is.

When the producer and you have constructed a sequence you’re all happy with, he’ll take the final two-track masters and the written-down sequence with timings (kind of like label copy) into the mastering studio, along with your mastering instructions. These instructions will specify catalog number, artists, title, ISRC codes (see below), the manufacturing plant that will receive the master, the quantity of reference disks required, quantity of safety disks or tapes, and any other special instructions.

The mastering engineer will fine-tune the recordings, adding equalization and adjusting levels between songs as necessary. With the producer’s guidance, he’ll also set the intervals or times between each track so that there’s a good flow.

After he makes any sonic changes and sets levels and the desired intervals between songs, the mastering engineer will insert “PQ” codes. This is the information that determines where tracks start, contains control points, and provides all the timing information.

When the process is complete, you should request a reference disk for you and your artist to listen to and review. This is so you can hear it where you customarily listen to music, and also because some mastering studios have such superb speakers that the music seems to sound better than life itself! Because of this, it’s best to listen to the ref in your usual environment.

When you’re happy with the results, the mastering studio will record the final master(s) to be used in the manufacturing process. The manufacturer sometimes refers to this master as a “pre-master.”

http://www.gatewaymastering.com/

http://www.themasteringlab.com/

http://www.berniegrundmanmastering.com/


ISRC Codes and GRid

I recommend that you include International Standard Recording Codes (ISRC) as a part of the mastering process. This is a unique global identifier for each track on a sound recording or music video, and can be permanently encoded as a kind of digital fingerprint. It’s one of the ways to protect your music against piracy.

The ISRC is a 12-character code that remains with each track, regardless of any future changes of ownership. The twelve characters are:

Country (2 characters) — country of residence of registrantRegistrant Code (3 characters) — label at time the ISRC is allocatedYear of Reference (2 characters) — year in which the ISRC is allocatedDesignation Code (5 characters) — number assigned sequentially by the label or producer

For example, ISRC “US-Z03-12-00212” corresponds to U.S. (country) -Z03 (registrant) -12 (year) -00212 (designation code).

Each label has its own unique code, and you can apply for your new label’s U.S. Registrant Code from the USIRC. See their website for details and to get the application form

http://usisirc.org/

Still more information can be obtained from the International Federation of the Phonographic Industry (IFPI) website. They have an excellent handbook that’s available on that page that has more information than you may even care to know!

http://www.ifpi.org/content/section_resources/isrc.htmlNote: that’s an “underscore” ( _ ) between “section” and “resources” in the above URL.

It’s important to keep track of the assignment of each song’s 5-digit code by year, and it’s probably best to list them sequentially, starting with xxxx1 for the first track on the disk. Use a simple spreadsheet or preferably a database, formatted by year, artist, album title, song title, and assigned ISRC number. I recommend that you allot 20 numbers per project to allow for singles and other variants such as special mixes, etc.

In addition, consider using GRid which stands for Global Release Identifier. This is an additinal protection for your intellectual property. Per their website “GRid provides a system of unique identification of ‘Releases’ of music over electronic networks....By assigning a unique GRid to each release it can be identified without amiguity in, for instance, reports of sales of products based on the Release.”The GRid Standard and the GRid Handbook and are available from the IFPI website

http://www.ifpi.org/

I know this all seems complicated, but proper maintenance of your intellectual property is necessary and vital to the well-being of your label.

http://www.usisrc.org/

http://www.ifpi.org/content/section_resources/isrc.html

http://www.ifpi.org/


Piracy

Piracy in the recording business has become a major industry problem and has resulted in the loss of billions to record labels, musicians, and copyrights owners throughout the world. Piracy is what happens when a company in a far-off country illegally manufactures CDs of music they don’t have the rights to. A more common, and epidemic, form of piracy has resulted due to the proliferation of peer-to-peer file sharing (stealing) of songs over the Internet by people using such programs as the original Napster, Limewire, Gnutella, and Kazaa.

Thankfully, a lot of that is now history!


Recording Project Check List

Read up on recording techniques if you’re not familiar with them. _____

Record the basic tracks. _____

Sweeten the tracks. _____

Mix them all down to a two-track master. _____

Mix down to a 5.1 track master (optional). _____

Sequence the songs into the final playback order. _____

Research ISRC codes and obtain your ISRC number. _____

Prepare your list of ISRC numbers for the project prior to mastering. _____

Prepare Mastering Instructions to include: Catalog Number. _____ Song Sequence with Timings._____ ISRC Codes. _____ GRid. _____ CD Manufacturer, with address and contact information. _____ Quantity of safety tapes required for backup. _____ Quantity of CD Reference Discs required. _____

Master the recording. _____

Chapter 11 – The Ins & Outs of Pre-Production | 113

Chapter 11 – The Ins & Outs of Pre-Production

Pre-Production is the process of preparing for the actual manufacture of recordings, including all commercial and promotional CDs, cassettes, vinyl LPs, DVDs, videos, or anything your business requires. It consists of the preparation of artwork for printing, the master for replication, and the coordination of all required matters with the artist, producer, designer, marketing department, etc., as appropriate.

You’ll need to know the following before you begin:

• What the artist and label would like the package to look like.• Who the designer will be.• Who the printer will be.• What configuration(s) you will be manufacturing (CD, Cassette, LP, DVD, Videotape, Download

— exclusively, or in addition to other media, etc.)• Which CD pressing plant or tape duplicator you will use.

Let’s address each of these matters.

The prime physical medium for recorded music remains the Compact Disc, as imperfect as it is. CDs have improved greatly since their commercial debut in 1983, but remain somewhat constricted in sound quality due to their containing only 16-bits of information at a sampling frequency of only 44.1 kHz. They need to stay as such in order to be compatible with the millions of CD players now in existence. Newer recording processes, though, are capable of carrying up to 24-bits and 192 kHz of information. Thus the original sound can now be stored at considerably greater fidelity. Unfortunately such formats are incompatible with the existing standard CD (although such media as DVD-Audio, Super Audio CD, and Blue Ray, as well as downloads are capable of this higher degree of resolution).

If you manufacture anything you’ll likely want to manufacture and sell CDs, since they remain the norm, at least for now.

And if you manufacture anything, should you manufacture audio cassettes? Commerical cassettes are essentially a thing of the past. Determine whether cassette sales are meaningful for the genre of music you’ll be recording. For example, a few years ago it was primarily rap, hip-hop, and urban music that sold any quantity of cassettes. Some labels used cassettes for singles, while others manufactured CD singles when they felt there was sufficient potential. But you should know that cassette sales are but a tiny fraction of what they were twenty or so years ago.

A few labels manufacture a limited quantity of 12-inch vinyl LPs for dance clubs when the music is appropriate. Others make audiophile LPs for that rarified and specialized market.

So what you manufacture will depend on your music and its audience.


Pressing/Manufacturing Plant

Take sufficient time to investigate the best manufacturer for your needs. Talk to your associates in the business to see who they’ve had experience with and which plants they’d recommend. What you’re looking for is a combination of the following:

• Good service with attention to your needs, and reasonable turn-around times.• Stringent quality control.• Fair, competitive prices.• Reasonable business terms (timing for payment, etc.)• Ability to give you speedy access to information about your order, such as how much has

been manufactured thus far, etc., and when any remaining balance will be available for shipment.

• Facility to drop-ship on your behalf.• Capacity to store your goods at no, or at least low, cost to you.

Location could be one of the factors in making your decision. Where is the manufacturer located, and how close is it to the location of your primary distributor? How near or far is it from you? The distances involved will have a bearing on the freight costs from the manufacturer to the distributor, and to you, because you’ll likely be responsible for paying these costs.

In regard to manufacturing costs — be sure to get competitive quotes, find out what’s included in the quote, and what each plant charges for “extras.”

These are some of the questions you should ask:

• Is their standard CD label printing silk-screened or offset?• How many colors are normally allowed on the CD label (is it standard 4-color process?), and

what are the charges for any additional color? Request samples.• Are clear jewel cases and trays available, and at what additional cost, if any?• Other than a standard folder or booklet, what additional charges apply for inserting extra

material into the package, such as a bounce-back card or small catalog booklet?• Can they print a “top spine,” and what do they charge? This is the plastic strip with artist

name, album title, and bar code that’s commonly placed on the top of the CD just prior to shrink-wrap. It’s what you see first as you browse through CDs in stores.

• How do they want you to supply them with the necessary information needed to print the top spine? (Fax, email, etc.)

• Do they charge extra for drop-shipping?• What do they charge — if anything — to store your manufactured product if they agree to

warehouse on your behalf?


Request samples of each supplier’s work so that you can check quality of manufacturing and label printing.

Some labels use a broker to handle their manufacturing and printing needs. This might be advantageous for a small start-up in that you have to talk to just one person about printing and manufacturing. It greatly simplifies the task, but has some pitfalls. First, it’ll cost more because you’ll be paying for the broker’s time, service, and experience. It also means that there’s always a middleman between you and the manufacturer — something I, as a hands-on type, dislike. I prefer to deal directly with the people actually responsible for the work. In the long run, direct contact with the supplier will enable you to ask questions and to learn more about the process, and will serve you in good stead as you grow large and prosper. I’ve always valued my close relationships with the people at various printers, pressing plants, and duplicators. Many have become good and close friends. Therefore I recommend you take a deep breath and dive into the pool yourself.

Note that many manufacturers, and printers too for that matter, may not require written contracts. These are some of the few remaining “good faith” relationships in the industry.

Once you’ve decided on a manufacturer, you’ll need to find out:

• What they require for manufacture from the Mastering Studio — Fully encoded CD-R, or type and format of tape (PCM-1630 U-Matic, Exabyte, etc.)

• What media do they need to print a CD or cassette label from? Will they want separated film or do they prefer an emailed file in InDesign, QuarkXPress, Illustrator, or PDF form? If it’s for a CD label, how many colors of ink will they allow without additional expense?

• How many days before your desired ship date will they require the various components listed above to be in their facility? No matter what they specify, however, schedule this delivery a few extra weeks (not days!) ahead of time on your calendar.

Once the finished recording is mastered, you’ll have to see that the required component is sent to the supplier for manufacturing.

When the master is received at a CD plant, it is used to generate a “glass master.” This is a glass disk covered with a photosensitive layer onto which a special laser engraves the minute pits of information that represents your music. A very thin silver coating is then applied in a vacuum evaporation process, after which the glass master is nickel-plated using an electrolytic process and a negative mold of nickel is “grown” from it. This negative is called a “father.” Positive parts, called “mothers,” are grown from the father, and then more negatives, called “stampers,” are grown from the mother.

The nickel stamper is a negative mold, which is then placed in a press into which a liquefied polycarbonate material is injected. After a few seconds of this, a clear circle of plastic containing all the musical information is ejected from the press. The disk is then “metalized” with an extremely


thin layer of aluminum using a vacuum process. This is necessary so that a CD player’s laser can read the underside of the disk. The disk is then covered with a thin clear coat of varnish that envelops the aluminum, thereby protecting the disk.

The label information is then printed right onto the disk’s upper surface by either a silkscreen or offset process using up to six quick-drying colors — depending on the plant and what you’re willing to pay. Finally the labeled disk is packaged with your booklet and inlay card (you may be supplying these separately — we’ll discuss this shortly) and placed into a plastic jewel box (or other form of package)which is then shrink wrapped for commercial release, probably with a printed top spine.

Most manufacturers have minimum run requirements. This means that they may take orders of no less than 1,000 units for an initial pressing, with re-runs having a minimum of 500 units. Be aware that most manufacturers supply CDs in 25-count or 30-count cartons. You might have a choice, so you should ask your distributor which size carton they prefer to deal with.

Be sure to request a test pressing. Some plants will supply a couple at no additional cost. Others will ship you a few of the first copies off the press as soon as they start replicating. The purpose is so you can check the quality of the manufactured CD — its sound, label printing, and correct packaging.

Wikipedia has an excellent article on the manufacturing process.http://en.wikipedia.org/wiki/Compact_disc_manufacturing

By the way, the DVD manufacturing process is very similar to that of CDs.

Tape Duplicator

If you’re making cassettes or videotapes, you’ll need a tape duplicator. The duplicator will advise you about what materials they’ll need for manufacturing. It’s your responsibility to see that they get the necessary master and appropriate file/film for label printing, and the printed J-cards, in sufficient time to meet your delivery date. J-cards are the printed folders typically wrapped around cassettes before they’re put into their jewel boxes. They look like the letter “J” in edge-on view.

In all likelihood, the cassette duplicator will want at least a CD to master from, but may prefer a PCM-1630 digital tape, Exabyte, or 1/2-inch or 1/4-inch analog reel-to-reel tape. They will use a “bin-loop” process by copying your source material from the master you supplied onto a wide, 1/2-inch “working” master that, as an endless loop, is placed in a big bin. This is played back at high speed, recording from the bin onto “pancakes” of blank cassette tape. After recording, each blank is loaded into C-0 cassette shells, labeled, and packaged into a jewel box along with the pre-printed J-card you’ve supplied.

If it’s to be videotape, again find out what the manufacturer will need from you so you can supply the necessary materials in sufficient time.

http://en.wikipedia.org/wiki/Compact_disc_manufacturing


Printer

You’ll choose your printer in a similar fashion to how you’ll choose your manufacturer. Quality is a very important factor, but so is service and price.

If the printer requires film in order to print your CD booklet and inlay (tray) card or your cassette J-card (see above), you’ll need to send the electronic (computer graphic) file to a color separator. Again, find out from your designer or colleagues who they recommend, or barring that, ask the printer for a recommendation. Many printers can do their own separations from your designer’s InDesign or QuarkXPress “soft mechanical” file.

Be sure you see a color proof before film is shipped or printing is started. It might be a “Matchprint” or similar laminated proof made from actual film negatives before they’re sent to a printer. A separation is made for each negative representing one of the four process colors, and the four separate sheets are laminated together. The result will approximate what the printed job will look like.

However, it’ll probably not look as good as it did on the computer screen due to the difference between an RGB image using light transmitted through the screen, and the CMYK look of reflected light off four layers of film and a layer of paper. On the other hand, don’t be fooled by the high gloss surface and richness of color of a matchprint. They almost always look better than the final, printed job due to the difference in process and the inks that offset printing uses.

There are many different kinds of printed packaging used for CDs. There can be single pages with the cover image on one side, and other copy on the reverse. More common are folders or booklets. Folders can be 4, 6, 8 or even ten pages that can be barrel folded (each page folds inside the next — like a snail) or folded in one direction and then the other (like a poster). Booklets can be from eight pages upwards, in multiples of 4 pages, and are usually stapled at the spine. Some labels prefer to print using four-color process on the outside of the folder or booklet, saving money by using just one color — usually black — on the inside. This is called four over one (4/1). If you have great graphics material available, and the budget, it’s nice to print four colors on all surfaces. Not surprisingly, this is called four over four (4/4).

Some companies like the look of a simple cardboard sleeve, or a folded cardboard sleeve called a gatefold. Sometimes the simple sleeve is used for promos, but I think promotional items should have all the graphics that will be used in the commercial release.

Some record labels like to use a Digipak®. This is a patented package that grips the CD in a plastic tray that’s attached to a cardboard “frame.” Sometimes there’s a pocket provided for an additional insert. However, this is can be a rather expensive item and is economically feasible only if ordered in substantial quantities.


Be advised that your printer may end up with an under- or over-run. Standard printing industry practice allows for 10%. So if you order 5,000 graphics, your printer might ship as few as 4,500 or as many as 5,500, and you’ll be charged appropriately for the amount they ship.

Your printer can usually supply you with the applicable template for the option (type of folder or varying sizes of booklet) you decide on, using InDesign, Illustrator, or QuarkXPress format.

To learn more about printing and the processes involved, get your hands on a small paperback titled Pocket Pal: A Graphic Arts Production Handbook, which is published by International Paper and is updated every few years. The current 20th edition cost $19.95 at the time of this writing, and can be bought online from Bay Press Services. It’s full of great information both for the novice and the experienced professional and includes all manner of information on traditional and more recent digital printing technology.

http://www.baypressservices.com/http://www.internationalpaper.com/us/en/business/cpip/pocketpal.html

Prices

Note that I haven’t discussed the costs for manufacturing of CDs, Cassettes, VHS tapes, and DVDs. That’s because they’re determined by many factors, including the size of the order, your anticipated annual volume, and many other things.

Nor have I discussed what it costs to print such items as booklets, inlay cards, J-cards, stickers, etc. Again there are lots of variables, such as whether you’re printing a folder or booklet, the number of pages, whether you’re printing in four-color process on all pages, or just black ink on certain spreads, whether you’re printing on one or both sides of the inlay (tray) card, and most important, the size of the order. In printing, the larger the quantity involved, the cheaper the unit price becomes. This is because a great portion of printing costs are determined by the labor involved to prepare the press for each job, and in cleaning the press after each run.

Notwithstanding my statements in the previous two paragraphs, I will say that you should be able to print and manufacture a CD for no more than $1.00, which includes the folder or booklet, inlay card, the CD, jewel box, and assembly. This assumes that your print and press runs are between 1,000 to 5,000 units, and that your printing requirements are modest. However, if you decide you need larger quantities, the costs will be considerably less. My advice is to err on the lower side pressing fewer units, and spend any leftover money (you have leftover money?) on marketing your music.

Self-Manufacture

If you’re going to be setting up a very modest label, you might consider purchasing your own CD duplicator. This is essentially a group of CD burners on a single chassis that can replicate a number of

http://www.baypressservices.com/

http://www.internationalpaper.com/us/en/business/cpip/pocketpal.html


CD-Rs at one pass, or that uses a single burner but changes the disks automatically. Thus this might be a useful option for artists who sell CDs only at their performances or from their websites, and who don’t need to order 500 or 1,000 disks at a time. There are no minimum requirements because you burn as you go.

Another possible use for such equipment is for short runs of promotional CDs.

There’s a lot of CD duplication equipment available, so you might search the Internet to get more information about them. One of these is the Bravo Disk Publisher that can burn up to 25 disks at a time and print a full color label directly on the CD surface.

http://www.primera.com/

Pre-Production Staff

You may decide to handle pre-production yourself, hire someone to take this responsibility on a permanent basis, or even have a bright, trusted assistant handle it. It’s not rocket science, but it requires someone with substantial ability and attention to detail since it’s a nit-picky kind of job. Whoever does the work will need to know the niceties of the design and printing processes, or learn quickly.

As I mentioned earlier, an excellent guide to this is the Pocket Pal, a Graphic Arts Production Handbook.

To learn more about CD manufacturing and tape duplication, you should take the time to visit a replication plant in your area, if one’s available. If not, ask your supplier lots of questions, explaining that you’re a production novice and want to learn. You’d be amazed at how helpful some supplier personnel can be. There’s also a fair amount of information available on the web.

The Creative Process

In all likelihood, your artist will want to be deeply involved in the look of the cover, if not the entire package. This has both its good and bad points.

Many artists, being creative folk by nature, have a good sense of themselves and think they know what their package should look like. They may also believe that they know all there is to know about art, design, esthetics, etc. In fact, they may or may not be right about this.

Your staff will have to be very careful to see that the artist’s wishes are respected and that the cover reflects the artist’s vision, assuming it’s not in conflict with the label’s. However, you don’t want the artist running roughshod over the company. Many artists are very helpful with the design process, but they should also be open to accepting good ideas presented by the designer and/or the label.

http://www.primera.com/


Some artists can throw a designer and company into conniptions with unnecessary demands of staff time, and their desire for a package that may cost more than the label wants to spend.

You’ll have to handle any such situation with care and tact. In the long run, what you want is a very good package that well represents the music and helps to market and sell the project, but also one that both the artist and label are happy with.

The Designer

Some labels have a full-time art director on staff who may design album packages. Sometimes the head of the label or its art director will prefer to hire an independent to create a specific package. Either way, a person with design background will be in charge of conceiving and executing the graphics.

It’s important that this person be intuitive, creative and, above all, diplomatic. He’ll have to work with and meet the demands of the artist, the producer, the head of the label, and hopefully, the marketing people. I mention marketing here, because the package has to reflect not only what’s on the recording, but also has to have sufficient “sizzle” to jump off record store bins and into consumer’s hands. In addition, it should also tie in directly with the marketing plan and work well as a display device when used on the web, on posters, club and window displays, in advertisements, etc.

If you’re a small start-up label, consider hiring an experienced and qualified freelance art director or graphics designer whose previous body of work is compatible with the look you’re going for. The advantage is that you don’t have to pay a weekly salary or fringes, but just a fee for the specific job. I’ve had a lot of success with this. At my own small label, I used the same designer for all of my work, but on a freelance basis. With another label, I chose different talent for each job, depending on the nature of the project.

However you decide to go, packaging is extremely critical to the eventual success of a project. A bad cover can definitely hurt sales, but a very good one will certainly help. So chose wisely.

The Package

For starters, you should know that printing graphics using the standard four-color process is less expensive than choosing two or three “matched” colors. The reason is that printers can gang your four-color job with others and print them on the same large sheet of paper using standard “process” inks. Use of specific, designer-designated colors requires that the press be thoroughly cleaned after each run before it can be used again. It also makes it impossible to be run with other jobs; therefore it’s more expensive.

Almost any color, however, can be achieved by using the standard four CMYK process inks — Cyan (a light blue), Magenta (a red), Yellow, and blacK.


As I wrote earlier, you can save money by using four-color process on the outside surfaces of a folder or booklet, and just black on the paper stock on the inside — this is referred to as 4/1. If you want to splurge you can use four-color process on both sides of the paper — called 4/4.

Cover Art

One of the first decisions you’ll make, in conjunction with the designer and the artist, is about the overall “look” and presentation of the package, and what you want to include in it. One of the determinations will be whether you go for new photographs of the artist, or an illustration, or both.

A striking likeness of the artist is almost always a good idea, particularly if the artist is attractive and photogenic. And, in most cases, you’re going to need new photos for publicity and other marketing purposes. Therefore, if you decide to go for photos, be sure there’s sufficient time during the photo session to take extra pictures for these ancillary needs.

Remember that the “look” of an artist — his image, if you will — is a key marketing tool and is highly important in furthering the artist’s career. Be sure that you, the designer, the artist, and the photographer are in agreement about this look before the session is held. The photos you end up with should be used in a consistent manner through everything that positions the artist’s image — all packaging, especially the cover, all marketing tools, advertisements, publicity stills, the website, etc.

Should you decide to use people other that the recording artists in a photo shoot, such as friends or models, be sure to have them sign legal photo releases giving you authorization to use their likeness in the package, advertisements, and other marketing materials used in conjunction with the project. A sample photo release is on the next page.

And if you decide to use existing illustrations or photos, be sure to get permission from the copyright owner for all usage in conjunction with the recording — cover, marketing materials, website, etc. It’s even necessary to request permission to reproduce old art masterpieces, because it’s more than likely that a museum or other institution or agency will own reproduction rights. You’ll be surprised at how reasonable such fees frequently are, provided you print the required usage credits.

When negotiating fees with a photographer or illustrator that you’ve decided to use, you need to discuss and agree on who ultimately will own the work product. Many “star” photographers and illustrators demand ownership of the materials, even though they’re a result of a commission or might be considered works for hire.


Sample Photo Release Form

I hereby grant to _____________________________________________ (Name of Record Label) the right to use photographs taken of me in conjunction with CD album art, publicity, and other related purposes from time to time.

I hereby irrevocably grant to _____________________________________________ (Record Label) perpetually, exclusively, and for all media throughout the world (including print, CD-ROM, Internet, and any other electronic medium presently in existence or invented in the future), the right to use and incorporate (alone or together with other materials), in whole or in part, photographs taken of me.

This agreement shall not obligate _____________________________________________ (Record Label) to use the photographs or to use any of the rights granted hereunder.

_____________________________________________ (Record Label) shall have the right to assign its rights hereunder, without my consent, in whole or in part, to any person, firm or corporation.

AGREED TO AND ACCEPTED this ____________day of _____________________, 20_______

__________________________________________________Participant’s Signature

______________________________________________________________________________________Participant’s Printed Name, Address, City, State, Zip

__________________________________________________Signature of Witness

______________________________________________________________________________________Witness’s Printed Name, Address, City, State, Zip


Keeping Track of Everything

Pre-production will need to keep very careful track of all elements of the process, and at all times. Some years ago, I developed a few simple tools that aided me greatly. I’ve always used some form of grid, expanded and revised over the years. I actually maintained two types of charts: one for each configuration of each release so it could be filed in that catalog number’s production file, and another separate but consolidated one that tracked all projects in active production when I was juggling many projects simultaneously.

Note: A sample of a CD Production Chart is on the next page.

CD Production Chart

This is a production chart by catalog number, artist, and title for keeping track of CDs, but I suggest you also maintain a separate, similar one for each cassette, LP, or other configuration such as videotape or DVD, that you manufacture. It’s a simple grid prepared using Excel, and is maintained manually in pencil — not in the computer, although you can do that if you prefer. (If you’re skilled at designing databases such as Filemaker that could also work.) I keep each configuration and catalog number separate, so that the chart and all accompanying papers, can be kept filed in its own folder. It eventually becomes a historic document, and you’d be surprised at how often you’re likely to refer to it months or even years after release. You’ll maintain a separate file folder for each configuration (CD, cassette, etc.) of each catalog number, keeping all the paperwork involved for the production of that item, including the Production Chart (which I recommend you keep as the top document), the copy given to the designer for preparing type for the booklet, inlay card, label, etc., plus mastering instructions, reader proofs, and all other related documents.

I think it’s extremely important to keep track of and note when each production step is completed and by whom (designer, suppliers, etc.) — always filling in the appropriate box as events occur. You can adapt the form to suit your own needs and methods of working. Note that I’ve indicated in a small type size the information I recommend you write in each box.

For example, be sure you note the date you give the print copy for each item to the designer, and if the designer is a freelancer, put the designer’s name in the space provided. In the last column, you might note the date when you expect to see the designer’s completed work.

On the same basis, if you’re sending an electronic file (soft mechanical) to a separator for preparation of films for printing, note the name of the separator, the date sent, the date you expect to see proofs and film, the date the proof or matchprint is approved, and the date film is shipped to your printer.

Most of this form is self-explanatory. However, some items, such as the SR Form, will be discussed in a later chapter.


CATALOG NUMBER

ARTIST

TITLE

Supplier DateDate Due/ Approved

Graphics/Film

Print Copy to Designer Designer Name Date Sent

Design Approved

Folder/Inlay Approved

Matchprint/Proof: Received/Approved if applicable Date Recd Date Approved

Folder/Inlay Soft-mechanical/Film to Printer Printer Name Date Sent

Label File (soft-mech)/Film to CD Manufacturer CD Manufacturer Date Sent

Booklets (Folders) & Inlays to CD Mfg. Date Sent

Title Information to SoundScan Date Sent

CD Manufacturing

Bill of Materials to Mfg. CD Manufacturer Date Sent

Final Mixes Received Mixing Studio Date Recd

Final Mixes to Mastering Mastering Studio Date Sent

Master to CD Mfg. CD Manufacturer Date Sent

Test Received from Mfg. Date Recd Date Approved

Miscellaneous

Mechanical Licenses Requested from Publishers Date Sent Dates Recd

Press and Radio Promo Copies (DJs) Shipped Date Sent

Copyright Form to Register of Copyrights Date Sent Date Recd

© 2007 & 2012 Keith Holzman, Solutions Unlimited

CD PRODUCTION CHART


Consolidated Production Tracking Chart

As you start working on a number of projects simultaneously, things will get complicated. I think you’ll find that this chart will help you keep track of events, but more important, it will help you anticipate — at a glance — what next critical action you may have to take on any item in production that you’re working on.

Note: A sample Consolidated Production Tracking Chart is on the next page.

This form is my suggested production “bible.” It too is maintained in a computer using Excel, but I always found it useful to keep a printout handy, and penciled in activity as it happened. About once a week, my assistant would update the form in the computer. I also kept a copy with me when I traveled on business, and my assistant would update me daily when I called the office. As production events occur, you just fill in the box with the date. It shows at a glance the status of every active project and gives visual clues of what’s not yet accomplished just by looking at the blank boxes, especially after a lot of boxes become filled in.

You can easily adapt it to your own needs.


CO

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PR

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Date

Artist

Title

Catalog Num

Ship Date

Copy to Designer

Mech to Separator

Matchprint

Film to Printer

Label Film to Mfg.

Print Mtrls to Mfg.

New Release Info to Distrib

BOM to Mfg.

Master Tape to Mfg.

1st Run Sample

Print/Press Orders

Mech Lic Requested

Label Copy to Catalogs

SR Form to Reg of ©

Sample Service

Tapes to Vault

ST

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JUN

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Art

ist

A1

00

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-2

Pro

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JULY

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Art

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B1

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02

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Pro

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B1

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Art

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B1

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Art

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Pro

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Art

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C1

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Art

ist

D1

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Pro

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D1

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SEP

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Art

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Pro

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© 2

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Production Calendar

Well ahead of time, it’s essential that you to put together a calendar grid for an entire year that shows all your key deadlines. These deadlines are determined by the monthly street (release) dates that are set by your distributor, who will usually supply you with a similar (but less detailed) chart a few months before the end of each year showing the due dates they require. This is because many independent distributors allow only one or two monthly releases — always on a Tuesday — whereas the majors release on almost every Tuesday. Note that the street dates determine everything that precedes them. For example, in the grid that follows, the distributor requires detailed information for the August 14th release to be supplied to them more than three months previous — in this case, on March 3rd. You should then set your own deadlines accordingly, giving yourself sufficient extra time to meet all your commitments.

You can expand on this chart by adding additional columns across the top for other important deadlines that you might require. Please note that the time periods at the bottom of the chart are arbitrary and shown as an example, but they’re illustrative of typical time periods needed for each item. Your distributor and your own requirements will determine the time periods for your own calendar chart.

Note: An example of such a calendar is on the next page.


Mon

th

Dis

trib

utor

New

R

elea

se

Info

rmat

ion

D

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lines

Mas

ter

to C

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Plan

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Pro

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Prod

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due

at

Dis

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Dis

trib

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St

reet

Dat

e (T

uesd

ays)

Jan

uary

10/4

/11

9/26

/11

10/3

/11

10/1

2/11

10/3

1/11

11/8

/11

11/1

1/11

12/1

9/11

12/2

6/11

1/10

/12

Feb

ruar

y11

/8/1

110

/31/

1111

/7/1

111

/16/

1112

/5/1

112

/13/

1112

/16/

111/

23/1

21/

30/1

22/

14/1

2

Mar

ch12

/6/1

111

/28/

1112

/5/1

112

/14/

111/

2/12

1/10

/12

1/13

/12

2/20

/12

2/27

/12

3/13

/12

Ap

ril

1/3/

1212

/26/

111/

2/12

1/11

/12

1/30

/12

2/7/

122/

10/1

23/

19/1

23/

26/1

24/

10/1

2

May

1/31

/12

1/23

/12

1/30

/12

2/8/

122/

27/1

23/

6/12

3/9/

124/

16/1

24/

23/1

25/

8/12

Jun

e3/

6/12

2/27

/12

3/5/

123/

14/1

24/

2/12

4/10

/12

4/13

/12

5/21

/12

5/28

/12

6/12

/12

July

4/3/

123/

26/1

24/

2/12

4/11

/12

4/30

/12

5/8/

125/

11/1

26/

18/1

26/

25/1

27/

10/1

2

Aug

ust

5/8/

124/

30/1

25/

7/12

5/16

/12

6/4/

126/

12/1

26/

15/1

27/

23/1

27/

30/1

28/

14/1

2

Chr

istm

as5/

8/12

4/30

/12

5/7/

125/

16/1

26/

4/12

6/12

/12

6/15

/12

7/23

/12

7/30

/12

8/14

/12

Sep

tem

ber

6/5/

125/

28/1

26/

4/12

6/13

/12

7/2/

127/

10/1

27/

13/1

28/

20/1

28/

27/1

29/

11/1

2

Oct

ober

7/3/

126/

25/1

27/

2/12

7/11

/12

7/30

/12

8/7/

128/

10/1

29/

17/1

29/

24/1

210

/9/1

2

Nov

emb

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Preparation of Package Graphics

When you actually begin production of your first releases, you’ll need to set up a file for each catalog number and each variant as discussed earlier. For example, each CD should have its own folder. If you decide to ship a pre-release CD, or a “DJ” promo CD, each one of these is a variant. The same would apply to a cassette or LP. I recommend that each version have its own folder.

The production person or department is usually responsible for compiling all the material that ends up being printed on the CD packaging. He will gather this material as best as he can, but it’s easiest if he starts the process as early as possible. Much of the information can be obtained from the artist and producer, and it’s important to lean on them to get it to you as soon as possible.

Pre-Release Materials

Most labels routinely ship pre-release CDs to their distributor about two and a half to three months before street date. This is so the distributor has samples to show to and play for their retail accounts as they solicit sales.

Pre-release CDs are also essential in trying to get press and print attention for your artists. Many publicists like to send out their press kits (pre-release CD, artist biography, artist photo, tour information, etc. about two months or more before street date — see Chapter 13.) These requirements will determine how far ahead you’ll need to have materials ready. Remember, it’s all keyed to, and derives from, the scheduled street date, so you should set the dates that work for your label into the chart.

Mechanical Licenses

Production, someone in business affairs, or another bright and capable assistant, can file for mechanical licenses for all the songs that will be on the finished release. This is in order to get permission required to record the songs if they’ve not been previously recorded or “mechanically” reproduced, or to get licenses if they have been. The owner of a copyright determines who can have the right of first “publication” or recording. Thereafter, anyone can record the copyright provided he requests and receives a license.

If your artist has written the songs, the task should be somewhat easier as the basics may be included as part of the artist contract. However, you’ll still need to officially request the license from the publisher of the material, unless you’re the publisher or co-publisher.

If you have trouble determining the publisher of a song, check the websites of the Harry Fox Office, or ASCAP, BMI, or SESAC. Their website addresses (URLs) are listed in Chapter 6 on Music Publishing.

If you and the artist want to print lyrics, special permission will be required from the publisher who owns the print rights. In such a case, they will usually require an acknowledgment that any lyrics appear courtesy of them, accompanied by their own legal wording, such as “(Song Title) by


(Writer’s Name) © (symbol or “Copyright”) 2012, ABCDEFG Publishing. All rights reserved. Used by permission.”

Whoever in the company is requesting mechanical licenses and lyric print permission should keep a file for each catalog number. It will probably be necessary to do frequent follow-ups since publishers are notoriously slow in handling their paperwork. Therefore, start the process as early as possible.

Sampling

Sampling pieces of existing music in new recordings has become extremely common, particularly for rap and hip-hop music. However, before you consider even using a sample of another work, be sure to obtain permission from the owner of the master recording, who will specify a usage fee, as well as from the owner of the written copyright, who will state what percentage of statutory they require. Sometimes they’ll want full statutory, which would be more than 9 cents per disk. And if you fail to get written permission, the resulting lawsuit could wipe you out! Therefore it’s vital to negotiate the fees and get sample clearance as early as possible. Don’t wait until the recording is finished! And be sure to do it yourself. Don’t rely on an artist’s word that such samples have been cleared.

What Goes Where on a Typical CD

There’s frequently a lot of text that gets included in a CD package. How much or how little is up to the label head who should set his own standard. Most owners of folk, jazz, and classical labels try to be very comprehensive. Owners of rock labels may prefer to print less text. It’s a matter of personal style and taste. Artists will frequently have their own preferences, in which case you should try to please as many people as possible.

Here’s a list of what’s often printed:

CD Booklet/Folder FrontArtist Name (preferably near the top of the front cover)Title of the project

CD Booklet/Folder BackLabel Logo (helpful but not mandatory)Catalog Number (helpful — particularly for the pressing plant, but not mandatory)

Inside CD Booklet/FolderSong TitlesTimingSongwritersPublisher of each titlePublic Performance Clearance Agency (e.g.: ASCAP, BMI, SESAC)

Example:From Here to Oblivion 3:35, Able and Baker, ZZZZ Publishing (ASCAP)


Names of soloing musicians if a single group has recorded the entire album, and/or guest musicians; otherwise list each musician who performed on the track.

If you print lyrics, be sure to get the publisher’s permission and their preferred legal language. Some labels opt not to print lyrics, particularly if permission to do so arrives late. They may instead place them on their website, listing permissions as appropriate. Or, they may not deal with them at all, although I think it’s a great benefit to music lovers.

Example of a lyric permission:© 2012 Able and Baker, ZZZZ Publishing (ASCAP) All rights reserved. Used by Permission

Producer CreditEngineering CreditsRecording Studio and LocationMastering Engineer, Mastering Studio and LocationAdditional Credits, in anyThank-you Credits, if anyLabel Logo (not necessary if on back of folder)Catalog Number (not necessary, but suggested for back of folder since it makes things easier for the pressing plant)

℗ and © Notice (the ℗ protects the recorded performance; the © is the copyright for the package.)

Inlay (Tray) Card or Back CoverArtist NameTitleAll Song Titles (with optional Timings)Musicians’ Names (not necessary, but should be listed for Jazz or small ensembles)Producer CreditLabel LogoUPC Bar Code

Don’t forget the bar code. It must be on the inlay card, preferably in the bottom right or upper right corner. You can make the bar code image slightly smaller than optimum, but don’t overly truncate it or make it so small that it can’t be scanned. Be sure that the bars and numbers are printed with black ink on a contrasting white or light-colored background so humans and machines can read them. Most important, do not use the color red anywhere in the bar code, because it can’t be scanned.

File Under ________________ (Insert “Jazz” or other appropriate suggestion so retailers will know where in the store to place the recording. This is optional, but is especially helpful for an unknown artist or if the musical genre is not obvious.)


A ℗ and © Notice with year, owner of Disk Copyright (usually the label), Street Address, State, Zip Code, Legal Language.

Example:

℗ and © 2012 YYYY Records, 11111 Main Street, Anywhere, CA 99999. All rights reserved. Printed in U.S.A. Warning: Unauthorized reproduction of this recording is a violation of applicable laws.

Spine of Inlay (Tray Card)Artist NameAlbum TitleLabel Logo or NameCatalog Number

CD LabelArtist NameAlbum TitleLabel LogoCatalog NumberSong Titles (optional, but helpful)Timings (optional, but helpful)

℗ and © Notice with year, owner of Disk Copyright (usually the label), Street Address, State, Zip Code, Legal Language. (Note: The address and legal language is suggested but not required.)

M M M

All the text that will be printed on the CD package and label should be compiled in a word processor — Microsoft Word is the most commonly used — so that the designer can flow the copy easily into his graphics software. Designers will usually use either Adobe InDesign or QuarkXPress. These programs can import Word documents with little difficulty.

You might even want to prepare a simple check list of all of the above, modifying it to your needs. The advantage is that you’re less likely to forget a step or omit a credit to someone important. It’s also a good idea for a few people who haven’t previously seen all of this copy to thoroughly proofread the final credits before they’re sent to the designer. Eliminating errors at this stage will save time and money.

Whatever you do, don’t rely on spellcheckers in word processors. They can miss lots of things such as “tot he” when it should be “to the.”


Later, when the designer has set your copy into the booklet or folder, proofread it thoroughly. In fact, proofread it thoroughly every time you see a new version, checking to be sure that something hasn’t been inadvertently omitted. Software — and designers — are known to make the occasional mistake. Sometimes, a slightly different version of a typeface from what your designer uses may cause weird things to happen with spacing, even causing lines to disappear. Many designers prefer to send PDF files for proofing because this reduces such problems. In any event, you can never be too careful at each stage of production. Taking time to thoroughly proofread can save lots of dollars if you discover that a key item has been omitted from the printed job.

Miscellaneous Tasks

There are a number of additional items that will have to be taken care of and carefully tracked in the pre-production stage.

Mastering Instructions

Prepare instructions for the mastering studio. This will include letting the studio know what kind of source tapes or other material (such as disk drives) you’re sending them, your purchase order number, catalog numbers, quantity and type of masters (CD-R or U-Matic tape) required, addresses of the plants where the masters are to be sent, etc. This is the time to order any backups or safety masters, reference disks, reference DATs, etc. Also provide your account number, and the name of your preferred freight carrier.

You’ll also need to send preliminary label copy to the mastering studio with all of the correct song titles — in sequence — and approximate timings when you send the instructions.

When the mastering is completed, be sure that you’ve requested that the studio send you a song list with final track times, and total times. These are the times that you should use on the CD label and Inlay (Tray) Card.

Bill of Material (BOM)

Most manufacturing facilities will request a Bill of Material (BOM) that provides them with all the information they need in order to manufacture your product. Your supplier may give you their preferred form; if not, I suggest you make one yourself. It will normally include the following information, for example:

• Date• Type of Product (commercial or promotional CD)• Label Name• Your Name and Contact Information


• Selection (Catalog) Number• Artist and Title• Number of Units in a Set if there’s more than one• Type of Jewel Box (standard or clear-case)• Type of Graphics you’re supplying (Folder and Inlay Card)• Promotional Sticker, if any, to be used, with name of supplier• Shrink-wrap (Yes or No. Pre-release and promo CDs are usually not shrink-wrapped.)• Carton Count (25 or 30)• Top Spine Copy• Special Instructions

Note: Samples of a blank BOM form, and a filled-in form, are on the next pages.


S A M P L E BILL OF MATERIALS

COMPACT DISK

To: Addressee at Manufacturer via Fax (if not Email): xxx/xxx-xxxx From: Your Name, Record Label, Email Address Date: xx/xx/xx

Product Type: [ ] Commercial [ ] Promotional DJ [ ] Maxi Single [ ] Mini Single

Label: Number in set: Selection No: Prefix:

Artist / Title:

Plant ID: [ ] Plant A [ ] Plant B (opt.) Plant Ship Date:

Jewel Case: [ ] Single [ ] Double [ ] Triple [ ] Digi Pack [ ] Slimline [ ] Other [ ] Spindles

Jewel Tray: [ ] Std Graphite [ ] Clear/Frosted [ ] Crystal Clear [ ] Colored (specify)

Graphics: [ ] Booklet [ ] Folder [ ] Picture Front Insert [ ] Back Inlay [ ] Universal Inlay [ ] Slimline Insert [ ] None [ ] Misc Insert, type: [ ] Additional Components: Box: [ ] Blisterpack [ ] Set-up box [ ] Other, specify:

Sticker: [ ] Yes [ ] No Size: Location (use grid): Apply [ ] Before [ ] After shrink-wrap. Location (use grid): Apply [ ] Before [ ] After shrink-wrap.

Shrink-wrap: [ ] Yes [ ] No Carton Count: [ ] 25 / ctn [ ] 30 / ctn Other:

SPECIAL INSTRUCTIONS / PACKAGING

This is a complete Bill of Materials. [ ] Yes


S A M P L E BILL OF MATERIALS

COMPACT DISK

To: Addressee at Manufacturer via Fax (if not Email): xxx/xxx-xxxx From: Jane Doe, YYYY Records ([email protected]) Date: xx/xx/xx

Product Type: [ ] Commercial [ ] Promotional DJ [ ] Maxi Single [ ] Mini Single

Label: YYYY Records Number in set: 1 Selection No: xxxxx-2 Prefix:

Artist / Title: The Doorstops “Keep It Open!”

Plant ID: [ X ] Plant A [ ] Plant B (opt.) Plant Ship Date:

Jewel Case: [ X ] Single [ ] Double [ ] Triple [ ] Digi Pack [ ] Slimline [ ] Other [ ] Spindles

Jewel Tray: [ X ] Std Graphite [ ] Clear/Frosted [ ] Crystal Clear [ ] Colored (specify)

Graphics: [ ] Booklet [ X ] Folder [ ] Picture Front Insert [ X ] Back Inlay [ ] Universal Inlay [ ] Slimline Insert [ ] None [ ] Misc Insert, type: [ ] Additional Components: Box: [ ] Blisterpack [ ] Set-up box [ ] Other, specify:

Sticker: [ ] Yes [ X ] No Size: Location (use grid): Apply [ ] Before [ ] After shrink-wrap. Location (use grid): Apply [ ] Before [ ] After shrink-wrap.

Shrink-wrap: [ X ] Yes [ ] No Carton Count: [ X ] 25 / ctn [ ] 30 / ctn Other:

SPECIAL INSTRUCTIONS / PACKAGING Use Clear Tear Tape on wrapping

the Top Spine should be imprinted with the following copy:

2-xxxxx The Doorstops “Keep It Open!” bar code # x xxxx-xxxxx-2 x

This is a complete Bill of Materials. [ X ] Yes


Quality Control

What your product sounds and looks like will be a direct reflection on your label, so it’s critical that you take pains to be sure your graphics look great and that there are no errors or typos. Be sure your printer sends you a couple of dozen samples of everything they print for you as soon as possible. Look them over very carefully. If you don’t like what you see, call the printer and have a discussion as to what’s wrong. Perhaps it’s not their fault, or maybe it can be fixed immediately at their expense, or in a subsequent re-run.

The same applies to the sound quality of CDs, cassettes, or anything else you have manufactured on your behalf. Get your supplier to send you test pressings, or at the very least first run samples, as soon as your item is manufactured. Listen to them carefully, checking for manufacturing flaws. These are rare, but they do happen. You can then decide, in conjunction with your supplier, whether it’s worth re-pressing, or whether the flaw is not important enough to delay a release.

Also be sure to check the packaging. Plants have been known to forget putting in a required insert or applying a special sticker, even though you’ve sent a BOM. Ultimately, it’s your responsibility to check on all of these quality matters.

Notify SoundScan

It’s important that you notify Nielsen SoundScan of the existence of each title and configuration (CD, cassette, etc.) you release so that sales of your product will show up in its system. SoundScan data is extraordinarily helpful — if you can afford to purchase it — since it can provide you with detailed sales information. Many distributors are subscribers to this service and may be willing to supply you with figures related to your own sales.

http://titlereg.soundscan.com/soundscantitlereg/

Note: The form is filled out online on their website, and looks something like an older version as shown on the next page.

http://titlereg.soundscan.com/soundscantitlereg/


ONE NORTH LEXINGTON AVENUE, 14TH FL.

WHITE PLAINS, NY 10601

(914) 684-5500

TITLE ADDITION SHEET

To add a title to the SOUNDSCAN database, each field on the title addition sheet must be completed in order for

it to be accepted. Please use a separate form for each additional title.

Title: ___________________________________________ Release Date: ____________________

Artist: __________________________________________

Label Information as it applies to this product

Parent Label: ____________________________________ Distribution Co.

Sub Label: ______________________________________ Label Abbr: __ __ __ __

Please enter all digits of the U.P.C. Code. (Including Prefix and Suffix)

To enter identification codes on how your product should be listed please check the example below.

PLEASE PRINT IN ONE CONFIGURATION FOR EACH LINE.

U.P.C. Code

EXAMPLE PRICE TYPE Configuration Types

9 9 9 9 9 9 9 9 9 9 9 9 9.99 _A_

_ _ _ _ _ _ _ _ _ _ _ _ ____ ___

_ _ _ _ _ _ _ _ _ _ _ _ ____ ___

_ _ _ _ _ _ _ _ _ _ _ _ ____ ___

_ _ _ _ _ _ _ _ _ _ _ _ ____ ___

_ _ _ _ _ _ _ _ _ _ _ _ ____ ___

_ _ _ _ _ _ _ _ _ _ _ _ ____ ___

PLEASE SELECT ONE GENRE WHICH APPLIES TO THIS PRODUCT: ____ 150 - R & B ____ 520 - SOUNDTRACK ____ 400 - COUNTRY ____ 184 - WORLD VIDEO SUBMISSIONS ONLY ____ 300 - JAZZ ____ 100 - ROCK ____ 186 - LATIN ____ 620 - COMEDY _____ 900 MUSICAL PERFORMANCE ____ 102 - METAL ____ 640 - GOSPEL _____ 901 SPORTS ____ 200 - CLASSICAL ____ 630 - CHRISTIAN _____ 907 MOVIE ____ 152 - RAP ____ 625 - KARAOKE _____ 905 OTHER (E.G. EXERCISE, DOCUMENTARY) ____ 180 - REGGAE ____ 360 - NEW AGE ____ 690 - CHILDREN ____ 156 - DANCE/ELECTRONIC ____ 470 - BLUES ____ 178 - SKA

Your Name: _____________________ PH# ( )_____-______ FAX# ( )_____-______

Email:

When you have completely filled out this form, please email it to dbase@so und scan.com

Please enter your name, phone number and email address in case we have any questions.

ALBUM SINGLES

A= LP 12" ALBUM E=CD SINGLE

B=CASS.ALBUM F=LP 12” SINGLE

C=CD ALBUM G=CASS. SINGLE

D= DVD AUDIO I=CD MAXI

VIDEO

M=VHS

L=DVD


Inventory Ordering and Maintenance

Sooner or later, you’re going to have to place print and manufacturing orders. This is very complex, but I’ll suggest here how you might go about doing this in the simplest and most cost-efficient manner.

The first item of inventory you’ll need to order will be your CD print materials — usually a booklet or folder plus its accompanying inlay card (also called a tray card).

In order to determine how much to print, you’ll need to know how many CDs you intend to manufacture. And in order to know that, you’ll need to talk to your distributor(s) and discuss not just how many you’d like them to ship to retailers, but how many they think they can realistically sell to the accounts.

To this add the following — the quantity of promotional or pre-release units for publicity to send to reviewers, and for the promotion staff to send to radio stations, the quantity the artist may get for free, the quantity the artist may wish to buy for friends and family, the quantity for sale to house accounts (specialized retailers who your distributor doesn’t sell to), the quantity for direct sale at performance venues either by the artist or label, website and mail order needs and, finally, an additional quantity for your label’s backup and other miscellaneous purposes.

Total all of these estimates for finished, manufactured CDs and add to it sufficient graphics for one or two CD re-runs.

Let’s see how this works:

(Note that these quantities are purely theoretical for the purpose of this exercise. Your needs will undoubtedly be different, and probably smaller.)

Pre-release CDs for Distributor 500Pre-release CDs for Publicity 750Pre-release CDs for Promotion 600

Sub-total Pre-release CDs 1,850Distributor for Retail Accounts 2,500House Accounts 500Artist (no charge – depends on your agreement) 50Artist (purchases for sale at gigs) 250Mail Order And Website Sales 250Spare for Contingency & Back-up 500

Sub-total Commercial CDs 4,050Total to Manufacture 5,900


Therefore you see that you’ll need to press at least 5,900 CDs in one form or other. Now if you want to be able to make one or two additional CD re-runs of 500 each (the minimum quantity at most pressing plants), you’ll need to order at least 6,900 graphics sets. Since most printers require orders in increments of 2,500, you should probably place your first print order for 7,500 sets. Review your printer’s price list very carefully. The cost to print 7,500 of an item may not be much higher than the cost to print 5,000.

Some pressing plants’ and printers’ prices and requirements may vary from what I’m suggesting here, so be sure to find out as early as possible how your suppliers work, what they require, and their minimum runs.

M M M

Now, how will you go about keeping track of your purchase orders, shipping information, sales data, etc? There’s lots of ways.

First, you might use an old-fashioned manual register. Picture Bob Cratchit wearing his muffler in a cold and drafty chamber, sitting at his ledgers, quill pen in hand. Well, your method may use simple printed forms and pencils, but it’s the same idea. In fact, I did that for years before spreadsheets and databases were in regular use. (Yes, there were such times in the Dark Ages!)

Later on, I used a spreadsheet for keeping track of inventory and sales. Each day, an assistant posted that day’s sales orders, which in turn automatically flagged any items that would fall below a theoretical re-order point. That called these items to our attention and we could decide whether or not to press or print additional quantities.

Another good solution may be to use an accounting program. Some of the better ones have methods for dealing with inventory.

And finally, you might use one of the better relational database programs such as FileMaker or Panorama to keep track of inventory and sales.

You’ll have to determine which system works best for you and your budget.

Remember when posting press orders that you have to reduce the quantity of print materials by the same amount, just as shipments of sales orders will reduce your inventory.

Also, factor in shrinkage. When a CD plant pulls print materials for a 500 piece re-run, it may actually use a few more. There’s a lot of potential for damage due to handling at a plant, so when posting new print materials into inventory, it might be a good idea to reduce the amount posted by 5–10%. Thus, if your printer claims to have shipped 7,550 pieces to your CD plant, consider reducing this amount by 375 to 750 pieces, and post the reduced quantity.


Bear in mind that inventory equals dollars that you won’t have access to. Do not print or manufacture more than you realistically need, and don’t base your decision on what you want to ship, or on hype. This is one of those areas where you need to be pragmatic and tight-fisted. It could be your own money at risk.


Pre-production Check List

Research pressing plants and/or tape duplicators. ______

Reputation for good service? ______

Excellent quality control standards? ______

Competitive Prices? ______

Reasonable business terms? ______

Speedy access to information? ______

Drop-ship capability? ______

CD label printing: screened or offset? ______

Number of colors at standard price? ______

Charges per additional color? ______

Clear Cases: available, and at what additional cost? ______

Charges for extra inserts? ______

Top spine print capability? ______

Drop-ship charges, if any? ______

Storage charges, if any? ______

Media needed for manufacturing (CD-R, 1630 PCM tape, etc.)? ______

Media needed to print CD labels (film or computer file — which program)? ______

Turn-around time to complete an order? ______

Test pressings supplied? ______


Research printers. ______

Many of the items above apply to printers.

Is film or a computer file required? ______

The Production Process.

Establish a Production Calendar. ______

Who will design the package? ______

Decide on the packaging “look.” ______

Photo or illustration? ______

Negotiate fee for photographer or illustrator. ______

Decide on package construction. ______

Decide on the number of pages in color and/or black & white. ______

Prepare a Production Chart for each configuration of each project. ______

File for mechanical licenses. ______

Prepare the text copy for CD (cassette, DVD) graphics. ______

Include items listed in section titled “What Goes Where on a Typical CD.”

Proofread all copy thoroughly. ______

Prepare mastering instructions. ______

Prepare Bills of Material (BOM.) ______

Send release information to SoundScan. ______

Poll staff for quantity of commercial and promo CDs needed by each. ______

Calculate quantity of Commercial and Promotional CDs needed. ______


Calculate quantity of print materials needed. ______

Place print order. ______

Place manufacturing order. ______

Chapter 12 – The Lowdown on Distribution | 145

Chapter 12 – The Lowdown on Distribution

Domestic (United States)

Distribution has changed incredibly since the first edition of this book in 2004. At that time distribution was primarily limited to CDs and to a lesser extent cassettes, LPs, and DVDs, with digital distribution representing a relatively small portion of sales of recorded music.

Apple launched its iPod along with its iTunes Music Store in 2001 and 2002. By 2011 digital sales have come to represent about half of all music sold, either as individual tracks or track-equivalent albums. Although there are other many other companies that distribute music online, iTunes has remained foremost among them.

I’ll go into details of downloaded distribution shortly, but for now I want to discuss how distribution typically worked for many decades, up until the last few years when things became more complicated.

The Way It Used to Be

As you’ve gathered from reading many of the subjects discussed thus far, I’m a great believer in doing your homework. This is certainly true when it comes to the matter of distribution. A good distributor can help make the most of a fine recording and its label, whereas a poor or inept one can ruin the marketing of a label, and dissemination of a great recording. Therefore it’s vital that you investigate this critical function to the fullest.

A record distributor’s job is to get downloads, CDs, cassettes, DVDs, etc., of recorded music through the chain of distribution and to individual consumers in the case of downloads or into the retail pipeline for “hard” goods. Conventional distributors do this by using their sales staff to solicit orders from the buyers of retail, chain store, one-stop, exporter, and other accounts, by publishing extensive catalogs and updates of all the product they carry, and additionally, it is hoped, by extensive sales effort, promotion, and marketing to their customers. Some distributors are very good at this; others are less so.

Bear in mind that some distributors specialize in certain genres of music whereas others are generalists and handle all kinds. So the kind of music you record will in part determine the best distributor for you, or at least help you narrow down the choice.

Some distributors are local or regional and may specialize in music from their own locality — New Orleans, for example — or sell only within their local territory. The size of this territory might be as small as a city or county, or as large as a few regional states. Just be sure not to end up with regional distributors with overlapping territories. It’ll be nothing but grief for them and you.


Other distributors are national (or may claim to be, but may not cover all accounts throughout the country) and might want an exclusive deal with you so they can have the entire U.S. as their territory. Some, with your permission, may also want to sell in Canada, using offices and sales staff up North.

Distributors sell to different types of accounts, not just to the small retailers that are usually called “mom and pop” accounts. Distributors who consider themselves “national” will also sell to chains such as Barnes & Noble, and to “rack jobbers” and “one-stops” all over the country.

Rack Jobbers are firms that historically leased space in mass retail and department stores and “racked” major label hit product and best-sellers in these locations. The current major racks are Handleman Company and Anderson Merchandising, and they sell directly to very large chains such as Target and WalMart. These large accounts generally take very little product from independents until a “lucky” indie label develops a substantial hit.

One-stops are accounts that carry a wide variety of product from almost all labels, in turn selling to small local retailers, mom and pops, small chain stores, etc. They’re called by that name because a store can buy almost all the product it wants to stock from a single source — the one-stop. One-stops are willing to sell one or two of an item, whereas large chains probably order in box lots of 25 or 30 directly from the distributor.

Be aware that it’s extremely difficult to obtain a good distributor when you have only one title to offer. It becomes a lot easier when you’ve got four or more substantial releases for them to work with. This is because they won’t want to put in a lot of effort on your first release if they think it’s going to be a “vanity” project and the only one from you. They’ll want to know that you’re in it for the long haul and that you’ll be having an even flow of new releases in the future. It takes a lot of effort on a distributor’s part to help launch a new label, with an artist probably no one’s ever heard about, from a staff that’s new to the business. Additionally, the distributor will want to be able to offset any returns against the sale of new releases.

To find out who might be the best distributor for your label, talk to your network of friends and colleagues in the business to see which companies they’ve had good experience with and would recommend.

Another way to find out about distributors is by contacting The American Association of Independent Music (A2IM) or The National Association of Recording Merchandisers (NARM).

A2IM was formed a few years ago following the demise of NAIRD and AFIM. Per their website they “represent a broad coalition of music labels to promote sector opportunity and enhance the market share of its combined membership.” Minimum dues are $1000 per year, which probably places it out of the reach of most startups.

http://a2im.org/

NARM is a not-for-profit trade association founded in 1958 whose nearly thousand member companies

http://a2im.org/


represent the retailers, wholesalers, and distributors of prerecorded music in the United States. Its associate members are major and independent record labels, and home video companies.

http://www.narm.com/

Billboard Magazine publishes an International Buyer’s Guide, an annual directory which includes listings of both domestic and international distributors and one-stops, as well as lots of other valuable information such as print and manufacturing suppliers. It’s rather expensive to buy, but is an excellent resource that may be available at your local library.


Another source for all things related to the recording industry is RecordLabelResource.com. They have an alphabetical list of domestic and international distributors.

http://www.recordlabelresource.com/

I strongly recommend that you make a visit to one or more distributors who, after investigation, seem appropriate to your music. You may find a lot of compatibility with your needs, or none at all. This is a business of personalities and connections as well as an interest in music, so it’s important that both sides create a favorable impression. You’ll be working closely with your distributor, so be sure you feel comfortable with them. If possible, meet some of the staff as well as the bosses. You can learn a lot by talking to the sales people that call on accounts, and from the folks in the warehouse who pull orders.

When you’ve narrowed down your preferred list, send samples of your CDs and marketing materials to the owner or sales manager at your first choices. I suggest you call first to establish a dialog and to let them know to expect a package from you. Distributors get solicited and unsolicited CDs every day, so you want to be sure yours are seen and heard. Then follow up with a phone call to be sure they’ve received your package and have listened to the music. Remember, distributors want music that will sell.

Before they consider carrying your product, the distributor will want to be sure that the artist and title as well as your label name and address are clearly listed on the product, along with a catalog number and UPC bar code.

When you start marketing your releases, you’ll have to supply the distributor with a “One-Sheet” which they’ll use in soliciting sales. This is a single 81/2 by 11 page with all key facts about the recording on it. It’s usually just black and white, but I’ve seen very effective four-color sheets used by some labels. I’ll discuss this further in the chapter on Marketing.

A diagram on the next page shows how the Chain of Distribution typically functions. A label sells to one or more domestic distributors and aggregators, any number of distributors or accounts overseas, and also to their artists. A distributor sells to many retailers, including chains, and to one-stops who, in turn, supply mom and pop accounts.

http://www.narm.com/


http://www.recordlabelresource.com/


Record Label

Domestic Distributor

One-Stop

Retailer B

Chain A

Mom & Pop A Mom &

Pop B

International Distributor

A


B


D


C

Rack A

Rack B

House Acct. A

House Acct. B

Chain of Distribution

Artist

Chain B

Consumers(Label

website, mail)

Download Aggregator

Amazon.com

iTunes

Retailer A

Amazon.com


The Distribution Deal

Now it’s time to consider price, payment, and all the other details of a distribution deal.

Pricing

Your label and the distributor will need to agree on the prices you’ll be charging for each category (full-price, mid-line, or budget) and configuration (CD, cassette, DVD) of product. These will be based on your suggested price at retail and will determine what price the distributor charges its accounts. Generally a label will charge its distributor about 50% of the Manufacturer’s Suggested Retail Price (MSRP). Some labels use the term “Suggested Retail List Price” (SRLP) but it’s the same thing. Therefore, if you decide you want the MSRP to be $15.98, you will charge the distributor about $8, but be prepared to settle for less — perhaps as low as $7.25 or $7.50 (about 45-47%). You should be aware that “percentage deals” are becoming more common, particularly with larger indies. In that case, the distributor would then receive something between 20–30% of the wholesale price. For example, if your wholesale price is $7.90 and the distributor wants a 25% markup, it would charge its account an additional $1.98 per unit — about $9.88.

A distributor will, of course, sell to its customers at a sufficient markup for it to make a reasonable profit. The retailer will also have to mark up to the customer who buys the product. That’s one reason records appear to be high priced, because everyone in the chain of distribution needs to make enough profit to stay in business.

M M M

Sidebar: Pricing and the Consumer

For some time now, public perception has been that prices for prerecorded music, specifically CDs, are too high. Remember, I said “perception,” for the reality is that, in comparison with other commodities, or the cost of living for that matter, it’s really not the case.

In May 2002, the RIAA commissioned a revealing report. It showed that, even though the public perceived CDs as being too expensive, CD prices fell 32% between their emergence in 1983 and the end of 2001. During that same, period the Consumer Price Index rose almost 78%. If CD prices had risen in the same proportion, the average price in 2002 would have been over $38. The cost of other forms of entertainment rose even more; for instance, the average price of admissions to entertainment and sport events increased by 142%! And these costs have gone up in the years since that survey, while CD prices remained about the same or were reduced — increasing the divergence. In fact, CDs may be even more of a bargain now in 2012. In 1983, the average length of a CD was less than 42 minutes, whereas in 2001, the average length was 55 minutes — a 30% increase.

Notwithstanding these surprising numbers, the perception is that the music industry is charging too much for its music, and it’s something you’ll have to contend with.


Term

Another item to negotiate is the length or term of the distribution agreement — whether it’s for one, two, or three years. After the first term, how long might it be extended? Frequently, such an agreement extends automatically from year to year, unless terminated in writing by either party with six months’ prior notice.

Payment

You must negotiate with your distributor as to when they’ll pay you. Will they pay in 60 or 90 days from date of invoice (the old standard), or will they want to take your product on a consignment basis? The former is preferable but it’s unlikely that a distributor will agree to it for a new label. The latter is much more common of late.

A retailer, rack jobber, or chain store normally pays for the items sold to them by a distributor within a specified time frame — usually anywhere from 30 to 90 days.

The distributor will, in turn, deduct from any of your due payments such items as returns, co-op advertising charges, and any other things they can think of — returns processing fees, early payment discounts (they’ll try to take the discounts even when they pay late), and retailer incentive discounts. They’ll also take a reserve for returns, even though you may own the inventory. The distributor essentially sits on the funds they collect for as long as they can before you end up getting paid. This creates a terribly difficult cash flow situation for independent labels, particularly start-ups.

Distributors can also have cash flow problems, so labels with product that sells and turns inventory regularly are likely to get paid more quickly. New labels are a low priority to receive payment.

Consignment

What consignment means is that a distributor is acting as an agency to convey your music through their pipeline to their accounts. You retain title or ownership of your inventory, and your product (CD, cassette, etc.) is not considered sold until an end consumer actually buys it. If a store finds that your product isn’t selling and is taking up valuable shelf space, it will ask for a Return Authorization (R.A.) from the distributor, allowing it to return the items for a full refund. You know who will take the hit — you! So when the distributor thinks it’s overstocked, it too will request an R.A., and all the excess product will come home to mother!

In theory, your ownership of the product under consignment means that it should be returned to you if your distributor, or any of their retailers, should declare bankruptcy. As a matter of fact, however, this doesn’t always happen. When Valley Media, a major one-stop, and its wholly-owned distributor, Distribution North America (DNA), declared Chapter 11 in 2001, independents who had product at Valley and DNA were not able to recover their inventory or its value, delivering quite a financial hit to the labels. That’s another reason to carefully and thoroughly research potential distributors!


Administrative Details

Discuss access to sales information with the distributor. Will they provide online access to their database for your account, or will they send you periodic sales reports by email or snail mail, and with what frequency (daily, weekly, or monthly)? You should ask them to show you samples of such sales data reports. It’s vitally important that you have ready access to information in sufficient detail that you get a good sense of what’s happening with your releases. This is not just in regard to the quantity of sales, but to which accounts and in what cities.

Distributor Promos

Most distributors will ask for a certain quantity of “promo,” pre-release, or what we used to term “DJ” copies of your releases. These copies are for their sales staff and their customer’s buyers — two groups that need to hear your product. “Promos” used to be “white-label” pressings of CDs without the usual multi-color labels. Now they’re more commonly, non-shrink-wrapped CDs or cassettes with holes punched through the bar codes keeping them from being scanned — thus not saleable. Promos are a necessity of doing business, so be prepared for them.

Fully shrink-wrapped saleable products are called “cleans” and that’s what’s sold in stores.

Free Goods

Your distributor may also request a quantity of “free” goods — “clean” commercial copies that you don’t charge them for. These are used as incentives for retailers to carry your music and are common when soliciting new releases. It also reduces your sales and income, so go along with it only when you consider this extremely helpful to your release.

For example, on a given new release, the distributor may want 10% of their order as free goods. So if they order 2,000 pieces, you may receive payment for only 1,800. You don’t have to agree to free goods, but it may make matters more difficult. Also, be sure you’re covered in your artist agreements for such “discounts,” so that you’re not obligated to pay royalties on them.

Many scams have been wrought in the industry through unsavory use of cleans, so be judicious in giving any away. In fact, I suggest you keep everything open and aboveboard and not make such deals. The decision is ultimately up to you.

Co-op Advertising

So-called “co-op” advertising is a common aid to marketing recordings. It’s called co-op because historically a label, its distributor, and a chosen retailer jointly shared the cost of such advertising. Nowadays a distributor gets retailers or other accounts to advertise your product in certain newspapers or publications, usually at a special price. You, of course, get the “privilege” of paying for this, not


the distributor or retailer. But you gain the advantage of lower media rates due to the retailer’s large advertising volume.

More common of late, co-op advertising will get your product better placement in stores for a limited period of time. Essentially it’s for price and positioning purposes without a media buy — particularly for non-superstar titles. This is because retailers make greater profit from such in-store-only deals.

In reality, simply being represented on the shelves of any major retailer will require co-op advertising, like a slotting fee. These can be good deals for the right artist and music, but can be incredibly expensive. So be careful how you utilize this frequently effective but costly tool. Only consider it when you’ve got positive action on a release, or when an artist has started receiving substantial attention on radio or in the press.

Freight

Another matter for discussion is who pays freight. It used to be customary that the distributor paid for freight both from the labels and to their accounts. With distributors having increasing negotiating clout, it’s become common for labels to pay the cost of freight for goods from their manufacturer or warehouse to the distributor (but not to the distributor’s accounts). On the other hand, any freight for returns should be borne by the distributor.

Contract

Another item you need to think about is what form your written agreement with your distributor might take. Will your distributor want a contract with you, and if so, will they want to use their own form? This is now common practice, whereas some years ago business with distributors was done with a handshake or maybe a simple appointment letter from a label stating terms and territory.

If your distributor doesn’t demand use of their contract, you should send an assignment letter or sales policy agreement detailing all the elements and items you’ve agreed on, such as prices, length of the agreement, payment terms, returns policy, ownership of inventory, who pays freight and in which direction. Request that he sign and return a copy to you.

Whether the distributor provides their own contract, or you make up a letter, it’s important that you state clearly in the document that, if it’s a consignment relationship, you retain title to the inventory until it’s sold.

You should also file a UCC-1 (Uniform Commercial Code) Financing Statement declaring your title to the inventory (not your distributor’s) and describing the consignment arrangement between the two of you. A sample form follows on the next page, but be sure to use the correct form for your state.


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Shipping

When it comes time for shipping your releases to the distributor, it’s essential that you or your supplier provide a detailed packing list showing your label name and address, plus quantity and catalog number by type (CD, cassette, etc.) of each item included. This will aid in your eventually receiving payment. If the distributor claims not to have received all or part of a shipment, be sure to check your copy of the packing slip, and put a trace on the shipment.

Finally, don’t oversell or overship on a new release. Ship only what you and your distributor think is actually necessary. This reduces the amount of returns, and makes it a lot more gratifying when you see re-orders.

“House” Accounts

If your distributor doesn’t sell to small or specialized accounts that may be important for your releases, you should establish arrangements for direct sale or consignment to these “house” accounts. (You should allow for this in your distributor agreement.) Just be sure that the account always signs for receipt of each delivery on an accompanying packing slip or invoice that gets returned to you.

Special Markets

Special markets consist of unique entities such as the Army and Air Force Exchange Service (AAFES), which sells to PXs, plus record clubs, and other specialized entities.

In addition there are special product compilations prepared for specific clients. Such projects includ a very successful series of CDs prepared by Concord Records for sale at Starbucks coffeehouses throughout the U.S. Other compilations might be prepared for large corporations to use as premiums or gifts to clients, or for retailers such as Whole Foods to sell at their many locations.


Digital Distribution

Digital distribution has changed markedly in the last few years, and has become quite complex. It requires a distributor or aggregator skilled in getting your music to as many online stores as you might want, with the capability to provide your music in the various formats required by those accounts. A digital distributor can handle sales of individual tracks and albums through various retail websites, but also tracks and ringtones for mobile devices such as cell phones.

Most distributors of conventional goods want exclusive rights, or at least a piece of, your online sales. I don’t recommend you grant them these potentially lucrative rights. The main reason is that whereas most conventional distributors are skilled in getting CDs into the marketplace, they are less experienced in matters of distributing digital tracks and albums. Most want your digital sales because it increases their income and their volume. Some do a fine job, performing a real service to which they’re entitled to a reasonable fee. Others perform little service but want a large percentage of the action. This is something you’ll need to thoroughly research.

But it also means you might be putting all your domestic distribution eggs in a single basket, making it more difficult to get paid if you’re having problems with the distributor.

Here’s another thought — should you decide to have your physical distributor also handle your digital assets, do not allow them to cross-collateralize your digital sales with anything else, because that’s a common subterfuge some distributors use to avoid paying.

I’m not recommending that you take a DIY approach by going it alone. Unless you have a sufficiently large and experienced staff, this is a task to leave to the specialists, sometimes called “aggregators.” These companies are skilled at getting your music disseminated to a wide array of online digital music stores and can handle the logistics of formatting your tracks as appropriate for each.

Let’s take a look at the prevailing download retail websites. There are quite a few and I won’t mention them all here. Some allow paid downloads of individual tracks, or of complete albums. The best known and most successful of these is, of course, Apple’s iTunes Music Store which represents by far the major percentage of all legal downloads, and which pays labels about 70 cents per downloaded track. Amazon.com has also been successful in selling downloaded tracks and albums.

http://www.apple.com/itunes/http://www.amazon.com/MP3/

Others sites use a subscription method whereby a consumer “subscribes” for a certain set fee per month which purportedly allows them to download as many tracks as they want. The catch here is that if they forget or neglect to pay a month’s fee, all the tracks they’ve spent hours downloading will no longer be playable. RealNetwork’s Rhapsody — now including Napster, and Yahoo Music are examples of these. Some allow individual track purchase as well. Another such site, particularly of interest to independent labels, is eMusic.com.

http://www.emusic.com/

http://www.apple.com/itunes/

http://www.amazon.com/MP3/

http://www.emusic.com/


http://www.rhapsody.com/http://music.yahoo.com/

The new kid on the bock is Spotify which requires its very own application rather than a URL. This service has been highly popular in Europe where it orginated, and was launched in the U.S. in July 2011. Many of the 1.4 million people who signed up in the first week use the service just for streaming music, but at least 175,000 (12.5%) were premium subsribers who paid for the privilige of downloading as much as they wanted.

http://www.spotify.com/us/

On which of these sites should a label try to have its music included? Why, all of course! The more the merrier since the more available a label’s music is to a buying public, the more exposure it’ll get for its artists, along with the opportunity to reap financial benefit for all concerned.

The key to your investigation are the “aggregators.” These are middlemen who can make your music available to all the primary sites, taking care of track preparation and distribution on your behalf. There are many, so I’ll list just a few — TuneCore, CD Baby, Ingrooves, IODA, Bandcamp, and The Orchard. Note that my mentioning them here does not imply an endorsement or a preference. They’re here for illustrative purposes only.

http://www.tunecore.com/http://cdbaby.com/http://ingrooves.com/http://www.iodalliance.com/http://bandcamp.com/http://theorchard.com/

CD Baby is primarily a distributor, but it also performs the services of an aggregator. Small labels, especially those owned by artists, can kill two birds by selling their CDs through them, taking advantage of their online distribution as well. CD Baby supplies digital tracks to all the major online stores, and handles all the paperwork and creation of appropriate digital formats, taking a modest percentage to cover their costs. They do require exclusivity, however, in order to avoid confusion created by multiple aggregators attempting to sell to the same online retailer.

In the relatively short time it’s been in existence, TuneCore has established an excellent reputation. With them you get to keep 100% of your royalties and all of your rights. TuneCore charges $9.99 per single, $9.99 per ringtone, and $49.98 per album per year storage and maintenance. That’s it!

From a consumer standpoint there have been problems associated with many of these systems, the greatest ones being that of interoperability and digital rights management (DRM) which limited how users make use of what they bought. The four major label groups originally required Apple to use DRM before selling their music to consumers. It was transparent to buyers who loaded their music from the iTunes Store onto their iPods. Thankfully, DRM is pretty much a thing of the past.

http://www.rhapsody.com/

http://music.yahoo.com/

http://www.spotify.com/us/

http://www.tunecore.com/

http://cdbaby.com/

http://ingrooves.com/

http://www.iodalliance.com/

http://bandcamp.com/

http://theorchard.com/


iTunes, is cross-platform, but will work only with Apple’s iPods, iPhones, and iPads.

eMusic is interesting in that it provides straightforward MP3 files without any form of DRM, making its downloads playable on virtually all portable players.

Be aware that there are liable to be many territorial restrictions, so what I’ve discussed here for domestic sales will in all likelihood have to be handled separately for each international territory. In any event, do your homework, and after you’ve thoroughly analyzed all of your options, decide which firm or method might be the best for you

Production & Distribution Deals

Some labels prefer to establish a production deal, or a production and distribution deal, with one of the major labels. This can be beneficial if you’ve got great A&R — artists you’ve signed who have a large potential for commercial sales. It’s extremely difficult to set up such deals unless you’ve been in the business for some time and have established substantial industry connections and a reputation as a music person who can deliver hits, so I’ll discuss these very briefly.

The Production Deal

A Production Deal can be established between a producing entity and a major label. It’s more like an imprint (essentially your label name,) in that the producer brings signed artists to the major, who then handles all the other aspects of running a label, including manufacturing, marketing, and distribution. The producer will probably receive a fairly sizable advance, either for his imprint as a whole, or for each artist he brings, plus royalties for each project. On the other hand, the major label does most of the work.

The Production & Distribution (P&D) Deal

A Production and Distribution (P&D) arrangement is considerably different from a production deal. What this entails is that the major label will handle manufacturing and distribution for you, but you’ll be responsible for all the other aspects of running your label.

The major will probably pay you a substantial advance against future income, and take a percentage of what they earn on your releases, passing the balance to you. Everything else is your responsibility. You’ll pay for the making of each recording, do all the marketing and pay those costs, plus all of your salaries and other overhead. What you gain is the major’s clout in the marketplace and their ability to push records through the pipeline. What you lose is a portion of your independence. You may also be a low priority for their salespeople, who might likely pitch their own product before yours. Another negative is that you’ll have all of your eggs in one basket and can be at the mercy of a company that may not care much about you and your problems. I know of one independent label that almost went out of business because the major label found ingenious ways not to pay its P&D client.


International

Foreign Distribution

International distribution is a very complex subject, and something that a very new start-up has some time to think about. An overseas company is unlikely to be interested in product from a brand new label. This can change once you’ve got a half a dozen good-selling titles, or your first release breaks out and gets significant attention and sales. So don’t expect much interest here unless your artist has toured overseas, or has created a substantial buzz domestically.

Should you fall into such a situation, be very cautious about any deals you make. This is not to say that foreign accounts may try to take advantage of your newness to the business, but it’s been known to happen!

This is another case when it makes sense to get as much information as possible from music industry friends to help determine which international distributors may be most appropriate for your label and music. There’s nothing like a positive recommendation and perhaps even a solid referral to suitable candidates.

When you’ve become reasonably well-established in the U.S., you might consider attending MIDEM, which is an annual international music market event in Cannes, France, in late January or early February. A great many distributors attend from all over the world so it’s a great opportunity to make deals. It’s important to try to set up meetings via email before you attend, because it’s also quite a zoo, and the most active distributors have busy schedules. MIDEM has a sales office in the U.S. at 360 Park Avenue South, New York, NY 10010, and their phone number is (212) 284-5145.

http://www.midem.com/

Attending MIDEM is quite expensive when you consider cost of airfare, lodging, meals and MIDEM itself. The attendance fee for 2012 is 495 Euros (about $700) plus VAT, and hotels and restaurants in Cannes tend to raise their prices when these kinds of events occur.

You might want to seek out exporters with offices in the U.S. who ship overseas, because that’s a good entry into international for a fledgling label. Your distributor probably sells to these accounts — and they’ll tell you who they are — or barring that, you should be able to directly ship and bill exporters who don’t have accounts with your distributor. You’ll invoice them and get paid thirty or sixty days from date of invoice (whatever you negotiate) in good old U.S. dollars. Be cautious, however, because records you might sell below your domestic price could end up in the domestic market; so don’t sell at such a low price that this can happen.

Also, be aware that there are few, if any, regional distributors that will cover an entire geographic area, such as all of Europe or all of Asia. The exceptions are the affiliates of such multi-nationals as Sony, Warner Music, Universal, and EMI, but they’re unlikely to be interested, are very hard to deal with,

http://www.midem.com/


and would prefer to make licensing deals (see below).It’s likely that, when the time comes, you’ll have to make separate deals for the U.K., France, Germany, Holland, etc. There are a few exceptions; some accounts may sell to all the Benelux countries (Belgium, the Netherlands, and Luxembourg), or the “GAS” territories (Germany, Austria, and Switzerland).

The territories or countries most appropriate for your label will, to a great extent, be based on the kind of music you release. French-singing artists will have the greatest appeal to Francophone accounts in Quebec or France. Spanish-language musicians will have appeal to a wide variety of Spanish-speaking countries, but this will be determined by the style of music. For example Salsa is big in Puerto Rico and New York, but not in Mexico, for example.

Asia, which consists of a great many countries, is another complex region. Some distributors may handle a number of countries in a territory such as “Asia-Pacific.” Such distributors sell to accounts in South-East Asia (Indonesia, Vietnam, Malaysia, Hong Kong, etc., but usually not China), and Taiwan. Asia-Pacific does not include Japan, which is the biggest Asian market. Japan is particularly receptive to certain kinds of American music, particularly jazz.

Pricing to overseas accounts is another complexity. Since these accounts have to pay import duties as well as freight to faraway locations, you’ll have to reduce your charges to them in order for the firms to be able to sell competitively, yet still make a fair profit. Therefore be prepared to lower your expectations accordingly. That’s why most labels have a provision for foreign royalties in their artist contracts so that the artist, by receiving a smaller royalty, bears part of the burden of lower prices for foreign sales. In fact, you might consider basing your artist royalty for such foreign deals on a PPD (purchase price to the dealer) basis, although this adds to the complexity of rendering royalty statements.

When dealing with smallish quantities, you’ll likely ship finished, packaged goods to your overseas accounts. And when you sell such goods, in addition to the artist royalty, you should pay mechanical royalties in the U.S. But check with the account first in the unlikely event that they might already be paying them overseas.

Foreign Licensing

Another issue deals with licensing your music to companies overseas. In many cases, granting such a license to a foreign distributor is a license to steal! There are many unscrupulous accounts that will sell lots more units than they’ll ever report to you or pay for. Your only protection is to ship them shrink-wrapped goods, or to sell them production components for packaging overseas. (More on this in a moment.) This will give you a limited form of protection, since they’ll try to pirate your music only if you’ve got a title that sells well in their territory. And unfortunately, you’re not likely to find out!

I once had an artist on my label who became a best-seller in Taiwan. And although I shipped a lot of product to Taiwan, someone was clever enough to pirate the titles. The counterfeits were so good that I had to look at one CD a couple of times before I noticed subtle errors and misspellings. Suing them


successfully resulted in moral satisfaction, but very little financial remuneration. The single, major advantage to a licensing deal is when you can negotiate a large enough cash guarantee at the outset that makes it worth your while. Such guarantees will help your cash flow situation, and make it possible to record more artists and projects. But these types of deals are very difficult to come by.

One suggestion for higher-selling titles is a hybrid distribution/licensing arrangement, which is not uncommon with accounts a label determines to be trustworthy. What this means is that you’ll sell them component parts (CDs on spindles plus print materials such as booklets and inlay cards) for an agreed-upon price that’s lower than your standard foreign distributor price, but that covers your costs, plus perhaps 10%. They will locally assemble them in jewel boxes and shrink-wrap. Then the distributor will pay you the lower invoice price shortly after receipt of materials, followed by a royalty a short time after the records are sold.

For example, let’s say that your standard foreign price is $6.50 per CD. In this hybrid case, you may sell them components for $2.00 per unit and get paid 15 days after delivery. Additionally, you’ll receive a $4.50 royalty 30 days after the CDs are sold. The amounts and timing may vary, but you get the idea. The advantage to the overseas account is that they pay less customs duty and even out their cash flow. The advantage to you is you know the quantity of units you should get paid for.

International sales are a great source of supplemental income; so don’t discard such possibilities at the outset. Just take your time by studying and investigating the possibilities as you build a catalog of foreign-worthy titles.

By the way, if you own the publishing or are a co-publisher, try to make a foreign co-publishing deal with your overseas account for the same territory, assuming that they’re also co-publishers.


A Quick Take on Distribution Issues

Domestic

Pricing

Term (Length) of Deal

Consignment Arrangement

Payment Terms

Access to Sales Information

Promotional Materials

Free Goods

Co-op Advertising

Freight

Contract

Shipping

House Accounts

Special Markets

Digital Distribution

Do you want to go through an aggregator?

Production & Distribution Deals

Do you want to work with a major?

International

Distribute or License?

Chapter 13 – The Complexities of Marketing | 163

Chapter 13 – The Complexities of Marketing

The actual recording and making of records is usually a lot of fun. The marketing of music, on the other hand, is probably the most complex, expensive, and frustrating aspect of running a record label — and the greatest potential hazard. This is true not only for large labels, but particularly for small ones with limited financial resources. Unless you’re very careful, marketing can be a bottomless pit — a vast abyss into which your precious dollars can rapidly disappear.

The purpose of marketing is to let the public know about your releases, to generate a buzz around it and the artists, to prepare the marketplace to receive stock, and ultimately to create sufficient demand so consumers buy your music.

Achieving success for any music product is extremely difficult, due not only to economic reasons, but also to the way our industry tends to do business. Many traditional avenues of marketing recorded music have shrunk during the past few years for one reason or other. Also, because the major multi-national music groups have tended to monopolize many of the media opportunities formerly available to smaller labels, going after what few opportunities remain has become very expensive.

Creating a comprehensive marketing plan is thus absolutely essential for the ultimate success of any recording. If you don’t know anything about marketing, but are starting a label because you love music, then you’d better work with a music marketer who really knows what he’s doing.

If you plan to keep your staff down to the barest essentials, use an outside marketing specialist experienced in your field of music. They exist, and can be very effective. Once again, you must do your research by talking to friends and colleagues to see who they’d recommend. But be cautious. It’s possible to spend a lot of money to little effect if you’ve engaged the wrong person.

On the other hand, a really good marketing individual can be the catalyst for selling lots of your music. So if you decide that you have sufficient funds to hire such a person full-time, and you’ve budgeted for it, then that’s a great way to build a label.

In the case of a brand-new start-up, it might be wise to use a professional with his own firm for your early releases. This way, you can begin to learn what music marketing is about. Later on, when you know more about marketing, you might hire someone to be on your staff. This can be a win-win scenario.

Either way, whether on staff or “virtual,” put some energy into finding someone with lots of experience and prior success in marketing the genre of music you’ll be releasing, since the marketing specialist will be responsible for designing and supervising the marketing campaign.


The Marketing Plan

It’s extremely important that you develop a marketing plan far in advance of the actual date you expect to ship a release. Start it as early as possible, even while the artist is recording in the studio.

Ultimately, the marketing plan should focus on how best to present the artist and his music, and which specific songs to concentrate on.

And, as part of the process, you should budget comprehensively for all departmental aspects and phases of the campaign. For example, in larger companies, each department (sales, publicity, radio promotion, online marketing, etc.) would develop marketing ideas related to the work they plan to do, and apply costs and a timeline to it. After that, all the valid concepts will be consolidated into the official marketing plan.

In a small label, there may just be one person devoted to each aspect. And an even smaller one may have just one person handling all of the marketing effort, and that person could be you! In such small companies, the key marketing person will create the plan, but on a “departmental” basis — Publicity, Radio Promotion, etc., as addressed further on.

As the plan is developed, each department should estimate when they should start working on the project. For example, it’s common practice that Publicity — in-house or independent — send a press kit (see below) to targeted national publications at least three to four months prior to street date. This is in order to obtain valuable national print coverage during the first month or two of release, since most national magazines go to press many weeks prior to the actual date they hit newsstands and mailboxes.

Radio Promotion will have to determine the “add date” for their first efforts, and the projected cost to achieve success. The add date is the date you want a maximum of stations to start playing your new release. It can be from two weeks to many months prior to street date, but varies with the genre. (I’ll go into more detail further on in this chapter.)

For a small label, it’s necessary to brainstorm as if there were several departments determining what needs to be done for each aspect of marketing.

As soon as possible, all of the proposed “departmental” marketing ideas and estimated budgets should be put together into a single comprehensive plan to see just what the combined effort might entail, and what the total cost could be. Management or you can then review all items and pare back the least essential elements until there’s a workable plan and a budget that’s financially feasible.

A marketing plan can be executed on a “phased” basis. For example, many ideas that might be cut or eliminated at the outset can be reinstated after initial goals are achieved and you have an idea as to whether you’ve got a release that’s starting to generate reasonable sales. This is true particularly for


radio promotion. If the early efforts indicate there’s significant interest in a new release, or that it could develop into a hit, that would be the time to put additional effort and money into promotion.

Or, if you see that the music is starting to sell in particular areas, you might consider putting additional funds into some form of artist tour in that area tied into local advertising. If it really seems to be taking off, consider national advertising.

On the other hand, if you feel you’re just spinning your wheels, change tactics. Pick another song to promote, or cease working the title.

In addition to a budget, it’s important that a timeline of events be developed and followed. Be sure that all departments are working closely together, keeping each other, your distributor, and any independent specialists advised of new events as they occur, and that they stay coordinated in their efforts.

But whatever the label size, the result is that a complete, comprehensive, and structured marketing plan will have been devised, including a budget as well as a timeline, delineating what’s to be spent and what’s to be accomplished in each and every aspect and phase of the campaign.

Moreover, it’s important to track actual versus budgeted expenditures once the project has started. You might need to cut back if you find you’re starting to run over. On the other hand, if actual expenses are not as high as budgeted, and it seems worthwhile to spend more, sufficient funds should be available to do that.

But it’s also very important to update and revise your plan as events occur and the situation warrants. Feel free to modify and make changes to the plan, budget, and timeline if you feel it will significantly improve your overall efforts, and assuming you have the available funds.

This “roadmap” of a structured marketing plan — including a budget and timeline prepared well in advance — will help you keep your costs under control, and it will enable you to more effectively market your music and manage your label for success.

A sample plan for an already established act, The Doorstops’ Keep It Open! on YYYY Records, a medium-size pop label, is on the following pages.


Sample Marketing Plan

YYYY Records

Marketing Plan for

The Doorstops: Keep it Open! YY 12345-2

Projected Marketing Timeline

Finished Product Due 2/13/12 Press Kits Ship 2/27/12 Press Starts 3/9/12 Distributor Sales Solicitation 3/12/12 Promo CDs to Targeted Radio Stations 4/16/12 Targeted Add Dates for Radio 4/30/12 Street Date 5/8/12 Tour Dates 5/18 – 7/22/12

Project Overview The Doorstops, one of the most ingratiating and exciting musical acts to arrive on the scene since the Seventies, have created their best album yet — the evocative Keep it Open! Filled with mellifluous melody and lilting lyrics, the quartet pulls out all the stops on this eight-tune wonder, including the 25-minute long gem, “The Return.” The ensemble begins its 20-city tour in Los Angeles on May 18th, ending in Boston on July 22nd. The Songs

1. Through the Door 2. The Other Side 3. Back Again 4. Down the Hatch 5. Up the Kazoo 6. Inside Straight 7. Narrow Hallways 8. The Return All Songs by The Doorstops Oakley Wood: vocals, keyboards Cold Steel: guitars Broken Glass: drums Pumping Iron: bass


Target Audience • Existing Doorstop fans

• Existing Oakley Wood fans • Typical Rock ‘n’ Roll audience Strategy

• Create awareness and heighten the profile of Oakley Wood and The Doorstops, promoting their image as a cohesive band, and as individual musicians. • Spur sales via this marketing campaign, with emphasis on publicity, radio promotion, retailer “co-op” advertising, and micro-marketing in conjunction with tour dates. • Create maximum presence at retail. • Extensive Social Network outreach • Reach established fan base, and add many new fans.

Key Information Format Compact Disc List Price $13.98 Item # YYY 12345-2 UPC# 0 9999-12345-2 9 Box Lot Quantity 25 New Release Discount 7% Street Date 5/8/08 Sales Goals: Phase 1 (initial ship) 10,000 Phase 2 (first 90 days) 30,000 Phase 3 (first year) 75,000 Retail “Co-op” Advertising

• Budget: $20,000 • Obtain listening stations at key retail locations. • Obtain End-Caps in key retailer locations where group is touring.

Merchandising, Sales, and Promotional Items:

• New Release One-Sheet • Promo and Press Kits (include bios, photos, CD folder) • Promo CDs to Distributor • Promo CDs to selected radio station list • Poster for in-store display and in support of tour performances • Sticker on CD: featuring the hit “Through the Door”


National Advertising Entertainment Weekly (quarter page) 5/21/12 Spin (quarter page) 5/28/12 Rolling Stone (third page) 6/11/12 The New Yorker (third page) 6/25/12 Guitar (full page) 7/9/12 Publicity

• PR campaign for features and reviews in general national magazines • Seek features and reviews in major newspapers: New York Times, Los Angeles Times, Wall Street Journal • Seek features and reviews in important secondary newspapers. • Seek features and reviews in major music publications. • Seek features and reviews in important fanzines. • Tour press • Social Network Outreach • Extensive Website Effort, including Chats with Band Members

Radio Promotion

• Promo CDs to targeted stations • Follow-up by Promotion Dept. • Targeted Add Date at Radio:

Raves for The Doorstops’ previous album “Open”

“A marvel!” (Rolling Stone) “Not since The White Album has there been such a combination of music, lyrics and energy.” (Vibe) “A must have CD to add to your collection.” (Spin)

The Doorstops Discography

Keep it Open! YY 12345-2 Open YY 98765-2

YYYY Staff Contacts

Jack Brown, Promotion 123-456-7890, ext. 35 Amy Mauve, Publicity 123-456-7890, ext. 46 Tony Green, Sales 123-456-7890, ext. 57 11111 Main Street, Anywhere, CA 99999


When to Ship a New Release

Once you’ve finished making a new recording, there’s always a desire to see that it gets born as soon as possible. To the artist, it’s like having a new baby. It’s gestated for a long period of time, and he’s going to be anxious to introduce it to the world.

However, it’s important that you plan for the birth, releasing it at the optimum time for acceptance.

For example, it’s never a good idea to ship a release from a new or unknown artist between the middle of September and the end of December because it’ll be competing for sales, publicity, airplay, and marketing effort with Christmas items and hot releases from the major labels and other independents. In addition, the cost of co-op ads and other marketing promotions tend to be much more expensive in November and December.

A particularly good time is the first quarter of the year, especially mid-January to late February, because the holidays have passed and there’s a greater likelihood of getting attention for your artist.

May is an excellent release month for artists who will be performing at summer music festivals because it allows sufficient time to create interest in them and their music.

If your new release will be pitched primarily to college students, try to avoid shipping it during mid-summer when many college radio stations are closed or inactive.

Marketing Responsibilities

A well-ordered approach to music marketing usually entails the following departmental activities, which will be discussed below in more detail:

• Sales• Publicity• Radio Airplay• Advertising• Artists Tour Support• Independent Marketing SpecialistsSocial Network Outreach• Video• Street Teams• Online Music Stores• Website

The diagram on the next page illustrates how these functions have an impact on sales.


$ALE$

Radio Airplay

Website, Social

Networking, & Online

Campaigns

Indie Marketing Specialists

Video

Artist ToursPublicity

AdvertisingStreet Teams

Marketing's Impact on Sales


Sales

The role of the sales department is to convey information about all releases to your distribution and retail network. The salesperson (or sales department in larger labels) has to provide the distributors with the materials necessary for them to solicit sales from their retail customers. The sales job includes overseeing of such marketing aids as the one-sheet (discussed later in this chapter), and ensuring that sample promotional CDs are sent to the distributors in sufficient time for them to do their job of selling. The salespeople are thus the key liaison between the label and the marketplace.

The relationship between Sales and your distributor can be a tricky one. On the one hand, Sales must see that the distributors take in sufficient inventory to properly service all their accounts. On the other, they must be sure that distributors don’t order more stock than retail can reasonably sell.

On that last note, I’m reminded of an occasion some years ago when Elektra was about to ship a major album by a very well-known artist at her peak of popularity. Our goal was to ship about 800,000 units. The distributors kept ordering and re-ordering to the point that we ended up shipping about 1,250,000. Well, of course, despite excellent airplay, we ended up taking back more than I thought we’d shipped! I’m exaggerating only slightly — the volume of returns was large enough to have stocked a major landfill.

At many labels, the sales department will oversee the activities of independent marketing specialists, street teams, non-traditional retail, and website and online activities, all of which will be discussed later in this chapter.

Publicity

Publicity is also referred to as Public Relations or Media Relations. In my mind, they’re essentially the same function — encouraging national and local newspapers, magazines, radio, and television to cover your artists. PR efforts can generate print articles as well as reviews and interviews that appear in print, broadcast, or online.

Over the last number of years, many newspapers have reduced, if not totally eliminated, coverage of recording artists and their music, and it’s only the squeakiest wheels (the majors) that have tended to get the most of whatever space may be available. This is true even with large national publications who’ve not only reduced the space allotted to music, but, not surprisingly, have devoted their limited space to those who advertise the most (again, major labels). To make the matter worse, many national pop music magazines have tended to cater to a youthful demographic, making space scarce for more mature artists.

Therefore, with the exception of supporting touring artists, publicity may be an area where you’ll want to spend comparatively little money. That’s not to say you shouldn’t attempt to utilize publicity, just that this may not be a prime method to market music — particularly for new and unknown artists.


However, while a national effort might not be effective in most cases at the outset, you could (and probably should) start on a local level — where the artist lives and performs most frequently.

Publicity is the kind of function that can easily be farmed out to an independent PR firm. And there are several such companies, small and large, that may be suitable to your needs. Many specialize in particular genres or types of music, and I’ve known some to be remarkably effective in helping labels launch new artists, putting the best spin on them. The advantage to a small label is that you’ll pay only for what you need — no payroll for a 52-week staff publicist.

You will customarily pay a publicity firm a negotiated fee for a specific project for a stated period of time (probably a three to four month minimum,) plus necessary out-of-pocket expenses. These include long-distance phone calls, postage, and perhaps meals with editors to whom your artist is pitched. Such expenses should be pre-approved by the label. Discuss at the outset what you expect from the PR firm and be sure you’re in agreement. Of course, the more work involved — such as national and tour press — the higher the cost, but at least you’ll know up front pretty much what to expect. You’ll probably be invoiced monthly, with the first month’s payment requested at the beginning of a project.

When you consider a PR company, you might want to contact other artists and labels they’ve represented, and perhaps even an editor or writer, in order to get a sense of the firm’s ability and reputation. Also, take a look at their website. Are there egregious misspellings and grammatical errors, or is the material clear, readable, and media-friendly?

A publicist’s primary function is to get attention for your artists, and usually the company if it’s a label campaign. She’ll do this by sending press kits to the media appropriate to the music involved. Media includes publications, writers, critics, and radio and TV show bookers and producers. She might also be the likeliest person to handle or direct all social networking elements of the campaign.

You should discuss whether this is to be just a local or regional campaign, or national as well. Depending on the marketing plan, you may decide to start locally. Later, you can add regional or national efforts when certain initial goals are achieved and it looks as if a more substantial campaign might be worthwhile. You might also want to target unconventional media — sport shows, the ethnic press, business press, city magazines, and other non-music outlets.

Any publicist worth his salt will have an extensive up-to-date database (as many as eight to ten thousand names) of publications and radio programs that provide space, however limited it may be, for music. The database will have names, addresses, and phone numbers of editors, critics, and producers by the various genres of music that they cover. It’s imperative that these lists are kept current.

Usually a PR firm’s database will be custom-sculpted to those media outlets that they feel will have a predisposition to your specific artist. This custom list might consist of only 300 to 400 outlets. Be wary of firms who don’t customize their lists for each project; they’re probably wasting your money and your product on materials that won’t get to the right people.


Radio publicity is important because many artists have become known through such national radio programs as NPR’s Morning Edition, All Things Considered, and Fresh Air. Additionally, certain local radio stations have been remarkably successful in helping to launch new artists. I think specifically of NPR affiliate KCRW-FM in my own back-yard of Santa Monica, a frequent bellwether for new recording artists in many genres. Talk radio is another venue to be considered, especially for articulate artists who do well with interviews.

In addition to broadcasts of interviews with my own artists, I’ve even had some of their music used as ”bumpers” between segments of All Things Considered. The show posts a list of this music on their website so listeners can buy the recordings.

Publicists also place interviews and performances on such satellite channels as SiriusXM, wire services like AP and UPI, syndicated radio outlets such as Westwood One, and morning television. They break news about the artists on online outlets like RollingStone.com, LiveDaily.com, and Billboard.com. And PR is not only about media placement. Publicists also place artists as panelists in industry conferences, as presenters on award shows, as attendees at premières, and find other creative ways to get their artist exposure.

Above all, you get out of a PR firm what you put into it. Publicists are grateful for ideas and leads. However, it’s their job to push the envelope and make the impossible occur.

Above all, heed the experience of the firm. You might think an artist is ready for Rolling Stone, but in reality an early pitch to a top-circulation magazine may be premature. If the publicist pummeled an editor for coverage, it might impair the years of trust between them.

Press Kits

Many publicists today don’t use “fancy” press kits, preferring to send stapled materials such as a bio, a track-by-track commentary, and previous key press-clips along with a CD. Most writers don’t like receiving a lot of “stuff.”

In the dark ages, a press kit consisted of the following — a folder with promotional CD, a biography of the artist or group, an artist photo, and artist tour information with dates and locations. The folder may have been generic to the label with the label logo, address, and publicist contact information. An alternative was to buy folders from a big-box stationer such as Staples or Office Depot, and then to apply specially printed stickers with the necessary information. If you had a lot of budget money to spend, folders were designed for a specific project.

Additional press kit materials included an interview with the artist, supplemental information about the recording, and sometimes track-by-track details or anecdotes.

Some publicists included photos in the press kits, while others prefered to make them available to media on a password-protected website — providing additional savings.


Very important — try to have publicity photographs of the artist taken at the same time as the cover shoot. This will save some money and will tie better to the cover used during marketing. If your publicist wants to send photos, you can further save by sending 4x5 inch shots rather than 8x10s. Most publications print small photos anyway, so the size shouldn’t cause any problems provided the images have good contrast and no halftone screens.

If you still decide to send press kits, but have a limited budget, then very carefully chose the publications most likely to be interested in your release, and send your materials only to them. Later on, as you start achieving some success, send additional kits to those who may do the project the most good.

Electronic Press Kits (EPKs) using DVDs ,and Digital Press Kits (DPKs) distributed via email are excellent tools when the budget permits. They can be made at relatively modest cost yet be of professional quality using “pro-consumer” video gear and edited on a computer. The kits can feature live performance video, interviews, an artist bio, etc. — all delivered electronically.

Press kits — whether simple, elaborate, or electronic — should always be directed to a person by name rather than just to a job title such as Music Editor.

When to Send Out Press Kits

The timing of all events of a marketing campaign are interlinked and connected, so the publicist and the marketing specialist will determine the optimum time to mail out the press kits. Ideally, they should go out three to four months before the street date of the release, but unfortunately this isn’t always possible. Ninety days is good, 120 days is even better. Editors work many months ahead, and these days, national magazines have a finite window for the week of your release, after which they’re on to the next thing.

Just be sure all efforts are coordinated.

Follow-up

Of course, just sending out press kits isn’t sufficient. It’s essential that the publicist checks to be sure the kits have been received, and then “pitches” an editor or writer for a feature story, an interview, or at least a review. This requires constant bird-dogging but can be extraordinarily helpful. There’s nothing like a full-page feature in color, or an extensive interview with your act, to create a buzz and eventually sell some music.

Press Releases

Some labels have been able to generate interest in their efforts through the effective use of press releases. The releases are commonly sent via email, often to as many as 5,000 people. A press release delivered first thing in the morning can be online that evening. And email costs next to nothing.


Record Release Parties

Holding a party in recognition of an artist’s new release can at times be worthwhile, particularly in the case of an artist who’s already built enough of a reputation that tastemakers from the press and radio, and staff at local record retailers, are likely to actually show up. It should be held in a club, a recording studio, or other accessible location. However, if you’re considering a party for a brand new artist who’s not yet become known, you are wasting time and money, even though the artist and his family will be grateful.

Radio Promotion

Radio promotion is still one of the prime methods of marketing music. Of course, airplay and your promotion efforts will be based on the kind of music you record and release. The genre of your music will determine whether or not your new CD will be of interest to program and music directors at commercial radio stations.

Unfortunately, there are many types of music that don’t get much, if any, airplay on commercial radio. These include folk music, singer-songwriters, Americana, roots, blues, traditional jazz, classical, gospel, etc. For these genres, you’ll have to rely predominantly on Public Radio affiliates and community and college radio stations. One plus is that the cost to promote to such stations is relatively small compared to promoting rock or country music for major commercial airplay.

As mentioned in the publicity section, you should also consider the broadcast magazines such as NPR’s Morning Edition, All Things Considered, and Fresh Air. They’re all interested in new and unusual artists and music, and conduct frequent on-air artist interviews. Your publicist should be able to handle these efforts.

Record stores make a lot of their buying decisions based on the airplay charts of Billboard, CMJ (formerly College Music Journal) in New York City, and Friday Morning Quarterback (FMQB) in Cherry Hill, New Jersey. Therefore it’s important that when you start getting airplay, you make maximum effectiveness of these charts.

http://www.billboard.com/http://www.CMJ.com/http://www.FMQB.com/


One area you’ll likely have to budget for is independent promotion, whether in conjunction with your own internal promotion staff, should you have one, or the hiring of indie promoters who specialize in the particular genre of music you’re releasing. I’m very much in favor of a label having as small a staff as necessary, so I don’t usually recommend that a start-up label hire a full-time promotion staff.


http://www.CMJ.com/

http://www.FMQB.com/


It happens that there are lots of solid independent promoters available, and for a wide variety of music. This is, yet again, one of those areas for which you should consult with reliable friends in the business for their recommendations. Another approach is to check with other small labels that seem to be getting good airplay in the same musical genre as your release. Ask the principals which promoters they used that got good results, and whether they’d use them again.

Another way to find out about promoters is to phone the stations you listen to the most that plays the kind of music you’ll be releasing, and speak to the music director. Ask him which promoters appear to be responsible and trustworthy and have provided the station with useful and programmable music without a lot of hype.

In fact, local music directors are good people to get to know in any event, since such personal relationships will make it easier for you to get airplay and interviews for your artists.

Some promoters operate only in selected regions of the country, but most work on a national basis, and that’s what I recommend, unless your music is such that a regional effort makes sense. Some promoters focus on commercial stations in their genre, others may work only non-commercial (college, community, and public) radio, while still others promote to all.

After you’ve done your “homework,” call or visit the recommended promoters and interview them thoroughly. Find out what other labels they’ve assisted and check their references.

Whether you end up using independents, or hiring your own staff, it’s essential that they work very hard to obtain and then track your radio airplay.

Add Dates

As part of your marketing campaign, you’ll have to determine what the most effective initial “add date” will be. This is the date you’d like all stations to start playing the music. It can be anywhere from two weeks to six months prior to street date, depending on the genre and an artist’s previous history at radio, or perhaps on or after street date for a new or unknown artist. For example, add dates for smooth jazz radio occur four to eight weeks prior to street date. Those for country may be as much as half a year prior. Research what’s most appropriate for each release.

The purpose of working toward an add date is that all stations and consultants (such as Broadcast Architecture) who you can convince to play your music should be encouraged to add it to their airplay lists at more or less the same time. A greater impact is created when this occurs simultaneously, and it may make the activity noticeable to any trade publications that track such data. These publications include CMJ, Billboard, and FMQB.

Once you start getting airplay, of course, you’ll have to continue to work hard to increase spin rotation (frequency of plays) and to see if you have music that radio and the public genuinely seems to like.


Servicing Stations

Stations should be serviced in much the same fashion as press. Send promo CDs along with such useful information as an artist bio, track-by-track commentary, etc. Use whatever you’ve got that makes the project interesting and helps it to stand out from all other CDs and promo items. This also helps a D.J. to be knowledgeable about the artist and the music.

If you’re not sending a specially prepared promotional CD single or album, then you might consider putting a “suggested airplay” sticker recommending particular cuts you’d like stations to play. These can be printed by sticker specialists, or if you’re not sending a great many, can be made on your own printer utilizing standard sticker materials that can be purchased at better stationers.

It’s also useful to have selected tracks be available for stations to download from a “hidden” page on your website.

Tracking Airplay

Once you start getting airplay, it’s important that you keep track of it. You could keep it simple and merely maintain a running list in a word processor, or, slightly better, use a straightforward spreadsheet format as might be created in Excel. But the best way is to use a database.

The database can be a simple flat-file, such as might be done in a spreadsheet, but an even better method is to use a relational database such as FileMaker Prp, which is conveniently cross-platform. (See the section on Software in Chapter 8 about setting up your office.) It can be on a single computer and be maintained by one person, or can be kept on a server and be used by many — and even be made available over a secure intranet using a web browser. It depends on the size of your company and your needs. But the prime advantage is that it’s extremely flexible and can be used for years, just by adding to it periodically as needed.

You might start such a database with a list of radio stations. This would include call letters; addresses by city, state, and zip code; region (based on airplay as tracked by the trades and distributors); phone numbers, musical genre(s); names of program director, music director, and DJs, with their email addresses, and access times when these people can be reached by phone.

A separate, but related, database file would be maintained for each project. This would contain the name of the artist, the title of a release, the catalog number, station and date added, rotation (low, medium, high,) spin count, etc. Most important is that airplay adds and spin changes should be tied to each adding station in the radio station database as a relation. What this means is that you don’t have to repeat all of the station info, it’s just that they’re related by commonality. The common factor would be the station’s call letters, or program name.

Then, whenever you want a current list of airplay by artist and title, all you’ll have to do is search the database. You might previously have prepared a list format for such a purpose, and once that’s


done, querying the list and printing it out is a simple matter. For example, you might want to send an email or fax to your distributor and its sales reps each week showing the stations where you’re getting substantial airplay for each release. They, in turn, should be sure that retailers are properly stocked with your product in markets with respectable airplay.

You could even post airplay data to your website in a password-protected location that can be reached only by those who should have such access, such as your distributor’s sales staff.

As you add titles, the database will grow. And what makes it very worthwhile — assuming it’s kept up to date (an essential in my mind) — is that it becomes extraordinarily useful in the future.

For example, when you want to release a title in a genre similar to one you’ve previously released, you’ll just have to search your database and filter those stations that play music in that genre. Those are the stations you’ll service with promo copies. Another example would be, when you issue a second title by an artist who received extensive airplay for their first release. In this case you’ll poll the database and be sure you send the new CD to those same stations (as well as others of the genre), perhaps even reminding them in a nice way how well they did with the artist’s earlier release.

But however you do it, be sure you maintain the database by always keeping it up to date. Don’t let it get away from you because if you do, it’ll be useless. Weekly — or preferably daily — maintenance will save you lots of headaches later on.

Social Media Outreach

Social Media and Social Networking were essentially non-exisiting when I wrote the first edition of this book. In the few years since, various forms of social networking have become essential tools that labels should use to market their music.

In the U.S. Facebook, Twitter, Google+, LinkedIn and, to an increasingly lesser extent, MySpace, are some of the many tools that should be used to get word about your artists and their music to the public. It’s become so important, in fact, that larger labels have staff that do nothing else but work them as essential marketing aids.

The sites mentioned above allow individuals to create profiles containing various info about themselves, including photos, videos, lists, and other information normally kept private. More recently it has become standard practice for record labels to set up pages or sections containing information about their artists and music. Facebook and Google+, for example, allow you to create groups around a common interest, and it makes sense to establish such for each artist and project.

Music Sharing Websites

There are a number of websites that allow people to listen to and occasionally download songs. Many of them have become incredibly popular, in particular Pandora, Shazam, Grooveshark, and as of July


2011 — Spotify. Be sure to send your music to these and other relevant sites as they can be helpful in getting your music exposed and disseminated.

Advertising

Advertising is an expensive way to market music, so I don’t recommend that most of you even consider it. The exceptions would be labels with an artist having substantial presence or who’ve achieved some form of buzz, either through airplay, good press, or other forms of recognition. Without these essentials in place, you’d only be wasting your money.

That said, the most effective use of any form of advertising is what’s called “co-op advertising,” which is “cooperative” only in that you get to pay all the costs! With co-op, your distributor, usually in conjunction with specified retailers, makes use of your print (space) or radio (time) buys by using the money you’ve allocated to purchase a certain amount of newspaper or magazine space or radio time for your ads. The advantage to you is that retailers who advertise all the time can usually secure lower rates than what you’d be able to get on your own. The “co-op” opportunity is for the distributor and retailer who your money goes through.

But don’t even consider this unless an ad buy is in useful support of an artist or project that’s beginning to gather “heat.” It might be an ad in a local paper where there’s already some degree of artist recognition. This ad might be in support of a local store and it should display the CD cover and list a suggested sale price. Another useful ad is one that includes mention of a local performance that’s about to occur stating the time and venue and showing a picture of the band and/or the CD cover. Another form of co-op is for getting “price and position” in a store’s end-cap (a special, prominent rack at the end of an aisle) or for buying space in a retailer’s listening station. Listening stations can be an effective marketing tool but have become quite expensive and, once again, shouldn’t be considered until you’ve started to get some form of buzz. The reason is that a casual aisle-stroller in a record store is unlikely to listen to your music unless the artist’s name rings a bell, or the packaging is eye-catching and provocative enough to encourage further attention with a listen.

You pay for positioning in many retail record stores, particularly the few remaining larger chains, so be sure that they buy sufficient stock to cover the cost of an end-cap or listening station co-op buy. Such deals with large retailers may not be cost-effective, so be wary of this tool. Use it only when there’s sufficient attention being paid to the artist so that a campaign may pay for itself.

The alternative to co-op is label-directed advertising in local and national media. This can be extremely expensive so you shouldn’t consider it at the beginning of a marketing campaign unless your artist has already achieved substantial public recognition or renown.

It’s very rare that print advertising results in significant sales, so I recommend it only to support artists while they’re performing on tour and have already shown some evidence of success. Artists love to see advertising for their music, but it’s an ego trip for them, and not cost-effective for the label until there’s certain knowledge that reasonable public interest in the artist and his music exists.


Tour Support

All of this brings us to the next area you need to consider, and that’s artist tour support. A good time for all artists to go on tour (especially emerging ones) is one to two months after release of their project. This allows some time for getting airplay and press attention. Such tours have become one of the most effective ways of building careers — and for selling music.

Major labels may spend fortunes supporting touring artists by paying money to musicians, for transportation and housing costs, and frequently even to a club or other venue. Most independent labels, however, can’t afford to assist touring artists to such an extent.

But labels can support their artists’ appearances by means other than financial. One way is to help them obtain gigs, especially your artists who don’t have a manager or agent. (Actually, I suggest you think twice before signing an artist without professional representation.) A label can do this by selecting appropriate performance spaces for an artist — initially in towns or cities close to where the artist lives, and perhaps where the label is located. On this note, the label needs to get to know the bookers, being sure to send them CDs and press kits, and to chat them up.

If you’ve got good live performance video, send it to potential venue bookers, make it available to local press and TV stations, and of course put it on YouTube.

Labels haven’t customarily taken fees for this work, but a few labels have recently set up their own management staff to provide this function, and thus may be entitled to a fee or percentage. However, don’t even consider this unless you’ve had extensive artist management experience and have the time to do it effectively. Also, I suggest you discuss such a venture with your attorney as it might result in a conflict of interest, and you’ll want to avoid lawsuits.

In any event, it’s imperative that you ensure that local press and radio are notified whenever your artist is about to be appearing in their area. See to it that someone on your staff, or an independent specialist hired for the project, arranges for interviews in local print media, both prior to, and while the artist is performing in town. Also strive to encourage publications to send reviewers to gigs so that they will print performance reviews.

Be sure to set up interviews with appropriate D.J.s or radio personalities well before an artist’s appearance in their town. This might result in an interview pre-taped for broadcast prior to a gig, or while the artist is in town. Most effective might be a combined on-air live performance and interview. And in the way of thanks and support to the station, you might offer a few pair of free tickets to the first few listeners who call in to the station after an interview. Another way is to offer a few free autographed promotional CDs to the station’s listeners either by way of a contest or other on-air promotion.

In the event that a station can’t set up an interview or performance, it’s still a good idea for the artist to “drop by.” It’s an opportunity for the artist to meet and shake hands with a D.J., music director, and/or program director, giving these folks a chance to get to know the artist.


Artist Development

Building artists and nurturing their careers can be a major part of a label’s success. Therefore some aggressive independent labels have set up artist development departments whose responsibility is to help guide careers. Booking gigs is just a part of it. Other ways include suggesting appropriate music to perform for non-writing artists, what clothes to wear on stage, and even helping develop set lists.

Retail In-Store Performances

It’s smart to combine touring with artist performances in record stores. These cost you and the artist nothing more than time and effort, but it’s a great way to build a fan base and to sell product. Be sure that the store has sufficient inventory on hand to meet the anticipated need. Some stores have a performance space (for example, the late, lamented Rhino Records Store in West Los Angeles — not affiliated with the label). In others, there’s usually some modest space, if only a wide aisle. Discuss facilities with the store because it’s possible a band may have to perform with acoustic instruments if there’s insufficient space for amps.

Independent Marketing Specialists

There are a number of independent specialists that you can engage to work with you on the campaign for a new release.

A primary function might be to help you create your marketing plan. Perhaps you’re able to do this yourself, but it’s frequently a great idea to work with someone who may be more experienced than you in marketing a particular genre of music. Good advice is a lot cheaper than expensive false starts.

Another key purpose for hiring these professionals is to provide retail marketing support. By this, I mean that an indie marketing team might send out sample CDs to key retailers in essential markets to get them interested in your release and to stock the title. They then can check by phone that the retailers are sufficiently covered with commercial inventory.

In addition, indie marketers see that key stores are notified when an artist will be performing in their town, when significant airplay is happening in their market, and to be sure retailers have enough CDs to cover anticipated demand. The retail specialist can also provide you with information on “spread,” sales movement, and compliance with co-op advertising and other label-directed promotions. “Spread” is information about just how widely (or narrowly) retailers are carrying your title.

Talking about spread — perhaps the most effective way of gathering information as to what’s selling and where — is through a subscription to Nielsen SoundScan, mentioned in previous chapters. They have special rates for independent labels. It’s possible that your distributor may already be a subscriber and might be able to supply you with SoundScan data for your releases.


Video

Music videos don’t make a lot of sense for most artists and projects with independent labels. First, they can be hugely expensive. More important, it’s extremely difficult to get video play for artists from indie labels, particularly for niche music. There aren’t a lot of stations that’ll play your video, no matter how good it might be. So hold off on such an expense unless the muses demand it and the planets are in alignment.

Then be sure that there’ll be sufficient stations willing to play the video. This assumes that the artist is already getting excellent airplay and press recognition.

For these projects, budget cautiously and tightly, spending no more than you can afford, or that the project warrants. And be sure that it looks thoroughly professional, even though it might be made using inexpensive equipment and edited on your own computer. And finally, if you do make a video, exploit it to the utmost by getting it broadcast in frequent rotation, particularly in markets where there’s heat. A good video can also be used in clubs and venues that customarily show them.

All that being said, live performance and interview video can be an extremely useful tool to use as a promotional aid — for publicity, on your website, and other suitable online locations such as YouTube. Plus, they can be made creatively and inexpensively.

Street Teams

Street teams can be useful for labels with repertoire that warrants the concept — which tends to be alternative rock, hip-hop, rap, and such. They’re like fan clubs, consisting of friends or lovers of the artist’s music who are willing to help out. They may promote, market, and sell records on high school or college campuses or elsewhere in their hometowns. Or they might put up flyers that help promote artist performances. They could also pass out promotional CDs and “fluff” at concerts of similar musicians. Fluff consists of such free materials as stickers, patches, and other inexpensive promotional items that the label supplies to team members.

The teams work at the direction and coordination of someone on your marketing staff and are located throughout the country. Street team members are not usually paid, although they might receive a modest commission. They do it for the fun and experience, and for free CDs, concert tickets, clothing such as T-shirts, advance “inside” information, and the satisfaction of being involved in something personally worthwhile.

You can get people interested in joining your street team effort by posting a notice on your website or other appropriate Internet newsgroup. For example, in July 2001, a message was posted in the Lost Highway Yahoo! Newsgroup about Lucinda Williams’ newest release, persuading her fans to get conversations going in various other newsgroups and message forums. Also e-cards promoting the CD were made available to fans to send to their friends. Each participant in this street effort was requested to initiate ten contacts on the topic and to forward their postings to a Lost Highway moderator as


proof of their work. A group of winners was selected at random and given free tickets to Lucinda Williams’ next performances. The total cost to the label was a few tickets and a bit of effort.

Sponsorships

When you have an artist starting to achieve real recognition and a sizeable buzz, you ought to think about looking for a sponsor whose product may have a natural tie-in to the artist or one of his songs. This sponsorship might be in the form of tour support, advertising, or anything else you can come up with. It’s an excellent way to expose your artist and the music, yet at the same time reduce your marketing costs. Such a sponsorship can be a wonderful win-win opportunity for the sponsor, the artist, and the label.

Non-Traditional Retail

There are additional places where you may be able to sell your music. Such locations might include so-called “lifestyle” stores that sell clothing, coffee and tea, books, or other merchandise that may correlate well with the music you’re selling. Think about places you frequent — restaurants, books stores, convenience stores, dry cleaners — and whether they might offer additional opportunity to expose your artist.

Artist/Venue Sales

Many artists sell their own recordings, particularly when they’re performing in clubs and other venues. This is another source of income for the label, which usually sell CDs to their artists for about five or six dollars. Such venue sales can be reported as part of SoundScan data when a label faxes the information to them. Be aware that the label has to be in existence for at least two years, must have one or more artists, and must pay a $500 annual fee, for SoundScan to accept the information. Particulars and procedures can be obtained from their website.

http://nielsen.com/us/en/industries/media-entertainment/music.htmlThen click on “Nielsen SoundScan Venue Sales Prodedures.”

Most labels don’t pay artist royalties on such sales because the artist has profited on the difference between what the label has charged and what the artist charges their fans. However, you must pay mechanical royalties if the artist is not the writer of the songs.

Mail Order

Don’t neglect such seemingly old-fashioned concepts as mail order. Customers who may have difficulty finding your CDs in big-box or mall retailers are likely to buy from your website, or may simply phone or write your office to make an order.



Always be sure that whoever answers your phones has a form handy to readily take such orders. The form should have all the information necessary to bill and ship to the customer, including name, address, phone number, email address, and credit card information, plus the artist, title, configuration, price, and quantity of the ordered items.

Just remember that you want to make it as easy as possible for customers to buy your releases.

When you receive such orders, it’s always a good idea to process them as soon as possible. If you’re unable to complete the order for some reason, such as lack of stock, then let the customer know via email or letter when they can expect delivery.

Marketing Aids

Marketing Aids include such items as one-sheets, posters, bin cards, postcards, mobiles, stickers, and any other devices that help market music. There was once a time when record stores were happy to display attractive posters and mobiles that were supplied by labels. Nowadays the larger chain stores will only use such point of purchase (P.O.P.) materials if a label pays for display space. Therefore I recommend you go to the expense of printing such items only when you know they can be used to promote artist performances or if you’ve got other practical uses for them. Postcards can be effective when sent to known fans of an artist, and to let retailers know of the existence of an act you may be working.

Street teams can also make good use of such materials. Just be sure you don’t spend any more than you can afford.

One-Sheet

A One-Sheet is a single 81/2 by 11 page (frequently two-sided and usually three-hole, ring-binder punched) that shows all of the key facts and details of a new release. It’s customarily provided to distributors eight to ten weeks before street date to use in soliciting sales. Check with your distributor as to when they require them to be available. Distributor sales staff will then use the one-sheet when they visit buyers, encouraging them to stock your title. It’s usually just black and white, but I’ve seen very effective four-color sheets used by some labels.

Some distributors may not require that you supply them with actual printed materials, but may prefer instead to have the one-sheet artwork delivered to them in electronic form. This might be an Adobe Illustrator, Photoshop, InDesign, or QuarkXPress file, or an Acrobat PDF document. Check with the distributor for their requirements. One of the nice things about an electronic file is that it’ll save you a lot of printing and shipping costs.

This is what needs to be on the one-sheet:


• Artist Name• Record Title• Image of Cover Art• Street (Release) Date• Configurations Available (CD, cassette, etc.)• Catalog Number for Each Configuration• UPC Number with Scannable Bar Codes for Each Configuration• Suggested Retail Price For Each Product Configuration• Track List, Including Songwriters (If Not The Artist) And Timings• Music Genre (such as Jazz)• Names of Accompanying Musicians, where appropriate• Marketing Plan Info: Key items such as radio promotion, press campaign, live performances,

advertising, etc.• Artist Live Performance Information, if available• Artist Bio (short) and other helpful information pertinent to the release• Label Name, Logo, Address, Phone Number, Website, and Contact Information

The one-sheet is the first manifestation of your artist and the release that distributors and retailers will see. For this reason, it’s vital that it be as attractive and eye-catching as possible, yet still convey all of the essential information. An example is illustrated on the next page.


The Doorstops “Keep it Open!”Street Date: 5/8/12 SRLP $13.98

The Songs1. Through the Door2. The Other Side3. Back Again4. Down the Hatch5. Up the Kazoo6. Inside Straight7. Narrow Hallways8. The Return

All songs by The Doorstops

Oakley Wood: vocals, keyboardsCold Steel: guitarsBroken Glass: drumsPumping Iron: bass

YYYY Records, 11111 Main Street, Anywhere, CA 99999Phone (123) 456-7890 www.yyyyrecords.com

Tony Green, Sales ext. 57

File under “ROCK’

The Doorstops, one of the most ingratiating and exciting musical acts to arrive on the scene since the Seventies, have created their best album yet — the evocative Keep it Open! Filled with melliflu-ous melody and lilting lyrics, the quartet pulls out all the stops on this eight-tune wonder, including the 25-minute long gem, “The Return.” The ensemble begins its 20-city tour in Los Angeles on May 16th, ending in Boston on July 20th.

Strategy• Create awareness and heighten the profile of Oakley Wood and The Doorstops, promoting their image as a cohesive band, and as individual musicians• Spur sales via this marketing campaign, with emphasis on publicity, radio promotion, retailer “co-op” advertising, and micro-marketing in conjunction with tour dates.• Create maximum presence at retail.• Reach established fan base, and add many new fans

Retail “Co-op” Advertising• Budget: $20,000• Obtain listening stations at key retail locations• Obtain End-Caps in key retailer locations where group is touring

Merchandising, Sales, and Promotional Items:• New Release One-Sheet• Promo and Press Kits (include bios, photos, CD folder)• Promo CDs to Distributor• Promo CDs to selected radio station list • Poster for in-store display and in support of tour performances• Sticker on CD: featuring the hit “Through the Door”

National AdvertisingEntertainment Weekly (quarter page) 5/21/12Spin (quarter page) 5/28/12Rolling Stone (third page) 6/11/12The New Yorker (third page) 6/25/12Guitar (full page) 7/9/12

Publicity• PR campaign for features and reviews in general national magazines• Seek features and reviews in major newspapers: New York Times, Los Angeles Times, Wall Street Journal• Seek features and reviews in important secondary newspapers• Seek features and reviews in major music publications• Seek features and reviews in important fanzines• Tour press• Social Network Outreach• Extensive Web Site Effort, including Chats with Band Members

Radio Promotion• Promo CDs to targeted stations• Follow-up by Promotion Dept.• Targeted Add Date at Radio: 4/30/12

DiscographyKeep it Open! YY 12345-2Open YY 98765-2

the doorstops

keep it open!


Online Marketing

Website

A label’s website is an extremely important aspect of its marketing. It is one of the areas where you should expend a lot of effort, yet not necessarily at great expense. It’s imperative that it contains loads of useful information, without excessive gimmicks or large graphics. In fact, I find that use of animation, such as Flash, slows down casual surfers who just want information without bandwidth-consuming frills. The same holds true for large graphic images. You should have enough photos to make the site exciting, but be sure your designer keeps the images sufficiently optimized to speed up page loading on users’ screens.

Other things to avoid are anything that blinks or moves, animated GIFs, type that’s difficult to read or that reverses out of a black or red background, or the use of frames.

And don’t use one of those unnecessary “entry” pages that display a logo or company graphic, and then require you to click on some word or object to enter. If someone’s gone to the trouble to visit the website, it can be assumed they want access — so eliminate this annoying and unnecessary step.

Your label’s website should contain, at minimum, new release information, artist listings or pages, and details about every release. Each artist should have a page or section showing the artist’s recordings with reproduction of cover image and lists of song titles. Some, if not all, songs should have music samples. I recommend that they be limited to streaming files using RealAudio, QuickTime, or Windows Media — or perhaps all three. Just don’t allow them be to be downloaded for free. Samples should be no less than 30 seconds, and no longer than a minute. Your label’s website should contain, at minimum:

• New Release Information• Artist Listings or Artist Pages• Details about Each Release, and• A Way to Purchase the Music

Each Artist Page should contain:• All Recordings Available for the Artist• Cover Graphic for Each Release• Complete Song Lists for Each Release• Music Samples, and• A Way to Purchase the Music

Additionally, you should have information about the label including any genre specialization, with contact data, history, and or purpose, your policy about A&R submissions — and if you allow it — the department that will receive submissions and to whom they should be sent. Also, feature artist-touring information so fans will know when and where they can see their favorites.


Be sure that no key information or statements are imbedded in the graphics since search engines won’t be able to read them and it’ll hinder search engine web crawlers and therefore subsequent listings of your site in Google, Yahoo, etc.

Most important, you should provide an easy way for customers to buy your music — whether as CDs or online. You can set up your own shopping cart system on your own site, or post links where people can make a purchase, such as to Amazon.com, iTunes Music Store, etc.

Shopping cart administration has become a lot easier, and many firms can handle this function for you anonymously if you prefer not to take it on yourself. In fact, this is one of those work-intensive areas that’s best left to others. It can be made so transparent that your customers won’t even know that you’re using an independent contractor. The cart companies can handle all operational aspects for you, including paperwork, credit card transactions, and frequently even fulfillment. Many such firms are available, so do your research by searching for “shopping cart” online, and with colleagues. Just be sure that the administrator has secure servers so that personal information is handled safely. You’ll know that you’re in secure mode when you see “https” (not “http”) at the beginning of a URL and a little “closed lock” sign in the outer frame of your browser window.

I like shopping cart firms that can provide “affinity” capability. This means that, once a customer of yours had made a purchase, their information is kept on file. During their next visit to your site, you can then advise the customer of a new release by an artist whose music they’ve previously bought, or other music they might like based on prior purchases. Amazon.com, for example, is brilliant at this.

And no matter whether you handle fulfillment yourself, or if others do it for you, be sure to maintain a database of your customers. This file should have the customer’s name, address, email address, what they bought, and when. You’ll be amazed how useful a marketing tool this can be.

Email

Email is another way to market your music, and it’s extremely inexpensive. In fact, it costs practically nothing except the effort to maintain a database and to send occasional messages.

You can get names and addresses for such a file in a number of ways. First, be sure to retain the email address and pertinent data of each and every purchaser of music from your website (see section above). Additionally, it’s a good idea to ask visitors to your website for their email address and city, state and zip code of residence, perhaps attracting them with some form of incentive such as a free newsletter, sticker, poster, artist autograph, or even a sampler CD. Third, request email addresses from people who attend your artists’ performances by putting sign-up sheets or return-mail postcards on tables or near the door. When you post these email addresses to your database, include the name of the artist and the venue attended.


It’s become common practice to establish and post a Privacy Policy Notice on your email sign-up page indicating that you won’t sell or lease their name to others. There’s so much junk hitting people’s email boxes that folks won’t want you spamming them, or giving their names to entities who might. This notice should also be on the email solicitation lists and postcards offered at live venues.

Make effective use of the email addresses by occasionally sending out newsletters or information about new releases, and about artists who might be touring near where they live. This is an incredibly effective marketing tool that costs nothing except effort.

Chat Rooms, Social Networking, etc.

A useful way to promote your artists is via chat rooms, user groups, newsgroups, online bulletin boards, social networking (as mentioned earlier), YouTube, etc. Try to have someone on staff keep current on these things, occasionally posting good gossip or other news relevant to your artists and their music.

Online Music Stores

There are a great many of these, which are discussed in Chapter 12 The important point is that you should try to have your music available for sale in as many online locations as possible.


A Quick Take on Marketing

Create a Comprehensive Marketing Plan by Department.

Sales _____

Publicity _____

Radio Promotion _____

Social Media Outreach _____

Music Sharing Websites _____

Advertising _____

Artist Tour Support _____

Independent Marketing Specialists _____

Video _____

Street Teams _____

Website _____

Online _____

Marketing Responsibilities

Sales _____

One-sheet _____

Publicity

Press Kits _____

Follow-up _____

Press Releases _____

Chapter 14 – Post-Production Basics | 191

Chapter 14 – Post-Production Basics

Post-production includes all the things you should do after you’ve shipped a release. There are many tasks that are part of this “clean-up” process, but it’s really just a matter of putting everything in proper order. “Housekeeping,” if you will.

Sample Service

It’s good form to send sample CDs to everyone involved in the making of a project, whether they were promised or not. So be sure to send complimentary samples to the producer, musicians, engineer, graphics designer, illustrator, photographer, mastering engineer, and anyone else who receives a credit in the liner notes. They may not be expecting to receive anything, so it can be a very pleasant surprise that costs very little except a bit of time and some postage. And it’s a great way to express “thanks for a job well done.”

I used to maintain a list of who should be receiving gratis copies during the recording and production process, and then made note of the date of such mailings on the production checklist (see chapter on Pre-production). I also found it useful to post to the production checklist the date promotional CDs were shipped to the distributors, and to people involved in the publicity and promotion effort. It’s frequently necessary to track such information.

File CO Form for Electronic Filing or SR Form

For each title you release, it’s essential that you file a Form CO via electronic filing (or a Form SR via mail) with the Register of Copyrights in the Library of Congress. These forms protect your copyright for the recorded work — what the ℗ (circle P) stands for in your copyright notice, and its unique packaging.

You can fill out the form and file electronically for $35, but you must register the first time you try to access the system; afterwards you’ll just log in. There is an electronic tutorial that can be downloaded as a PDF. Note that there are certain browser requirements, as mentioned in the tutorial.

http://www.copyright.gov/eco/ http://www.copyright.gov/eco/eco-tutorial.pdf

Alternatively you can file an SR Form, which can be downloaded as a PDF from the following website. Also, download a copy of Circular 56. It explains how to use the form, and contains valuable information about copyright law as it applies to sound recordings.

http://www.copyright.org/forms/formsr.pdfhttp://www.copyright.gov/circs/

http://www.copyright.gov/eco/

http://www.copyright.gov/eco/eco-tutorial.pdf

http://www.copyright.org/forms/formsr.pdf

http://www.copyright.gov/circs/


A person in the Business Affairs department might process these forms at some labels. In others, it’s someone in Production. At least be sure that somebody — possibly even you — takes care of it. This is vitally important because it helps protect one of your label’s most valuable assets.

Fill out the form, providing all of the information required. Then send it to the address below, with two sample copies of the CD (or “best edition” as specified in Circular 56 and Circular 7b), plus a check payable to “Register of Copyrights” for $65.00 (as of 2011). Note that the CDs will not be returned to you. They stay on file with the copyright office.

Library of CongressCopyright Office101 Independence Avenue, SEWashington, DC 20559-6238

Ask Business Affairs or your attorney if the recording is considered to be a “work for hire.” This has become a sticky subject of late so you want to be sure you’re in compliance with your artist’s contract. (This was discussed in the chapter on artist agreements.) In some cases, you’ll type “record label as employer for hire” on Line 2a of the form. Circular 9, also available as a PDF file, provides additional information about works for hire.

Note that many labels handle the date of first publication (Line 3b) differently. I think the most pertinent date is the date that the release first ships from your pressing plant to your distributor. Other labels use the street date. This is another case where you might check with your attorney. It’s also the reason why you can’t complete the form until the relevant date has passed.

The next two pages are a sample filled-out SR Form as a guide to how it might be done in the most common circumstances. Compilations, being somewhat more complex, are also addressed in Circular 56. If you need additional help, call the Copyright Office at (202) 707-3000.

You should file for copyright protection if you’re also the publisher of the underlying works as well as the recorded performance. In this case, you can use the same Form SR and protect the written compositions and the performed work in a single document.

Type carefully and cleanly, since what you put on the form will end up being duplicated onto special paper with a red and blue U.S. Copyright Office logo, and this will be returned to you as proof that the registration has been completed. It will also show the effective date of registration.

Note that an original signature is required on Line 8 — not a rubber stamp or other facsimile.

If there are problems with your submission, someone in the copyright office will usually phone or write requesting clarification. The staff is very helpful and cooperative, and once you’ve done this a couple of times, each succeeding release becomes easier.


Protect Your Masters

As soon as a recording has completed mastering and quality control checks, and is ready for release, round up all the tapes and other media used in the process. This means all multi-track masters and disk drives, whether analog or digital, any accompanying computer disks that may have been used in mixing, and all other relevant materials such as DATs, musical charts, arrangements, etc. Be sure that each tape box, and everything else, is clearly marked with appropriate legends, track layouts, etc.

These masters are an extremely valuable asset to any record label, and are a significant part of its value and heritage. Their worth can increase greatly over time, particularly in the case of a project that becomes a hit, or has achieved other historic importance.

For instance, Elektra has frequently used and remixed the original Doors multi-tracks for various re-issues and compilations since they were recorded more than forty years ago. They were also remixed for surround sound use for DVD-Audio. If the masters were in poor condition or had been lost, these re-issues would not have been possible.

All materials should be logged in a computer database so you know the specifics about each reel or item used, and its exact location. Then you can easily have tapes pulled when needed, but be certain to update the current location of such reels in your database. And of course it’s essential that you see that they get returned to storage and that the database gets updated and is kept current at all times.

A closet in your office or home is not secure enough or conducive to the long-term storage and maintenance of such valuable property. Tapes must be shelved vertically, in a secure place that’s kept at the proper temperature and humidity.

The Library of Congress recommends the following criteria for storage of recording media. For short to medium term storage, maintain tapes at a temperature between 65–70 degrees at a relative humidity of 45–50%. For long-term storage temperatures should be between 46–50 degrees (no lower than 46 degrees due to binder lubrication needs), at a relative humidity of 20–30% for magnetic tapes, and 45–50% for all other items — about the same as for fine wine.

http://www.loc.gov/preservation/care/record.html I recommend that all original tapes, drives, and related materials be maintained off-site in a secure, climate-controlled location that specializes in the storage of film and recorded media. There are quite a few such firms around. I’ve found Iron Mountain, for example, to be among the more reliable.

http://www.ironmountain.com/

You might also want to keep a copy or two of the master in the form of a safety tape. They don’t have to be stored off-site, but should be in a locked, climate-controlled location. And they, too, should be logged in the database.

http://www.loc.gov/preservation/care/record.html

http://www.ironmountain.com/


Production Files

Now, gather together all the production files. Be sure they’re well organized and clearly marked with the catalog number and/or whatever production control number you may utilize. Then file them in a secure but readily accessible location in your office. A locked file cabinet is highly recommended. You’d be amazed at how many times you may need to refer to them, even a year or two after release. And in some cases, they may be needed years after a project has been first issued.

For years after I left Elektra, I would get calls from their production staff requesting details about projects I’d been involved with many years earlier. Not only had the scrupulously maintained production files been mislaid some time after they were shipped to New York in 1983, but they also were unable to locate the two sets of microfilm backup that had been kept separately in the production and accounting departments.

Mechanical Licenses

Check that mechanical licenses have been received from every publisher involved in a recording. Publishers are notoriously slow in responding to licensing requests, so follow up on the stragglers. Then be sure that copies are supplied to the accounting department for royalty statement purposes. They should also be filed in the production files referred to above.

Archive

Many labels neglect to maintain an archive, but I’m a firm believer in such a resource. The archive should consist of at least five or six copies of everything you publish — CDs, cassettes, LPs, videotapes, DVDs, and such components as CD booklets and inlays, folders, J-cards, posters, marketing materials, catalogs, even giveaway marketing aids such as T-shirts and other “swag.” These items are frequently referred to and should also be maintained in a secure environment, such as a locked closet, with access limited solely to those who require it. If you’re ever in doubt whether or not to archive something, do it!

Extra Inventory

Of course you should have copies of all the CDs, DVDs, and everything you release in a readily available location in your office where you mail such materials to press people or radio stations. Always keep a reasonable quantity on hand, particularly just after a new release, because you’ll need them as back-ups for radio stations and publications that say they didn’t receive the first copy sent.


Artist/Venue Sales

Your artists will probably want to buy CDs for sale at their performances. Most labels sell CDs to their artists for between five and six dollars. These artist or venue sales can be included in SoundScan’s accounting if the label faxes the information to them. Remember, every sale helps! To do this, however, the label will have to have been in business for two years, and must report sales for more than one artist. Note that there’s a $500 fee per year ($900 for 2 years) to report these sales.

http://nielsen.com/content/dam/corporate/us/en/public%20factsheets/Soundscan/Soundscan-US-Sales-Procedure.pdf

Most labels don’t pay royalties to artists on their own venue sales because the artist will profit from the difference between the price you charge them and what they charge their customers. However, you should pay mechanical royalties when the artist is not the writer of the songs.

Royalty Accounting

Royalty accounting is one of the most complicated aspects of running a label. At many, it’s become a black art, using not only smoke and mirrors, but all manner of arcane methods. The object, of course, is not just to thoroughly confuse the artist, but to pay out as little as possible.

Preparing royalties statements is probably the most challenging function of a label’s accounting department, due in great part to the complexity of most artist contracts. Deals tend to be labyrinthine, with curlicues of different royalty rates and furbelows of costs that labels consider as being recoupable from the artist. The resulting maze of deal points makes for, at best, a difficult statement to prepare — even when a label is completely honest and forthright.

Because of the intricacies of most deals, in the case where a label may be less than honest, there’s room for a lot of chicanery. A statement may not, for example, show the actual quantity of royalty units that it knows were sold, it may take unreasonable reserves against returns (not just the contractual percentage), it may delay reporting of foreign sales, and may take charges against the royalty account beyond those that may be contractually justified. And even when a label is honest with its statements, they’re frequently difficult to read and understand because they’re not laid out clearly or rendered easily comprehensible.

In fact, there’s very little well-written and moderately priced software available that’s been specifically designed to handle royalty accounting. However, larger labels might want to investigate one of the following before they decide how they’ll handle royalty accounting:

• Royalty Review Council per their website “deliver a turnkey outsource royalty accounting solution... for content owners and distribution of creative works.”http://www.royaltycouncil.com/



http://www.royaltycouncil.com/


• Royalty Share has a web-based system for royalty management that might be useful. http://royaltyshare.com/technology-solutions/

Note that I’m not specifically recommending the above choices because needs vary. They may be too complicated or costly for a small start-up, so be sure to thoroughly investigate the software, its methodology and function, technical hardware requirements, and your label’s needs before you make your decision. In addition, some royalty software may work only on “Wintel” PCs. In fact, I know of some labels that use Macintoshes exclusively, but use a Windows partition on the Mac that has to handle royalties.

Small labels might consider use of a spreadsheet program such as Excel or a relational database like FileMaker Pro (both programs work on Macs and PCs) to calculate and prepare statements. However, no matter which software is used, it’s extremely complicated, with lots of room for honest error, no less for the rendering of dishonest statements.

In a case where not much is at stake, some labels assume that a royalty recipient won’t spend the money to send in a qualified auditor, and frankly, there aren’t a lot of CPAs knowledgeable in the intricacies of recording industry accounting. Therefore the label may bury untold “errors” when they prepare their statements.

Where a lot of money may be involved, an artist, publisher, or publisher’s representative, such as the Harry Fox Agency, may suspect they’ll find sufficient accounting errors — whether honest or not — to justify the rather high cost of an audit. One former major label CFO purposely placed relatively easy-to-find errors in royalty statements so that an auditor would find them rather than other better-hidden “adjustments.”

Who customarily receives royalties?

First, there are the artists, who may be an individual, a duo, or a group. The recording agreement, which artists — or more likely their attorney or manager — negotiates with a label, will clearly specify circumstances as to how and when the artist will be paid. These negotiations can get quite heated as each party tries to make the best deal possible. Points that are argued the most are royalty percentages, cash advances, recording funds or budgets, escalations, reserves for returns, “free” goods, and what costs the label may recoup. Such recoupable items are not just the cost of making a recording, but may also include tour support and videos, as well as part or all of independent promotion and/or publicity.

Independent producers may also be royalty participants. In such an event, the producer’s royalty is usually deducted from the artist’s share. The label will then make a direct payment to the producer on behalf of the artist. This protects the producer and ensures that he receives his money.

http://royaltyshare.com/technology-solutions/


Labels frequently license a song, a track, or an entire album from another label for a compilation, soundtrack, or re-issue. The licensor of this music will then be a royalty participant according to the terms of the negotiated license.

Finally, almost all recordings contain copyrighted works. A common exception is classical music written by long-deceased composers. The publishers (not customarily the writers) are supposed to receive mechanical royalties for each song or copyrighted work. (The publisher will in turn pay the writers their share.) A tribunal appointed by Congress sets the statutory rates, which in 2011 is $.091 per song of less than five minutes, or $.0175 per minute (a bit more than one and a half cents). This rate will probably be increased early in 2012 but had not been set at the time of writing. The new rates will be posted on the “Updates” page of this book’s website when they’re available.


Most publishers’ mechanical licenses state that royalties must be paid on all units “manufactured and sold.” Very few labels comply, and pay only for units shipped less a reserve for returns, thereby not paying for inventory that may be in the “pipeline” and which was not in fact sold to consumers. Frankly, I don’t find this unreasonable.

Some labels base their statements on SoundScan data.

It’s standard practice that labels render royalty statements to artists, producers, and licensors semi-annually, ninety days after the close of a calendar quarter. Thus you might be mailing these statements (and possibly checks) on March 31st and September 30th. Publisher statements, on the other hand, are usually rendered four times a year, forty-five days after the close of a quarter — or on February, May, August, and November 15th.

Where possible, try to negotiate with your smaller, and possibly more-flexible publishers, to let you render statements semi-annually rather than quarterly, halving the time and cost of preparation for your accounting people. This is particularly true in the case of small, artist-owned publishing companies.

I believe it’s in the best interest of labels that they do whatever is possible to render honest and clearly understandable royalty statements. And if you keep your artist contracts simple, it’ll be easier to calculate and pay royalties, and for the artist to understand the statements.

Samples of a typical Artist Royalty Statement and a typical Mechanical Royalty Statements are on the following pages.



SAMPLE ARTIST ROYALTY STATEMENT

Date: 3/31/12 For Period 7/1/11 through 12/31/11

Royalty Statement for:

The Doorstops

2345 Hall Row

Frame, CA 99988

Catalog Number Title

98765-2 Open

CD Sales – Domestic 7155 units

CD Returns – Domestic -901

Net CD Sales 6254 units

Reserve for this Period – CD 1000 units

Total Royalty-bearing Units 5254

Royalty Base Price $15.98

Royalty Rate 10%

Royalty Deductions none

Royalty Due this Period – CD $8,395.89

Online Sales $4,560.00

Reserves Prior Period (1/1/07 through 6/30/07) 2000 units

Liquidation of Prior Reserves $3,196.00

Balance from Prior Statement -$7,335.45

Total Due Artist $8,816.44

Payment to Artist $8,816.44

© 2008, 2012 Keith Holzman Solutions Unlimited

YYYY Records11111 Main Street

Anywhere, CA 99999


SAMPLE MECHANICAL ROYALTY STATEMENT

Date: 2/15/12 For Period 9/1/11 through 12/31/11

ABCDEFG Publishing

99 Alphabet Place

Anywhere, NY 99998

Catalog Number Artist/Title

98765-2 The Doorstops "Open"

Song Title Composer % Owned RateNet CD

SalesNet Online

SalesAmount

Due

Though the Door Wood 100 0.091 4120 1945 $551.92

The Other Side Steel 100 0.091 4120 1945 $551.92

And Back Glass 50 0.091 4120 1945 $275.96

The Return Iron 25 0.091 4120 1945 $137.98

Total Album Mechanical $1,517.77

Catalog Number Artist/Title

98767-2 Suzy Troubadoura "Two"

Song Title Composer % Owned RateNet CD

SalesNet Online

SalesAmount

Due

I'm Free Troubadoura 100 0.091 3456 1227 $426.15

You're Not the One Troubadoura 100 0.091 3456 1227 $426.15

It's the Other Troubadoura 100 0.091 3456 1227 $426.15

Total Album Mechanical $1,278.46

Total Due Publisher this Period $2,796.23

Payment to Publisher $2,796.23

© 2007 & 2012 Keith Holzman Solutions Unlimited

YYYY Records11111 Main Street

Anywhere, CA 99999


Post-Production Check List

Send samples to people connected with the project. _____

File the CO Form online or mail the SR Form. _____

Gather and protect all project masters. _____

Check production files for completeness and secure them in a safe place. _____

Check that all mechanical licenses have been received. _____

Place copies of appropriate materials in the Archive. _____

Make sure that accounting has all the necessary royalty data. _____

Deal Terms and Sales Information. ____

Chapter 15 – Follow-up Marketing | 203

Chapter 15 – Follow-up Marketing

Following up on the marketing of your releases is essential to the success of your label. Every single element of the marketing plan must be explored and developed thoroughly by those charged with their respective responsibilities, whether it’s by in-house staff or external freelance specialists such as public relation firms, independent promotion people, etc.

And as head of the label, it’s ultimately your responsibility to see that everyone is properly pursuing their tasks and the label’s goals. You need to be actively “connected” to be sure each person is following through on decisions made during the development stage.

But, as you progress, if you find that a particular strategy isn’t working out as originally planned, be prepared to modify it and go in another direction. The marketing plan is merely a road map. If you come to an obstacle in the road, be ready to veer off onto a side route, just as long as you meet the ultimate destination — success of the project!

Publicity

Are you starting to see a lot of newspaper and magazine articles written about your project? Are these articles in the publications initially targeted in your marketing plan? Are your artists getting interviewed on the radio?

If your answer to any of these questions is “No,” then be sure that your publicity department or independent public relations firm is doing its job. Gentle prodding should encourage them to do what they’re supposed to do, and if that isn’t sufficient, then push harder. Be sure they sent out press kits with CDs to the targeted publications. Then check that they followed up with the editors and writers encouraging them to print articles or interviews. It usually takes a lot of bird-dogging, but persistence — and good music — will usually result in some form of success.

If your answer is “Yes,” be sure to let your distributor and all pertinent others know about the good news. Positive reactions help create more positive actions.

Airplay

Very much the same kind of pressure should be applied to the promotion people working your music at radio. Be sure that they’ve gotten CDs to the initially targeted stations, and that they’ve done everything possible short of payola to get music directors to broadcast your release.

And be certain that when you start getting airplay in particular regions that the promotion people


convey that information to stations in other areas, spreading the word that your music is getting played, and encouraging additional stations to add your music to their lists.

Always try to increase spin rotation to implant the music in listeners’ ears, and request that DJs let people know the name of the act they’re hearing. The promo staff should ask that each play is not only announced before it spins, but that it’s back-announced as well. Repetition of play and the artist’s name creates recognition in the minds of the public, and eventually sales of CDs and downloads. Of course, this is usually up to each station’s protocol, but it doesn’t hurt to ask. Note that some stations post their playlists on their websites.

Artist Tours

Presumably your marketing plan called for a lot of artist touring. Is your artist getting out there and are the performances going well? Are audiences being attracted to the performers and their music? Are CDs selling at venues and nearby record retailers? Are DJs and reviewers being invited to shows, and are they responding positively? Are the artists doing radio interviews prior to live performances? And are they getting reviews in the local papers afterwards?

Assuming the answers are “Yes,” then this is the time to add more venues to the schedule. It’s important that you keep artists working on the road, because the more shows an artist does, the better they get, and the more music you’ll sell.

But if there are any “No” answers to the above questions, then quickly determine why and fix them.

If musicians are weak on stage, then have them woodshed until they inhabit their material. Of course, you should have known about this before signing the act, and either not contracted with the artist, or solved performance problems before release of the CD. As I wrote in the acquiring artists chapter, one of the criteria in signing an artist is the ability not only to record, but also to perform live in a thrilling manner.

If artists are not selling CDs at gigs, find out why and ask them to do so. The only time I discourage artists from selling CDs at performances is if there’s a well-stocked retailer close to the performance venue, since it’s not a good idea to be in competition with a valued retailer. But if they’re out of stock, or haven’t even carried the title, then the artists should try to sell CDs at their gigs. On the other hand, be certain that nearby retailers have sufficient stock prior to the performance date, and even invite them to the venue. It’s a great way to win friends and encourage good product placement in stores.

Be sure that local print reviewers and key radio personnel are invited to concerts, and try to get them to do artist interviews prior to the performance. If you subsequently learn that one of these tastemakers didn’t like a show, find out why so it can be improved.


Always try to present your artist in the most positive light, fixing what needs to be fixed, and building on their unique qualities.

In-Store Performances

As mentioned earlier, artist “in-stores” can be very effective. They allow potential audiences to see an artist perform in a simple, relaxed fashion. Artists frequently use acoustic rather than electric instruments because most stores have little space for live performance. The informality helps an audience see the musicians up close and personal, and enhances the sale of CDs while the artists are there and can sign autographs.

Artist Development

A lot of what I’ve just been discussing falls under the name of “Artist Development.” I’m a strong advocate of artist development, whether done by someone on staff as a sole responsibility, or by the label head or marketing person as an additional task. What you’re trying to achieve is the building of artists’ careers over the long term. This was common in medium to large labels some years ago, but is almost nonexistent with today’s multi-national majors who tend to promote their latest hot artists whose careers rarely last beyond a second CD.

And I think it’s remarkable that many artists who started out twenty or more years ago remain successful today because their labels and their management worked hard to build lasting careers. Think of Neil Young, Eric Clapton, Steely Dan, Paul Simon, Emmylou Harris, Bonnie Raitt, U2, B.B.King, and Dolly Parton — all highly successful over multiple decades.

It’s more than simply talent. It was lots of hard work on their part and the part of their support teams. It was many months on the road each year, followed up by recurring releases of inspired new recordings.

Advertising

I’ve always discouraged advertisements for new or unknown acts prior to the release of their CD. It’s just wasted money.

However, when you start achieving some level of success, very limited advertising might be of value. For example, if an artist has had a successful gig in a town and has gotten good reviews and substantial airplay in that town, then radio spots and small newspaper adds touting the artist’s next local performance can be valuable. Nevertheless, don’t spend a lot of money on this, but do it incrementally as you build the artist’s career and increase sales of his CDs.


Video

Should the marketing plan call for production and release of a video, be sure not to do so prematurely. Video production can be costly, and video promotion is a significant amount of work. Make one only when you’re certain that stations will play it, when the artist has started to achieve substantial sales, and has received enough notice in the press and at radio to warrant the expense. And be certain of your timing, so that a video is not released too early in the trajectory of a release, or too late when the buzz you’ve created has died down. Then get as much mileage out of it as possible.

However, considered purely as a marketing tool, video — especially if made inexpensively — can be extremely effective. YouTube is a great location for good performance videos and artist interviews, not to mention your own website.

Update the Marketing Plan

Follow the budget, actions, and ideas that were in the marketing plan established months earlier, modifying it to reflect events as developing situations warrant. The plan is a guideline that was written in a word processor and spreadsheet, not in stone!

Website & Online Activity

I’m presuming that your website was launched prior to a release’s street date and that information on the site has been kept current. Details of every product should be available, including artist interviews. Good reviews should always be posted. Artists’ touring itineraries should be listed and updated frequently. Most important, there should be a way to allow visitors to the site to listen to short music samples that can be streamed but not downloaded. Purchase information should also be available — whether from the label’s own website, or by a link to where the music can be bought. Make it easy for a new fan to listen to, and buy your music — whether it’s a CD or a digital download. And don’t neglect Facebook, Twitter, and other “outreach” efforts.

Keep Everyone Informed

It’s vital that all of your marketing staff and outside support people keep everyone involved in the project fully informed of developments. This means the label staff, the distributor, the artist’s management and agent, and each other. Of course, they should hear all the good news about great performances, should see all the good press — whether of the CD or live shows — and know about all the airplay the project is receiving, with details of station location, track name, and spin rotation.

And if something goes wrong, be particularly sure that all relevant people are informed. For example, if a performance somewhere gets cancelled for whatever reason — flood, illness, etc. — then arrange to


cancel or preferably reschedule interviews, etc. The same would apply if you’ve taken advertisements supporting a gig. Cancel the ads, reschedule them, or repurpose them. (Of course, if you’ve followed my advice, you haven’t scheduled any ads at this early stage of a project’s development.)

Definitely, one of the most important things you should do is keep your distributors, retailers, and street teams up to date, particularly about good news. Be certain that they all know when an artist is doing live appearances, that the accounts are supplied with the latest tour information, and that retailers have any available support materials such as posters and fliers. Most important, be assured that the retailers have sufficient inventory in all regions where there’s a buzz happening — either because of airplay, live performance, or print reviews.

Also, be sure that distributors and their accounts are aware of the specifics of airplay success by track, region, and spin rotation.

It’s a good idea to regularly send copies of all major press “clippings” — whether interviews, CD reviews, or performance reviews — to distributors and their key accounts via email. They all count as positives and help keep your artist’s name at the front of their consciousness. After all, it doesn’t hurt to toot your horn a bit — it’s just plain good business!


A Quick Take on Follow-up Marketing

See that all elements of the marketing plan are being followed:

Publicity _____

Airplay _____

Artist Touring _____

In-Store Performances _____

Artist Development _____

Advertising _____

Video _____

Website _____

Revise and update the marketing plan as necessary. _____

Keep everyone informed. _____

Chapter 16 – Ancillary Income | 209

Chapter 16 – Ancillary Income

Most labels focus the greater part of their efforts on marketing their music primarily through traditional brick and mortar retail and digital download sites, all too often neglecting other potential sources of revenue.

So just what is “ancillary income,” and how can a label earn some? What are the additional sources of income that you should be looking for? And what can it mean to the success of your label?

Ancillary income is earned by making the most out of a label’s existing assets. Such earnings might come from, but are not limited to:

• International Distribution and/or Licensing• Music Publishing• Online Sales• Downloadable Music• Licensing to Films, Television, Commercials• Non-Traditional Retail• Special Compilations• Sponsorship & Underwriting• Record Clubs• AARC• SoundExchange™

International Distribution and/or Licensing

You can sell your music outside the United States, either by making distribution deals territory by territory, or by granting licensing rights to selected overseas companies known to be honest.

I prefer distribution deals where you ship finished, packaged CDs to your foreign accounts. That way, you know exactly what you’ve sold and what you should get paid for. Such an approach may not yield as much income as you might expect based on your experience with domestic distribution, but it helps prevent under-reporting of sales. The overseas company has to deal with freight and import duties, for example. But any reduced income will be offset somewhat by lower artist royalties. This if, of course, assuming that you have a standard provision for reduced rates for foreign sales in your artist and publishing agreements.

Licensing, on the other hand, is a license to steal if you grant rights to less than scrupulous companies. Be sure you know who you’re dealing with by getting positive recommendations from trusted colleagues. And be sure to get substantial advances and guarantees up front. The reason is that you’ll never really know just how many disks a licensee may have actually manufactured and sold. It’s frequently a lot more than may be shown on a royalty statement. And if you do decide to go this


route, endeavor to license a substantial portion of your catalog. In other words, don’t let a licensee cherry-pick selected titles.

Alternatively, you might be able to keep somewhat greater control with a hybrid or variant arrangement than with straight licensing. Using this approach, you sell finished CDs to your foreign distributor/licensee at cost or a bit higher, say 10% more to cover your cost of tying up cash by carrying inventory. Subsequently, you’ll receive a negotiated per-unit “royalty” as product is sold each month or each quarter. This smoothes cash flow for your international affiliate yet helps keep him honest because you’ll always know exactly how much product you shipped for subsequent sale.

Music Publishing

As discussed in Chapter 6, you should also contemplate establishing an affiliated music publishing company. Not all labels do this, either through lack of expertise and experience, or insufficient time to deal with it. If you’re facing either or both of these hurdles, consider having a qualified publisher handle the administration and licensing of your copyrights.

There’s considerable money to be gained that you shouldn’t leave on the table. And as your catalog grows, so will publishing income. In fact, over a period of time, publishing could yield greater income than record and download sales, and it enjoys better copyright protection.

Miscellaneous Fluff

There are many other items you can sell in addition to music products. T-shirts, caps, coffee mugs, etc., with your logo or an artist’s likeness on them, are great gift items that can generate additional income. There are many suppliers for such items. You can find them by searching for “promotional products” using Google.

Online Sales

Many labels sell CDs, digital downloads and other catalog items such as DVDs, T-shirts, etc., on their own websites, but too many others don’t. One major benefit is that you’ll receive the entire suggested retail price, rather than the lesser amount you’d get by selling via a third party or through a distributor. Parenthetically, as I wrote earlier, I don’t think it’s a good idea to grant exclusive online (or downloadable) rights to a distributor, even though some request this right in their contracts. I urge that any such deals be non-exclusive.


Shopping Cart software is now available in various forms, so selling from your website has become relatively simple. This works most smoothly if you have the capability to handle your own fulfillment. If you don’t want to do fulfillment, then consider generating a link to Amazon.com or a similar company, where you’ll at least pick up a small referral fee as an “associate.” Any approach is valid, so long as you’re getting your music sold.

Downloadable Music

As I wrote in Chapter 12, this is primary income — not ancillary. It’s vital that you offer downloadable versions of all your music on your own website — at a reasonable cost (between 75 and 99 cents) as well as with iTunes and other responsible companies. Do it in a way that doesn’t inhibit the ability to burn it onto a CD-R if the download has been paid for. Nor should you set a limited time frame for how long the track remains viable on a customer’s hard drive. Both of these were current practice of some major labels just a few years ago.

Licensing to Films, Television, Commercials, Etc.

A great deal of supplemental income can be obtained through “master use” licensing of your music tracks to feature films, television shows, documentaries, and radio and TV commercials. Feature films are particularly advantageous because of the additional incremental usage fees for soundtrack recordings, subsequent television broadcast, and home video. You can collect for every one of these rights as each subsequent milestone event is reached. The dollars are usually negotiated in the original contract, occasionally with supplemental amounts that are projected on a sliding scale based on box office success.

Television commercials are not only lucrative, but can also provide valuable wide-ranging exposure for your artists. And, in any of the above cases, if you also control the publishing, you will be able to receive “synchronization license” fees for the same song. Such “synch” licenses are generally made for the same dollar amounts as the master use license, so if you own the publishing, you’re likely to double the income for the usage of a single track. The Film/Television Music Guide in the Recommended Reading section might be a valuable aid for placing your material.

Non-Traditional Retail

Depending on the type and genre of the music you release, consider selling to “lifestyle” retailers. Specialty-clothing stores, audiophile shops, surfer shops, and even hair salons may be potential customers. There are most likely many other outlets that can profitably sell your music, and you may be able to obtain substantial income from this for relatively little work.


So have your entire staff, and even your friends, get out there and see what stores might be appropriate for your music and may be persuaded to carry it. Try to have them display your CDs in a prominent place, such as close to the cash register. You’ll probably have to sell on a consignment basis so the accounts won’t be out of pocket and thereby won’t have to take any risk. Moreover, I’ve observed that a buzz started at an alternative retail outlet has frequently crossed over to create significant mainstream record store and online sales.

Special Compilations: Retail Premiums for Specialty Outlets

I’m sure you’ve seen distinctive compilation CDs in Starbucks, Williams-Sonoma, Whole Foods, or Pottery Barn of music that appeals to these company’s customers. The Special Products divisions of the majors create these compilations and usually supply their clients with “turnkey” CDs — including everything (songs, royalties, CD, and packaging) for a set price.

So depending on the nature of the music in your catalog, think of other chain retailers or companies whose products and clientele closely complement your music. For such projects, you should be able to make special deals with your artists and their publishers, and frequently even your suppliers, to hold down costs in order to achieve a reasonable profit for all involved. This becomes a lot easier to achieve once you’ve developed a sizeable catalog of good music.

Sponsorship & Underwriting

You may be able to persuade a company to sponsor an artist’s tour. Look for a business whose publicity and image matches the tenor of your artist and his music. This takes a lot of work to achieve, but it translates into a lot less money you’ll need to spend to keep your artist on the road. And, as a result of a successfully sponsored tour, you should be able to sell more product to a delighted public. Additionally, the sponsor will frequently buy CDs from you to use as gifts for clients and associates.

You might seek such sponsorship from a large specialty company in your, or your artist’s, hometown or region.

I also recommend that you try to discover and create other special tie-ins between your artists and appropriate products.

You could also try to get underwriting for certain projects, such as from the National Endowment for the Arts (NEA). This is pertinent primarily for classical music, particularly contemporary composers, but also to jazz, folk, and indigenous artists. NEA grants must be applied for by the artist, and are given to them for a specified recording project. The label derives benefit because the cost to make the recording is wholly or partially defrayed by the grant.

http://www.nea.gov/

http://www.nea.gov/


Bonus Benefits

An additional source of income is the Alliance of Artists and Recording Companies (AARC), a non-profit organization that was formed to distribute royalties to recording artists and owners of sound recordings (usually record labels) as a result of the Audio Home Recording Act of 1992. The money they collect and distribute comes from manufacturers of digital audio recorders and blank disks and tapes as compensation for lost sales due to home taping. You should file an application with this organization because there’s something to gain and nothing to lose. Forms can be obtained from their website.

http://www.aarcroyalties.com/new/join.html

Another source of virtually “automatic” income, however small it may be, is SoundExchange™. This non-profit, quasi-governmental agency is responsible for taking advantage of the accuracy and efficiency brought by modern technology. SoundExchange™ licenses, collects, and distributes public performance revenue for sound recording copyright holders within such digital channels as cable, satellite, internet radio, and web cast transmissions.

http://www.soundexchange.com/

The Copyright Office recognized the benefits of SoundExchange’s™ administration of these royalties, and appointed it as the sole administrative entity for subscription services’ royalties.

SoundExchange™ is a benefit to both indie and major labels as evidenced by SoundExchange’s™ membership roster — including more than 20,000 artists and 2,500 independent labels. These member companies understand the economic efficiencies and benefits of the cost-sharing associated with administering royalties.

You can join by obtaining and filling out a few documents that are available on their website in PDF form. It costs you nothing, and you’ve got lots to gain, particularly as web casting and other forms of digital conveyance proliferate and thrive.

M M M

This doesn’t pretend to be an exhaustive list of ways to earn additional income, but one or more of the above ideas might make the difference between your having a profitable or unprofitable year. As much fun as the traditional music business can be, do explore these supplementary non-traditional income-producing techniques.

http://www.aarcroyalties.com/new/join.html

http://www.soundexchange.com/


A Quick Take on Ancillary Income

Get the most out of your assets by taking advantage of as many of the following as possible:

International Distribution and/or Licensing. _____

Music Publishing. _____

Online Sales of miscellaneous merchandise such as T-shirts, etc. _____

Downloadable Music. _____

Licensing to Films, Television, Commercials. _____

Non-Traditional Retail. _____

Special Compilations. _____

Sponsorship & Underwriting. _____

AARC. _____

SoundExchange™. _____

Chapter 17 – It’s a Wrap — Almost | 215

Chapter 17 – It’s a Wrap — Almost

By now, you’re working hard on your first release. And, if you’ve been thinking ahead, you’ll be well into the process of your second and succeeding follow-up projects. As I’ve emphasized throughout this book, planning ahead is one of the keys to success in any business, and though it appears the record industry is weak in this regard (and for many labels that’s indeed true), there are others who’ve had much success because they’ve not been caught unaware by the calendar, or the vicissitudes of business life.

Planning Your Next Releases

Although this section comes at the end of the book, in actuality the planning for your second and later releases should have started well before you finished recording the first project. Some start-ups wait until the first project becomes either a success or a disaster (or somewhere in between) before they start dealing with another project. That’s a mistake!

By the time you enter the studio with the first project, you should have a pretty good idea of which artist you wish to record next. In fact, it’s ideal to have the artist agreement negotiated and signed, and be well into the planning stage for this second project, when you begin to record the first. You might even be well into signing and planning the third and fourth projects by this time as well.

All this assumes that you’ve carefully planned well in advance, and have secured sufficient funding to keep you in business for quite a long time — ideally no less than two to three years, and hopefully even longer! (This was discussed in detail in the business plans chapter.) In any event, you should be well on the way to planning the marketing of the second and third releases before you even ship the first. By doing this, you ensure an orderly flow of releases, which is not only good for the label, but also for your distributor and retailers. They like to know that a new label is not going to be a one-shot venture, and that new product will continue to flow at frequent intervals.

My suggestion is to try to ship your second title three to four months after your first, with the third following another three to four months after the second.

In your first year, try to publish at least three or four releases, and in the second year, anywhere from four to six — with an even flow of at least six to eight new titles each year thereafter. In a few years, you will have built up a nice little catalog, and it’s steady and continual catalog sales that keep a label alive by generating respectable cash flow.


Crisis Management

What is “crisis management”?

Sometimes called contingency planning, this is what you have to do to stay in business after unexpected circumstances occur and things have gone to hell — be it a fire, earthquake, tornado, flood, catastrophe, or terrorism. It’s putting into effect the prior planning you’ve done should a crisis occur.

And don’t think it can’t happen to you. Remember Hurricane Katrina? I still recall the aftermath of a severe Los Angeles earthquake in January 1994. I walked into my office in Santa Monica that day at around 8:30 a.m. only to find a complete and utter mess. File cabinets had been thrown down, many twisted out of shape. The majority of the computers and monitors had been tossed onto the floor. (Amazingly, most of them worked when power was restored — thanks to the ruggedness of Apple Macintosh designs; the PCs hadn’t fared as well!) CDs and cassettes were all over the floor of the stock room. Paper supply cabinets had also been tossed to the floor, and paper was everywhere! Luckily, no glass had broken and we were structurally intact. Electricity existed in only part of the space. Telephones, because they were digital, were not working for lack of electricity, and we couldn’t even get a dial tone on the emergency analog phone. Cell phone frequencies were clogged or barely functioning.

When phone service was restored, we talked to everyone on staff that we could reach to check on their well-being, and requested they try to make it to work the next day. Since many freeways were down, it took some staffers three hours to get in. Others lived close enough to bike to work. Some brought their kids, who were a great help in straightening up the office space, including arranging the CDs and putting them back in their cartons. Luckily, a nearby pizza place was functioning so we were able to feed everyone.

The following sections cover what you need to do to prepare for a similar unexpected incident.

Personnel

Be sure you have up-to-date, comprehensive contact information for everyone on your staff, including interns and freelancers, with a plan in place as to how to reach everybody in times of emergency. This list should be set up with as much information as possible so that you can use whatever post-crisis communications capability may be available. If the phones don’t work, email might possibly function, but with power outages email may not be an option. And since most of us don’t have a ready supply of carrier pigeons, you may have to rely on cars or bicycles.

In a large company, the easiest approach is to develop a phone tree. For example, have the most senior person contact the department heads, whose responsibility it is to contact each and every person who works under them. You can refine this further, based on the size of your label.


Be sure that all key personnel have copies of this contact list as well as a procedures memo that states where people should assemble in the event they can’t get into the office. In fact, encourage the staff to call their immediate supervisor to find out if the company will be functioning, and where and when they should meet.

If communication is dicey or just not available, then an arrangement should be made which is based on adjacency. In other words, the most senior person in a neighborhood would walk, bike, or drive to the next nearest person in order to ascertain the well-being of the employee, and to give out information. This info would include whether and how the company will be operating over the next many days, stating the alternative location if there is one, as well as materials or equipment needed, etc. Continue on down the line, either as a round robin, or through other pre-defined methods.

Infrastructure

Space

If you think your office or primary place of business may not be available to you, whether for a few days or indefinitely, you’ll need to have a backup plan in place for another location. Perhaps you’ll work out of a conveniently located hotel, your living room, or a part of another staffer’s home which may be more centrally located and accessible to the most essential personnel. If possible, allow for additional alternate locations in your plan.

Equipment & Services

Be sure to have sufficient equipment and services available to support your key operating staff. You’ll need all of the following, and don’t forget extension cords, lights, etc.

FurnitureBased on the size of your essential staff, plan as to how you’ll “house” them with sufficient work-surface space. It may be folding chairs and tables, or empty cardboard cartons that can be pressed into service.

CommunicationsIf phone systems are temporarily inoperative, try to rely on cellular phones — but only for essential conversations. However, under certain circumstances, cellular transmitters may be incapacitated or temporarily non-functioning. Consider reasonable alternatives, short of smoke signals.

Computer HardwareAll reachable staff with company-owned portables or laptops must make them available. Other key personnel who have their own laptops should be requested to bring them, even if they’re not compatible with the office operating system.


In your backup space, have several Ethernet hubs and sufficient cables available to help you connect equipment. Otherwise, you’ll have to resort to “sneaker-net,” using thumb drives, or other removable media.

Computer SoftwarePrior to any crisis, be sure that all important and essential business programs have been installed on the laptops of people who may need them in the event of an emergency, and that they’re kept up to date.

Printer, Copier and FaxHave at least one of each available in your backup space. The printer should be Ethernet or Wi-Fi capable so all who need this can share it.

Internet AccessYou may have to rely on modems and phone lines (rather than DSL, T-1, or cable) once telephone service is re-established.

Mail & Courier ServiceFind out if the Post Office, UPS, FedEx, etc., are functioning, or how soon they expect to be back in business.

Systems

Use the most recent backups of all your essential accounting and operating data and databases, etc. You do have backups, don’t you? And will they be readily accessible to you in an emergency? Planning for this is essential, because as likely as not, someday you’ll need them; perhaps it won’t be during a “crisis” but when key files have somehow become corrupted. You might look at the myriad of backup information available on the web.

Then copy your best and most appropriate backups onto the laptops of those who will need them, and resume work. But be careful how you maintain these newly updated files so that they can be re-loaded onto your corporate computers when you’re able to get back into your office.

Besides software, you’ll likely have to reorganize any available staff, reassigning responsibilities as necessary in order for the company to continue to function.

Occasionally emergencies occur during work hours when you’re in the office — power outages, for example. So don’t forget to prepare for this. For instance, be sure that electronic door locks can be opened manually. Also, keep a battery-operated radio available and a few flashlights (checking their batteries frequently). In addition, keep sufficient extra petty cash on hand to be sure people have enough money for food and transportation.


It’s also a good idea to have uninterruptible power supplies for all essential computers and servers. If there’s a power failure, the built-in batteries will allow sufficient time to save your work and shut down the computers.

M M M

I’ve made only a few, elemental suggestions here. Hopefully it’ll help you think about what you’ll have to do to protect your own business and your staff. There’s a lot of informative material available on the web, so I encourage you to dig into it, read it thoroughly, and then come up with a crisis management plan that works for you.

Possible Exit Strategy

Most readers will have started their label because of a love of music and a desire to get it disseminated to the public. However, a few may have also gotten into this hoping to strike it rich. However unlikely this may be, it is possible! So how can you reap the rewards of starting and building a successful record label?

First, you can sell outright to the highest bidder. As improbable as it may seem, it’s not only possible, but has been accomplished many times. Many rap labels that were started on a shoestring have been sold to one of the majors for multiple millions.

In other cases, owners who wished to stay involved have sold their labels to a larger entity, but with a guarantee that they could continue to run the company for a specified period of time. Some entrepreneurs left when their contracts were up, but others have continued to run their labels for many years after being acquired.

Owners of other start-ups that became very successful continue to run their labels, but have sold a significant portion of shares to independent investors or investing syndicates.

If you exit — and how — is really up to you, should that be your goal. I’d like to think, however, that you’re not in it just for financial rewards — but that you’ll want to continue to record and release great music for many years to come.


Manage for Success

If you’ve read this far, you’ve gained a pretty good idea of how I think a start-up label should operate. As a reminder, here are some of the key points to managing your label for success.

1. Always plan ahead — think about what comes next… and what comes after that.2. Be sure to raise sufficient capital so that you can remain in business for a couple of years,

despite periods of slow sales or delays in getting paid.3. Do your homework for all aspects of the label; for instance, thoroughly research any genre

of music you’re considering getting involved in.4. Before you think about signing any artist, see them in live performance to ensure that

they’re exciting to watch and hear. Also, be sure they’re willing to tour extensively in support of their release. And it helps a great deal if they have professional management.

5. Budget everything carefully, then keep close track of expenses to be sure you’re staying within the budget.

6. Prepare extensive marketing plans for each release, and act on them. 7. Keep your artist contracts fair and uncomplicated.8. Treat artists and employees — and for that matter, everyone else — with respect.9. Work with the very best professionals — attorneys, accountants, and consultants. It’s

cheaper in the long run, and you’ll learn more.10. Keep track of all details — particularly pre- and post-production.11. Back up all vital computer data daily, and less essential data at least once a week.12. Keep up to date with the latest information by subscribing to my free email newsletter

Manage for Success, I suggest you do so now by emailing:mailto:[email protected]/

or by visiting my website and clicking on the “subscribe” button on most pages. Note that I will not lend, rent, or sell the names on this list to anyone. It’s used only for my newsletters or occasional special messages from me.


Updates

Finally, I suggest that you check this book’s website from time to time for updates or corrections.http://www.cgsrc.com/updates.htm





Concluding Checklist

Plan your next releases. _____

Draft a Crisis Management Plan. _____

Personnel. _____

Infrastructure. _____

Systems. _____

Consider planning an Exit Strategy. _____

Check for updates to this book. _____

Manage for Success!

Recommended Reading | 223

Recommended Reading

This is a guide to what I think are some of the best books and publications about the music business, and business in general. Many of these books can be purchased from local bookstores, or online from Amazon.com.

http://www.amazon.com/

Music Business Law

All You Need to Know About the Music Business, 7th Edition by Donald S. Passman. This is an absolutely essential guide to the legal and financial aspects of the record industry. If you’ve got time to read only one book about the business, this should be it. Passman has a relaxed, conversational style of writing about what can be a very dry subject, and he updates the book about every three years. I suggest you buy your own copy and not borrow it from the library because you’re likely to be referring to it frequently.

What They’ll Never Tell You About the Music Business: The Myths, the Secrets, the Lies (& a Few Truths) Revised and Updated by Peter M. Thall. This is one of the newest of the legal books and is intended primarily for artists considering signing with a label, but it has great insight into the signing process.

Legal Aspects of the Music Industry: An Insider’s View by Richard Schulenberg. This book covers almost every aspect of music business law, particularly contracts, breaking down legalese into readily understandable language.

Music, Money, and Success: The Insider’s Guide to Making Money in the Music Business, 7th Edition by Jeffrey Brabec and Todd Brabec. Intended more for songwriters, composers, and those interested in music for film and television, this is a good supplement to Passman. The Brabecs update it every couple of years.

Music Industry

The Plain and Simple Guide to Music Publishing by Randall D. Wixen. Ths is probably the clearest explanation of how music publishing works.

Indie Power by Peter Spellman. This is a good complement to “The Complete Guide.” Spellman approaches the subject from a somewhat different angle that I do, and he has an interesting outlook on the Indie label scene.

http://www.amazon.com/


Indie Marketing Power (The Resource Guide to Making Money in the Music Business) by Peter Spellman. This is an excellent companion to the above that suggests up-to-date approaches to marketing music.

Indie Business Power by Peter Spellman.

All three Spellman books are available at the following site:http://www.MBSolutions.com/

The Musician’s Handbook, Revised Edition by Bobby Borg. Directed more to musicians than label owners, Borg’s book has many helpful suggestions about building a career in the music business.

http://www.bobbyborg.com/

How to Promote Your Music Successfully on the Internet by David Nevue. An excellent source of up-to-date information on internet marketing. There’s a recent 2011 edition.

http://www.musicbizacademy.com/bookstore/htpromotemusic.htm

Guerilla Music Marketing Handbook by Bob Baker.http://www.bob-baker.com/buzz/index.html

This Business of Music Marketing and Promotion (Revised and Updated) by Tad Lathrop

Music Industry Biographies and Histories

Fire and Rain: The Beatles, Simon and Garfunkel, James Taylor, CSNY, and the Lost Story of 1970 by David Browne.

Hit Men: Power Brokers & Fast Money Inside the Music Business by Fredric Dannen.

Follow the Music: The Life and High Times of Elektra Records in the Great Years of American Pop Culture by Jac Holzman and Gavan Daws. Not coincidentally by my brother, Jac. Who says nepotism is bad? And it includes lots of interesting comments from the artists and others involved in Elektra’s success.

Exploding: The Highs, Hits, Hype, Heroes, and Hustlers of the Warner Music Group by Stan Cornyn with Paul Scanlon. Reading this, I discovered a number of things about the inner workings of Warner Music that, despite my thirty year connection, I’d never known about. I had lots of laughs as well.

Little Labels—Big Sound: Small Record Companies and the Rise of American Music by Rick Kennedy and Randy McNutt.

http://www.MBSolutions.com/

http://www.bobbyborg.com/

http://www.musicbizacademy.com/bookstore/htpromotemusic.htm

http://www.bob-baker.com/buzz/index.html


Recording Studio Practice

Sound Recording Practice, edited by John Borwick, Association of Professional Recording Services.

Professional Microphone Techniques by David Miles-Huber.

The Recording Engineer’s HandbookThe Mixing Engineer’s Handbook both by Bobby Owsinski.

Temples of Sound: Inside the Great Recording Studios by William Clark, Jim Cogan, Quincy Jones.

Sound Recording Advice for the Home Recording Studio by John J. Volanski.

Off the Record: The Technology and Culture of Sound Recording in America by David Morton.

Management and Business

There are more than 330,000 books listed under “Business Management” on Amazon.com’s web site! These are some that you may find particularly useful.

The Essential Drucker (In One Volume, The Best of Sixty Years of Peter Drucker’s Essential Writings on Management) by Peter F. DruckerThe Effective Executive Revised by Peter F. DruckerThe Practice of Management by Peter F. DruckerManagement Challenges for the 21st Century by Peter F. DruckerDrucker has been one of the most influential writers on business and management for the last many decades. He helped develop management consulting as a profession.

Seven Habits of Highly Effective People: Powerful Lessons in Personal Change by Stephen Covey.

Ethical Theory and Business (8th edition) by Tom L. Beauchamp, Norman E. Bowie and David Arnold.

Essential Managers: Managing Budgets by Stephen Brookson. Part of the “Essential Managers” series by reference publisher Dorling-Kindersley.

Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher, William Ury, and Bruce Patton.

Getting Past No: Negotiating in Difficult Situations by William Ury.

Good to Great: Why Some Companies Make the Leap... and Others Don’t by Jim Collins.


How to Become a Great Boss: The Rules for Getting and Keeping the Best Employees by Jeffrey J. Fox.

The Long Tail: Why the Future of Business is Selling Less of More by Chris Anderson. The value of building a large catalog that’s salable for many years.

General Interest Publications

The New York Timeshttp://www.nytimes.com/

The Wall Street Journalhttp://www.wsj.com/

Time Magazinehttp://www.time.com/

Newsweekhttp://www.newsweek.com/

U.S. News and World Reporthttp://www.usnews.com/

Business Publications

Forbeshttp://www.forbes.com/

Fortunehttp://www.fortune.com/

Business Weekhttp://www.businessweek.com/

Music and Entertainment Industry Publications

Billboardhttp://www.billboard.com/http://www.billboard.biz

CMJ New Music Reporthttp://www.cmj.com/

Rolling Stonehttp://www.rollingstone.com/

Variety and Daily Varietyhttp://www.variety.com/

http://www.nytimes.com/

http://www.wsj.com/

http://www.time.com/

http://www.newsweek.com/

http://www.usnews.com/

http://www.forbes.com/

http://www.fortune.com/

http://www.businessweek.com/


http://www.billboard.biz

http://www.cmj.com/

http://www.rollingstone.com/

http://www.variety.com/


The Hollywood Reporterhttp://www.hollywoodreporter.com/

Magazines about Recording

Electronic Musicianhttp://www.emusician.com/

Mixhttp://www.mixonline.com

Online Publications

Music Industry News Networkhttp://www.mi2n.com/

Music Dish http://www.musicdish.com/

All Access Music Group http://www.allaccess.com/

All Music Guide http://www.allmusic.com/

Music Think Tankhttp://www.musicthinktank.com/

For a comprehensive list of music journals, newspapers and periodicals (although it may be a little out of date), see:

http://library.music.indiana.edu/music_resources/journals.html

Miscellaneous Music Publications

A&R Registry. Updated every eight weeks, includes A&R contacts not listed in any other directory; lists all major and indie labels in New York, Los Angeles, Nashville, London, and Toronto.

Film/Television Music Guide. Published every June — lists all movie studio, TV network, and independent production company music departments, record and publishing film/TV departments, music supervisors, etc. This is particularly useful if you’re interested in getting your masters and/or copyrights used in movies or television shows.

Music Publisher Registry. Published twice a year at the end of January and June, lists all major publishers and significant independents in LA, NY, Nashville, Toronto, and London, entire creative staff, direct dial numbers and assistant names.

http://www.hollywoodreporter.com/

http://www.emusician.com/

http://www.mixonline.com

http://www.mi2n.com/

http://www.musicdish.com/

http://www.allaccess.com/

http://www.allmusic.com/

http://www.musicthinktank.com/

http://library.music.indiana.edu/music_resources/journals.html


Music Attorney, Legal and Business Affairs Guide. Published every May, lists music business attorneys, record company legal and business affairs departments, etc.

All four of the above are available from Music Business Registry. Call 800-552-7411 to place an order or get additional information.

http://www.musicregistry.com/

Miscellaneous

The New York Times Manual of Style and Usage: The Official Style Guide Used by the Writers and Editors of the World’s Most Authoritative Newspaper by Allan M. Siegal and William G. Connolly.

The Elements of Style by William Strunk, Jr. and E. B. White (Foreward by Roger Angell).

The above two books are invaluable in determining editorial style, and are extremely useful references for writing press releases, formatting text in CD booklets, etc.

Pocket Pal: A Graphic Arts Production Handbook, 19th edition, published by International Paper.http://internationalpaper.com/US/EN/Business/CPIP/PocketPal.html

http://www.musicregistry.com/

http://internationalpaper.com/US/EN/Business/CPIP/PocketPal.html

Index | 229

Symbols

3M 1014/1 1174/4 1175.1 108, 112360 Deals 41800 number 84

℗ and © Notice 131

A

A2IM 146AAFES 48, 154AARC 213Access 89accountant 17, 68AccountEdge 17, 93accounting 9, 91, 218accounting system 91acquiring talent 37Acrobat® 184add date 164, 176Address Book 90administrative details 151Adobe 94Adobe Acrobat 63Adobe Creative Suite 95advances 43advertising 72, 179, 205AFIM 146AFM 22, 54, 103AFTRA 22, 54, 103airplay 203airplay tracking 177All Access Music Group 227Alliance of Artists & Recording

Companies 213All Music Guide 227

All Things Considered 71, 173, 175

All You Need to Know About the Music Business 10, 38, 223

Amazon.com 10, 82, 155, 188, 211, 223

Americana 175American Association of Independent Music 146American Federation of Musicians 22, 54American Federation of Television and Radio Artists 54ancillary income 209Anderson, Chris 226Anderson Merchandising 146Angell, Roger 228answering machine 84anti-virus software 90AP 173Apocalypse Now 239Apple 85, 89, 145, 216Apple’s iTunes 108Apple’s iTunes Store 155approvals 54A&R 69A&R administration 69A&R administrator 70archive 80, 196Army and Air Force Exchange

Service 48, 154A&R Registry 227art director 69, 120artist advances 43artist agreements 41artist approval 54artist contract 38artist development 72, 181,

205

artist royalty statement 55, 199artist sales 183artists and repertoire 69Artist Share 34artist tours, follow-up 204artist tour support 180artist/venue sales 183, 197ASCAP 22, 59, 61, 63, 129Asia-Pacific 159assistants 72Association for Classical Music

239Atlantic 4attorney fees 9attorneys 37Audio Home Recording Act of

1992 213audiophile shops 211audit 198Austria 159automated attendant 83automated mixing boards 108

B

backup 94backups 218Baker, Bob 224balance sheet 29Bandcamp 156bank account 17bar code 15, 16, 114, 147, 151,

185Barnes & Noble 146Barnes&Noble.com 10basic rate 48basic tracks 107Bay Press Services 118B Coder Pro 16Beauchamp, Tom L. 225Belgium 159

Index


Benelux 159Bernie Grundman Mastering

109Berra, Yogi 2Billboard 3, 7, 16, 147, 175,

176, 226Billboard.com 173bill of material 133blues 175BMI 22, 59, 61, 63, 129BOM 133, 134bonus benefits 213bookkeeper 68booklet 117book updates 220Borg, Bobby 224Borwick, John 107, 225Brabec, Jeffrey 10, 223Brabec, Todd 10, 223Bravo Disk Publisher 119Bread 239break-even 30break-even analyses 24broker 115Brooks, Mel 63Brookson, Stephen 225Brother 87Brown, Alison 2Browne, David 224Browne, Jackson 239browser 89budget items 27budget, marketing 164budget, recording 101Bug Music 64business affairs 69, 192business essentials 17business license 15business plan 21business publications 226Business Week 226

C

C-0 cassette 116cable 218Canon 87, 96capital requirements 25caps 210Cars, The 239cartage 103cash flow 30cash flow problems 150cash flow projections 24cassettes 196catastrophe 216C-Corp 11, 22C-Corporation 11CD Baby 3, 156CD booklet 117CD burner 86CD label 114CD Production Chart 123CD-R 108, 133, 211CDs 196CEO 68Certified Public Accountant 9CFO 68Chain of Distribution 147, 148chain store 150Chapin, Harry 37, 239Chapter 11 150chat rooms 189checking account 17China 159Chrome 89Circular 7b 192Circular 9 192Circular 56 191, 192Clapton, Eric 205Clark, William 107, 225classical 175cleans 151Cloud, The 94CMJ 175, 176

CMJ New Music Report 7, 226CMRRA 62CMYK 117, 120coffee mugs 210Cogan, Jim 107, 225Cognito Systems 93College Music Journal 175college radio 175Collins, Jim 225Collins, Judy 239Columbia 4commercials 211commitment 42communications 83, 217community radio 175company overview 22Compass Records 2competition 23compilations 212compulsory right 62CompuMark 13Computalabel 16computer 217computers 85Concord Records 154conference room 79, 80Connolly, William G. 228consignment 150Consolidated Production Tracking Chart 125Consumer Price Index 149contingency 104contingency planning 216contract, distribution 152controllable expenses 28controlled compositions 49control room 100COO 68co-op advertising 151, 152,

179copier 95, 218co-publisher 160copyist 103

Index | 231

Copyright Act of 1976 45copyright law 191Copyright Office 59, 61, 192copyright owner, locating 63Copyright Rotalty Board 61Cornyn, Stan 224corporation 11Costs of Goods Sold 28courier 218COVAD 14cover art 121Covey, Stephen 225Coyright Notice 131C.P.A. 9, 50, 68CPU 86creative control 107creative director 69creative process 119crisis management 216cross-collateralization 51crowdfunding 34current assets 29

D

Dannen, Fredric 224DAT 101, 133database 89, 177, 195databases 218DATs 195DAW 108Daws, Gavan 224D/B/A 14deal memo 39deal terms 64Decca 4decor 81delivery requirements 42Dell 85demo deal 39designer 120DiFranco, Ani 2Digipak® 117

Digital Distribution 155Digital Performer 108digital print rights 61, 63, 66digital recording systems 101digital rights management 156Discovery Records 239distribution 145distribution contract 152distribution deal 149distribution, international 209distribution/licensing arrangement 160Distribution North America

150DJ 151DNA 150documentaries 211Doing Business As 14Dolly Parton 4Dolly Records 4domain name 12, 13domestic distribution 145Doors, The 43, 195, 239Doorstops, The 25, 89, 165Doorstop X 90double-entry accounting 92downloadable music 211downloads 49, 145Dreamweaver 95DRM 156, 157Drucker, Peter F. 225DSL 84, 218DVD-Audio 108, 195DVD burner 86DVDs 196

E

Eagles, The 239Early Music Academy 239Earthlink 14earthquake 216EIS 67

Electronic Musician 107, 227electronic press kits 174Elektra/Asylum/Nonesuch 12Elektra Records 1, 4, 43, 47, 57,

95, 171, 195, 196, 239email 188, 216EMI 3, 158Employee Identification Number 67Employment Eligibility Verification 67eMusic 157eMusic.com 155engineer 100, 103Entourage 88EP 48EPK 174Epson 87equity 29Essential Drucker, The 225Essential Managers: Managing

Budgets 225Ethernet 86, 87, 218Ethical Theory and Business 225Eudora 88, 89Exabyte 115, 116Excel 17, 88, 89, 125, 198exclusivity 41executive summary 22exit plan 25exit strategy 25, 219Exploding 224Explorer 89extra inventory 196

F

Facebook 71, 178, 206facilities closet 81fairness 57fan-funding 34father 115fax 95, 218


feature films 211FedEx 218fees 103fictitious business name 14FileMaker Pro 89, 177, 198films 211Film/Television Music Guide 211,

227financial plan 24fire 216Fire and Rain 224firewall 90first recording project 99Fisher, Roger 225fixed assets 29Fixed Expenses 27Flash 187flat fee 48flat file 89flood 216FMQB 175, 176folders 117folk music 175Folkways 4, 12Follow the Music 224Forbes 226foreign distribution 158foreign licensing 159foreign subpublishing 65Form PA 59Form SR 191Fortune 226four over four 117four over one 117Fox 62Fox, Jeffrey J 226France 159free goods 51, 151freight 152Fresh Air 71, 173, 175Friday Morning Quarterback 175furniture 82, 217

G

G&A 68Garage Technology Ventures

33“GAS” territories 159Gateway Mastering 109GCC 87Geffen, David 12Gehry, Frank 81GEMA 61, 65general and administrative 68general interest publications

226general manager 68Germany 159Getting Past No 225Getting to Yes 225glass master 115Global Release Identifier 110GM 68Gnutella 111GoDaddy 13GoLive 95Goodman, Steve 239Good to Great 225Google 12, 21, 210Google+ 178Google Chrome 89gospel 175GRid 110Grooveshark 178group provisions 55Grundman, Bernie 109GS1 16Guerilla Music Marketing Handbook 224

H

Handleman 146hard drive 101hard drives 103

Harris, Emmylou 205Harry Fox Agency 62, 198Harry Fox Office 129Hewlett-Packard 85, 87HFA 62Hit Men 224Holland 159Hollywood Reporter 227Holzman, Jac 47, 57, 224Holzman, Keith 239home studio 99Hong Kong 159house accounts 154How to Become a Great Boss 226How to Promote Your Music Successfully on the Internet 224human resources 70Hurricane 239Hurricane Katrina 216hybrid distribution/licensing

arrangement 160

I

I-9 67iCal 90IFPI 110Illustrator 94, 115, 184income 27income, ancillary 209income projections 27independent marketing specialist 181independent promotion 53,

175InDesign 94, 115, 117, 132,

184Indie Business Power 224Indie Marketing Power 224Indie Power 223Indonesia 159infrastructure 23, 217

Index | 233

Ingrooves 156initial decisions 5inlay 117Institute of Management Consultants 239in-store performances 181, 205insurance 17intercom 83International 71, 158International Buyer’s Guide 147international distribution 158,

209International Federation of the

Phonographic Industry 110

International Paper 118Internet 84, 218Internet Explorer 89Internet Service Provider 14interns 73Intuit 17, 93inventory, extra 196Inventory maintenance 139inventory ordering 139IODA 156iPad 157iPhone 157iPod 145, 157Iron Mountain 195IRS 67ISDN 85ISP 14, 84ISRC Code 110, 112iTunes Music Store 145, 155,

188

J

Japan 159JASRAC 61jazz 175J-card 116, 117jewel box 116

Jones, Quincy 107, 225

K

Kawasaki, Guy 33Kazaa 111KCRW 173Kennedy, Rick 224key man 55Kickstarter 34kitchenette 80

L

label name 12label size 2LAN 86lawyer 17lawyer fees 9leakage 107legal advice 8Legal Aspects of the Music Industry 10, 223legal fees 9legal structure 11LegalZoom 11letterhead 15liabilities 29Liabilities & Equity 29Library of Congress 191, 192,

195licensing 209, 211licensing, master use 211lifestyle retailers 211Limewire 111limited liability corporation

11, 22LinkedIn 178listening posts 5Little Labels—Big Sound 224LiveDaily.com 173live performance and interview

video 182

LLC 11local area network 86locating copyright owner 63lock out 99Logic 108logo 15, 210long distance 84Los Angeles Venture Association 34Lost Highway 12, 182Love and Affection Clause 57LPs 196Ludwig, Bob 109Luxembourg 159

M

Macintosh 17, 85, 108, 216mail (service) 218Mail (Apple program) 89mail order 183mailroom 70, 79, 80Malaysia 159Manage for Success iv, 7, 220management 24management and business 225management plan 22managing director 68Manufacturer’s Suggested Retail

Price 149manufacturing plant 114market analysis 23marketing 23, 163, 215marketing aids 184marketing budget 164marketing, follow-up 203marketing head 71marketing materials 121marketing, online 185marketing plan 164marketing plan, update 206marketing specialist, independent 181


mastering 104, 109mastering instructions 133Mastering Lab 109mastering studio 115masters, ownership of 45master use 211master use licensing 211matchprint 117, 123McNutt, Randy 224mechanical licenses 129, 196mechanical rights 61, 62, 66mechanical royalties 49mechanical royalty statement

55, 199media 72media relations 71, 171Mexico 159microphones 100Microsoft Office 88MIDEM 158MIDI 63Miles-Huber, David 107, 225minimum run 116Minolta 96miscellaneous rights 64mission statement 22Mitchell, Joni 239Mix 107, 227mix-down facility 100Mixing Engineer’s Handbook 225mixing session 104mom and pop accounts 146,

147MoneyWorks Accounting Software 93Morning Edition 71, 173, 175Morton, David 107, 225mothers 115MP3 157MSRP 149mugs 210multi-track masters 195MusiCalc 198

Music Attorney, Legal and Business Affairs Guide 228music business attorneys 37music business law 223Music Business Registry 228Music Dish 227music, downloadable 211music & entertainment industry publications

226musicians 103Musician’s Handbook, The 224music industry 223music industry biographies

224Music Industry News Network

227Music, Money, and Success 10,

223music publications, miscellaneous 227Music Publisher Registry 227music publishing 22, 59, 210music stores, online 189Music Think Tank 227music video 53, 182MYOB 17, 93MySpace 37, 178

N

NAIRD 146Napster 111, 155NARM 146National Endowment for the

Arts 212, 239National Music Publishers Association 62NEA 212negotiating the deal 38Netherlands 159network 86networking 7, 37

network server 87Nevue, David 224New Orleans 145new release - when to ship 169newsgroups 189Newsweek 226new technology 48New York 159New York Times 7, 226New York Times Manual of Style

and Usage 228Nielsen 137, 181Nielsen SoundScan 3, 137, 181, 183NMPA 62Nolo.com 11Nonesuch Records 1, 239non-traditional retail 183, 211Norton Anti-Virus 90Norton Personal Firewall 90notice of copyright 59NPR 173, 175

O

Office Depot 96, 173office manager 70office set-up 79office space 23, 79Off the Record 107, 225OmniWeb 89one-sheet 147, 184one-stops 146online 206online access 84online bulletin boards 189online marketing 185Online Marketing 187online music stores 189online publications 227online sales 210Opera 89operating budget 27

Index | 235

operations 23opportunities 24options 43Orchard 156outboard gear 100Outlook 88, 90over-run 118ownership of masters 45Owsinski, Bobby 107, 225

P

package 120package graphics 129packaging deductions 51pancakes 116Pandora 178Panorama 89partnership 11, 22Parton, Dolly 4, 205Passman, Donald S. 10, 38, 59,

64, 223payment 150PC 17, 85, 216PCM-1630 115, 116P&D deal 4, 33, 157PDF 63, 115, 133, 184, 191,

192Peachtree Accounting 93performing rights 61performing rights agencies 59personnel 70, 216phone, long distance 84phone system 83phone tree 216phonorecord 56photographer 121photo release 121Photo Release Form 122Photoshop 94, 184piano tuning 103piracy 111Pirates of Penzance 239

Pitney Bowes 96P&L 27Plain And Simple Guide to

Music Publishing 59, 223planning ahead 215planning next releases 215P&L Statement 68Plumstead Theatre Society 239P. O. Box 96Pocket Pal 118, 119, 228postage meter 96Post Office 218post office box 96post-production 191Pottery Barn 212power outages 216, 218PPD 46, 159PQ 109PR 172premiums 48, 212pre-production 113pre-production staff 119pre-release 151pre-release CDs 139pre-release materials 129president 68pressing plant 114press kit 173press kits, electronic 174press releases 174prices 118pricing 23, 149Prine, John 239printer 87, 117, 218print rights 61, 63, 66private office 80process inks 120producer 45, 99producer approval 54producer desk 100production 70, 192production and distribution

deal 157

Production Calendar 127Production Chart 123production deal 157production files 196product manager 70professional advice 8Professional Microphone Techniques 107, 225Profit and Loss Statement 68profit & loss statement 27promos 151promotion 72promotion, independent 175promotion, radio 175ProTools 108PRS 65PRS for Music 61publicity 71, 164, 171publicity, follow-up 203Public Radio 175public relations 71, 171Published Price Per Distributor

46publisher rights 61publishing administration 64publishing, music 59publishing rights 60Puerto Rico 159PX 48

Q

Qualcomm 88quality control 137QuarkXPress 94, 115, 117, 118,

132, 184Queen 239QuickBooks 17, 93Quicken 17, 93


R

R.A. 150rack jobber 146, 150radio 211radio promotion 72, 164, 175Raitt, Bonnie 205RAM 86RCA Victor 4RealNetwork 155record club 48RecordCompanyStartup.com

14RecordCoStartup.com 14record distributor 145Recording Artists’ Coalition 45recording budget 43, 101Recording Costs 28Recording Engineer’s Handbook

225recording first project 107recording fund 43recording session costs 103recording studio 100recording studio practice 225RecordLabelResource.com 147record release parties 175reference disk 109Register of Copyrights 191, 192Registrant Code 110rentals 103re-recording restrictions 54reserves 50retailer 150retailers, lifestyle 211retail, non-traditional 183, 211return authorization 150return on investment 24revenue 27reversion of rights 55RGB 117Rhapsody 155Rhino Records Store 181

RIAA 149Righteous Babe 2risks 24ROI 24, 34Rolling Stone 226RollingStone.com 173ROM Records 1, 8, 59, 60, 239Ronstadt, Linda 239roots 175royalties 46royalty accounting 94, 197Royalty Review Council 197

S

SACD 108SACEM 61Safari 89safety tape 195sales 71, 171sales and marketing 71sales department 171sales, online 210sales strategy 23Salsa 159sample marketing plan 165sample service 191sampling 130Sax, Doug 109SBA 8, 11Scanlon, Paul 224scanner 88Schulenberg, Richard 10, 223S-Corp 11, 22self-manufacture 118sequence 108server 87servicing radio 177servicing stations 177SESAC 59, 61, 62, 63, 129Seven Habits of Highly Effective People 225Sharp 96

Shazam 178shipping 154shopping cart 210shopping cart software 210,

211Siegal, Allan M. 228Simon, Carly 239Simon, Paul 205singer-songwriters 175Singles 48SiriusXM 173Skype 84Small Business Administration

8, 11sneaker net 86SOCAN 61Social Media 178social networking 178, 189soft mechanical 117, 123software 88, 218sole proprietorship 11, 22Solutions Unlimited 239Sony 158Sony Music 3SoundExchange 213soundproofing 81Sound Recording Advice for the

Home Recording Studio 107, 225

Sound Recording Practice 107, 225

SoundScan 3, 16, 50, 137, 181, 183, 199

South-East Asia 159space 217specialty-clothing stores 211Spellman, Peter 223, 224sponsorship 183, 212Spotify 156, 179spreadsheet 24, 88, 140, 177Sprint 84SR Form 191SRLP 46, 149

Index | 237

staffing 67stampers 115Staples 96, 173Starbucks 154, 212start-up costs 27start-up money 33stationery 15statutory rate 49, 60, 66Steely Dan 205storage closet 80stores, specialty-clothing 211street teams 182Strunk, William Jr. 228studio 100, 103Subchapter S-Corp 11Suggested Retail List Price 46,

149surfer shops 211suspense file 69sweeten 107Switzerland 159synch license 211synch rights 61synchronization license 211synchronization rights 61, 63,

64, 66systems 218

T

T-1 85, 218Taiwan 159TalTech 16tape 103tape duplicator 116television 211television commercials 211Temples of Sound 107, 225term 42, 60, 150term of copyright 66territory 41test pressing 116Thall, Peter M. 10, 59, 64, 223

The Long Tail 226The Mixing Engineer’s Handbook

107The Recording Engineer’s Handbook 107The Wall Street Journal 7The Witches of Eastwick 239This Business of Music Marketing and Promotion 224Thomson CompuMark 13thumb drives 218tickler file 69Time Magazine 226toll-free number 84top dog 68top sheet 24tornado 216tour support 52, 180tracking airplay 177trademark 12tray card 117TruPhone 84T-shirts 196, 210TuneCore 156turnkey CDs 212TV 211Twitter 71, 178, 206

U

UCC-1 152UCC-1 Financing Statement

152UCLA Extension 239U.K. 159U-Matic 115, 133under-run 118underwriting 212Uniform Commercial Code

152unions 54

United States Copyright Office 59

Universal 158Universal Music Group 3UPC bar code 15, 147, 185updates 220UPI 173UPS 218URLs 129Ury, William 225U.S. Copyright Office 13, 59,

192user groups 189USIRC 110U.S. News and World Report 226U.S. Patent and Trademark Office 13U.S. Registrant Code 110

V

Valley Media 150Vanguard 4Variety 226VAT 158venture capitalists 34venue sales 183video 53, 206videotapes 196Vietnam 159Virex 90virtual office 67virtual staff 6, 73vocalists 103voice mail 84Volanski, John J. 107, 225

W

Waits, Tom 239Wall Street Journal 226WalMart 146Warner Brothers Records 44


Warner Music 3, 158warranties and representations

55web browser 89web site 121, 187, 206West, Garry 2Westwood One 173what goes where 130What They’ll Never Tell You

About the Music Business 10, 223

when to ship new release 169White, E. B. 228whois 12Whole Foods 154, 212Wi-Fi 86Wikipedia 116Wilco 44Williams, Lucinda 182Williams-Sonoma 212Windows 108Wixen Music Publishing 64Wixen, Randall D. 59, 223Wizard Music 239Word 88word processor 88workers compensation insur-

ance 67work for hire 45, 192wrap 215

X

Xerox 87, 95, 96

Y

Yahoo Music 155Young, Neil 205YouTube 180, 182, 189, 206

About the Author | 239

About the Author

Keith Holzman is the Principal of Solutions Unlimited, a management consulting firm specializing in the recording industry. He is a trusted adviser and troubleshooter, skilled in providing solutions tailored to his clients’ specific requirements. A seasoned music industry senior executive with extensive experience in all aspects of running a label, Keith was President of ROM Records, an eclectic pop music label specializing in new and unusual artists, and was also Managing Director of Discovery Records, a label specializing in pop, rock, jazz, and film music. At Discovery, he managed a staff of more than thirty-five employees, including Production and Administration, while simultaneously handling Business Affairs and International Marketing.

In the early Eighties, Keith served as Director of Nonesuch Records, one of America’s most prestigious classical music labels. He was responsible for the entire label, and oversaw the production of over 150 recordings.

Concurrent to his position with Nonesuch, and for the fifteen prior years, he was Senior Vice President of Elektra Records, responsible for the running of the Production, Art, Studio and Engineering, Manufacturing, and Administration Departments, as well as office design and facilities management.

Over the years, Keith has overseen production of hundreds of recordings, by such artists as Jackson Browne, The Doors, Carly Simon, Joni Mitchell, The Eagles, Linda Ronstadt, Judy Collins, Queen, Steve Goodman, John Prine, Bread, The Cars, Tom Waits, and Harry Chapin, and supervised such soundtrack and show recordings as Apocalypse Now, Hurricane, and The Pirates of Penzance. He was Music Supervisor of The Witches of Eastwick.

He has taught the Independent Record Label course at UCLA Extension, was a member of the Institute of Management Consultants, and has served as a panelist for the National Endowment for the Arts, and as a board member of the Plumstead Theatre Society, Association for Classical Music, Early Music Academy, and Wizard Music.

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