Though I run the risk of seeming useful and informative (and I wouldn’t want to do that and encroach on DBM), today we’re going to talk labels and contracts … specifically the nature of contract deals, how table product works (the stuff artists sell at their tables before and after each concert), and other label logistics (production capability, distribution capacity, promotional muscle, money breakdowns, standard length of a contract, up-front money, royalty advances, that kinda thing). Before we begin, though, some qualifications: for the most part, let’s confine our comments to more established artists and labels (Greater Vision and Daywind; Hoppers and Spring Hill … examples, only … but the sorta thing we’re aiming at here). And, too, each contract at whatever level is different, depending on the savvy of the artists and the record labels. That said, here we go.Here’s how contracts typically work:
1. Artist signs with label.
2. Label foots the bill for recording.
3. Artist purchases finished product from label to sell on the road (table product).
4. Once recording budget has been recouped, the artist then (and only then) starts receiving royalties off the sale of the project.
That’s the short form. Here are some variations:
1. Artist signs with labels. In mainstream music and CCM, it’s fairly common for the artist to receive a signing advance (sometimes even non-recoupable) from the label. This is rare in sg, although it does happen.
2. Label foots the bill for recording. This usually includes photo shoots, promotion, sometimes even the meals the label “buys” for the artists during the recording process. (I’ve heard before of an artist who talked about how “honored” she was that the label would take her out to dinner, etc., until she saw her recording expenses billed back to her from the label … only then did she realize she was actually taking the label out to dinner.)
3. Artist purchases finished product from label to sell on the road. Labels don’t GIVE the artists product to sell at their concerts. Artists buy product, usually at reduced rates, but they still purchase it. This is one area that varies greatly from contract to contract. For instance, I’ve heard that several years ago, when a major all-male quartet signed with a major sg label, the label wanted the group so badly that the label gave the group its product at such a low rate that the label ended up losing money on the deal - but it was worth it for the label, at that time, to score a prestigious group and so boost the label’s street cred.
Because of the low cost at which the labels sell to the artists, the larger labels often don’t count table-product sales in the artist’s budgets. That is, the artist can only start earning royalties off product sales after product sales have covered the cost of producing the project, but the artists can’t count product sold at concerts from the artist table. Only product sold through normal retail distribution channels goes to paying off production expenses. Point is, labels NEVER just give away product. Ever. The closest thing to a free lunch is that labels usually give artists roughly 90 days to pay for product they purchase. This grace period allows the group time to drum up sales on the road.
4. In southern gospel, where naiveté, inexperience or over-earnestness can inadvertently give way to gullibility, there’s the temptation for labels to be less-than-scrupulous. It’s pretty rare that an artist recoups a recording budget from product sales. This is largely because many sg labels charge back to the artists things normally considered (at least in many other genres of music) day-to-day expenses of running a label … things like the cost of shipping singles to radio, in-house radio promotion, ads in trade magazines. That kinda thing. In fact, a lot of sg performers have no idea what “artists royalties” are. Projects rarely earn enough in sales to recoup production expenses, so artists rarely ever see any royalties. Artists consider the profit they make off table sales to be the primary and only reliable form of “payment” they’ll get from their projects. Contrast that to other genres of music, in which artists royalties are what the artists tend to live on.
The length of contract varies greatly, but it’s common to see a five-year, three-record deal or something to that effect. Typically, the contract expires one year after the release of the last project.
It’s the label’s job to market, promote and distribute the product. The artist usually has very little say in how this is done. In sg, much of what’s gained by being on a label is credibility, especially for a new act. Because of what’s charged back to the artist, most artists would make a lot more money simply by doing independent projects and finding distributors for those projects (this is the route the Whisnants seem to have taken, and if I had to guess, I’d say the W’s talk in the April issue of SN about how successful they’ve been with independent projects speaks more to profit margins than quantities sold, but that’s just my guess). But (big but), many artists love the fact that the labels do the promotional work for them, using the (often) well-oiled machine and established network the label has established. Saves the artist a lot of work and - if the label has the right clout - maybe gets the artist’s foot in a few doors that may have otherwise remained shut. So, the artist may be poorer but better-connected (as I once wrote, many sg artists would rather give off the appearance of success - being well connected - than have actual success - real sales and market viability). Artists are often willing to pay for that vicarious clout. Which is, I think, understandable.
Ways labels can stick it to the artists:
Soundtracks. Some labels release soundtracks using the artists’ original recording, but the artists aren’t paid royalties on these sales (that’s even though the artists “paid” for the recording in the first place). This is, needless to say, something that should be specified in an artist’s contract but is often overlooked by the artists.
Compilation CDs. Labels often will sell projects featuring their artists for a reduced rate (such as $9.99 for a cd) and not pay any artists royalties. They can do this by claiming the project is “promotional,” and yet the label is still making money off the project, especially since there are no recording costs for the label … only the minimal overhead in packaging and marketing the thing. And of course, these sales typically aren’t counted as part of the recoupment for original recording costs, as they should be (in my opinion).Email this Post