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Old 1st February 2009 | Show parent
  #31
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Demonslave's Avatar
 
🎧 10 years
Hi Michael!!

Quote:
Originally Posted by mwagener ➡️
It's pretty much impossible and you're at the mercy of the label's reporting system.

I have had done a few label audits in my life and always walked away with a substantial amount that the label owed me. In one case the auditors found around $500,000 that was owed to the band (not me) for unpaid sales over a period of 2 years.

That said, the accounting from a band direct is much worse than that from a label, mostly because they really don't know how.
I also read in a Producers forum that Mudrock did the same sort of thing... Aren't These "audits" expensive????? I would guess they could be in the tens of thousands??
Old 1st February 2009 | Show parent
  #32
Gear Nut
 
🎧 10 years
Quote:
Originally Posted by mwagener ➡️
On one (big) album I overlooked a clause that the escalation would only be paid on the sale of "black vinyl records", right at a time where they only pressed 30,000 black vinyl records but about 5 million CDs. No escalation for me on that album, that oversight cost me close to 1 million $$s in Royalties

That's why I try to go with the simplified version.
Ouch... I know that was a hard lesson to learn, although most producers would have loved to have learned it! I know I would! Question: do you know of producers that get paid their producer royalties proactively instead of retroactively? I was wondering if that happens, and how often.
Old 1st February 2009 | Show parent
  #33
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PheelTheMusic's Avatar
 
🎧 10 years
1. Listen to Michael - he's been spot on.

2. Time for everyone to read Everything You Need to Know About The Music Business by Donald Passman and This Business of Music by Krasilovsky and Shemel so you don't get burned.

3. If you are serious about your career GET A GOOD ATTORNEY RIGHT FROM THE START.

Old 1st February 2009 | Show parent
  #34
Gear Nut
 
Tony"CD"Kelly's Avatar
 
🎧 10 years
Quote:
Originally Posted by johnnyjellybean ➡️
Mechanicals have nothing to do with publishing which is collected and paid to the publishers by performing rights organizations.
Mechanicals are publishing royalties from total sales, which is paid to publishing companies or administrators. They also deals with Sync fees for Movies, video games, etc.
Performing rights Societies collects from spins on radio stations, Music Videos, TV Shows, Ads, concerts, restaurants, some webs and the list goes on.

Blessthumbsup
Old 1st February 2009 | Show parent
  #35
Motown legend
 
Bob Olhsson's Avatar
 
🎧 15 years
Sad to say Michael probably had a music lawyer. It is unbelievably important to learn how this stuff works. It isn't nearly as complicated as many would have you believe.

Yes, you need a lawyer but you need to know enough about the business to be able to supervise what your lawyer does. If your lawyer is working for a percentage, you probably also need a business lawyer to make sure the negotiating lawyer isn't going for what's best for themselves and their relationship with the label instead of what's in your best long term interest.
Old 1st February 2009 | Show parent
  #36
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mwagener's Avatar
 
🎧 15 years
Quote:
Originally Posted by Bob Olhsson ➡️
Sad to say Michael probably had a music lawyer. . .
Yes I did, but Cocaine was an unbelievable popular substance in the 80s, especially for lawyers. I found 12 things wrong with the contract before I finally signed it, but that one slipped through. I know I should have gotten another liar, err lawyer, but back then I still believed in the system. The weird thing is that this clause was put there purposely to cheat on me, but there was nothing I could do afterwards.
Old 1st February 2009 | Show parent
  #37
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mwagener's Avatar
 
🎧 15 years
Quote:
Originally Posted by surflounge ➡️
Here's a quick spreadsheet PDF from some experience
That's funny, not very realistic, but funny.
Old 1st February 2009 | Show parent
  #38
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mwagener's Avatar
 
🎧 15 years
Quote:
Originally Posted by Demonslave ➡️
I also read in a Producers forum that Mudrock did the same sort of thing... Aren't These "audits" expensive????? I would guess they could be in the tens of thousands??
Well, the auditor gets 20% of whatever they find, so it's not cash out of your pocket unless they find something. In some cases you need to get the band to agree to do the audit and then the producer can attach himself to that audit. In some contracts there will be a clause that you can't audit at all as a producer. Once you audit, they will pay you immediately, but you can never go back and audit that same time period again. That tells me that even the auditor doesn't find everything they probably owe you.
Old 1st February 2009 | Show parent
  #39
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mwagener's Avatar
 
🎧 15 years
Quote:
Originally Posted by tnsngwtr ➡️
Ouch... I know that was a hard lesson to learn, although most producers would have loved to have learned it! I know I would! Question: do you know of producers that get paid their producer royalties proactively instead of retroactively? I was wondering if that happens, and how often.
Not sure what you mean by proactively. In some cases you get an advance on your royalties, which you have to recoup with your royalty payments after the recording cost are recouped with the artist net rate, before you get paid any more money.

Some bands don't pay a royalty (mostly for mixing), in which case they pay a buyout per song.
Old 1st February 2009 | Show parent
  #40
Lives for gear
 
🎧 15 years
Quote:
Mechanicals are publishing royalties from total sales, which is paid to publishing companies or administrators. They also deals with Sync fees for Movies, video games, etc.
Performing rights Societies collects from spins on radio stations, Music Videos, TV Shows, Ads, concerts, restaurants, some webs and the list goes on.

not completely true. sync fees are negotiated by the labels and publishing/adminstrator if the actual sound recording is used. one license is for use of the master and the other for the underlying song. typically the total fees are identical so if they pay $10k sync they also pay $10k sync fee for the master.

ej
Old 1st February 2009 | Show parent
  #41
Lives for gear
 
🎧 10 years
Quote:
Originally Posted by tnsngwtr ➡️
Question: do you know of producers that get paid their producer royalties proactively instead of retroactively?
hi,

you mean "prospectively" instead of "proactively".

right.
Old 1st February 2009 | Show parent
  #42
Lives for gear
 
🎧 10 years
Quote:
Originally Posted by mwagener ➡️
The weird thing is that this clause was put there purposely to cheat on me, but there was nothing I could do afterwards.
hi,

you can dispute an unconscionable clause, or anything drawn in bad faith, or a "contract of adhesion". statute of limitations may be problematic if you wait [but it usually does not start to run until you learn of the damages]. actual fraud may be attackable at any point.

not a lawyer / liar.



right.
Old 1st February 2009 | Show parent
  #43
Gear Nut
 
Tony"CD"Kelly's Avatar
 
🎧 10 years
Quote:
Originally Posted by ejsongs ➡️
not completely true. sync fees are negotiated by the labels and publishing/adminstrator if the actual sound recording is used. one license is for use of the master and the other for the underlying song. typically the total fees are identical so if they pay $10k sync they also pay $10k sync fee for the master.

ej
HUH? What's not completely true? I did say the Pub / admin deals with Syncs.

Bless thumbsup
Old 2nd February 2009 | Show parent
  #44
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mwagener's Avatar
 
🎧 15 years
Quote:
Originally Posted by oky**** ➡️
hi,

you can dispute an unconscionable clause, or anything drawn in bad faith, or a "contract of adhesion". statute of limitations may be problematic if you wait [but it usually does not start to run until you learn of the damages]. actual fraud may be attackable at any point.

not a lawyer / liar.



right.
We tried and didn't get anywhere. Bad faith is extremely hard to prove.
Old 2nd February 2009 | Show parent
  #45
Lives for gear
 
🎧 15 years
Quote:
HUH? What's not completely true? I did say the Pub / admin deals with Syncs.

Bless
you are correct that publishers deal with sync fees but so do the labels. just wanted to clarify that point as someone might interpret your statement and think sync fees/licenses are exclusively a publishing thing only.



ej
Old 2nd February 2009 | Show parent
  #46
Lives for gear
 
🎧 10 years
Quote:
Originally Posted by mwagener ➡️
We tried and didn't get anywhere. Bad faith is extremely hard to prove.
hi,

ah yes, hard to prove, but easy to remember. so they won't get you that way again, right?

and good on you for trying. maybe if more people would push back "they" would not feel like they can get away with stuff that is out of hand.


rights.
Old 2nd February 2009 | Show parent
  #47
Gear Head
 
🎧 10 years
Quote:
Originally Posted by druhms ➡️
Hey Michael,

What's it called when the labels shave off the top 5% - 15% for damaged goods and promotional units?
Druhms
It's known as "shrinkage" and also covers the number of units that mysteriously vanish throughout the distribution chain...
Old 7th February 2009 | Show parent
  #48
Lives for gear
 
🎧 10 years
Quote:
Originally Posted by mwagener ➡️
In general, if there is no special deal going, producers points are paid from actual sales. They are calculated of the net retail price, which is a floating price to say the least.

The way it is normally set up (or at least was when the industry was still halfway sane):
The artist (with an artist deal at a label) gets anywhere from 10 to 20 % (points) of the net retail, which could be anywhere from $7 to $18 depending on the the deal the label has with distributors and a million other things. Out of the artist points he/she pays the producer's points.

Lets say for numbers sake and very much simplyfied:
the artist gets 13%, and out of that he/she pays the producer 3%, so he/she is left with a net artist rate of 10%. The net retail price for numbers sake, is at $10. That means the producer would make $0.30 per actual CD sold. The artist would make $1 per actual CD sold.

Here comes the hitch:
Royalties are normally paid retroactive from sale of unit one, after the "Recording Cost" are recouped. Recording cost (which include anyting to do with making the album, except for producers advances) are recouped at the "net artist rate" which in our example is 10%. So, again for numbers sake: Let's say the record cost $100,000 to make. The artist would have to sell 100,000 units to recoup the recording cost. At that time everybody would start to get paid royaties, BUT retroactive to sale of unit one. In other words, as a producer you would not see a dime until CD 100,001 is sold but then you would get $30,000 right away, plus whatever sales over 100,000 are accounted for, minus all the other contractual deductions for reserves, returns, packaging etc. etc. etc. The artist would get paid $100,000 at that point, minus any advances he/she got to survive during the making of the CD. If the producer got any advances for the project, he/she would have to recoup those first. In our examle above: if the producer got an advance of $20,000, he/she would get paid $10,000. After recoupment there should be a 3 month or 6 month statement, hopefully with a check attached.

The producer has no right to any Publishing royaties, unless he is part writer of a song or the artist "gives" him writing credits for his work on the songs. I never ask for publishing, but leave it completely up to the artist to include me in it, if they feel I contributed enough to a song to make a difference. Publishing is about the only money an artist will make for a while (other expenses like touring, or a video shoot will eat up any royalties), and since they have to be able to exist, otherwise they can't tour and sell CDs, I advise every artist to not let anybdy touch their publishing (and merchandising for that matter). Also, publishing is paid from sale one and is not reliant on recoupment of the Recording Cost.

All that said, you can imagine it takes a upwards from 50 pages contract to nail this down (especially since royalties are at a different rate in different countries), so I changed my royalty system to $0.0X per song sold, very simple, the artist sells a song (download or CD) and I get paid $0.0X. Makes for a one page contract.

This is a very simplified exlanation of the whole deal, but I hope this helps.
Michael,

In your example the Producer waits for 100,000 sales to tick over before receiving his royalty. Obviously this is still subject to further recoupment of the Producer's Advance.

So 2 questions, first:

If a Producer signs a deal where the payment is not retroactive and effective of unit one, ie, only receives percentage of sales after 100,000, is this generally deemed to be "unconscionable"?

Second, as it is in the interests of the label to not have to pay artists and producers anything, I have always suspected that labels sometimes downplay units sold. Let's face it, if in the above example the sales were 100,001, the payout is substantial, but if they fudge the numbers to show a figure of just 99,999, then the payout is nil. Do you think this is a common dodge? Is there a fairer pro rata deal?

As for a fixed amount receivable per sale of recording to keep abreast of digital sales etc, I take it that this deal is still subject to the same recoupment schedules as per the "old" deals?

Thanks.
Old 7th February 2009 | Show parent
  #49
Moderator
 
Trev@Circle's Avatar
 
🎧 10 years
Quote:
Originally Posted by princeplanet ➡️
Michael,

In your example the Producer waits for 100,000 sales to tick over before receiving his royalty. Obviously this is still subject to further recoupment of the Producer's Advance.

So 2 questions, first:

If a Producer signs a deal where the payment is not retroactive and effective of unit one, ie, only receives percentage of sales after 100,000, is this generally deemed to be "unconscionable"?
Thanks.
Not unconscionable (laissez faire - freedom to contract) just foolish.
Old 8th February 2009 | Show parent
  #50
Gear Addict
 
smoore98's Avatar
 
🎧 15 years
This thread intrigues me. This convoluted model seems to be disliked by all involved and just doesn't look like it's reasonable in the year 2009. Maybe this is a dumb question, but has anyone (i.e. company) figured out a better way, and been able to bring people on board with it?

Perhaps a software company could/should build a program which simplifies the workflow for contracts, collections, tracking, etc focused on the music industry. Surely someone has made an attempt to fill this gap. I am not talking about the independent model, CD Baby, iTunes, etc. I am talking specifically about making the contract process, tracking, and reporting of payments easy for both sides, with access to the information (transparency) so that there are no surprises going through it. I am thinking the equivalent of Quickbooks-meets-Turbotax, only substitute a contract wizard instead of the Tax wizard, and song sales and downloads (costs, etc) with accounts receivables.

It seems extremely antiquated to me that someone has to wait 6 months for money in this day in age, when the internet and a database can reach globally. I guess I tend to oversimplify things, but this sounds easy enough to correct in my mind. Just let MW handle all the contract creation.
Old 8th February 2009 | Show parent
  #51
Lives for gear
 
jimmydeluxe's Avatar
 
4 Reviews written
🎧 10 years
An excellent book on this subject that goes into very specific details using actual contracts is Moses Avalon's, "Secrets of Negotiating a Recording Contract."

Also highly recommended is, "Confessions of a Record Producer," in which he shares real-world situations with name artists and how to get screwed as little as possible.

I stumbled upon, "Confessions," at Borders, and believe I got the follow-up at a small songwriter seminar where he was speaking--the guy knows his stuff. He has a website as well that I believe has some free info on it.
Old 8th February 2009 | Show parent
  #52
Lives for gear
 
surflounge's Avatar
 
🎧 15 years
attached is my cost breakdown for producer points
Attached Thumbnails
Producer Points-costs.jpg  
Old 8th February 2009 | Show parent
  #53
Moderator
 
Trev@Circle's Avatar
 
🎧 10 years
Quote:
Originally Posted by surflounge ➡️
attached is my cost breakdown for producer points
best you get publicising those records!
Old 9th February 2009 | Show parent
  #54
Gear Nut
 
🎧 10 years
Quote:
Originally Posted by surflounge ➡️
attached is my cost breakdown for producer points
Aren't those numbers lifted from Albini's essay "The Problem with Music"


edit: Yeah. Yeah, they are.
The Problem With Music

Quit pirating other people's creative works
Old 9th February 2009 | Show parent
  #55
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mwagener's Avatar
 
🎧 15 years
Quote:
Originally Posted by princeplanet ➡️
Michael,

In your example the Producer waits for 100,000 sales to tick over before receiving his royalty. Obviously this is still subject to further recoupment of the Producer's Advance.
Yes, it is, if there is any producers advance.

Quote:
Originally Posted by princeplanet ➡️
So 2 questions, first:

If a Producer signs a deal where the payment is not retroactive and effective of unit one, ie, only receives percentage of sales after 100,000, is this generally deemed to be "unconscionable"?
Wouldn't make sense. Why would you (producer) not want to get paid on the sale of the first 100,000 units? If you get paid from unit one, it would mean you don't have to wait until the Recording Cost are recouped, but instead would get paid from the first unit sold, not unit 100,001

Quote:
Originally Posted by princeplanet ➡️
Second, as it is in the interests of the label to not have to pay artists and producers anything, I have always suspected that labels sometimes downplay units sold. Let's face it, if in the above example the sales were 100,001, the payout is substantial, but if they fudge the numbers to show a figure of just 99,999, then the payout is nil. Do you think this is a common dodge? Is there a fairer pro rata deal?
That would just buy them another 3 month of not having to pay you, but then would have to pay a bigger check with the next statement. The sales figures are largely based on "Soundscan", which means the point in time when it goes over 100,001 could maybe moved one accounting period later, but it couldn't stay at 99,999. Not sure what you mean by a pro rata deal

Quote:
Originally Posted by princeplanet ➡️
As for a fixed amount receivable per sale of recording to keep abreast of digital sales etc, I take it that this deal is still subject to the same recoupment schedules as per the "old" deals?
It would be negotiable in any case, depending on how much pull you have with an artist. But the whole point is to simplify the deal.

Thanks.[/quote]
Old 9th February 2009 | Show parent
  #56
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mwagener's Avatar
 
🎧 15 years
Quote:
Originally Posted by iamlark ➡️
Aren't those numbers lifted from Albini's essay "The Problem with Music"


edit: Yeah. Yeah, they are.
The Problem With Music

Quit pirating other people's creative works
... and they are pretty far fetched, especially when taken out of context with the article Steve wrote.
Old 9th February 2009 | Show parent
  #57
Lives for gear
 
🎧 15 years
Quote:
Originally Posted by mwagener ➡️
Actually I much rather negotiate with an artist than with a label
Me too! I've never had a problem with a band - only labels, and the bigger they are the harder they are to deal with.

FWIW, my experiences are spot-on with Mr. Wagener's (just my numbers are quite a bit lower!)
Old 9th February 2009 | Show parent
  #58
Gear Maniac
 
Imagearho's Avatar
 
🎧 15 years
Quote:
Originally Posted by iamlark ➡️
Aren't those numbers lifted from Albini's essay "The Problem with Music"


edit: Yeah. Yeah, they are.
The Problem With Music

Quit pirating other people's creative works
Ouch!!! Now thats being called out! Mr. Wagener and Mr. Tony Kelly, thank you for the informative thread!!!

Old 13th February 2009 | Show parent
  #59
Moderator
 
narcoman's Avatar
 
🎧 10 years
Quote:
Originally Posted by mwagener ➡️
... and they are pretty far fetched, especially when taken out of context with the article Steve wrote.
which was at least 50% bunk when he wrote it.......
Old 26th July 2012
  #60
Lives for gear
 
🎧 10 years
I have a different aspect to this question:

What if you are a member of the band, played-wrote musical content on the record, engineered and produced the whole thing and didn't charge anything as far as fees to the band.

What sort of point/percentage model would be present for that situation?
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