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Sunday, February 17, 2013

Royalties versus Advances

There is a famous quote stumbling around the internet that "waiting for royalties is like waiting for a baby to be born."  Now, because it's in the internet, no one knows off the top of their head to whom to attribute the quote.

Anyway, this is a big thing in the music business.  As an artist, I would love to be able to release music and get a check.  "Here is your music, Evil Music Empire Machine."  "Thank you, music making peon.  Here are some trinkets."  The truth of it is if you are on a label any money that you are given BEFORE your music is released is a loan.  Nothing more than that.  Your collateral is the future earnings of your release.  Most artists don't know or understand this and spend the money immediately.  In fact, everything you do is a loan with a label.  Your videos, studio time, tour expenses, manager fees, promotional costs are all loans and must be paid by your earnings.  You make money by supporting the album sales and going on tour.  What is crazy is that all these artists think they are making all this money and don't realize that they are running tabs with the label.  When they eventually demand royalty payments the label drops the hammer on them with the bills.

Now as an indie label owner I don't have the cash to loan out money for music that hasn't sold.  I can release the music.  I can publish it.  I can promote the hell out of it but in the end I'm waiting for the royalties and sales just like if I were an artist.  The upside to this is I can release my own music whenever I please.

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