The Record Company - who does what? Part 2

by Marlyn Ntsele and Russel Hlongwane


Before you start looking for a record company it is good to know what you expect from your record company. The conversation and negotiations with them are different, depending on if you are looking for an artist deal, a licensing deal or a distribution deal.

In part 2 of the "Record company, who does what?" we look at the A&R function and Record contract, the different types of deals and what it is that the A&R does.


“ president, Michael Laskow is outspoken about why a major record label might still be your best bet – at least for the time being. He raised this point while moderating the Major Label A&R panel at last year's TAXI Road Rally, and not one of the thousand musicians in the audience could argue his point. No hands were raised when Laskow asked if anybody in the ballroom had made more than chump change as an independent artist using the Internet as their primary marketing channel. “ Brent DeFore

The A&R manager

The A&R manager decides if an offered artist is interesting enough for the record company. Record companies are continuously receiving demo’s from unknown musicians. Randomly sending something usually does not work. You often only get a response when your demo is being offered by a good relation of the record company like a manager, a publisher, a producer, a studio boss or a booker. It is an art to find someone to help you out without having to offer something in return.
Record companies look for a concept that does not cost them a lot of effort (costs) and can be easily molded into a sellable product. In practice they are looking for that one hit song that can make the artist famous and build on a career.

Your demo gives the A&R manager a clear impression of the type of record you would like to make. Preferably he hears a ready-made hit. This is why sending out live recordings or your voice on a back track is useless.
Record companies do not return demo’s. You most likely never even get a letter. If you do, it will most likely be a standard letter to thank you, but that the record company does not see any possibilities for commercial exploitation. That means that A&R person did not like it. If he did, but it was not good enough, usually there will be a personal message in which he asks to keep him updated of new demo’s, reviews and performances. From that point you might find a record company employee checking out your show.

The Record contract

Before you start looking for a record company it is good to know what you expect from your record company. The conversation and negotiations with them are different, depending on if you are looking for an artist deal, a licensing deal or a distribution deal.
Artist deal: the record company fully deals with the production costs and will become the master owner of the recording. The record company carries the full financial risk and this will mean that they would want to be closely involved with the artistic process, for instance with the choice of studio and producer. The royalty that the artist gets will depend on his market value, but will be between 2 and 12 % of the PPD (Price Per Dealer).

Licensing Deal: the artist records his own material (and pays for this) and gives the record company the (temporal) right to exploit this material. The investment that the record company does is still pretty high. To release 5,000 copies the costs can get high and imagine adding marketing and a music video to this. The artist usually receives between 15% and 30% of the PPD. Sometimes the licensing deal comes with an advance of which the artist can pay for the studio and production costs and put the rest in his pocket. That sounds attractive, but this will be deducted from the royalties earned. So the artist only gets paid once the advance has been returned to the record company.

Distribution deal: If the idea of giving 70% to 80% of your profits to a record company freaks you out, you can keep the production- and fabrication process in your own hands. The most difficult part will be CD distribution. You can consider to only sell your albums after your shows or to drive to the most important stores yourself and see if they take your album, but this usually works demotivating and is time consuming and expensive. More so because a lot of CD stores will only pay you once they have sold your album. A solution for this would be a distribution deal. You deliver boxes of your album to the distributor, who makes sure your CD’s end up in store. Sometimes a distributor also helps out with some promotional activities. Since the distributor usually gets 15%-30% of your CD sales, it also helps him if your sales are high. He also benefits if your music is played on radio, that there are posters and flyers etc. The percentage that you pay the distributor is influenced by the amount of promotional activities the distributor might do for you.

Promo deal: Another variation of the contracts mentioned is to find someone to help with the promotion (sometimes in combination with a distribution deal). There are some independent promoters/pluggers who can promote your album. This means that they will create interest for your music within their network of media. They will help getting you airplay and reviews. Pluggers and promoters usually charge an hourly rate. You can budget between R5, 000 and R15, 000 for a promotional campaign.

It is important to know what type of deal would be ideal for your career, choose wisely by making informed be continued




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