Modern Music Business

Are major label record deals designed so that most artists won't earn any master royalties from them unless they receive an advance? Record labels have normalized taking the vast majority of the master royalties. Major label artists often get less than 20%. The discrepancy is exacerbated because labels have also normalized recouping a disproportionately high amount of the expenses from the artist's share. Here is a simplified example to illustrate the effect of this. An artist wants to record an album but needs a record label to help to market it. A record label wants to market an album but needs an artist to record it. The cost to record an album is $50,000 and the cost to market it is $50,000, so $100,000 total. Scenario 1: The record label puts up $80,000 and the artist puts up $20,000 to cover $50,000 in recording expenses and $50,000 in marketing expenses. The label and artist split the master royalties 80/20. Both parties would break even when the album generates $100,000...

If a recording artist signs a record deal and receives an advance, how much of that advance would the artist get to keep and how much money would their music have to generate in order to fully recoup that advance? Here is a scenario: a new artist signs a record deal with a major record label and receives an all-in master royalty of 18% and a $100,000 advance. An advance is a prepayment of the musician's share of the royalties. Typically, the record label will pocket the artist's share of the master royalties until that share fully recoups the $100,000 that was advanced. The way lawyers get paid can vary, but some of them may take 5% of the advance, so that would leave the artist with $95,000. Artist managers typically take 10 to 15 percent. If this artist has a manager that takes 15% of that $95,000, then the artist would be left with $80,750. Advances are not loans. They are considered taxable income. So if state income taxes, federal income taxes, and FICA taxes take a combin...

[Disclaimer: I am not a lawyer and this post should not be considered a substitute for legal advice.] In the music industry, what is the difference between publishing and masters? They are each related to a different copyright. In U.S. copyright law, there is a musical work copyright that protects lyrics and melodies and a sound recording copyright that protects sound recordings. Each copyright grants its owner a set of rights. Musical work copyright owners are granted 5 rights: the right to reproduce the work the right to publicly distribute the work the right to publicly display the work the right to publicly perform the work the right to create derivative works based on that work Sound recording copyright owners are granted 4 rights: the right to reproduce the work the right to publicly distribute the work the right to publicly perform the work via certain types of digital audio transmissions the right to create derivative works based on that work Except for certain cases, such as f...