1) I give artists an agreed upon cash advance to record them.*
2) I pay for everything involved in a release: design, mixing, mastering, manufacturing, PR, legal fees, etc. These costs are verified by receipts.** The advance I give the artists is also part of the cost. If I recoup these costs, then I split profits 50/50 with the artists and their representatives.***
3) Legal matters for music are notoriously complex, and much more so now with so many ways to share and listen to music. As pertains to the specific recordings I make: I made them, so I own the copyrights to those particular sound recordings. HOWEVER, artists ALWAYS retain publishing rights to their own songs. If they haven’t yet registered their songs with a music publishing company in their name, then that gets done for them at no cost to them.
4) Any synchronization licensing opportunity (if an entity wants a song for a movie, for example) would be split with the artist 50/50, which is industry standard.
5) All my contracts are drawn up by a lawyer who is sympathetic to the artists and the objectives of my label. He keeps the wording as plain-spoken as possible, so contracts can be communicated to the artists clearly in their language.
6) If I choose to enter into a co-release situation with another label or distributor—which greatly increases the chance of success for a micro-label like mine—all of the above continues to apply.**** HOWEVER, it only applies to my side of the co-release deal. Typically, a release partner wants 50%. I then pay the artists, assuming I recoup, as outlined above from my share.
7) With 5 releases thus far, my losses run well into five digits and no release has recouped. There have been no proceeds to distribute.
*The one exception is the flamenco project I’m working on where the artists were kind enough to record a few tracks each for free because the budget was tight and there were so many different artists.
**Travel costs are NEVER factored into the expenses.
***To date, I’ve never come close to recouping. Also note: industry standard for label/artist split is generally 85/15 in favor of the label.
****A co-release can slightly alter the music publishing agreement wth the artists, as bigger labels often insist on some percentage of publishing rights for a specified period of time (because they work hard to place the songs in synch deals, etc.). However, these agreements are all explained and consented to by the artists ahead of time, and the artists ALWAYS retain full author credit and copyright for their songs.
Through the label website, I'll occasionally get emails. While these have been generally friendly and supportive, I recently received two in succession that can be roughly paraphrased to read something like this: “Hello... You better be giving the money you make to the artists. How dare you exploit these poor people and their music for personal gain. I will await your reaffirming response and financial disclosure regarding your business. Then I’ll consider buying an album. Thank you.”
While emails like that don’t deserve a direct response, I do think it’s a good idea to outline my “business” practices here in order to clear up any confusion, if for no other reason than to ward off similar emails in the future.
While a significant history of unethical practices in the music business is a matter of public record, I am so far on the outskirts of that “business” that I can’t say whether that continues into the present day or not. What I do know for sure is that thanks to the internet, downloads, streaming and the like, the business model for music as a sellable commodity has forever changed--it’s become a bad business to be in for almost all involved.
While the digital revolution has increased the amount of music available to a consumer exponentially, the retail value of this music has dropped almost proportionately. What’s happened is a little like what I’ve read about taxi medallions in New York City. They used to be a valuable commodity. But now they’ve become comparatively worthless thanks to the advent of ride sharing, which is wreaking havoc on the business model.
Not surprisingly, there hasn’t exactly been an outpouring of support for the plight of New York cabbies. Likewise, it’s hard to get folks worked up about record executives losing money. But it’s not just the executives. Everyone involved in making or selling music is finding it hard, if not impossible, to stay out of the red. If artists make money these days, it’s mostly with live shows, merchandise and licensing—not music sales. Music shops will attest to this, and most have gone out of business. Meanwhile, big labels are scrambling to work the tech side of music, trying to own pieces of the way it gets seen and heard digitally. At the very bottom of the food chain are the micro-labels like mine. We’re the ones who release “niche” music for small audiences, and we have three options: A) find hard-to-come-by public funding for a release, B) exist as a kind of cottage industry or hobby that’s indifferent to the bottom line, or C) fold the tent.
In case you’re wondering, The Vital Record has selected option B for now.
In terms of revenue, only two aspects of the music business are growing right now. The first and most obvious is “streaming.” I really don’t know who makes money off that. Someone is, somehow, but as far as I can tell it’s not the artists or the labels. I suppose digital platforms are cashing in. But music itself as a “commodity” is plummeting in value. While I’m no economist, this drop does make economic “sense.” Technology and apps ensure that the supply of music is vast. While the demand may also be vast, it’s satisfied easily and cheaply via this same technology. The upshot is that it becomes very difficult to attach any real monetary value to a recording, especially because there is no longer any object associated with it. Increasingly, people don’t even own the digital files anymore. Everything is moving to the “cloud.” Of course, this “cloud” certainly has monetary value for those in the "cloud" business, but, to extend the metaphor, the individual raindrops that comprise the cloud do not. Hence, the cash value of a song—and the ability to even attach one to it—is contracting violently.
Fortunately, there has been some pushback against this ruthless devaluation and de-materialization of sound recordings: the vinyl LP is back. Vinyl is the only other revenue stream in the music business that is on the rise. But, of course, it’s a small piece of a rapidly shrinking pie. LPs are a niche product aimed at a minority of consumers who attach special value to music. These tend to be the people who want to know more about the artists and the music than could ever be made available on a streaming platform.
From a business perspective, the advantage that vinyl supposedly presents over a CD is that it can be priced more reliably. Because the CD is nearly extinct, it’s hard to price them in a way that makes them viable to manufacture. They may be relatively cheap to produce, but if no one wants them, it proves costly. Moreover, artwork and liner notes, which are so vital to the music I release, get rendered too small to properly appreciate. So, ultimately, I end up with carefully researched, beautifully designed CDs in unopened factory boxes sitting on shelves in a storage unit. That pretty much sums up what the music business has been for me.
Now, however, with the resurrection of the LP, I may stand a fighting chance of at least breaking even with a release. While they’re expensive to produce, LPs also hold their value in the market place and can be more fairly priced for everyone in the chain: consumer, label, distributor and store. Moreover, the minimum manufacture numbers are lower, so there’s less of a chance of them sitting for years in a storage unit. Finally, the larger format gives me a chance to spread out and attempt to realize my vision of creating beautiful, engaging objects that are worthwhile to look at, read, listen to and own.
Of course, I don’t expect anyone to care about the plight of small labels, or any “business” for that matter. But I do want those with little knowledge of the business who may have “ethical” concerns to know what’s involved before they fire off discourteous emails. The idea of a record label like mine swooping into some supposedly “underdeveloped” region or country and running off with their unique music to make a fortune (or, thus far, any money at all) is laughable. This is a labor of love—for anyone in the small label “business”—and for what it’s cost me I could have bought a serviceable new car. That’s my choice, and for me it’s worth it. But I’d suggest that self-righteous emails presuming unethical business practices are probably better directed at the entities in these regions who are currently robbing, polluting, clear cutting, mining, drilling, paving, burning and wiping out the unique cultures whose music I’m trying to record and preserve.
While those companies have massive PR departments that spew out propaganda on a daily basis about how much they’re helping the people and the environment at the local level, it doesn’t take more than five minutes in the places I go to record to see the devastation being caused. Get to know a few people, go to a few local indigenous rights gatherings and the scale of it all is disheartening beyond belief.
Oddly enough, that's precisely why I started this label: as some kind of small, helpless response to all that culture-obliterating, earth-devouring “business” activity. In fact, I originally conceived of this label as a non-profit. But, ironically, non-profits can be expensive to form, so I figured that money would be better spent recording and releasing music. But, fear not, while my business is registered as a standard LLC, my accountant could nervously reassure you that it’s always been a de facto non-profit. I have never come close to covering my costs for any release. If I’m lucky enough to make money on a project in the future, there’s nothing that would give me more pleasure and satisfaction than splitting that with the artists and giving back to those communities.
So that’s the long answer to the emails I’ve gotten about my business practices. If people have any lingering doubts, then I encourage them to start their own label and make the music they love available to the world and see how it goes. Thank you for your support.
David Aglow, owner, operator and sole employee of The Vital Record