Friday, March 21, 2008

Online Music Success In 15 Easy Steps

Advance: $250,000
Manager's cut: $37,500
Legal fees: $10,000

Recording Budget: $150,000
Producer's advance: $50,000
Studio fee: $52,500
Drum, Amp, Mic and Phase "Doctors": $3,000
Recording tape: $8,000
Equipment rental: $5,000
Cartage and Transportation: $5,000
Lodgings while in studio: $10,000
Catering: $3,000
Mastering: $10,000
Tape copies, reference CDs, shipping tapes, misc expenses: $2,000

Video budget: $30,000
Cameras: $8,000
Crew: $5,000
Processing and transfers: $3,000
Offline: $2,000
Online editing: $3,000
Catering: $1,000
Stage and construction: $3,000
Copies, couriers, transportation: $2,000
Director's fee: $3,000

Album Artwork: $5,000
Promotional photo shoot and duplication: $2,000

Band fund: $15,000
New fancy professional drum kit: $5,000
New fancy professional guitars (2): $3,000
New fancy professional guitar amp rigs (2): $4,000
New fancy potato-shaped bass guitar: $1,000
New fancy rack of lights bass amp: $1,000
Rehearsal space rental: $500
Big blowout party for their friends: $500

Tour expense (5 weeks): $50,875
Bus: $25,000
Crew (3): $7,500
Food and per diems: $7,875

Fuel: $3,000
Consumable supplies: $3,500
Wardrobe: $1,000

Promotion: $3,000

Tour gross income: $50,000
Agent s cut: $7,500
Manager's cut: $7,500

Merchandising advance: $20,000
Manager's cut: $3,000
Lawyer's fee: $1,000

Publishing advance: $20,000
Manager's cut: $3,000
Lawyer's fee: $1,000

Record sales: 250,000 @ $12 = $3,000,000 gross retail revenue Royalty (13% of 90% of retail): $351,000
Less advance: $250,000
Producer's points: (3% less $5
0,000 advance) $40,000
Promotional budget: $25,000
Recoupable buyout from previous label: $50,000
Net royalty: (-$14,000)

Record company income:
Record wholesale price $6.50 x 250,000 = $1,625,000 gross income
Artist Royalties: $351,000

Deficit from royalties: $14,000
Manufacturing, packaging and distribution @ $2.20 per record: $550,000

Gross profit: $710,000

The Balance Sheet: This is how much each player got paid at the end of the game.

Record company: $710,000
Producer: $90,000
Manager: $51,000

Studio: $52,500
Previous label: $50,000
Agent: $7,500
Lawyer: $12,000
Band member net income each: $4,031.25

I found this online here and thought it was a nice breakout of how money is distributed once it gets down to the nitty gritty of who gets paid and how.

This is the part of the game no one thinks about.

Everyone wants to be a rap superstar and be on a major label.

Major labels want to make money off you the product.

The problem arises when you do not understand the business.


So the problem for the major labels become how can we make enough sales to recoup what we put into marketing and recording?

1st things notice how manufacturing was not even mentioned in this scenario.

If you still are on the corner trying to slang your CDs welcome to the digital world buddy.

Who still buys CDs anymore?

Real talk.

Many labels wanted to sue blogs and other folks who leak their music early.

Some actually did.

Instead of trying to stop change, embrace it.

Let me explain how you can take 150K and turn it into profit.

ROI anyone?

1st off I am not a damn accountant and I never had to break down the exact expenses that are incurred on a major recording budget so fuck off if I am not correct in this aspect or forget whatever.

You should get the picture.

We are going to be building a buzz for a new artist in a 15 easy steps.

1) Start with 150K Mr Major Recording Label.

If you are not a major with money like that well use whatever budget is applicable.

Simple enough right.

2) Take 75K for recording fees like producers, mastering, equipment rental, and all those good things.

Now you should have at least 30 - 40 hot tracks.

If you as an artist cannot get your Tupac on in the studio and create music constantly well you need to be a doctor or something.

3) Now out of these 30 - 40 hot tracks you can select at least 4 or more hot tracks to leak to the net early to build up a buzz.

Don't leak em yet.

4) Take another 10K to get all promotional pictures done.

This includes a cover and back for the digital EP, a cover and back for a digital LP we will get into later, any singles you will be leaking, those ab pics for the ladies, or the ones that bring the boys to the yard.

Get it all done in one setting and sit on them.

5) Then release them to the DJ world 1st.

If you are in the music business and don't know any DJs, well just shoot yourself now.

DJs play what is hot.

I am not talking about your local radio station DJ either.

Club DJs.

Network people.

Now we all know the blogs are a place where new music is heard 1st.

For free.

So instead of whining about my single getting released, take the pro-active approach and release it yourself.

If it's hot it will spread.

People will go, "Who The Fuck is That?" a la Dolla.

6) Release it to the LowKeys, the Eskays, the Mr. X's, 2dopeboyz, YoungKingz, Marc Jaycob's, Preachers, there is only one Perez, Necole Bitchie's, illseed, bossip, OnSmash, honestly the more the better.

They in turn will spread it if its hot.

Again for the layman this is called free marketing.


Again if it's not hot I doubt it will get any re-link value.

Just a note for all you folks who really should not be doing music.

7) Of course remember to always include the singles for download as a ringtone, or in the single version at itunes, Yahoo, AOL, or wherever you DL music from.

The recouping process begins there...

Major labels have the advantages here over a smaller indie because anytime a (insert major label here) artist releases a single they get some promotion at least and the (insert major label here) brand name is enough for some people to give it a listen.

Small labels don't fear!!

If it is hot, they will listen....

Some people come to the crossroads of DJs and bloggers spreading your shit and say to yourself, "How can I do this without paying them to pay my shit?"

Again this is a road you must cross yourself between you and them.

I say if it's hot let it spin but that is me.

I am not one to turn down a fat check either.

Now we are sitting at 85K spent and we are looking good.

I am going to say if it was REALLY hot you recoup with the additional 10 - 15K paid DLs.

Lets keep it 99 cents so we have around 15K recouped.


Take good ole Jordin Sparks.

Her album sold shitty but her single is getting major DLs because of the Chris Brown collabo.

If only they didn't waste all that money on manufacturing she might be getting some chips....

Oh wait she is on a major label....

8) Time for a good ole fashioned tour of the States.

Not an expensive Lear jet tour but a simple bus will suffice.

It is just about getting this new artist out into the minds of his/her soon to be public.

Mall tours, coffee shop tours, mosh pit tours, car show tours, state fair tours.

The list goes on really.

Use your imagination.

So we are all on the same page here...

We have recorded 30 - 40 songs, taken care of all promotional pics for EP, LP, and singles, distributed the single for ringtone and single download, and are now in a promotional Look at MeNow and Remember My Ass kinda tour.

9) Depending on what kind of online buzz you see for the singles that were released is when you begin the tour.

If the response is immediate then you immediately start your Look at Me now and Remember My Ass tour.

We will throw another 35K into the tour for food, bus, and the needed bullshit.

So we are sitting at 120K of our 150K budget.

Pretty good.

Now here is the time we really start to try to recoup.

People will DL your shit illegally.

It's gonna happen.

So give them a reason to buy it.

10) It will only be available via DL and the album will have exclusive videos but only found on particular DL sites like itunes, Amazon, or whomever you want to partner with.

Sell it for $6.99.

Since the minute it gets bought by someone that version will be available for DL as well somewhere online, don't fret.

Again people will always DL illegally just like people will always buy things.

Some folks are very scared by those things shown before the movies.

Now if I should have told you to already have a MySpace/Facebook/Many Others Take Your Pick page created before you even began this journey of stardom, and someone online constantly to get people as your friends and interested in your everyday activities, well you should have already contacted King Jafee to get your social media marketing skills up.

Do it right you should garner at least 50 - 75K DLs.


By doing it right I mean know your target market.

Make sure that the songs on the EP are all dope and no filler is included.

So using the low end of 50K we recouped 349,500K.

So we are 99,500k in the green.

Stop now?


Now it depends on where you want to take it from here.

11) I suggest after the Remember My Ass tour you get your artist as many major appearances as you can like guest appearances, TV, magazines, blah blah blah.

Now people who saw them on the Remember My Ass Tour will go, "Oh yeah Them!!" and the other ones will go, "Who is this Person?" and it begins the branding process.

12) Remind folks that a LP will be dropping by releasing some teaser singles from the album for illegal DL and purchase.

DJs and bloggers become your friend again.

13) Now time to release a good ole LP with additional videos, behind the scenes, whatever you you can use to give your fans more than the next guy.

Sell it for $9.99.

This better have been worth it because if you do this process right you will have eager fans anticipating the album release.

If done right again you should garner at least 75 - 100K DLs.


Using the low end of 75K we recouped $749,250.

Not bad off a 150K investment.

14) After releasing the LP we spend the remaining 30K to go on a It's Me Bitches Tour.

Held in places across the country where the fans can get the feel they are getting to know the artist personally.

I believe they call them intimate settings.

15) Finally sit back and let the music fuel your creative passion.

This whole scenario can take anywhere from a year to three years depending on really how it is mapped out.

I prefer the year and a half to two year scenario because it is easily achievable.

All it takes is planning and execution.

And quality online marketing.

50 Cent is the only major artist who seems poised to actually take advantage of this new horizon.

And he is having fun doing the music.

Plus doing entertaining videos exclusive for the internet (HINT HINT) for songs that are on his web only released albums. (HINT HINT)

That is hip-hop.

Hope this helps some of you who are having a hard time with the whole technology running the world aspect.

The beauty of this plan is that it can apply to any genre of music and the possibilities that you can include in terms of offline and online marketing and promotion are limitless.

It really is up to you.


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1 comment:

Travis said...

Awesome post. I've been getting into the "behind the scenes" part of the business (meaning I just want to know more) and this was a good write up for just that