Whenever I talk to a band who are about to sign
with a major label, I always end up thinking of them in a particular
context. I imagine a trench, about four feet wide and five feet deep,
maybe sixty yards long, filled with runny, decaying shit. I imagine
these people, some of them good friends, some of them barely
acquaintances, at one end of this trench. I also imagine a faceless
industry lackey at the other end holding a fountain pen and a contract
waiting to be signed.

Nobody can see what's printed on the contract.
It's too far away, and besides, the shit stench is making everybody's
eyes water. The lackey shouts to everybody that the first one to swim
the trench gets to sign the contract. Everybody dives in the trench and
they struggle furiously to get to the other end. Two people arrive
simultaneously and begin wrestling furiously, clawing each other and
dunking each other under the shit. Eventually, one of them capitulates,
and there's only one contestant left. He reaches for the pen, but the
Lackey says "Actually, I think you need a little more development. Swim
again, please. Backstroke". And he does of course.

I. A&R Scouts

Every major label involved in the hunt for new
bands now has on staff a high-profile point man, an "A & R" rep who can
present a comfortable face to any prospective band. The initials stand
for "Artist and Repertoire." because historically, the A & R staff
would select artists to record music that they had also selected, out
of an available pool of each. This is still the case, though not
openly.

These guys are universally young [about the
same age as the bands being wooed], and nowadays they always have some
obvious underground rock credibility flag they can wave. Lyle Preslar,
former guitarist for Minor Threat, is one of them. Terry Tolkin, former
NY independent booking agent and assistant manager at Touch and Go is
one of them. Al Smith, former soundman at CBGB is one of them. Mike
Gitter, former editor of XXX fanzine and contributor to Rip, Kerrang
and other lowbrow rags is one of them. Many of the annoying turds who
used to staff college radio stations are in their ranks as well.

There are several reasons A & R scouts are
always young. The explanation usually copped-to is that the scout will
be "hip to the current musical "scene." A more important reason is that
the bands will intuitively trust someone they think is a peer, and who
speaks fondly of the same formative rock and roll experiences.

The A & R person is the first person to make
contact with the band, and as such is the first person to promise them
the moon. Who better to promise them the moon than an idealistic young
turk who expects to be calling the shots in a few years, and who has
had no previous experience with a big record company? Hell, he's as
naive as the band he's duping. When he tells them no one will interfere
in their creative process, he probably even believes it.

When he sits down with the band for the first
time, over a plate of angel hair pasta, he can tell them with all
sincerity that when they sign with company X, they're really signing
with him and he's on their side. Remember that great gig I saw you at
in '85? Didn't we have a blast?

By now all rock bands are wise enough to be
suspicious of music industry scum. There is a pervasive caricature in
popular culture of a portly, middle aged ex-hipster talking a
mile-a-minute, using outdated jargon and calling everybody "baby."
After meeting "their" A & R guy, the band will say to themselves and
everyone else, "He's not like a record company guy at all! He's like
one of us." And they will be right. That's one of the reasons he was
hired.

These A & R guys are not allowed to write
contracts. What they do is present the band with a letter of intent, or
"deal memo," which loosely states some terms, and affirms that the band
will sign with the label once a contract has been agreed on.

The spookiest thing about this harmless
sounding little memo, is that it is, for all legal purposes, a binding
document. That is, once the band signs it, they are under obligation to
conclude a deal with the label. If the label presents them with a
contract that the band don't want to sign, all the label has to do is
wait. There are a hundred other bands willing to sign the exact same
contract, so the label is in a position of strength.

These letters never have any terms of
expiration, so the band remain bound by the deal memo until a contract
is signed, no matter how long that takes. The band cannot sign to
another laborer or even put out its own material unless they are
released from their agreement, which never happens. Make no mistake
about it: once a band has signed a letter of intent, they will either
eventually sign a contract that suits the label or they will be
destroyed.

One of my favorite bands was held hostage for
the better part of two years by a slick young "He's not like a label
guy at all," A & R rep, on the basis of such a deal memo. He had failed
to come through on any of his promises [something he did with similar
effect to another well-known band], and so the band wanted out. Another
label expressed interest, but when the A & R man was asked to release
the band, he said he would need money or points, or possibly both,
before he would consider it.

The new label was afraid the price would be too
dear, and they said no thanks. On the cusp of making their signature
album, an excellent band, humiliated, broke up from the stress and the
many months of inactivity.

II. There's This Band

There's this band. They're pretty ordinary, but
they're also pretty good, so they've attracted some attention. They're
signed to a moderate-sized "independent" label owned by a distribution
company, and they have another two albums owed to the label.

They're a little ambitious. They'd like to get
signed by a major label so they can have some security you know, get
some good equipment, tour in a proper tour bus -- nothing fancy, just a
little reward for all the hard work.

To that end, they got a manager. He knows some
of the label guys, and he can shop their next project to all the right
people. He takes his cut, sure, but it's only 15%, and if he can get
them signed then it's money well spent. Anyways, it doesn't cost them
anything if it doesn't work. 15% of nothing isn't much!

One day an A & R scout calls them, says he's
'been following them for a while now, and when their manager mentioned
them to him, it just "clicked." Would they like to meet with him about
the possibility of working out a deal with his label? Wow. Big Break
time.

They meet the guy, and y'know what -- he's not
what they expected from a label guy. He's young and dresses pretty much
like the band does. He knows all their favorite bands. He's like one of
them. He tells them he wants to go to bat for them, to try to get them
everything they want. He says anything is possible with the right
attitude. They conclude the evening by taking home a copy of a deal
memo they wrote out and signed on the spot.

The A & R guy was full of great ideas, even
talked about using a name producer. Butch Vig is out of the question-he
wants 100 g's and three points, but they can get Don Fleming for
$30,000 plus three points. Even that's a little steep, so maybe they'll
go with that guy who used to be in David Letterman's band. He only
wants three points. Or they can have just anybody record it (like
Warton Tiers, maybe-- cost you 5 or 7 grand] and have Andy Wallace
remix it for 4 grand a track plus 2 points. It was a lot to think
about.

Well, they like this guy and they trust him.
Besides, they already signed the deal memo. He must have been serious
about wanting them to sign. They break the news to their current label,
and the label manager says he wants them to succeed, so they have his
blessing. He will need to be compensated, of course, for the remaining
albums left on their contract, but he'll work it out with the label
himself. Sub Pop made millions from selling off Nirvana, and Twin Tone
hasn't done bad either: 50 grand for the Babes and 60 grand for the
Poster Children-- without having to sell a single additional record.
It'll be something modest. The new label doesn't mind, so long as it's
recoupable out of royalties.

Well, they get the final contract, and it's not
quite what they expected. They figure it's better to be safe than sorry
and they turn it over to a lawyer--one who says he's experienced in
entertainment law and he hammers out a few bugs. They're still not sure
about it, but the lawyer says he's seen a lot of contracts, and theirs
is pretty good. There'll be great royalty: 13% [less a 1O% packaging
deduction]. Wasn't it Buffalo Tom that were only getting 12% less 10?
Whatever.

The old label only wants 50 grand, an no
points. Hell, Sub Pop got 3 points when they let Nirvana go. They're
signed for four years, with options on each year, for a total of over a
million dollars! That's a lot of money in any man's English. The first
year's advance alone is $250,000. Just think about it, a quarter
million, just for being in a rock band!

Their manager thinks it's a great deal,
especially the large advance. Besides, he knows a publishing company
that will take the band on if they get signed, and even give them an
advance of 20 grand, so they'll be making that money too. The manager
says publishing is pretty mysterious, and nobody really knows where all
the money comes from, but the lawyer can look that contract over too.
Hell, it's free money.

Their booking agent is excited about the band
signing to a major. He says they can maybe average $1,000 or $2,000 a
night from now on. That's enough to justify a five week tour, and with
tour support, they can use a proper crew, buy some good equipment and
even get a tour bus! Buses are pretty expensive, but if you figure in
the price of a hotel room for everybody In the band and crew, they're
actually about the same cost. Some bands like Therapy? and Sloan and
Stereolab use buses on their tours even when they're getting paid only
a couple hundred bucks a night, and this tour should earn at least a
grand or two every night. It'll be worth it. The band will be more
comfortable and will play better.

The agent says a band on a major label can get
a merchandising company to pay them an advance on T-shirt sales!
ridiculous! There's a gold mine here! The lawyer Should look over the
merchandising contract, just to be safe.

They get drunk at the signing party. Polaroids
are taken and everybody looks thrilled. The label picked them up in a
limo.

They decided to go with the producer who used
to be in Letterman's band. He had these technicians come in and tune
the drums for them and tweak their amps and guitars. He had a guy bring
in a slew of expensive old "vintage" microphones. Boy, were they
"warm." He even had a guy come in and check the phase of all the
equipment in the control room! Boy, was he professional. He used a
bunch of equipment on them and by the end of it, they all agreed that
it sounded very "punchy," yet "warm."

All that hard work paid off. With the help of a
video, the album went like hotcakes! They sold a quarter million
copies!

Here is the math that will explain just how
fucked they are:

These figures are representative of amounts
that appear in record contracts daily. There's no need to skew the
figures to make the scenario look bad, since real-life examples more
than abound. Income is bold and underlined, expenses are not.

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

Off-line: $ 2,000

On-line 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 $50,000 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: $ 7l0,000

--------------------------------------------------------------------------------
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

The band is now 1/4 of the way through its
contract, has made the music industry more than 3 million dollars
richer, but is in the hole $14,000 on royalties. The band members have
each earned about 1/3 as much as they would working at a 7-11, but they
got to ride in a tour bus for a month.

The next album will be about the same, except
that the record company will insist they spend more time and money on
it. Since the previous one never "recouped," the band will have no
leverage, and will oblige.

The next tour will be about the same, except
the merchandising advance will have already been paid, and the band,
strangely enough, won't have earned any royalties from their T-shirts
yet. Maybe the T-shirt guys have figured out how to count money like
record company guys.

Some of your friends are probably already this
fucked.

--------------------------------------------------------------------------------
Steve Albini is an independent and corporate
rock record producer who played in the band, Big Black, (and helped create the "hard industrial" sound that is making millions for others) most widely known for having produced Nirvana's
"In Utero".