Being Indie is Worth the Sweat and Tears

The advantages of being an Indie Artist are endless. The amount of control that you retain is worth its weight in gold. Being able to call the shots on all aspects gives you the freedom to put out the type of music, when you want, how you want, wherever you want is something every artist dreams of. Why be a slave to a record label that gets a higher percentage of the proceeds than you do. Lets face it you ultimately get paid last. The song writers also known as publishers and the producers get to reap the benefits long before you see a dime.

How Royalties Work:

Royalties can be paid on the basis of a royalty rate multiplied by the manufacturer’s suggested retail list price (SRLP) or on the basis of some “wholesale” price, sometimes referred to as the “published price to dealers” (PPD).

The artist’s royalty rate will of course vary depending upon the relative bargaining positions of the parties. Deal making is, after all, about who wants who more. However, generally speaking the artist’s royalty rate will run anywhere from 6% to 10% or perhaps a bit higher, when based upon the SRLP. If the label calculates royalties upon a PPD basis, the rate is about 60% higher than the retail rate but of course it is calculated on a lower base price. The artist may negotiate for an escalation of these rates as the deal progresses, either based upon sales (i.e. 7% up to x units, 8% for sales in excess of x units and so on), or higher in subsequent years and on subsequent albums. Note that I use the term “royalty rate” since this number is vastly different than the “royalty” the artist actually receives.

There are also deals for the artist which include a producer royalty, the so-called “all in deal,” in which the label will pay an additional royalty over and above the artist royalty to include a royalty for the producer, generally anywhere from 3% to 5% of the SRLP. Under such a deal, it is the responsibility of the artist to pay the producer out of the all in deal. Unless the producer is the same person as the artist, this all in deal can be tricky for the artist to make since often third party producers wish to be paid from the first record sold after the artist recoups. In such an instance, it may be that the artist is not recouped because the artist has several albums with the label but the producer is entitled to the producer’s royalties because the particular album on which the producer worked has recouped its recording costs. The artist is then in a cash flow bind since it owes money to the producer but has no money coming in. And if the artist is in a cash flow bind, likely as not so is the producer.

Investors:

The reality of it all is Investors don't like to invest in musicians because there is no guarantee on a R.O.I (Return of Investment) There is a huge risk in investing in an artist. Now does that mean you can't make it in the business? Of course not. If you look at musicians who are in the business now and successful they all have invested in their own craft and struggled to make it. A select few (who shall remain nameless) have had rich parents to support them and invest lots of money for them to come out in less than a year. That of course is rare. Most artist take 5-10 years for them to reach the level of success that will sustain them. Tre Songz is on his 4th album and is just now getting to the high point of his career after 10 years of working hard. Don't allow the struggle to discourage you. Work hard, build your buzz and keep your music fresh and you will see that it is all work the sweat and tears!



Author Jasmine Sanders
CEO Royalty Enterprise
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