How To Be A Broke Artist….

Call it what you will, ‘the paper chase’, ‘steady grinding’, or whatever, at the end of the day it’s all about the dollar dollar bill yaaall. But there’s more to the late great Biggie’s catch phrase: More money, more problems. The reality always is if you have a bigger plate at the free buffet, you’re probably gonna walk away with as much on it as possible. Now when it comes to artists who have ‘made it’, the buffet is three blocks long filled with crowds of taunters telling them we love you and buy everything. I mean, they do have an image to uphold after all. And isn’t it easier to spend money advanced to you for upcoming album sales? Of course! Just listen to the crowds, they love you! You’re selling millions presently………Three houses, Grammy’s, and marriages later you’re filing for bankruptcy. What the hell just happened?

Who’s Broke?

Well, we can ask Xzibit who’s going from pimpin rides to asking for one. More celebrities are going bankrupt at an astounding rate. Timbaland’s Miami house is in foreclosure as well as Chamillionaire’s Houston mansion, back in 08′ legendary Doug E. Fresh owed 3.5 million dollars on some homes in Harlem, and then there was Tony Braxton defaulting on mortgage payments over a $12,500 Bank of America debt. Notable artists who were at the top of the game at one point are now feeling the lowest of lows. The most recent bankruptcy filing was by T.L.C. group member T-Boz. According to her documents, she only pulls in $1,200 a month in royalties. That’s a pretty low number considering how much they still get airplay and t.v. play. It’s no wonder the world of endorsements and reality t.v. is becoming first nature for artists. They market themselves and 10 products in the first year nowadays just to maintain that cash flow. And we wonder why Lil Wayne rocking skinny jeans looking like a walking commercial break.

The Problem

One of the biggest problems artists have (besides the record contracts) is bootlegging (physical and digital). How many times have we looked up youtube videos or music and it wasnt from the actual artists’ page? Every one of them plays is one less the artist gets credited for. Digital music revenues grew by an estimated six per cent globally in 2010 to US$4.6 billion, accounting for 29 per cent of record companies’ trade revenues in 2010. Music video services such as VEVO and MTV are commanding significant audiences and monetising them by selling targeted advertising. YouTube remains the most popular platform for viewing music videos online, accounting for around 40 per cent of online videos watched in major markets. Justin Bieber’s Baby is the most watched music video online with more than 430 million views on YouTube.

Digital piracy continues to massively erode industry revenues, hitting jobs, investment in new music and consumer choice. The report comprehensively reviews the scale and impact of the problem. Notably:

  • Fewer new artists are breaking through globally. Total sales by debut artists in the global top 50 album chart in 2010 were just one quarter of the level they achieved in 2003
  • Traditionally vibrant music local industries, such as Spain and Mexico, are especially hard hit. In Spain, where music sales fell by an estimated 22 per cent in 2010, no new home-grown artist featured in the country’s top 50 album chart, compared with 10 in 2003
  • A study by Adermon & Liang of Uppsala University in Sweden found that physical music sales would be 72 per cent higher and digital music sales 131 per cent higher in the absence of piracy. The researchers concluded “piracy is the main cause of the decline in sales.”

So, though Vevo and Youtube and the Industry may try to zombify us with their marketing ploys, it’s the availability and control they have to do so.  If we really support our artists, we’d make sure the music we listen to is from their official sites. Remember that performance royalties are tracked and paid out by the performance rights organizations like ASCAP, BMI, SESAC, and SoundExchange.

Where Does All The Money Go?

Why, to the Record Companies of course! This is big business. The financial aspect of investing in music looks like this:

  • US-$5 billion a year invested in artists by record companies worldwide
  • Around 30% of revenues spent on artist development and marketing
  • $1 million to break a new artist in major markets
  • $160 billion “broader” sector employing two million people

A typical example of the breakdown of the costs of breaking a new act in major markets is as below:

Advance $200,000
Recording $200,000
3 videos $200,000
Tour support $100,000
Promotion/marketing $300,000
TOTAL $1,000,000

Such an advance allows an artist to give up their day job and concentrate on writing, rehearsing, recording and performing music. Advances are recoupable from an artist’s sales, but are not recouped if those sales do not reach certain levels, leaving the record company bearing the risk of investment. If the artist don’t make ‘that mark’ and the company is left in a deficit, guess who’s contract says the royalties rate will be in favor of the record companies?  The Artist. Here the artist is stuck with low royalty payments, but yet, depending on them for financial survival.  And back to what I had said earlier: physical music sales would be 72 per cent higher and digital music sales 131 per cent higher in the absence of piracy. T-Boz has a right to be mad if her monthly $1,200 royalty check could be almost $9,000-$12,000. Wouldn’t you? She can thank the ‘circle of investment’ contracts, technology and the public for her financial crisis. Considering how big the U.S. music industry is with it’s 35% share of world market value, I wonder if she’d be eligible for a bailout?  Lesson today folks: that’s how an artist goes broke.

References
http://www.ifpi.org/content/section_news/investing_in_music.html
http://entertainment.howstuffworks.com/music-royalties7.htm
http://en.wikipedia.org/wiki/Music_industry#Statistics

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