Record Company Guide

The
Complete Guide to Starting a Record Company

Third Edition Revised and Updated
Keith Holzman
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The Complete Guide to Starting a Record Company

Third Edition Copyright 2004, 2007, 2008 and 2012 by Keith Holzman. Published by Solutions Unlimited, 11500 San Vicente Blvd., Suite 407, Los Angeles, California 90049. Manufactured in the United States of America. All rights reserved. No part of this book may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the author, except by a reviewer, who may quote brief passages in a review. ISBN 978-0-9746580-2-5 Library of Congress Control Number: 2011914825
Acknowledgments
Id like to acknowledge the assistance and advice of a number of people who helped me through the task of writing this book. Four colleagues kindly checked and added choice portions to chapters on their particular expertise for the First Edition: Cary Baker of Conqueroo for publicity, Andrew Halbreich of Trace Elements/ Shrub Music for music publishing, William Hochberg of High Mountain Law for artist agreements, and Denny Stillwell of Mack Avenue Records and Artistry Records for distribution and marketing. My brother Jac Holzman, founder of Elektra and my cohort in music during our years together at Elektra and Discovery Records, made valuable suggestions. Kurt Triffet, Triffet Design Group, designed the web site. My daughter, Rebecca Holzman, the editor of the Second and this Third Edition, has assisted me in many ways. Feedback from my former UCLA Extension students, and from the schools using the book as a text, have been instrumental in making several improvements. Finally and most important Id like to thank my wife Jo, who held my hand and listened to me grumble whenever Id complain about writers block, software or other problems, who read this book in various stages and provided numerous cogent comments. She is my signicant editor for the book, and in life. Most of all I want to express my gratitude to her for being my best friend and soul mate during our many years together.
Note to the Reader

This Third Edition has been written to provide the reader with substantial information on how to start a record label. While its impossible to be completely comprehensive and inclusive, it strives to provide as much up-to-date information as possible to help you succeed. Numerous revisions and updates have been included throughout. Although Ive been in the music industry for more than forty years, Im not an attorney or accountant and I dont intend to replace legal, accounting, or other professional advice. Many aspects of creating a label require the assistance of such competent professionals familiar with the current record industry and common-business practices. In certain chapters, books and publications on the record industry are recommended. Reading some of these may be essential to understanding how the industry works. Therefore youre encouraged to read as much additional material as possible in order to be knowledgeable and up to date. Note: when I make reference in this book to he or him, it might just as well be she or her. This language is used to avoid the awkward he or she and him and her phrasing. Any service marks, trademarks, and product names mentioned in the book are assumed to be the property of their respective owners. The ideas and opinions expressed here are my own and may not apply to all start-up labels or in all circumstances. And since customs and situations change in these fast-moving times, certain aspects may be out of date by the time of publication. You might wish to check the books web site from time to time where updated information will be posted. http://www.recordcompanystartup.com/updates.htm I recommend you subscribe to Manage for Success, my free monthly email newsletter that deals with how to solve independent record label problems by emailing: mailto:join-solutionsunltd@mh.databack.com/ or by visiting the Solutions Unlimited web site and clicking on the subscribe button on most pages. Note that the names on this list will not be lent, rented, or sold to anyone. http://www.HolzmanSolutions.com/
Absorb and make use of as much of this book as you can. And above all, use your common sense, have fun, and bring forth great music!
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1. First Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2. The Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 3. Raising Start-up Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 4. The Art of Acquiring Talent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Understanding Artist Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. An Introduction to Music Publishing . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Setting Up Your Ofce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 41 59 79
7. Stafng Possibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 9. Planning the First Recording Project . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 10. Recording the First Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 11. The Ins & Outs of Pre-Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 12. The Lowdown on Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 13. The Complexities of Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 14. Post-Production Basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 15. Follow-up Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 16. Ancillary Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 17. Its a Wrap Almost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 Recommended Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229 About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
Introduction | 1
Introduction
My four plus decades in the record industry have been alive with an abundance of wonderful experiences working with outstanding artists and colleagues, many of whom became lifelong friends. There are countless memories of late nights in the studio, untold meetings huddling over seemingly endless possibilities for cover art, and innumerable conferences with artists, managers, and attorneys. Its all been richly fullling. After twenty exciting years with Elektra and Nonesuch Records, I took a sabbatical, and although remaining involved with music, I missed the excitement. So I subsequently started my own label, ROM Records. And Im glad I did because I learned what its like to run my own business and be responsible for everything. These numerous lessons have resulted in the writing of this book as an attempt to help other entrepreneurs fulll their own dreams of starting an independent recordcompany. Thus, this book is a primer of what you need to know, and what you must do, in order to start your own label. It contains the important facts youll need and points you to other resources you can access to help get your label off the ground. This third edition has been revised and updated to include more about the digital aspect of our business and the world of the Internet. Before digging in, however, I think its important that you look deep inside yourself to be sure youre aware of what youre getting into, and why you want to do it. You must be committed life and soul to the process, because itll be totally time-consuming and exhausting. It can also be exhilarating and life-enriching. Youll need passion and desire for both music and business in order to have a reasonable shot at success. From your own standpoint, you must enter into this venture with your eyes (and wallet) wide open, because it will be extremely tough on your energy, nancial resources, family, and life. Itll be fraught with pitfalls, but many rewarding opportunities. If youre considering starting a label for the money you think is in it dont! Unless youre extraordinarily brilliant or extremely lucky, you wont be making much if any in the early years. Later on, however, as you acquire experience and build a catalog, the opportunity exists to earn a respectable, and possibly even substantial income, not to mention priceless knowledge. Most important, you must love the music you want to release, no matter what genre or style it may be. I assume you do or you wouldnt have picked up this book, but your passion for music has to be so pervasive that its in your blood and under your skin. After all, the music is what counts and that will ultimately guide your efforts. You should have, or develop, a thick skin because youll encounter lots of negativity and rejection, sometimes from surprising corners, and frequently from those closest to you. Train yourself to turn No into Yes!
2 | The Complete Guide to Starting a Record Company
Above all, stay focused. Dont let events sidetrack or derail you from your goal. As Yogi Berra said, Youve got to be careful if you dont know where youre going, because you might not get there. Whether youre a musician who wants to build a label that releases your own performances, or an entrepreneur who loves music and wants to bring the creations of others to the public, you will have much legwork and research to do. Youll need to become familiar with copyright law; artist, publisher, and distributor contracts; how to make a recording, market, distribute, and sell it. Youll need to know a lot about music, and about business. This does not mean that you have to have a conservatory degree or an MBA. Thats what this book is for to guide you from conception to realization of your very own record company. There are different kinds and sizes of record labels. Some are very small, operated by just one or two people, and issue only a couple of releases a year. Others have extensive staffs and ship anywhere from twenty to forty or more titles annually. And then there are those in between probably the majority of independent labels today with modest-size staffs, releasing half a dozen to a dozen titles per year. Some labels that were started by musicians for the purpose of forwarding their own careers have thrived and now offer music by other artists as well. Such a label is Alison Brown and Garry Wests Compass Records, a successful and thriving purveyor of Bluegrass, Americana, and Celtic music. Another is Ani DiFrancos Righteous Babe label, which DiFranco started because she didnt want to sign with a major and wanted control over her recordings and their marketing. Its been extraordinarily successful. By the way, when referring to records, I mean all forms of recorded music be it compact discs, cassettes, LPs, DVDs, or downloads.
Who Should Read This Book

This book is primarily geared to the solo entrepreneur or to someone who, with a few associates, plans to build a small to moderate-sized independent label. However, theres a lot of information included for those who have more ambitious plans or who just want to know how larger labels deal with certain functions. Note that although this book is written in a linear fashion, many of the activities discussed will vary a great deal in their timing and many events and actions will undoubtedly overlap or may occur in a different sequence. As you begin the process, its vital that you bear in mind a number of things. First, educate yourself to the fullest. I will recommend many books and other resources that will be important, if not essential, in order for you to become fully knowledgeable. This is all a part of what I call doing your homework, for without it, youre likely to stumble over unnecessary obstacles and waste time and
Introduction | 3
money. Second, stay on track to your goal and dont allow yourself to be easily steered off course. Third, carefully detailed planning will be essential if youre to succeed. Its another part of doing the homework. Fourth, keep things simple. Youre embarking on a major venture, so when in doubt, less is more. Fifth, watch your cash ow and spend as little money as you can, particularly at the outset. Finally, and above all, think positive. Remember, this is an experience youll never forget. Its changed my life for the better, and hopefully will do the same for you.
A Little History
The last few years have seen an incredible insurgence of small independent labels that were started by music lovers or musicians. This is partially due to the availability of comparatively inexpensive recording equipment and the use of desktop computers as digital workstations for post-production, editing, and CD burning. Its also due to the Internet as a means of making the public aware of new releases from indie labels, as well as a way of selling from label-owned websites, online retail sites such as Amazon.com and CD Baby, and other locations where downloadable music can be legally purchased Apples iTunes Music Store, for example. Some interesting facts according to Billboard and Nielsen SoundScan, there were about 75,000 new albums released in the U.S. during 2010, compared to about 105,000 new releases. during the peak year of 2008. Of the 75,000 titles in 2010, the bulk 60,000 disappointlingly sold between 1 and 100 units, an average of only 13.3 units per title. At the other end of the scale, new titles that sold 500,000 or more had almost 18% of those sales as digital, the balance of course being CDs. The more popular a title, the higher the ratio of CD to download sales. Of the 105,000 titles sold in 2008, about half were digital-only releases. However, these 50,000 titles were responsible for only about 1.8% of sales of all new release albums sold in 2008. The number of actual physical titles was up about 3% from the previous year. Album sale of new titles equaled 149 million units in 2008, down 17% from 2007. This was about 150 million fewer (basically half!) the sales of new releases in 2001, just seven years earlier. In 2008 only about 950 titles sold 25,000 or more units, and these 950 titles accounted for 153 million sales, or about 82% of all new release titles. Also during 2008, only 1515 titles sold more than 10,000 units. In 2009 only 1319 sold more than 10,000, and in 2010 only 1215 sold more than 10,000. Up until 2008, the sales from new releases distributed by Indies had been consistent (about 37 million) even though the number of titles increased drastically. In 2008, Indie new release sales dropped 27% to 27 million units. The primary reason is the consolidation of much of the music industry into a handful of huge, multinational conglomerates that control the bulk of the business. These companies are Universal Music Group, Sony Music, Warner Music Group, and EMI of Britain (in the process of being sold, as of late
2011.) Music from these corporations is distributed all over the world, from Alaska to Zanzibar, and because they spend billions to advertise, market, and sell their music, they get the primary attention from the media. And the conglomerates not only distribute the music of their own wholly owned labels, they also handle printing, manufacturing, and distribution (so-called P&D deals) for some of the larger independents those theyve not already swallowed up by acquisition. Parenthetically, a P&D deal is one in which a major label handles all aspects of manufacturing and distribution for an independent label, but the label is responsible for all the other aspects of its operation. Theres more information on this subject in the chapter on distribution. As a result of this consolidation, musicians who have been dropped by the majors, who had contracts that were not renewed, or who decided they were fed up, have frequently taken control of their destinies by starting their own labels. Dolly Parton is one example, with her Dolly Records. A decision youll have to make fairly early on is whether or not you intend to align yourself with a major either by making a P&D deal, or just having them handle your distribution. Many entrepreneurs with a more modest approach may prefer a do it yourself method, and thats my recommendation in most circumstances. Whichever way you decide to proceed, you should be aware that youre about to begin one of the greatest, but probably one of the most rewarding, challenges of your life. This is not the rst time the industry has looked somewhat muddled and offered both challenges and opportunities for entrepreneurship. In the early fties, there were just a few large domestic record labels in the United States Columbia, RCA Victor, and Decca principal among them. The Lp had just been invented and the majors had excess pressing capacity, making it possible for edgling upstarts to enter the business. Thus Elektra, Vanguard, Folkways, and Atlantic, etc., began what became a long and eventful life for some of these labels. It was a lot easier then because getting started required relatively little capital. In fact, Elektra was started by two people, and with just $600! At that time, there were many independent distributors dotted all over the country that sold records only in their own regions. If one distributor didnt sell what you thought they should, it was relatively easy to replace them with another. And the distributors had their own local promotion and publicity staffs to supplement the labels efforts. Their salespeople intimately knew all of the retailers buyers, and they usually paid within thirty days! It was not unusual for a label to have twenty to thirty distributors, just for the U.S. As a result, all of its eggs were not kept in a single basket.
Introduction | 5
Initial Decisions
Before you get started doing such things as hiring an attorney and accountant or building an infrastructure, there are a number of questions you need to answer for yourself. These include: What kind of music do you plan to offer? Is there a sufficiently large public for your music to make it economically feasible? What size company do you want it to be? How will you finance the company? Will you be doing this alone, or with one or two partners? What will be the legal structure of the company (corporation, partnership, etc.)? Will you be working out of a home office, or renting space? If renting, how much space are you likely to need initially, and then for the first few years? How big a staff will you need one or two assistants, or a staff of a dozen or more? How will you distribute your music? Will you be linked to a major, or work with an independent distributor, or will you go it alone? Part of making the size determination is to do a thorough analysis of the kind of music youre going to release and what it will take to promote and market it. For example, country, rock, and alternative music require considerable nancial resources since radio promotion, a key factor in marketing these genres, is extremely cutthroat, and money talks. Those with the deepest pockets talk the loudest! This is also true for marketing, because listening posts and display space in the few record retail locations that still exist have become almost prohibitively expensive dont expect to get them for free! And dont forget the resources it takes to provide tour support to keep your artists working in venues where they can be seen and can start establishing their audience awareness and following. To achieve a substantial marketing presence, youll need a fair number of experienced employees, and this in turn will determine how much and the kind of space youll need to house them. Frankly, I dont suggest you even consider building this big a company unless youve had a considerable amount of both music industry and general business experience. On the other hand, if your interests are in folk, jazz, or classical music, for example, your marketing can be more modest, the staff quite small, and your requirement for funds appreciably less. You also have to consider the size of the company that seems ideal for your purposes. For example, do you want it to be a small, vest-pocket label with just one or two employees and whose essential purpose is to promote your own music with an occasional CD release? Or is this intended to be a venture with wide potential appeal that will require a staff of three to ten (or more) people and appropriate office space to support five to twenty releases over the first couple of years? A larger company will necessitate a substantial infrastructure. Ofce space requirements will have to be calculated based on the number of departments and the people youll need to staff them.
Youll have to have enough desks, phones, computers, printers, faxes, ofce copiers, etc., to handle the load.
Virtual Staff
For many years, Ive been a rm believer in what I refer to as a virtual staff. What this means is that you dont have to hire a lot of full-time employees especially not during the early days but can make use of the talents of as many experienced freelance contractors as you may need and can afford. For example, do you really need an art department when youre starting up? Instead, why not make use of the services of a skilled independent art director or a small team of graphic designers to come up with the look for your packaging and marketing print materials. The same can work for publicity and promotion. Use your network to nd qualied people. The advantage is that youll have the skills of clever people at your disposal on a pay as you go basis. An additional plus is that you dont have the overhead and payroll of a large staff, meaning you also dont have to pay social security or health benets. In fact, you might think about hiring one or two high school or college students as part-time interns. Theyll get to learn about the music business and youll get inexpensive, or possibly free, labor.
A Few More Thoughts

Should you decide to begin with a small label, you might be able to nance it with your own money or with additional help from family and friends. This will be discussed in more detail in Chapter 3 Raising Start-up Money. For a larger company, youll need to work up a comprehensive business plan (a wise idea for a venture of any size, and I urge you to do one even for a small label). The intention is that youll be looking outside your immediate circle of relatives, friends, and associates not only for necessary funding, but also to businesspeople and venture capitalists who might be willing to invest in order to support the label for a period of at least three years. Your carefully thought out and budgeted business plan will give you a good idea of how much money youll need to provide a solid foundation for the early years. See Chapter 2 The Business Plan. As I stated earlier, Im a great believer in planning ahead, and the business plan is but one of the many plans youll need to deliberate on while starting and building a label. In fact, careful planning is essential at almost each phase of what youll be doing. Once youve pondered all the questions and issues previously cited many of which well cover in detail further on youll want to get started! The following pages deal with what needs to be done.
Chapter 1 First Steps | 7
Chapter 1 First Steps

Building a successful record label requires many pursuits, especially during the early set-up days. There are certain things youll just have to do to stay on top of it all to build a solid foundation. First, you need to become as knowledgeable about the music business as possible, which requires a committed study of the recommended books and other resource materials. Theres a lengthy list of titles in the Recommended Reading section at the end of this book, and updates are occasionally posted at: http://www.cgsrc.com/updates.htm Read such industry publications as Billboard and CMJ New Music Report commonly called the trades whenever possible. Subscriptions are expensive (though tax deductible) so make frequent visits to your local library. If the library doesnt carry these publications, urge them to do so. http://www.billboard.com/ http://www.cmj.com/ Its also a good idea to stay on top of news about music and the recording industry in the daily newspapers. In particular, I recommend The New York Times and The Wall Street Journal, both in print and online. http://www.nytimes.com/ http://online.wsj.com/home/us/ There are also quite a few online publications and websites you might nd helpful, such as: http://digitalmusicnews.com/ http://musicthinktank.com/ Last, but certainly not least, I suggest you subscribe to my free email newsletter Manage for Success. Its chock full of sound advice and music industry news that helps with the day-to-day problems of managing a label. Send an email: mailto:join-solutionsunltd@mh.databack.com/ or visit my website and click on the subscribe button on most pages. Note that I will not lend, rent or sell the names on this list to anyone. Its used only for the newsletters or occasional special messages from me. http://www.HolzmanSolutions.com/ The business has been changing rapidly during the last few years, so you must keep informed in order to be knowledgeable about the latest activities. Second, network. Networking means staying in regular touch with friends and colleagues. Make them aware of what it is youre doing in the event they have other friends or colleagues who may be able to help you. It also means attending as many industry events as possible where you may be able to meet other like-minded people to add to your network. The larger your network grows, the more effective
it becomes. For example, in reviewing over sixty pages of notes that covered the rst six months of building my own ROM Records, I was surprised to see how well I utilized my network to gain valuable information. Frequently, this intelligence covered the kind of things not readily found in books. Third, I cant emphasize enough that you plan ahead. The more you do it, the easier it becomes. Everything about establishing a successful start-up involves extensive planning. So get used to it. Fourth, youre going to need to set up a simple ofce for yourself. It could be a small rented facility or a part of your home. This is where youll work on the preliminaries of building a label. If you decide to work at home and are unable to dedicate a room as an ofce, try to nd a corner of a room that can be devoted to these activities. Its not a good idea to have to clear off the dining table every time you want to work on business! For inspiration, you might want to glance ahead at the chapter on setting up your ofce and read about some of the things you may need in way of furniture, communications, computer gear, and software. Before you go any further, take a look at the website of the Small Business Administration (SBA). It has all kinds of very useful information about developing a start-up company. http://www.sba.gov/ Look particularly at the sections on starting and managing a business, the different types of business entities a subject well be dealing with shortly, and the section on business plans, which well address in the next chapter.
Professional Advice
Legal
First, and most essential, you should obtain the services of a good entertainment industry attorney, specically one with lots of music business experience. No matter what youll be doing in the early stages, it will involve legal matters. And since this will be the rst major decision you make, youre going to want to do it the right way. Be sure to ask for recommendations from as many of your colleagues as you can. Then interview the candidates who seem most appropriate and compatible. Not only will an attorney guide you in setting up the legal aspects of your business, but he can also assist you in handling your artist negotiations, write your artist contracts, and advise you on all other contractual and legal affairs. In fact, its best that you have your attorney handle negotiations directly with the lawyer representing your artists and distributor. The attorney will be a lot more experienced at it, and he has the advantage of saying to an opposing lawyer, Well, I need to consult with my client about that. Such comments give both you and the attorney time to ponder a decision. It may cost you more initially in attorney fees, but this expense will save you a lot of money and grief later on.
Try to nd a lawyer who has a personality compatible to your own, since youll be spending a lot of time with him, both in person and on the phone. Its also important that hes known for returning calls promptly. One well-known music business attorney is notorious for not returning calls! Its also benecial if he enjoys music, especially the kind of music you plan to release. When I had my own label, I would frequently run into my attorney at my artists local gigs. A good lawyer doesnt come cheap, and this is one area where you should be prepared to spend some money. A partner in a large law rm will have to charge you more than a senior associate in his rm, so you might consider working with the associate. But ask rst if one of the partners supervises him and looks at the contracts he drafts. This was the case with the attorney I hired for my label, ROM. I had the advantage of working with a young lawyer who had a fair amount of experience, but I was also aware that the managing partner, who Id known for some years, would be keeping an eye on things. Many attorneys bill by the hour, or fraction thereof. Sometimes the fraction is quite large as much as a quarter! For example, a ve-minute phone call might be billed as a quarter-hour rather than the actual one-twelfth, so ask at the interview stage how the billing works. Other lawyers want a negotiated retainer per month, which they request be paid in advance. This retainer will probably be based on the time they project spending on your behalf. Ask if you can get a at fee, or at least an estimate, for such things as drafting the standard artist agreement for your label, or for setting up a corporation, if thats what you decide to do. (More about that shortly.) Also, be aware that some rms charge a lot for sending faxes. Find out up front what these kinds of supplemental charges will be. Again, I cannot emphasize strongly enough how important your attorney will be to you, so chose one wisely and well.
Accounting
Next, youll need the advice of a very good accountant, preferably a C.P.A. (Certied Public Accountant) with music business experience. His role will be to advise you, along with your lawyer, about how to decide on your legal entity. This will be determined in part on your nancial assets, plus other factors such as the expected size of the staff and the amount of business you realistically expect to do. Later on, he should suggest how to set up your nancial books and records, discuss the most appropriate accounting software, tell you what reports to le and when, and determine the taxes youll have to pay. It would also be a good idea to review your budgets with your accountant before putting them into your business plan, as Ill discuss in the next chapter.
Legal Books for Study

In addition to the input youll receive from your lawyer and accountant, you should personally become familiar with the complexities of the law as it pertains to the music business, particularly in regard to contracts for artists, distributors, etc. Therefore I suggest you get your hands on one or more of the following books, either at your local library, bookstore, Amazon.com, or Barnes&Noble.com. http://www.Amazon.com/ http://www.BarnesandNoble.com/ Donald S. Passmans All You Need to Know About the Music Business, 7th Edition (Simon & Schuster). This is an absolutely essential guide to the legal and nancial aspects of the record industry. If you have time to read only one book about the business, this should be it. Passman has a relaxed, conversational style of writing about what is usually a very dry subject. He updates the book about every three years or so, and there will probably be a new edition soon. You should buy your very own copy of this one, and not borrow it from the library, because youll be referring to it frequently. Peter M. Thalls What Theyll Never Tell You About the Music Business: The Myths, the Secrets, the Lies (& a Few Truths), Revised and Upodated (Billboard Books). This is one of the most recent of the books and although its intended primarily for artists considering signing with a label, it has great insight into the talent-signing process. Richard Schulenbergs Legal Aspects of the Music Industry: An Insiders View (Watson-Guptill). This book covers almost every aspect of music business law, particularly contracts, breaking down legalize into readily understandable language. Jeffrey Brabec and Todd Brabecs Music, Money, and Success: The Insiders Guide to Making Money in the Music Business, 7th Edition (Schirmer Trade Books). Directed more to songwriters, composers, and those interested in music for lm and television, this is a good supplement to Passman, but is not as essential. Its updated every few years.
Now read as much of the above as you can. You wont get quizzed, but the more carefully you read and understand whats written, the fewer problems youll have when dealing with contracts and the other arcana of the business of music. Itll make things much easier for you, and youll be a lot more knowledgeable when you start interviewing for an attorney to represent you and your edgling label.
Your Legal Structure

Youll need to consider your labels legal structure. I wont go into this in detail, but your options include Sole Proprietorship, Partnership, Corporation (S-Corp or C-Corp), and LLC (Limited Liability Corporation) and these are just some of the possibilities. However, no matter what you decide, papers will have to be led with an appropriate governmental agency. In addition to the Small Business Administration (mentioned earlier), an excellent source of information on legal structures for businesses, and on the law in general. is Nolo.com. I nd this site to be wonderfully helpful on many subjects, particularly business and law. You might also look at LegalZoom. http://www.nolo.com/ http://www.legalzoom.com/ Briey, a C-Corporation is a legal entity and is the most complex and the most expensive business to set up. It might not be the appropriate choice if youre going to be predominantly self-nanced, are ying solo, or have only one or two partners. On the other hand, other than fraud, it provides you the greatest protection from liability. You establish a corporation at the state level, but the rules vary with each state. Because its a business entity, a corporation les its own tax returns. A Subchapter S-Corp is also a legal entity, is somewhat easier to establish, and will shield you to a certain extent from personal liability. It requires that regular reports be led with your state. Prots and losses from an S-Corp ow through proportionately to the personal tax returns of the shareholders who control it. It also requires that if the shareholder works for the company, and if theres a prot, he must pay himself wages that are comparable to normal such salaries for the position, the type of business, and the geographical region. And since the corporation is an entity and not a person, going bankrupt doesnt affect the personal assets of its ofcers. A Partnership is a business with more than one participant that has not led formal papers with a governmental agency. Its simple to construct and maintain, but the business owners are personally liable for debts, lawsuits, etc. Although its not necessary to have a contract between the partners, its a good idea that there be one specifying responsibilities and ownership, what happens if theres a major disagreement between the partners, and how to divide the assets if the partnership is dissolved. A Sole Proprietorship is the cheapest to set up and the easiest to organize. You are free to make your own decisions or mistakes, receive all income to keep or reinvest, and prots ow through to your personal tax return. Typical employee benets such as health insurance are not directly deductible from your business income. The biggest drawback is that it offers no protection from liability, and going bankrupt will affect your personal credit status. A Limited Liability Corporation (LLC) is somewhat similar to a partnership. It can be established by one or more shareholders and has certain tax advantages. Most important, it provides the liability protection of a corporation. Its somewhat more complicated to establish than a sole proprietorship,
but is a lot easier than an S-Corp or C-Corp, and currently appears to be the most prevalent legal structure for start-up labels. As discussed earlier, your lawyer and accountant will advise you on the best type of legal structure for your purposes. The choice is likely to be based mostly on the extent of personal liability youre willing to be exposed to and the tax advantages or disadvantages that best suit your unique circumstances.
Label Name
While youre doing all of the above, you should be thinking of a clever and euphonious name for your label something that communicates the essence of the records you plan to issue. In the future, this may become one of your companys most valuable assets, so spend some time on the name, and chose it carefully. Aim for making the name easy to remember, and its always a good idea if it relates to the music youll be releasing. For example, Ive always thought that Folkways was a great name for a label because it clearly indicates the labels devotion to folk music. Lost Highway is another, more recent label whose name cleverly evokes its music. On the other hand, naming a label after yourself is not usually a great idea, unless your name is Geffen. Actually, David told me one August day in 1974, when we were discussing moving Elektra/ Asylum/Nonesuch to the West Coast, that hed never start another record label, and certainly not name it after himself! He obviously changed his mind. It also helps if the rst letter of your labels name is early in the alphabet. When distributors decide to pay their suppliers a seeming rarity in itself they commonly look at their accounts payable starting with A and ending with Z. The earlier you are in the alphabet, the likelier you are to be paid!
Trademark & Domain Name Checks

After youve decided on the ideal label name and hopefully youll have a few alternates in mind in case your bright idea has already been taken you should do both a trademark search and check Internet domain availability. This is to be sure that your chosen name is not already taken. You can do a quick and dirty check on the web using a search engine such as Google but not nding a name already in use doesnt mean there may not be an existing legal trademark. http://www.google.com/ You can then do a domain name check at one of the whois databases: http://www.internic.net/whois.html http://www.whois.net/
If you havent found someone already using your preferred name by utilizing the above tools, I recommend having a trademark service such as Thomson CompuMark do a more thorough label name availability search on your behalf. Their fee is well worth your peace of mind. http://compumark.thomson.com/ Thomson CompuMark have described themselves as the global leader in trademark research and brand protection. They can explore key music industry and copyright sources to identify the existence of names in current use. Their coverage includes the U.S. Copyright Ofce for records since 1978, their own proprietary database of music-related sources, U.S. Federal and State trademarks in entertainment-related classes, and all domain names with .com, .org, .edu, .net, and .gov sufxes. They can be reached on the web and at Thomson CompuMark, 500 Victory Road, North Quincy, MA 02171, phone 1-800-692-8833. They also have ofces in many major cities. You can call them for a copy of their Rates and Services Guide. You might also do a check at the website of the U.S. Patent and Trademark Ofces Trademark Electronic Search System. http://www.uspto.gov/smallbusiness However, I suggest you read their How To pages rst. http://www.uspto.gov/main/howdoi.htm By the way, although you can and should use it, you cant actually register your label name and logo until youve shipped your rst commercial release through interstate commerce. You can then protect your logo, which will become the registered trademark, after ling some paperwork and paying fees. You can do this yourself, but its advisable to have an attorney whos familiar with trademark registration handle it for you. Once youve received governmental approval of the trademark, you should be sure to place a (register mark) next to the logo, denoting its registered and protected status. This registration is only valid for the U.S. Note that until you become a large company, it would be prohibitively expensive to register around the world.
Domain Name Registration

Register your label name as an Internet domain with a domain name registrar as soon as possible. There are many such registrars. Ive heard good things about GoDaddy who claim to be the worlds largest registrar, and may be one of the least expensive: http://www.godaddy.com/ So many names have already been registered that dot com domains are becoming harder to get. Its also a good idea to register likely variants on your name to protect your future. If your preferred
com domain is unavailable, consider using a biz domain. Since this type of domain has been available for a much shorter time, more names will be available. As a matter of fact, Ive registered my business with a number of different domains, all of which are active links to my site: http://www.HolzmanSolutions.com/ http://www.Holzman-Solutions.com/ http://www.KeithHolzman.com/ http://www.SolutionsUnltd.com/ and even http://www.ManageForSuccess.com/ When I wanted to register a domain for marketing this book, I discovered that most of the names I wanted were already taken by various start-up ventures. Therefore I registered both RecordCompanyStartup.com and its variant RecordCoStartup.com as domains, as well as the leading initials of the books title: http://www.cgsrc.com/
Email Address
Once youve registered your labels domain name you should assign it to an ISP (Internet Service Provider) or leave it with the domain registrar, many of whom can provide web hosting and maintenance of your own domains email addresses for very little extra cost, if any. ISPs are available all over the country and include Earthlink, COVAD, and many others. http://www.earthlink.net/ http://www.covad.com/ One of the nice things about having your very own domain is that it can make your email address be distinctive to your business, such as Joe.Doe@YourDomain.com. For example, Im Keith@HolzmanSolutions.com. This is much more professional than using an AOL, Gmail, or Yahoo address.
Your D/B/A (Fictitious Business Name)

Talk to your attorney about the advisability of creating a D/B/A, which stands for Doing Business As. Depending on your local or state law, most businesses that operate under a ctitious name are required to complete a ctitious business name statement, publish the statement in a newspaper of general circulation, and then record this information with the County Recorder where the business is located. Corporations are generally exempt, as are businesses that use the individual proprietors own name. If you are doing business as (d/b/a), generally you need to comply with your local ctitious business name rules. Your attorney can advise you of the appropriate ofces to contact.
Business Licenses & Tax Registration Certicate

Your lawyer may also advise you to take out a business license with your local city or county, as might be required by local statute. In any event, youll probably have to get a Tax Registration Certicate and a Resellers License, which can be obtained through your states taxing agency.
Logo & Business Stationery

By now, youll need some sort of business-like, professional-looking letterhead. This is a good time to have a qualied graphic artist design your logo. Try to nd a designer whos experienced at logo design, which is a highly specialized eld. A graphic artist who may be great at laying out CD covers, advertisements, and posters, for example, may not be skilled at creating a unique and eye-catching logo. Your logo should try to express the nature of the music youll be working with, and it should be attention-grabbing and attractive. Be sure that it reproduces well when reduced to tiny sizes, as is frequently necessary. In some cases, a designer will create a logo for regular use, and a variant with thicker lines when it has to be greatly reduced. If you simply cant afford a professional designer, try a local art school. An enlightened instructor, working with seniors or graduate students, may make designing your logo into a class project. You can then award an appropriate, but modest cash prize to the winning entry, or give a cash gift to the school. A temporary alternative, while youre putting your company together, is to use a simple type only letterhead. Although a bit cheaper, it wont create as good an impact on people you might want to impress. The letterhead block can be printed on the y by your laser printer at the time you write correspondence, prepare faxes, etc. When you have your designed logo and other elements in hand, I suggest you print only as much stationery (letterhead, envelopes, business cards and mailing labels) as you think youll need initially. Youre liable to have to make changes due to relocating your ofce, changing phone numbers, etc. Most important, be sure your rms email address is on the letterhead and business cards, and when the time is appropriate, include the URL for your website as well.
UPC Bar Code

Its probably not too early to obtain your labels unique number for your UPC bar code. This will be the rst ve numbers of your catalog number (not including the small leading prex digit). And it will be part of the bar code on the back of your CD.
Its absolutely imperative that you bar code all your releases. Without it most if not all distributors will not carry your label. Used to track sales and inventory, the bar code is essential if youre interested in getting your sales counted by SoundScan. And its SoundScan numbers that will determine your chart positions in Billboard, the leading industry trade paper. More important, it provides extremely valuable information to you, the label owner. So if you can afford it, I suggest you subscribe to their service for an important release. Be aware that not all sales are scanned, particularly in small retailers, but SoundScan has developed algorithms that attempt to account for locations without capability for scanning or reporting. http://www.nielsen.soundscan.com/ You should apply for your UPC Number from GS1.US. Detailed facts and an application are available online. The minimum (and likely) fee for a new label is currently $760. Their phone number in Dayton, Ohio is 937-435-3870. http://barcodes.gs1us.org They will supply you with your leading and next ve digits and you will supply the rest of the catalog number. Lets say, for example, that they supply you with 099999. Your rst release might then be 09999-91001-29.
99999 10012
Note that in the above example the catalog number (5 digits) begins with the last digit that you are given a nine. The next four numbers can be anything you want, but its best that you create a sequential set starting with 1001. The number after the second hyphen used to be the product conguration number. For example, 1 stood for LP, 2 for CD, 4 for cassette, 7 for vinyl singles, etc., but this no longer applies. The nal number, a small 9, remains as a check digit and is usually created by the bar code software that you or your designer should have. The very rst number, in this case a zero, is a number system character, and is supplied by the folks at GS1. If you buy one of the bar coding programs, you wont need to order special lm for each new release. Look for software that draws bar codes in the UPC-A format which is the one used by the record industry. Computalabel International has an excellent website that provides a great deal of information about bar codes and their usage. Their MBC4 for the Macintosh is an excellent program. For the PC, you might look at B Coder Pro from TalTech. http://www.computalabel.com/ http://www.taltech.com/
There are limitations to how the bar code is displayed on the inlay card, which well cover later on in the graphics design portion of the chapter dealing with pre-production. By the way, note that the sample bar code above is full size and not truncated or reduced. You should also be aware that the music industry might change to a 13-digit number in the next few years, so try to buy software that anticipates such a change and can handle it.
Bank Account
Open a business checking account at a conveniently located bank, particularly one that might have a start-up, entertainment, or entrepreneurs division. The account should be in the corporate, partnership, or other ofcial name. Even if you decided that your label should be a sole proprietorship, I still suggest you have a separate bank account for the business, and that you keep all of its nancial records and accounts completely separate from your personal ones. Try to establish a close relationship with your banker. He can be very helpful during the capital acquisition phase, and even after youve started rolling, so choose your bank and banker carefully. Youll probably be spending a lot of your and/or your partners own money until youre fully funded. So your checking account, not to mention your credit card account, will help you keep track of the details of what youve spent during the preliminary stages. In fact, its a good idea to get a simple accounting or checkbook program at the earliest possible stage in order to keep track of your expenses. Examples are Quicken and QuickBooks, both of which exist for PC and Macintosh. More sophisticated programs include AccountEdge for Windows, and AccountEdge for the Mac. You can also use a spreadsheet program such as Microsoft Excel, but it wont be quite as easy. http://www.intuit.com/ http://www.accountedge.com/ Be sure to save all your business receipts for tax purposes. And when it comes to taxes, be sure your accountant takes deductions for expenditures such as this book, and depreciates all necessary capital expenditures such as computers, furniture, software, etc.
Insurance
Discuss possible kinds of insurance with your lawyer and accountant, including at what stage of development you should have some. Moreover, they can probably recommend qualied insurance brokers that theyve worked with. Youll want to be certain that your ofce equipment is insured. It may already be covered by your homeowners or renters policy if you have one. However, these things are sometimes explicitly excluded if used for a business, which means youd have to purchase such coverage separately.
If youre using your home and have part-time or full-time employees working there, be sure you obtain sufcient liability insurance. And as soon as you have employees, you should also get a workers compensation policy. Once youre established, you might also consider a business interruption policy to cover what happens if an earthquake or other disaster should keep you from operating for a period of time. A good insurance broker can advise you as to all thats necessary.
First Steps Check List

Read the trades. ______ Read the recommended legal books, especially Passmans All You Need to Know.... ______ Network at all opportunities. ______ Set up a basic starter ofce. ______ Interview and hire a music business attorney. ______ Interview and hire an accountant. ______ Decide on your legal structure and set it up. ______ Choose a label name. ______ Do a trademark and domain name search. ______ Register your domain. ______ Get an email address for the label. ______ Establish a D/B/A if necessary. ______ Get a Business License and Tax Registration Certicate. ______ Design a logo. ______ Get your business stationery printed. ______ Apply for a UPC bar code number. ______ Open a business bank account. ______ Buy insurance, if necessary. ______ Keep planning ahead. ______
Chapter 2 The Business Plan | 21
Chapter 2 The Business Plan

I believe its essential that you write a comprehensive business plan. First, it will be one of the key tools youll use to raise investment capital or to secure a loan, if necessary. In addition, the plan should be complete enough to be useful as an operating manual, or road map if you will, for your labels rst years. The operating manual should provide a clear direction and vision for your label, yet be sufciently exible so you can course-correct as dictated by the releases, marketing conditions, and prevailing circumstances. Furthermore, an honestly constructed business plan is an important reality check for the entrepreneur. In summary, its both a tool to attract investment capital or secure loans, and a vital management and planning device. Cover all the bases in the plan, but write it simply, avoiding industry buzzwords or business jargon. Be realistic in your nancial projections so you can see and identify potential snags, and whether any problems can be solved. There are a number of books on this subject as well as a great deal of software to assist you. A Google search for business plans revealed many thousands of websites on the subject, many with sample plans and outlines. If you decide to purchase business-plan writing software, be sure it conforms to your particular business and what you want to achieve with it. Not all canned plans will work for the record industry; in fact, probably very few will. Make use of the ideas and formats, not the content. Whatever tools you decide on, be sure that you cover your subject extensively yet not exhaustively. Some business plans are extraordinarily lengthy, detailing every conceivable circumstance of the companys operations. Although I think your internal operating plan should be comprehensive, the business plan shouldnt be so long that its unlikely to be read thoroughly by potential investors. Fifteen to thirty pages should be more than enough and, in some circumstances, ten to fteen may be sufcient. Also, bear in mind that the document will vary depending on the type and size of record company you want to build. For example, if youre not planning to ask for outside funding, itll primarily be used as your road map and can be fairly brief. However, if youre planning to raise money from family, friends, or independent investors for a somewhat more substantial label, itll need to reect more of the business and mechanical aspects of the labels operation. Finally, if you need to raise substantial capital, itll have to be considerably more comprehensive. As you create your business plan, dont be afraid that someones going to steal your ideas. Other than talent, very little has happened in the last few years as to how independent record companies operate. So youre unlikely to be ripped off by showing your business plan to interested parties. Chances are nothing youve come up with will be enormously revolutionary.
A Model Business Plan

There are many different formats you can use for a business plan. What follows is my suggested model, with the parts that I recommend you include in yours.
1. Executive Summary
This summary is the single-most important part of the plan and should contain all the salient facts who you are, the type of music youll be releasing, what youre trying to achieve, and who your audience will be. Youll want this info all at the beginning of the plan. Organize the summary in order of importance, and try to keep it to one page. Write this section rst, as it will help you crystallize your thinking and make the rest of the document easier to draft. Its essentially your entire plan in miniature and should be succinct, logical and, most important, fascinating if not seductive! If a reader goes no further, he should come away with a good idea of what you plan to achieve. Ideally the summary should be so engrossing as to encourage reading all the way through to the end. The point is to capture a potential investors attention. Some professionals suggest you write the executive summary after youve written everything else, making it truly a compact version of your plans. Thats O.K. too. Whichever approach you decide to take writing it rst or last is entirely up to you.
2. Products and Mission Statement

This section describes the type of music youll be releasing and what makes it special. Make it so engaging that the reader will want to hear the music for himself. Explain the timeline of events, such as when you plan to put out the rst and then subsequent releases. Should you decide to develop a music publishing division, or other related adjunct as part of the company, ideas on that should be included here. Then write about what youre trying to achieve, and what your long-range goals are. You dont need a comprehensive ve- or ten-year plan; however, you should be clear about the labels rst two to three years, with a vision of what youd like to achieve once the label is established on a rm footing.
3. Management Plan (Company Overview)

Include information about your legal structure, such as a Sole Proprietorship, Partnership, Limited Liability Corporation, S-Corporation, C-Corporation, etc. You might want to include information about any special licenses or afliations (American Federation of Musicians, AFTRA, ASCAP, or BMI,
for example) that you may have or plan to obtain. Well discuss the above-mentioned unions and performance rights organizations in later chapters. Touch on your infrastructure and operations, such as the kind and size of ofce space youll require, where its likely to be located, and whether its leased or purchased. Discuss stafng. For example, mention how many people youll need, and when youll need them. Personally, Im a great believer in hiring as few people as possible, utilizing non-salaried freelancers as necessary, and bringing on salaried personnel only when essential to the daily operation of thebusiness. Write about your plans for manufacturing, if applicable. Almost every independent label outsources this function, utilizing the services of independent printing and manufacturing plants. Youll probably be purchasing print materials, CDs, possibly LPs and cassettes only as needed, since judicious and savvy inventory management is vital to keep costs manageable and under control.
4. Market Analysis and Competition

The music business is a multi-billion dollar industry, so dont exaggerate the potential market for your product. Be sure to explain your musical specialty or niche, what makes your music unique and sales worthy, and what percentage of the market it may take. For example, jazz and classical each represent only about 4 to 5% of the entire industry; so if youre going to be a jazz-only label, for example, your market segment is but a small portion of the whole. All the labels releasing jazz music will share this segments potential, so be realistic here. This is not the time or place for hype. Write about your likely customers who they are and what their musical preferences may be. Where are they most likely to purchase your products? Discuss the competition, if any, for the music youll be issuing, and how your music may differ from theirs. What will differentiate your label from all the others?
5. Marketing and Sales Strategy

Explain how youll go about marketing and selling your music, including how you will distribute, publicize, and promote the releases. Do so in general terms without going into excessive detail. At the same time, dont give away any unique or proprietary ideas that could be copied or used by others before your recordings reach the market. You might want to discuss your pricing strategy whether youll be full line, medium, or budget. Consider whats happening in the music industry currently, and decide if youll be pricing in the same category as the majors, or if youre going to try something different. For example, if your competition is priced at $14.98 or $16.98, perhaps youll price your front-line releases at $11.98 or $12.98. This assumes youve worked out the numbers and can be protable at a lower suggested list.
Discuss your approach to online sales. Will you be using an aggregator (see Chapter 12) or will you do it yourself? What percentage of your total business do you anticipate will consist of online sales?
6. Management Team
This section describes who you and your associates (if any) are, stating music industry or other business experience and education. It should also incorporate projected job titles and responsibilities. Dont go into long biographies here. Just list the high points that project you and your staff as industry professionals.
7. Financial Plan
This should include simple and clearly delineated spreadsheet top sheets, with realistic costs and potential sales projected for the rst two or three years. By top sheets, I mean the summary pages, although you should go through the entire process of generating all the underlying pages that wont be included in the business plan, but that will include all of the minutiae of a comprehensive budget. You should enumerate projected income from sales of each release, and all the costs of operating the business for a period of time the rst two years, for example. This way, if a potential investor wants to see more detailed numbers, theyre available just not included in the plan for sake of simplicity and brevity. Be sure to include everything in your underlying budget that you can possibly think of. Consider all the possibilities in your planning, but settle on those that seem most appropriate for your purposes. Youll want to include an ROI (Return on Investment) statement and when such a return is expected to occur. Include Break-even Analyses and Cash Flow Projections. I strongly urge you to enlist the aid of your accountant in preparing this data, which will help insure accuracy as well as the customary formatting. Sidebars on budgeting, and suggested items to include in the budget, appear later in this chapter, and should be very helpful as you draft your projections.
8. Potential Risks and Opportunities

Once again, be realistic in this section. The music industry has always been a calculated gamble, so be sure to indicate this by expressing what pitfalls could occur. This section is, by its nature, always a negative but needs to be there to keep you honest! On the other hand, you can express what upside potential there may be when a release strikes the publics fancy, becomes a big hit, and how that may benet the company and its investors.
9. Exhibits
This could include information about your rst artist signings, and additional spreadsheets such as a typical Recording Budget, etc.
10. Capital Requirements (optional) & Exit Plan

Some business plans include the specic dollar amounts that management is trying to raise. If you want to do that, include the number in this section. However, some business plan gurus recommend that you not state the capitalization amount at all in the plan, presumably for reasons of both fundraising exibility and a desire not to scare off potential investors. Also, some plans include a suggested exit strategy so that investors will know how and when they might be free to withdraw their investment and share of prot. This would be at such time that the company has become well established, is operating on an even keel, and is in a protable position. This is a statement from management that species the anticipated timing of such an exit, or other variants that they might deem appropriate. As part of the exit strategy, you should indicate whether you, or any other senior managers, plan to stay on to run the label if the company is sold or after the investors recoup or whether you plan to run all the way to the bank!
Budgeting
You should start the budgeting process by creating a new spreadsheet, using a program such as Excel. Estimate all the releases youll put out in the rst year, guring out when you expect each one to hit the street. Approximate how many units youll sell during each of the remaining months of the year. Heres an example. The Doorstops, a new rock band with a fanatical local following, will ship in March. Estimate your pre-release expenses for that project in the months prior to street date; also estimate sales by month in units, and in dollars (based on when you think youll actually receive funds from your distributor). Then factor in the marketing expenses for this project for the months in which theyll occur. In addition, in June you expect to ship a new CD by Suzy Troubadoura, an exciting, young singersongwriter. So plug in the estimated costs of recording and marketing, followed by sales income for the months in which you expect to receive payment. Continue in this fashion for each new release.
Next, estimate all of your other costs of sales, and all general and administrative expenses, which include staff salaries, fees for independent or casual help, rent, phone, fax, Internet, website, and all other customary and projected overhead items. Total all the above. Will you be able to survive? In other words, will there be sufficient income from sales to cover the costs of making and marketing the recordings, and for running the label? If so, great! Youre on the right track. If not, youll have an excellent idea of how much capital youll need to raise so that you can stay aoat until the numbers start showing a prot. Once you actually begin operating the label, you should update the budget by replacing estimated numbers with actual costs and income as they occur, keeping the road map up to date. Or, coursecorrect if necessary, making whatever changes you need that will keep you alive and in business. For the second, and each succeeding, year, youll add to your new release estimates all your projections for catalog sales by month, as above. (Your catalog will consist of all prior years new releases.) The result will give you a good idea of projected sales income over a period of time. Also, add any licensing income that is anticipated. This comprehensive detailing is the essence of effective budgeting, and it should be applied to all aspects of your operation. Prepare budgets for each new recording project, and when the master is completed, compare the actual numbers to those budgeted. How well did you estimate? Use this experience in preparing the budget for the next project. Do the same with all marketing expenses (radio promotion, publicity, advertising, etc.) on a projectby-project basis. But most important, keep track of the actual numbers and compare them regularly to the projections. The more you do this, the better youll be at creating new budgets, and the more effective youll be as a label manager.
Typical Budget Items for the Business Plan

Note that many of the items listed below may not apply to a small start-up, but theyre included as a guide to be sure youve not forgotten something. Typical Start-up Expenses Legal Accounting Other Professional Fees Ofce Rent Licenses/Permits Talent Advances Salaries/Wages Payroll Expenses Outside Services (Freelance Staff) Supplies Utilities Insurance Capital Equipment Purchases Capital Equipment Leases Income Projections (Prot & Loss Statements) Income projections show whether youll be in a prot or loss position for selected periods of the year. They should preferably include a three-year summary, detailed by each month for the rst year, and by quarters for the second and third years. Income (or Revenue) Sales Domestic Sales Foreign Sales Online Sales (both Domestic and Foreign) Mail Order Artist Sales Licensing Income Publishing Income (if applicable) Operating Budget (may be separated into xed and controllable expenses) Fixed Expenses Ofce Rent Equipment Leases Depreciation Insurance Utilities
Controllable Expenses Costs of Goods Sold Graphics Production Printing Pressing & Duplication Royalties (projected) Artist Producer Mechanical Freight Returns Processing Recording Costs Artist Advances Producer Advances Studio & Engineering Producer Engineer Musicians Instrument Rental Tape Mastering Salaries/Wages Payroll Expenses Employee Benets (Health Insurance) Outside Services (Freelance Staff) Sales & Marketing Publicity Promotion Advertising Marketing Aids Promotional CDs Conventions & Meetings Travel Loan Payments Bank Charges Legal Accounting Dues & Subscriptions Fees Insurance Phone, Fax Messenger & FedEx Postage
Internet Website Design & Maintenance Entertainment Expense Travel Printing & Stationery Supplies Repairs & Maintenance Janitorial Utilities Taxes Miscellaneous Expenses Balance Sheet Current Assets Cash Accounts Receivable less Reserve for Returns Royalty Advances Deferred Production Costs Inventory Prepaid Expenses Fixed Assets Master Recordings (Note: some labels treat Masters as a xed asset; others as a capitalized asset subject to amortization.) Archives Copyrights & Trademarks Furniture & Fixtures Ofce Equipment Computer Equipment Sound Equipment Leasehold Improvements Total Assets Liabilities & Equity Current Liabilities Accounts Payable Royalties Payable Equity Capital Retained Earnings Total Liability & Equity
Cash Flow Projections Cash ow projections illustrate how youll be spending and receiving money in a given time period. Itll show whether youll have cash on hand, or how much in the hole you might be. Do projections for each month for the rst year, and for each quarter for the second and third years. Once youre operational, its essential that you do a cash ow analysis every month. Break-even Analysis The purpose of this is to show what youll need in monthly income to stay aoat.
Business Plan Check List

Do your homework by looking at the existing plan-writing software. ______ Make sure that your writing is simple and straightforward. ______ Thoroughly work out all details on paper before you write. ______ The Executive Summary is the most important part of the plan. Make it that way! ______ The Product & Mission Statement should describe your genre of music, timeline, etc. _____ The Management Plan should explain the type of company, infrastructure, and staff. ______ The Market Analysis & Competition section should position you in the industry. ______ The Marketing & Sales Strategy section should discuss pricing, distribution, and marketphilosophy. ______ The Management Team section should cover key personnel. ______ Your Financial Plan should project income and expenses in a clear-cut form. ______ The writing of the Potential Risks & Opportunities section should be candid. ______ The Capital Requirements & Exit Plan sections (both optional) should be frank. ______ Budget the entire operation thoroughly for the rst two years. ______
Chapter 3 Raising Start-up Money | 33
Chapter 3 Raising Start-up Money

Once youve completed your comprehensive business plan, it can be used to raise the money needed to get you in business. While you were in the process of writing and rening the plan, you should have been thinking about who you might approach to invest in your new venture. Hopefully, youve already made up a good list. Obviously youll rst tap close and not so close family members, friends, and associates, as theyre the most likely candidates. They know you and may want to help you get started, especially if the investment units are not too expensive. In their own minds, they may even consider it a gift and not an investment. You and your accountant will decide what shares should cost, based on what you need to raise to operate for a substantial period of time. Too many start-ups not just record companies undercapitalize themselves by not raising sufcient funds to see them through the rst couple of years of limited cash ow. Youll need that time to build an artist roster and to establish the foundations for a solid business. Should you decide to seek a P&D (Production and Distribution) deal with a major label well discuss this in more detail later in the chapter on distribution you may need less start-up capital. The major may supply much of the infrastructure support, as well as some seed money. However, this only applies to someone with extensive music industry experience, whos become well known in the industry and has developed a name for himself. Surprisingly, sometimes its easier to raise a couple of million than just a few hundred thousand! Be aware that, unless you have substantial personal assets, youre unlikely to be able to obtain a bank loan. Banks tend to frown on the record business and see it as too risky a venture. You might enlist the help of your attorney, accountant, or other professional adviser in the raising of capital. They have many useful business contacts and may be able to introduce you to someone with deep pockets that could be interested in what youre trying to achieve. Unless youre experienced in the music industry and have substantial business experience, it may be difcult to be taken seriously by professional investors. Take the advice of Guy Kawasaki, CEO of Garage Technology Ventures, a boutique investment bank for high technology ventures, and stick with the 3Fs: Friends, Fools, and Family. Because friends and family know you, theyre the most likely to be interested in what youre trying to do and will want to support you in achieving yourgoals. http://www.garage.com/ Kawasaki also suggests that if you decide to seek professional investors, you should surround yourself with a board of directors or advisers people with grey hair, no hair, and stents instead of nose earrings. It will be much easier to be taken seriously. (Stents are devices inserted in blood vessels of heart patients to aid blood ow.)
Before you look to professionals, however, seek out local businesspeople whose operations might be compatible with yours. Determine who is supporting cultural activities locally. You may just nd someone in your own town whos interested in what youre doing and whos willing to invest. However, should you decide to go the route of typical business investors, such as venture capitalists, do so only if you need to raise a lot of money $2 million or more. A search of the web or local telephone directory will give you the names of venture capitalists or associations in your local area such as The Los Angeles Venture Association. You might also investigate resources available at the VC Fodder website. Be aware though that professional investors are unlikely to put money into a record label unless the principals are highly experienced music industry professionals with an existing and highly credible track record. http://www.lava.org/ http://www.vcfodder.com/ Companies that tend to successfully raise venture capital have the following characteristics in common, per Vcapital: 1. Real likelihood of achieving a signicant ROI (Return on Investment) of 50% or more in three to ve years, 2. Exit strategies that are clearly dened, and within an attractive timeframe, 3. A management team experienced in the industry, in growing a company, and in exiting successfully, 4. Great potential in a growing market, 5. A unique product, 6. A demonstrated, clear path to protability, with substantial revenue growth, 7. Management willing to share ownership and control in exchange for capital. A recent development is something called fan-funding or crowdfunding, which invites fans and followers to pitch in by investing modest amounts and getting something in return a free CD, their name in a song, free tickets to a show, etc. Examples are Artist Share and Kickstarter. http://www.artistshare.com/home/default.aspx http://www.kickstarter.com/ If neither venture capital nor fanfunding work for you, another but more risky alternative is to try to secure a personal bank loan only be very sure you can pay it back. And be realistic about the likelihood of success. Dont be looking through rose-colored glasses.
Chapter 3 Raising Start-up Money | 35
A Quick Take on Raising Money

Decide on how much money you need to raise. Start with family, friends, and associates. Consider angels, venture capitalists, and fan-funding. Secure a risky bank loan.
Chapter 4 The Art of Acquiring Talent | 37
Chapter 4 The Art of Acquiring Talent

While youre trying to raise money, and even as you write your business plan, you should be working on bringing artists to your label. That is unless youre building a label around your own talent. How do you find great artists? by networking and talking to friends in and out of the music business. I signed a few artists because I heard about them from colleagues, from artists Id already signed, or from producers and engineers who were working with unsigned talent. Music business attorneys also know a lot of good, available talent. By the way, a lot of potential artists use MySpace.com to get their name and music out there. People may go to their site, hear the music, add them to their buddy list, and then receive notices about gigs, releases, etc. This might be one way to nd an artist, but I have my doubts about this approach. You should also be going to clubs and other places where performers do their thing. Go often and visit as many venues as possible that feature the kind of artists whose music you like. Label owners typically spend a great deal of time in music clubs in their local areas to assess the abilities of artists who theyd like to work with and who they deem worthy of a larger public. Be sure that you see any artist youre interested in perform many times before you seriously consider signing them. And before you contemplate signing an artist, you should answer the following questions: Is this someone Im willing to spend a lot of time with, and effort on? Is this a nice person, or am I likely to regret extending myself to this artist? Is the artist talented not only as a musician, but as a good songwriter, and also as a performer with an exciting stage presence? Is the artists ego in check? Does the artist perform frequently in front of an audience? Does the artist have depth both as performer and writer? If the artist is not a writer, is there access to vital new material? Will this be someone who is cooperative to work with? Is the artist willing to be involved in the marketing of the album? Is the artist willing to tour, do lots of gigs, and help promote the album by doing many interviews and phone calls? Does the artist have an active manager and/or agent? Does the artist have a day job or other means of financial support? You dont want to give an artist the impression that the label will be able to offer nancial support. Positive answers to these questions are essential to the future success of your label. As I write this, Im reminded of the late Harry Chapin. Shortly before, and long after, his rst record came out, he worked tirelessly at sales meetings, did lots of radio and press interviews, called program
and music directors, DJs, etc., and always graciously and sincerely thanked those that were playing his music. And it wasnt easy getting stations to play the seven-minute plus Taxi, which became his rst hit. (No one seemed to notice that the timing on the label said 6:70!) By the way, let me caution you against signing under-age artists those under 18. Theyre a great hassle legally, despite so-called ironclad contracts, and you not only have to deal with probable immaturity, but parents as well.
Draft Your Standard Artist Contract

This is an excellent time to be working with your attorney to have him draft a standard artist contract for your label. If he is primarily a record or entertainment industry attorney, hes probably written, or certainly negotiated, many such agreements, but its important that the agreement works for you. Many of the terms in the agreements that the majors have been using for many years are out of date, and although legal, may be ethically questionable. And I strongly urge that you adopt a straightforward, simple, artist-friendly document rather than what has been industry custom. I also believe it should be written in plain English so that an artist can clearly understand it. Although there are many canned contracts available, I think its best that you have your attorney prepare a short document that fairly represents the tone of your label. Above all, be fair to your artist. Well discuss this in a lot more detail in the next chapter. If you havent yet read Donald Passmans All You Need to Know About the Music Business suggested in the First Steps chapter read it now. This book will give you a thorough understanding, not only of essential legal terminology, but also of how the business traditionally works. After reading it, you may decide to work around the system rather than within it, and since the business is going through such major changes at the beginning of this century, youll want to be sure you know what youre doing.
Negotiate the Deal

O.K., so youve done your homework and have read all about the legal aspects of the music industry. You have a solid draft of an artist agreement, have been assiduously club hopping, and have lined up talent that youd like to be the very rst artists signed to your edgling label. Now is the time to enter into contract negotiations.
Chapter 4 The Art of Acquiring Talent | 39
A lot of talent will be attered by a positive approach from you, but will want to know more than just what kind of deal you might offer. Theyre going to want to know specics about your plans whats attractive or special about you and your label, what kind of experience you have, how good your distribution is, and how you will go about marketing their release. These are not unreasonable requests from talent, and this information is vital to their careers and well-being. Be sure you can answer them condently, and if you cant answer them, youre probably not yet ready to sign artists. Some label owners discuss the terms of a proposed deal soon after general agreement with an artist that theyd like to work together. Many artists are not too knowledgeable about these terms and may not understand whats being offered. An alternative is for the label to draft a deal memo in which the key terms of the offer are listed. The advantage to both parties is that the artist can discuss the memo with an attorney representing him who will be able to explain the terms further. Frequently the artists attorney or manager will respond with a counter-proposal requesting what they believe to be more favorable terms. Youll give or take as you and your attorney think best, trying to nd common ground so that both sides are comfortable with the offer. Once both sides agree on the basic terms of the deal, the label, or most likely the labels attorney, will draft the agreement, using your pre-established standard form, with insertions pertinent to the specics of the offer. This will probably prompt further negotiating by both sides until that magic day when all parties actually sign the deal. By the way, be sure that your artists obtain their own legal counsel. You dont ever want an artist to think you or your attorney has bamboozled or pressured him. In fact, many contracts have a clause stating that the artist has been properly represented, and requiring such an acknowledgement.
Demo Deals
Some labels might be interested in a given artist but may not be willing to commit to a lengthy contract. In this case, they may negotiate a simple demo or development agreement. Usually the agreement states that the artist may record a certain number of songs which will be paid for by the label up to an agreed upon cost. The deal also grants the label a rst right of refusal for the artists services. The signing of the demo agreement by both parties then gives the label a subsequent chance to sign the artist to an extended agreement. The label, if it likes what it hears within a certain amount of time usually about sixty days has a right of rst refusal to sign the artist under mutually acceptable terms. This locks out competitive labels from signing the artist before the label that has the demo deal can complete a more comprehensive agreement.
Acquiring Talent Check List

Attend as many artist performances in clubs as possible. _____ Network with friends and associates asking for artist recommendations. _____ Draft a standard artist contract. _____ Before deciding to sign a particular artist answer these questions: _____ Is the artist special? Is this artist a good musician, songwriter, and performer? Does the artist perform frequently? Does the artists talent have depth? Does the artist have a manager or agent? Is the artist willing to tour? Are you willing to spend a lot of time with this artist? Is this artist a good person? Is the artists ego in check? Will this artist be cooperative? Is the artist willing to help market the music? Does the artist have a job or financial support? Does the artist expect your label to offer financial support? Negotiate a deal. _____ Be fair in what you plan to offer and ask for. _____ Consider a demo deal where appropriate. _____
Chapter 5 Understanding Artist Agreements | 41
Chapter 5 Understanding Artist Agreements

There are many kinds of artist deals, and they vary considerably in complexity. In fact, its not unusual for artist contracts with some of the majors to run in excess of a hundred pages! Of course, the big labels are protecting themselves every which way, but I dont see the need for such length. I prefer agreements that are simple, clear, and straightforward, and above all fair to both sides. Labels that treat their artists with respect will reap respect and probable success in return. What follows are provisions found in most artist contracts.
360 Deals
In recent years the major labels, and some independents, have turned to negotiating so-called 360 Deals wherein the label seeks a porton of the artists income from touring, merchandising, endorsements, licensing, publishing, etc. as partial recompense for the labels work in building the artists career. The majors need this additional income to help offset the drastic decline of sales of physical product. Why 360? Because there are that many degrees in a circle, and its the circle that encompasses all of an artists potential earnings. Im not a fan of such deals, particularly for indie labels, since I think its inherently unfair to artists. However, this is one of those items you should discuss with your attorney. You do have an attorney, dont you?
Exclusivity
A typical artist agreement calls for the label to have the exclusive use of the artists talent, and frequently in all media not just for records. This keeps an artist from recording for other labels. In many cases, they will allow for a sideman clause, which permits the artist to record in the background as a non-featured musician or singer, provided the artists label is given a courtesy credit. This is a common practice for jazz and classical artists. Name and likeness (i.e. the use of an artists identity in promoting and marketing) will usually be exclusive during the term, and non-exclusive afterwards.
Territory
Artist agreements always state the territory for which the agreement applies. This is frequently for the world and not infrequently for the universe sometimes even parallel universes! Sometimes its just for the United States, or the U.S. and Canada. Labels often allow a so-called territorial reversion clause, so that if two consecutive albums are not released in a specied territory, say Australia, the artist can get the contract to no longer apply in that territory. However, these clauses usually provide many hoops for the artist to jump through in order to make it work.
Term
This is the length the agreement runs over time, and is usually for a year, or in case of a rst album sometimes a few months more than a year. This time allows for the project to get recorded, released, and marketed, and to give the label a chance to see how well the artists career may be progressing and whether or not it may wish to exercise its rst option. Options (see below) may be used to extend the term. However, if an artist is late in delivering a recording, the label will extend the term by the amount of time of the lateness. This should be specied in the agreement. If the artist is expected to deliver a completed project in the latter part of a year say after midAugust its likely that the label will not want to release this new project until at least the following mid-January. If so, there will be extra months provided in the agreement for the additional time. Many agreements state that the term of each option period (see below) will be a specied length of time from six to nine months after the delivery of the artists last album required for that period, but no less than some other agreed upon time period perhaps eighteen to twenty-four months. An artist may want the right to enter into a new recording agreement during the last option period, but will of course still need to render services in support of the marketing of the last album under the term of the original contract. This point is hard for an artist to get without much leverage, but would be well worth it to him. Labels will naturally discourage it.
Artist Delivery Requirements

The agreement will stipulate when the label expects the artist to deliver the project. Such a clause was added some years ago when artists started exercising greater creative control over the recording process. Should the artist fail to deliver on time whether due to writers block, problems in the studio, illness, etc. the term of the agreement will be extended by the amount of that extra time. Some majors tack on a nancial penalty for late delivery, but I dont recommend you do it. If an artist completely fails to deliver a project, the labels recourse is to sue for breech of contract obviously a step both parties would prefer to avoid.
Commitment
A label will not always commit to releasing a project, but if it does, it will commonly commit to only one album by the artist, assuming that its deemed technically and/or commercially acceptable to the label. An aggressive artist representative, on the other hand, may try to get the label to make a two album rm commitment with options, each of which would contain two albums. This provides the artist with pay or play protection, because if the label wishes to drop the artist before the second album
of any two-project option, it must pay a penalty based on a formula or previously agreed-upon kill fee. You probably wont want to do agree to it. Sometimes an artist can get a label to make a rm commitment for two or more albums, but that usually applies only to established artists. For example, it was necessary that Elektra give a threealbum guarantee to The Doors in order to clinch their deal. Try to avoid this.
Options
Most agreements grant the label not the artist a specied number of options for the artists services. These options, if exercised by the label, will require the artist to deliver an additional album within a specied time, which is usually one year, or sometimes ten months to one year following delivery and acceptance of the prior album. Deals by major labels may call for six or more options, whereas independent label deals usually call for just two to three. Options for new artists will generally be fewer and shorter than for established artists, because the label wants to have a longer time to work with successful talent. As mentioned in the Commitments section above, artists representatives may try to get a label to commit to two albums per option period. Labels will want to avoid such multi-album commitments.
Artist Advances & the Recording Budget or Fund

Typical larger label deals call for an artist advance that can vary considerably in amount depending on the artists fame, if any, and reputation. Sometimes the advance is considered to be a recording fund which allows for a certain amount of money to be spent on making the project. This fund is almost always controlled by the label and doled out to recording studios, musicians, etc. as the recording progresses. Any money that is left over goes to the artist. In some cases, the label will remit the entire fund to the artist. For an artist with proven reliability, it may work better to advance the recording funds to the artist. For example, the label and artist agree that the album should come in at no more than $30,000, and the label advances that amount frequently in two or three portions as dened in the agreement (more on that in a moment) and the artist controls the expenditures. If the recording comes in under budget, the artist gets to pocket the difference, creating an incentive for the artist to keep the cost of making the recording under tight control. In fact, I recall an occasion when a well-known, highly
respected and established artist actually returned a large portion of the fund because he was able to bring in his recording at a low cost. I guess he felt guilty about keeping the substantial difference. And as right would have it, the project turned out to be very successful for both the artist and the label. When doling out such a fund, the parties usually agree on something like the following formula one-third just prior to the start of recording; one-third on completion of Basic tracks (just prior to mixing,) and the balance when the recording is delivered to, and accepted by, the label. The fact that the artist has delivered what he deems to be a completely nished project does not mean the label will automatically accept it thats accept in the legal sense. The label, by way of the agreement, may have retained the right to determine the works artistic, technical, and sometimes even commercial worthiness. This is how some agreements got to be very lengthy. If ultimately a label doesnt like what an artist delivered, and they cant come to agreement on a solution, it might be willing to turn the masters back to the artist after reimbursement for all costs, and an override if the artist is able to place the master elsewhere. This is what happened to Wilco some years ago when they left Warner Bros. In other cases, the label may prefer to give the artist a simple cash advance, say anything from $2,500 to the skys the limit! Seriously, the advance is tendered so that the artist will get paid at least something for his effort. The amount is highly varied and is based on the artists career position whether just staring out, or established. It may also vary if theres signing competition with other labels. Generally, but not always, an artist will sign with the label offering what appears to be the best deal to the performer, manager, or lawyer. This might include large cash advances, a lavish recording budget, commitment to one or two videos, and a specied amount for marketing and tour support. Such a generous offer is not something you should be considering as a start-up label. The label will determine the amount of the recording fund or budget, usually after lengthy discussion with the artist and producer. Itll be based on what the label feels it can afford, on the number of musicians needed to meet the artists and labels mutual artistic goals, where the recording will be made (such as a modest studio in a small town or a large facility in a major city,) and how much studio time may be required, etc. In some circumstances, there will be a contractual agreement for a budget of a specic amount for the rst recording, with escalations for each additional recording. For example, a budget of $20,000 may be contractually agreed upon for the rst project, $30,000 for the second, $40,000 for the third, etc. In any event, whatever the size of the advance and the recording budget or fund, they will almost always be chargeable against the artists future royalties. Some recent deals call for no advance and no recording costs to be paid up front by the label. The artist pays all recording costs, owns the masters, and splits any prot 50/50 after the labels costs are recouped. These costs typically include cover art, all manufacturing, marketing, independent promotion and publicity, advertising (including co-op), and distribution fees. In this, and some other cases, the label licenses the master from the artist for an agreed upon period of years, splitting the prot evenly, or pays a negotiated royalty.
Producer
Sometimes the label and artist will agree that they need a certain producer to work with the artist in making the recording. Some producers, especially for small jazz or classical projects, receive modest fees and perhaps a modest royalty. Star producers may receive large cash advances and up to four royalty points (i.e. 4% of the suggested retail list price). Its also common for producers to be paid royalties retroactively from record one in other words, once the label has recouped its costs, the producer is paid a royalty retroactive to the rst unit sold. This differs from the artist who is only paid prospectively after the label recoups its recording costs that is, the artist is never paid royalties on the albums sold prior to the point of recoupment. This is a rare provision thats granted to only the starriest of producers whove already achieved a notable track record. Its common practice for the label to deduct the amount of the producers royalty from the artists. For example, lets say that an artist well call Zee has an eleven-point deal, but the producer is getting two points. In this case, the producers two points will be deducted from Zees eleven, netting the artist nine points. Also, the amount of the producers royalties will be crossed (i.e. cross-collateralized) against the artists, reducing the artists income by that amount, since it comes out of his share.
Ownership of Masters
The agreement will specify who ultimately owns the master recordings. Its most commonly the label. However, some agreements stipulate that, should the label go under or be in default for not paying royalties, ownership of the masters will revert to the artist.
Work for Hire

Most agreements, until recently, stipulated that a recording made by the artist was considered to be a work for hire. This meant that the label became the author of the work and the ownership of the copyright rested with them, not the artist. Its a matter of who owns the copyright the artist is still entitled to negotiated advances and royalties. This became a point of contention by the Recording Artists Coalition, which lobbied successfully to remove language from legislation in California that would have automatically dened a recording as a work for hire, regardless of language in the contract, or factual circumstances. The signicance of the work for hire designation is that normally a creative work reverts to the author 35 years after it was created per the Copyright Act of 1976, but this legislative protection does not apply to works for hire.
Check with your attorney about this, but if in doubt, and in the interest of being artist-friendly, do not consider the recording to be a work for hire.
Royalties
Most deals call for the label to pay its artist a royalty in addition to advances. The amount varies widely and is, once again, based on whether the artist is new and untried, or well established. An unknown artist will not get as high a royalty as an established artist may receive. Note: much of the following royalty information is patterned after standard industry agreements and terms that were developed by the majors and large, well-established independent labels over many years. It need not apply to artist contracts for a small independent label. Its here for historical purposes, and to assist you in determining how you might want to have your own artist agreements structured.
1. Basic Domestic (U.S.) Album Royalty

An album or record is considered to be a full-length CD or cassette. The words album and record (and many others in current usage) date back to the days when an album consisted of a single LP (331/3 rpm long-playing vinyl disk for the uninitiated or young ones among you) or, even further back, to a group of ve or six 12-inch, 78 rpm records which were fabricated into a heavy, bound album with each disk placed in its own separate sleeve much like a photo album. In fact, many agreements still use the word LP rather than CD, even though the CD has existed for more than thirty years! An album will usually contain ten or more songs (or masters) and be 45 or more minutes in duration. The length of an album is frequently one of the items negotiated in the contract, and many agreements call for no less than, and sometimes no more than, a specied amount of recorded time. By the way, a CD can hold up to 80 minutes of music primarily classical works and 60-minute CDs are quite common for other genres. New artists may get a royalty of from 812% per album, whereas well-known artists on a positive trajectory may be able to get upwards of 18% from one of the majors. This basic rate will be stated as X% of 100% of the SRLP (Suggested Retail List Price.) More recently, royalty rates may be based on a percentage of the wholesale Published Price Per Distributor or Dealer (PPD) rather than the SRLP. In this case, the rates will be doubled. The advantage to the label is that calculating royalties on the wholesale price may be a lot less complicated than on retail, and the artist feels that the percentage is larger. Its really a matter of perception, because the actual amount earned will be about the same.
For years, many labels paid the royalty on 90% (rather than 100%) of net sales. This is a continuing recent practice despite the fact that the 10% was originally intended to be a breakage allowance due to the high fragility of 78 rpm shellac records. I strongly discourage you from continuing this tradition. The 90% clause was part of the Elektra contract during the Sixties. My brother Jacs argument was that the royalty should be taken from only 90% of the list price, since approximately 10% of that price was the royalty paid to the artist. This argument worked every time, but is out of date in the current musical environment. Sometimes an agreement will call for an escalation of royalty percentages, starting perhaps at 10% and then increasing 1% for each additional album. More common though, an escalation is based on the accumulated sales of the preceding album. Such a deal might increase the royalty for the new album by 1% for sales between 50,000 and 100,000, with an additional 1% for sales in excess of 100,000. This is a good process, and one that might work well for you. Just adjust the numbers to what seems fair. The rate at which these royalties rates can escalate is based on the previous success of the artist or whatever the artists attorney and the record label can agree upon.
2. Foreign Royalty
Most labels reduce the royalty rate for records sold overseas due to the additional costs of marketing internationally. Such common terms might be: 75% of the U.S. rate for major territories This usually includes such countries as the United Kingdom, France, Germany, the Netherlands, Japan, etc. Sometimes it will include all major countries in Western Europe, which would add Spain, Portugal, Belgium, Luxembourg, Austria, Switzerland, and all the Scandinavian countries. In negotiating, its important to know which countries have strong markets for the genre of music being marketed For example, Spain is not a good market for American country music, but Germany has a growing interest in the genre. Its also important that the agreement specify the countries that are considered to be major. 60% of the U.S. rate for minor territories or R.O.W. (rest of the world) This would include all countries not considered to be major. Many independent labels pay 50% for all non-U.S. territories. This is a great deal easier to keep track of and, considering industry economics and modest international sales, is not unreasonable.
3. Singles
Singles are essentially a ction these days and exist as individual tracks made available as downloads. Singles used to be two tracks on a CD or cassette, which were sold as such in commercial release. The term derives from the days of two sides of one 78-rpm lacquer disk, subsequently replaced by two sides of one 45-rpm vinyl disk you remember, the one with the big hole in the center. A typical royalty rate for singles was 811% of the suggested retail list price, where the basic rate (discussed earlier) might be 813% or higher. Remember that the parties involved negotiated all of these rates. In some agreements, singles royalties were paid at 75% of the Basic Rate, rather than being based on the SRLP.
4. EPs
EP stands for Extended Play and refers to a project that is not as long as a standard album, but not as short as a single. For example, it might contain ve or six songs that total 25 to 30 minutes of playing time. A typical royalty for EPs is 75% of the Basic Rate.
5. Club, Premium and Flat Fee

This is a royalty rate for record club sales, special premiums, and for licensing deals where a at fee is negotiated. This rate is usually between half and two-thirds of the Basic Rate, or 5066.6% of net earned receipts, whichever applies. Actually, I dont recommend a club deal, should you be in a position to be offered one, unless the advance is so high that you just have to accept it. Its doubtful that youll ever receive anything beyond the advance.
6. PX
Royalties for sales to large-scale buyers for the military, such as the Army and Air Force Exchange Service (AAFES), are sometimes at the Basic Rate. More frequently however, they are reduced proportionately if the selling price is below your customary wholesale amount a common occurrence. For example, if you sell to the military at 75% of your standard distributor wholesale price, the royalty for these sales would be 75% of the Basic Rate.
7. New Technology
Many labels specify a reduction of royalty as high as 25% for what they consider to be newly developed technology. This applied to CDs when they were rst issued during the early Eighties, and
now may apply to the next big thing that comes along. In fact, some majors still consider CDs to be a new technology and take the 25% deduction, despite the fact that CDs have been around for more than two decades! Such a new technology rate might be 8087.5% of the otherwise applicable rate due to what labels expect could be high start-up costs for a new conguration.
8. Downloads
Some labels consider downloads to be new technology and pay their artists accordingly. I think this is unfair and suggest you pay 50% of your net receipts as an artist royalty after deducting for mechanicals.
9. Controlled Compositions
A controlled composition is a song or work written by the artist who youve chosen to record. Its considered controlled because, in theory, the artist who is the songwriter has some control of the publishing. The usual rate is 75% of the minimum statutory for the year the agreement is entered into. For example, the statutory rate as of January 1, 2011 is $.091 (9.1 cents) for a work up to ve minutes long. For songs over ve minutes, the rate is $.0175 per minute or fraction thereof. On January 1, 2013, the statutory rate will likely increase, but had not been established at the time of this books publication. Check this books website for updates. http://www.recordcompanystartup.com/updates.htm The rate referred to above is for the payment of mechanical royalties, which is the amount labels pay to the publisher of the recorded copyrights. This is in addition to the royalty the label pays to the artist for his performance. For many years labels put a cap on the total of mechanical royalties they would pay to the artist/ songwriter for controlled compositions. This isnt fair to the artist who writes his own music. The cap is commonly ten times 75% of the statutory rate, which means the label only plans to pay for ten songs, and at a reduced rate. If the artist decided to record twelve songs, or some compositions by other writers that are not controlled, the label has hedged its costs by placing the cap. For example, in such a case in 2011, where an artist has recorded twelve of his own songs, the label would still pay only 681/4 cents per album for mechanicals 10 songs, times 9.1 cents, times 75% (10 x 9.1 x .75 = $.6825). In a slightly different circumstance, where an artist records eight of his own songs, and four songs by other artists that are not controlled, the label would still pay a total of 681/4 cents. It would pay 36.4 cents (four times statutory) to the publisher of the four uncontrolled songs, but only 31.85 cents to its own artists publisher, because of the 681/4 cents cap ($.6825 $.36.4 = $.3185).
Congress periodically sets the statutory mechanical rate ceiling (9.1 cents as of 1/1/11). Your contract should specify whether the applicable rate is locked in as of the date of manufacture, initial release, or even signing of the contract, since the rate could rise between these events.
Reserves
Most agreements have a provision for holding royalties in reserve in anticipation of returns. For the record industry, and commonly the book industry as well, an item is not considered sold until a customer actually pays for it at the cash register, and the retailer pays the distributor and/or the label. Thus retailers have a 100% return privilege. This is not unlike whats customarily considered to be consignment sales. At the time a label has to account for royalty payments to its artists, it may not know how many units have actually been sold. There may be a lot of inventory throughout the chain of distribution at the distributor, at retailers warehouses, or sitting in retailers bins. The label will only know what it shipped to its distributor(s). Holding reserves protects the label from paying an artist for more records than have actually been sold to consumers. For example, a label may have shipped 6,000 CDs to its accounts. Perhaps only 3,500 may have been sold. Thus theres a return liability of 2,500 units. The only way for a label to know how many CDs have actually been bought by consumers is to wait until all unsold inventory has been returned through the chain of distribution to the label. Some labels rely on SoundScan numbers and pay royalties based on their reports. SoundScan compiles highly detailed accounts of sales as a result of a unit getting scanned at the point of purchase in selected retail stores. Parenthetically, for those labels that can afford it, a subscription to SoundScan is extremely worthwhile because of the incredible detail of information they can supply. http://nielsen.com/us/en/industries/media-entertainment/music.html The actual amount of the reserve percentage which can be as high as 30 or 40% and how it will be accounted for, will be specied in the artist agreement. The accounting of reserves is very complicated since theyre liquidated in specied accounting periods and then may be reapplied in succeeding periods. This adds to the complexity of royalty accounting, which is rightfully considered by many to be one of the black arts. It may take an experienced C.P.A. to understand the royalty statements from some labels.
Packaging Deductions
Packaging deductions exist in most industry deals because labels say they want to pay royalties only on the actual musical recording and not include the cost of the container or package that it comes in. In reality, its a way for labels to reduce the royalty they will actually pay an artist. The deduction is commonly 20% for cassettes and 25% for CDs. I dont recommend such a deduction because it looks like youre taking money away from the artist, and because it complicates the royalty statement. However, you might factor in an amount when calculating the royalty you intend to offer.
Free Goods
When a label is trying to do a concerted push on a new release by an artist its got a lot of faith in, it may give away a certain quantity of CDs as a sales incentive. Its essentially a form of discount. For example, it may give away ten or fteen out of every hundred units sold in such a campaign. Therefore, these ten or fteen CDs are considered to be free goods and the label will not pay royalties on them. Its another way for a label to pay less in royalty. The amount of allowable free goods is usually specied in the artist agreement. Be aware that an artists representative may try to cap free goods at no more than 10% of manufactured or shipped product.
Cross-collateralization
Many of the costs involved in making a recording are considered by the label to be recoupable against an artists total earned royalties. This includes artist advances, all recording costs, any tour support provided by the label, and frequently some, or a percentage, of the costs for independent promotion or publicity. In the case where the artist makes more than one recording for a label, the label usually requires that all of the recoupable costs be maintained in a single account, rather than separate accounts for each release. This allows the label to recover the costs from a release that may be in decit (the recoupable costs are higher than the artists royalties) when the artist may be in an earned status from other releases. Let me explain this further. In our example on the next page, the rst release of the artist Zee has the following recoupable costs attached to it:
First Release Artist Advance Recording Costs Other Chargeable Costs Total Chargeable Royalties Earned Unrecouped Balance (due to Label) Zee is unearned to the tune of $40Gs.
$5,000 30,000 25,000 $60,000 -20,000 $40,000
Now lets review the costs of Zees second release, an album thats done very well: Artist Advance Recording Costs Other Chargeable Costs Total Chargeable Royalties Earned Amount in Artists Favor $10,000 40,000 40,000 $90,000 $120,000 $30,000
Note that Zee is earned on the second release. However, he shouldnt be looking for a check in the mail any day soon, because hes still in debt to the label for $10,000. Unrecouped Balance Release #1 Earned Amount Release #2 Unrecouped Balance (due to Label) $40,000 -30,000 $10,000
Zee wont have to pay this amount, but it shows what the label has spent on behalf of the artist.
Tour Support
All artists need to perform in front of the public preferably before paying audiences in order to hone their craft and to promote the sale of their work. This isnt always easy to achieve, and at the beginning of an artists career may cost some dough. Of course, most artists cant afford it and so they seek nancial assistance from their label. Many labels are willing to assist their artists by granting them a certain amount of money to help with touring, thus these funds are considered to be tour support. The amounts forwarded on behalf of the artists performances are usually recoupable against the artists royalties.
Most small labels simply cant afford such funds, so they try to assist the artist by providing other, non-nancial assistance. This might be through help getting performances dates and providing tour publicity. Sometimes an agreement will stipulate how much the label is willing to help out with tour support funds, usually after lots of heavy negotiating on both sides. Commonly labels will refuse to put specic tour support funding commitments in writing, but assure the artist that off contract monies might be available, depending on prevailing circumstances such as cash ow, and the artist acting reasonably and responsibly.
Music Videos
For some artists and genres, music videos can be an effective promotional and marketing device. But since videos are not cheap to produce, particularly for name acts, part of the amount spent in making videos is generally recoupable against the artists royalties usually 50% of the cost. Bear in mind that producing a video even a very good one is not a guarantee of exposure. Sometimes there will be a contractual commitment to make a video. Alternatively, many labels will try to avoid making such a commitment, even though they might intend to shoot a video. In the case of an artist with a distinctive or glamorous visual appeal, and when the music is selling well, the label and artist may decide to sell these videos to the public in the form of DVDs. In this case, all of the cost of making the video will be chargeable against the artists video royalties, or half of the costs may be chargeable to the artists audio royalties, in which case only the remaining half would be charged to the video side. Again, be fair to your artist and dont double-dip.
A common video royalty is between 1018% of the wholesale price with no deduction for packaging. An artist on a major label will try to get a commitment to produce and release a video for each of the rst two singles (with production costs 50% recoupable only from the record royalties with no cap) and at least one video per each additional album. Artist approval, or at least mutual approval of all creative elements director, producer and concept or script, is often negotiated. Yet rarely do artists get approval of the budget or video marketing plan.
Independent Promotion
For certain musical genres, a label may decide to use the services of one or more independent promoters to work the record at radio. In the case of jazz, for example, these costs tend to be reasonable, but for pop or rock music can run deeply into six gures at a major label. Most labels will charge 50%
of these costs to the artists royalties, sometimes with a not to exceed cap negotiated by label and artist.
Re-Recording Restrictions
Most agreements include a re-recording restriction that states that the artist may not re-record works that have been released by the label, until a specied time. Frequently, the duration will be expressed as the later of the date ve years after delivery (sometimes release) of the last album in a contract, or two years after expiration of the contract.
Approvals
Some labels may automatically grant an artist approval of the producer and cover art. Others may give limited approval of the producer, but frequently will not grant cover art approval, or may grant approval not to be unreasonably withheld. It seems to me that an artist must, at minimum, have producer approval since the choice of producer is such a critical part of the creative process of recording. As for cover art, although Im a rm believer in artist input into the look of the package, I dont go along with granting actual approval. Ive seen too many cases where a difcult artist has caused a project to be delayed due to unnecessary and unreasonable demands in what the cover should look like.
Unions
Most independent labels are not signatories to the agreements of the two principal unions involved in the making of recordings The American Federation of Musicians (AFM) and the American Federation of Television and Radio Artists (AFTRA). AFM is the union for the musicians who play instruments on a recording, and AFTRA is the union for vocalists. The majors are all signatories and must pay at least union scale for all recording sessions, and must abide by the union rules as to how much actual music may be recorded in a session, how long sessions may run, and when musicians must take breaks, etc. Self-contained groups will frequently disregard the rules, but larger ensembles such as orchestras, or musicians used in sweetening sessions, may insist on it. Violation of the regulations can result in nes and additional and unnecessary cost. To simplify the recording process, and to keep a lid on costs, I recommend that start-up and independent labels not sign with the unions.
Warranties and Representations

This is some of the legalese and boilerplate that attorneys put in contracts, usually to protect the label, and not the artist. However, some of the language will be necessary and important to both sides. Your attorney will know how to protect you.
Group Provisions
When the artist is a group, additional provisions may prevail that protect the label if a member of the group leaves, or if the group breaks up. Such a provision will usually keep a departing member signed as a soloist, at the labels discretion, and also provide options to keep the other members as well.
Reversion of Rights
Labels rightly consider their master tapes to be of considerable potential value and are a signicant asset of the company. However, some artists request a provision in their contracts that tapes be returned to the artist under certain circumstances for example, if an album has been out of print for a specied period of years, or if a label is going out of business.
Key Man
Occasionally labels will grant a key man clause to an artist, that will allow the artist to terminate the contract if a key person, such as the head of the label or the signing individual, should depart. Clive Davis successfully used his key man clause with Whitney Houston to force a new label deal with Bertelsmann after he was removed from Arista.
Artist & Mechanical Royalty Statements

Agreements should specify when the label will render royalty statements to its artists typically twice a year, ninety days after the end of a calendar half. In other words, a label will render statements on or about September 30th for the period ending June 30th (the rst six months of the year) and on March 31st for the period ending the previous December 31st. Additionally, labels are supposed to render Mechanical Statements (those sent to music publishers) quarterly, typically forty-ve days after the end of each calendar quarter in other words on the 15th of February, May, August, and November. I also think its in everyones best interest that a label render its royalty statements in as clear and
straightforward a manner as possible. Artists are not accountants, so the simpler the statement, the easier it can be understood, the fewer calls to label management for clarication, and extremely important the easier the royalty accounting will be.
Miscellaneous Provisions
Many labels, particularly start-ups, protect themselves from being raped by another label that wants to acquire their contracted artist. So they require that if an artist wants to jump to a larger label, that the original label to which the artist was contracted will receive a royalty override of 23% from the sale of the rst unit. Its also likely that the original label may try to recover from the acquiring label any unrecouped costs from prior releases by the artist. With the high degree of sampling (incorporation and/or reworking of short snippets of other music) used by some artists such as in hip-hop, labels make the artist declare that either no samples were used, or that any samples of other copyrights have been cleared with permission, stating what royalty percentages might be involved. These royalties of course would come out of the artists share, since samples are a part of the artists performance. Because labels usually want to include photographs or illustrations of the artist in the package or promotion materials, permission to use the artists likeness is provided for in the agreement. Since you should have advised your artist to seek assistance of an attorney, there is usually a statement in the agreement that indicates that the artist has been professionally counseled. The contract should state that it cannot be changed except in writing, and signed by all parties. Furthermore, dont consider a deal to be completed until you have the agreement in your hands with the artists signature on it. It seems obvious, but I know of a label that thought it had a completed deal, and released two CDs that were extensively marketed and supported. But when the senior executive who made the deal left the label, the support staff discovered that the contract had not been signed either by the artist or his representatives. This was a mess that was years in litigation.
Denitions
In order to keep an agreement reasonably simple, some attorneys put all of the denitions, and certain other boilerplate, in a discrete part of the contract. These are items that will usually remain standard for all of a labels agreements and simplies the negotiating persons work and reduces the amount of typing by an assistant or paralegal. The denitions will include all of the standard words that require strict explanation so that there will be no confusion over terminology. Such a denition might include Phonorecord, an all-purpose term derived from days of yore but
which remain valid today in these days of CDs, DVDs, and music videos, where LPs, cassettes, and 8-track tapes are things of the past. Phonorecord is also a word dened in the U.S. Copyright Act.
Love and Affection Clause

During the ower-child era of the late Sixties, my brother Jac placed the following clause in all Elektra Records artist agreements. We agree to treat artist with love and affection. You in turn agree to treat executives of company with a modicum of respect. Although a breach of this paragraph by either party shall not be a material breach of this agreement, bad karma resulting therefrom is the responsibility of each party. More than four decades later, I still see this paragraph occasionally pop up in agreements from labels completely unafliated with the Elektra of years ago, but I believe the intent remains extremely valid.
General Comment
Remember that all of these contractual terms are considered to be negotiable. Smart attorneys, or managers worth their salt, will ght like the devil to make the best deal they can for their artist. On the other hand, the label, which is responsible for acting as the bank for the artist, as well as for marketing, merchandising, publicizing, and selling the artists music, will ght like hell to protect its interests and cash. After all, the label has overhead in the way of staff salaries, rent, etc., to pay for, and itll want to control all costs to make maximum use of its resources. So the label will try to make the deal in such a way that it will have a reasonable chance of earning back its costs, and eventually making a prot.
Fairness
Its my personal bias and strong belief that a label should make as fair a deal as possible when signing an artist. After all, this should be like a partnership where both artist and label share any bounty. Agreements should be just that an agreement between both parties that is fair and equitable, creating a win-win situation for all. In short, dont be greedy.
Summary of Deal Points

360 Deals Exclusivity Territory Term Artist Delivery Commitment Options Artist Advances, Recording Fund Producer Ownership of Masters Work for Hire Royalties Reserves Packaging Deductions Free Goods Cross-Collateralization Tour Support Music Videos Independent Promotion Re-Recording Restrictions Approvals Unions Warranties and Representations Group Provisions Reversion of Rights Key Man Artist and Mechanical Royalty Statements Miscellaneous Provisions Denitions Love and Affection Fairness
Chapter 6 An Introduction to Music Publishing | 59
Chapter 6 An Introduction to Music Publishing

A key adjunct and potentially considerable asset of a record label is its own music publishing company. Not every start-up label establishes one, either through lack of expertise and experience, or insufcient time to deal with it. In fact, when I started my own ROM Records some years ago, I decided to forego the publishing aspect. I knew relatively little about it then, thought I didnt have the time to deal with it, and didnt want to be distracted from the A&R, marketing, and other aspects of running a start-up. It reduced potential income and was a big mistake that I regretted for years. Setting up a publishing company is not very difcult, but is beyond the scope of this book. Specics for doing so can be found in some of the books on music industry law. Such titles include The Plain And Simple Guide to Music Publishing by Randall D. Wixen, and those by Donald Passman and listed earlier in the First Steps chapter and in Recommended Reading.
An Overview
Briey, the role of a music publisher is to create, exploit, administer, and collect royalties for its copyrights, with the object being to maximize their value. Administration involves the ling of a notice of copyright (Form COd) with the United States Copyright Ofce in Washington for all of your copyrights, the issuing of licenses, collecting of royalties, and paying of writers and co-publishers. http://www.copyright.gov/ Bear in mind that, since January 1, 1978, a copyright remains valid for the life of the author plus 70 years. Prior to 1978, a copyright was valid only for 95 years from the date of publication. Its also important to index your copyrights with the Performing Rights Agencies ASCAP, BMI, and SESAC. (These agencies are addressed later in this chapter.) Exploitation entails getting other performers to record your copyrights, and extends to getting your copyrights used in lms, television, radio, and commercials. Creative publishers those with songwriting savvy work with their writers to help them to improve their craft and ultimately their output. This is an unlikely goal for a start-up label, and unless you have a lot of songwriting experience, is an area you should probably avoid. A music publisher acquires rights to songs from songwriters, lyricists, and composers. Assuming youre a record label that wants to have a publishing division, you should try to acquire publishing rights to the material written by your artists when you negotiate their recording contracts. Although
the publishing contract is completely separate, its a good idea to acquire publishing rights when you enter the negotiations for the recording side, as the two are intimately tied together. Often labels will pay advances to their artists for co-publishing rights in addition to any advances for recording. In some cases, an artist may not want to give total publishing rights to you, but may agree to a copublishing deal. Your label, as co-publisher, wouldnt get to acquire as large a piece of the pie, but its still more than it might otherwise be able to obtain, and can be quite lucrative. Its then the labels responsibility as co-publisher to administer the copyrights. Always keep in mind that the copyrights you own will in time become an extremely valuable asset of your business. Had I set up publishing when I started ROM Records, and co-published my artists songs, I wouldnt have had to write such large checks to their publishers every quarter. I would have been able to use some of the saved co-publishers share for investment in future projects. In addition, I would likely have been better equipped to develop the publishing assets than the artists were able to do on their own. Note that although most artist contracts require that a label render two royalty statements per year, publishers generally require four per year. A label is supposed to issue statements within forty-ve days after the close of each calendar quarter therefore by February 15, May 15, August 15, and November 15. On the other hand, this means, as a publisher, that you should receive statements, and presumably checks, soon after the above dates from those whove licensed your copyrights. In turn, youll have to render statements to your co-publishers and songwriters shortly thereafter. There are various kinds of publishers administrative, co-publishers, and sub-publishers, and people use these terms differently. Therefore, if youre interested in this subject, I suggest you investigate it further by reading one of the books mentioned at the beginning of this chapter.
Term
By the way, recent changes to the copyright law have extended the ownership of a work to the life of the author, plus seventy years. Alternatively, a copyright that was written as a work for hire lasts for ninety-ve years.
Statutory Rate
The statutory rate as of January 1 of 2011 remains $.091 (nine and one tenth cents) per song of less than ve minutes, or $.0175 (one point seven-ve cents) per minute or fraction thereof for songs longer than ve minutes. These rates have been the same since January 1, 2006 and will hold until
December 31, 2012. The Copyright Rotalty Board is expected to establish new rates some time during 2012, presumably to be effective on January 1, 2013.
Publisher Rights
Until recently, there were four rights involved in music publishing Performing Rights, Mechanical Rights, Synchronization Rights, and Print Rights. In addition, there now exist Digital Print rights. Lets take a closer look at these ve types.
Public Performance Rights

If you decide to set up a publishing company, be sure to get afliated with one of the performing rights societies ASCAP, BMI, or SESAC. These agencies collect royalties for radio, television, and live public performance spaces such as nightclubs, hotels, and discos, and for use in retail stores and other establishments that use pre-recorded music in an effort to enhance their business. If your songwriters are already afliated with any one of these agencies, then you should be as well. Many publishers afliate with two or more societies because of their songwriters. Not only must you register your new copyrights with the Copyright Ofce (see above), but you should also notify the appropriate performing rights society of each work you own as you acquire it. Keep in mind that some of these agencies are for-prot companies; others are non-prot. ASCAP (The American Society of Composers, Authors and Publishers) has ofces in many of the same cities as BMI. Their principal ofce is at One Lincoln Plaza, New York, N.Y. 10023; phone: (212) 621-6000. http://www.ascap.com/ BMI (founded as Broadcast Music Inc.) has ofces in Miami, Los Angeles, Nashville, Atlanta, London, and Puerto Rico. Their principal ofce is at 320 West 57th Street, New York, N.Y. 10019-3790; phone: (212) 586-2000. http://www.bmi.com/ SESAC (founded as the Society of European Stage Authors and Composers) has ofces in New York, Los Angeles, and London, with headquarters at 55 Music Square East, Nashville, TN 37203; phone: (615) 320-0055. http://www.sesac.com/ The above organizations are for the United States. Foreign countries have similar organizations, frequently government-controlled. They include SOCAN (Society of Composers, Authors and Music Publishers of Canada), PRS for Music in the United Kingdom, SACEM (Socit Mutualiste des Auteurs, Compositeurs & Editeurs de Musique) in France, GEMA (Gesellschaft fr Musikalische AuffhrungsUnd Mechanische Vervielfltigungsrechte) in Germany, and JASRAC (Japanese Society for Rights of
Authors, Composers and Publishers) in Japan among others. http://www.socan.ca/ http://www.prsformusic.com/ http://www.sacem.fr/ http://www.gema.de/ http://www.jasrac.or.jp/ejhp/
Mechanical Rights
The Copyright Act provides that once a piece of music has been recorded and publicly distributed, anyone else can record that work on a phonorecord (an audio-only recording) provided they pay the current statutory rate (discussed earlier). This is called a compulsory right. Not surprisingly, mechanical rights are the rights to reproduce music via mechanical means, and dates back to the early days of piano rolls and, later, the phonograph. Permission is required to mechanically reproduce a licensed work. Thus a publisher issues licenses to those who request the right to record a work already mechanically reproduced. The issuing of such licenses is one of a publishers many responsibilities. And the money paid and collected for such licensing is what we call a mechanical royalty. Many publishers prefer to have someone else issue licenses and keep track that payment is received for such licensed works. The largest rm that handles such matters is the Harry Fox Agency, Inc. (HFA), also known as Fox, and as the National Music Publishers Association (NMPA). Fox, per their website, was established in 1927 as a musical copyright information source and licensing agency for the music industry. They currently represent more than 27,000 music publishers and are the premier licensing resource for the mechanical use of music reproduced in all formats and media. Thus Fox enables record labels to write fewer checks as it represents so many separate publishers. Their fee is 4.5% of the money they collect. HFA conducts royalty compliance examinations of licensees utilizing in-house staff and outside accountants to verify the accuracy of royalty statements reported and payments remitted by licensees. Royalty compliance also veries that mechanical licenses have been obtained for all phonorecords released by the licensee. The Harry Fox Agency, Inc. 711 Third Avenue, New York, NY 10017, Phone: (212) 370-5330. http://www.harryfox.com/index.jsp CMRRA, the Canadian Musical Reproduction Rights Agency, is the Canadian counterpart to Harry Fox. Their address is 56 Wellesley St. W. #320, Toronto, Ont. Canada M5S 2S3, Phone: (416) 926-1966. http://cmrra.ca/default.htm
Locating the Copyright Owner

To nd out which publisher owns a copyright you want to use, check the websites of BMI, ASCAP, and SESAC. If the song you want is not listed by one of these agencies, try contacting Songle on the Harry Fox website.
Synchronization Rights
In addition to income from recordings of your copyrighted music by artists signed with other labels, you might have songs and copyrights that are of interest to lm and television producers (to use as background or source music in their productions), and also to those involved in commercial advertising. This can be extremely lucrative. As a publisher, you would negotiate and subsequently issue a synchronization license so that the copyrighted material can be used in timed synchronization to a visual. And in the case where, as the label, you also own the recorded performance thats used, you would issue a master use license for the work as performed on your recording. Thus there are two copyrights and therefore two licenses and two fees involved one for the written copyrighted music, and one for the recorded performance. In the case of feature lms, each license can range upwards from $20,000 to well into six gures, so theres a lot of potential income. As you see, it pays to be a publisher! Which reminds me of Mel Brooks, Its good to be the King!
Print Rights
Traditionally, music publishers issued sheet music of all of their copyrights. This was a huge undertaking for it required the actual printing of copies of all of its copyrights and then the maintenance of inventories of varying versions based on instrumentation, etc. Such extensive printing is rare these days, but large publishers occasionally issue printed folios of works by major songwriters who they represent. And, of course, these print rights are very valuable.
Digital Print Rights

Digital print rights have become a millennial addition to the previous four. Its now possible for publishers to make available digital versions of songs and sell them online. This can be done as digital representations of printed sheet music, such as Adobe Acrobat PDF les, as MIDI (Musical Instrument Digital Interface) les and in versions for the iPad and similar tablets. The advantage of this is that a publisher need not actually print and subsequently maintain in inventory versions of all of its copyrights, but can instead have every single one digitized and be available indenitely on a centralized server. Thus they can be made available and sold on a 24/7 basis. And there are no warehouses full of dusty print materials!
Miscellaneous Rights
Youll not likely have much to do with miscellaneous rights. However, just for background purposes, these rights include music boxes, lyric reprints, electronic games (a form of synchronization right), etc. A colleague calls these eccentric rights.
Deal Terms
Deal terms for publishing agreements vary considerably. For more information, look into Passman and Thall, as mentioned earlier. There is no longer a standard deal; however, its common that a publisher takes 50% of all income and turns over the remaining 50% to its songwriters. In Europe, general practice has one-third going to a lyricist, one third to a composer, and the nal third to the publisher. With the exception of very large publishers who can set almost any kind of terms they want, I think you, as a small label and probable neophyte publisher, shouldnt be greedy. You should be fair and reasonable to your writers with a simple, straightforward deal where you share the benets. For example, an artist might not just retain their normal 50% writers share, but might be willing to grant you half of their publishing share, giving them a total of 75%. Thus you, as co-publisher, would control 25% of their copyrights.
Getting Help Publishing Administration

As you see, music publishing is a huge responsibility. Thus, in many cases, small publishers may opt to have a larger publisher handle all of the administrative work for a fee, of course. This makes a lot of sense if you dont have the time or experience to handle the volume of work. And as your catalog of copyrights becomes substantial, youll nd quite a few companies willing to handle the responsibility on your behalf. Although there are really too many possible administrators to list here, you might look into one of these: Wixen Music Publishing, Inc., Calabasas, CA. Their website has an excellent publishing primer and free advice page. http://www.wixenmusic.com Bug Music. Theyre headquartered in Los Angeles and have additional ofces in New York, Nashville, London, and Munich. http://www.bugmusic.com/ You should also consult with friends in the business to see who they might recommend.
Once youve decided on an administrator, be sure they do their job, not only to issue licenses and collect funds, but also that they work to properly exploit your copyrights. As weve discussed earlier, theres a great deal of ancillary income to be obtained by having other artists record your copyrighted music, and from getting the material employed in other media.
Foreign Subpublishing
Since its a big world out there, not only do you have domestic rights to consider, youve also got foreign rights. Thats where a foreign subpublisher comes in. Most governments overseas use quasigovernmental agencies (such as PRS and GEMA) to automatically collect mechanical royalties, so you may as well get paid your share if youre selling product overseas that contain your copyrights, or if youve licensed your copyrights to others who are releasing outside the U.S. Therefore you should retain a subpublisher in each territory where your copyrights might appear, assuming theres sufcient volume to make it worth their while. Take into account that it works differently in each country, so do your homework.
A Quick Take on Music Publishing

Music Publishers create, exploit, administer, and collect royalties for their copyrights. Copyrights are an extremely valuable asset. Term of copyright: Life of author plus 75 years Works for Hire 95 years Public performance rights via ASCAP, BMI, SESAC for the U.S.; SOCAN Canada; PRS U.K.; SACEM France; GEMA Germany; JASRAC Japan; etc. Mechanical Rights are for the mechanical reproduction of copyrighted music. Synchronization Rights are for timed synchronization with visuals. Print Rights are for printed music. Digital Print Rights are for digital representations of printed music. Statutory Rates: Year Starting 1/1/2006 Starting 1/1/2013 Less than 5 minutes $.091 to be established in 2012 Per Minute 1.75 to be established in 2012
Chapter 7 Stafng Possibilities | 67
Chapter 7 Stafng Possibilities

Part of building your label will be the hiring of essential staff. For those not starting with their own recordings, staff considerations will probably be addressed after youve signed more artists. Just how many or how few people you will need will vary considerably and be determined by the size of the label, available capital, and your ambition. I suggest however, that you start modestly, bringing in only those people you absolutely must have in order to function; hire additional staff later as events require and the budget allows. As Ive mentioned previously, Im a rm believer in a virtual ofce, which means using appropriate freelance talent as needed, thereby creating the effectiveness and appearance of a larger company than actually exists. For self-funded start-ups with negligible cash, and this is most beginning labels with a maximum of zeal and energy but limited nancial means, I suggest only the barest minimum of staff. What this implies is that the founder or founders if there are two or more will, for all intents and purposes, be the entire staff, perhaps with one or two part-time assistants. This means youll be putting in long fun-lled days handling all of the functions and all of the responsibilities that many staffers would do in a larger label. Youll need to be extremely hands-on, and what you dont know at the outset youll have to learn quickly. Thus youll likely perform all the tasks necessary to run a label A&R, banking, bookkeeping, business affairs, marketing, etc. This will even include stufng envelopes and handling routine mailroom functions. Running such a small-staffed label is an enormous responsibility and undertaking. However, many now-thriving major and independent labels were started by someone with large ideas and a small wallet, who learned the business by doing it all. Note that when you hire staff youll need to get an Employee Identication Number (EIS) from the IRS, will have to take out Workers Compensation Insurance, and that youll have to comply with various governmental regulations, such as the completion and retention of an I-9 (Employment Eligibility Verication form) stating whether or not the employee is a U.S. citizen. http://www.irs.gov/businesses/small/article/0,,id=98350,00.html http://www.ice.gov/sevis/faqs/information_employers_nonimmigrant_students.htm
Traditional Staff Functions

The pages that follow are provided so youll have an idea of how large record companies are structured. This will help you determine what to add as your label becomes successful and needs to grow. A midto-large sized label will consist of many departments and employees, falling under two groupings General and Administrative (G&A) and Sales & Marketing.
General and Administrative

Ill rst briey discuss those employees who would fall under the heading of G&A on a Prot and Loss (P&L) Statement. Note that theres no attempt to place these in a hierarchical position.
The Top Dog

This is probably you, and when your company grows, your title might be President, CEO, Managing Director, El Supremo, or Chief Cook and Bottle Washer. Youll be the banker and fundraiser and will have the responsibility for major decisions, the labels A&R direction, and the general well-being of the label.
General Manager
As companies get larger, they may need someone to take part of the load off the label head. Thats where a general manager COO, executive vice president, whatever you might call him comes into play. Most of the staff will report to the GM, with the GM reporting to the top dog. Sometimes a GM will double as head of marketing in midsize labels.
CFO, Accountant, or Bookkeeper

The bookkeeping or accounting function is a highly critical one. This person will be responsible for the maintenance and handling of all nancial data, including invoicing, accounts receivable and payable, sales data via a spreadsheet or database, royalty reporting, and preparation of such internal documents as P&L statements and all the other nancial reports that a businessperson needs to analyze the nancial state of his company. The person you employ for this position will be directly involved in all nancial matters. He will oversee the nancial welfare of the label, will do nancial projections, and either keep the books or supervise that function. Due to its importance, this is one of the most critical hires you can make; so when the time comes, be sure youve thoroughly researched your needs and the work history and background of the candidates. Its a sensitive position, so hire with care and discretion. You might even have your outside accountant interview the nal applicants to help in this critical hiring decision. How highly qualied the candidate has to be will be determined by your needs and budget. If you require a high-powered individual with lots of knowledge, you might hire a C.P.A. with years of accounting experience. But sometimes its a good idea to bring on a person with less experience but who shows great ability, potential, and honesty. Then let this individual grow on the job. If, at a later time, the label requires someone with substantial knowledge and experience, you can then hire a more highly qualied person, knowing that the original employee will be the one who knows the nancial ins and outs of the label, and where any bodies may be buried.
Accounting data must always be kept safe and protected, up to date, and be backed up to a secure offpremises location. The staff must also keep track of all capital purchases and leases.
Business Affairs
Business Affairs takes care of all the legal aspects of a label and negotiates all of its deals. In larger labels, a staff attorney usually lls this role. However, in small companies, the head of the label will often handle the bulk of this function, leaving the tougher aspects of negotiations to an outside attorney experienced in negotiating music-business contracts. Business Affairs should also maintain a suspense or tickler le that keeps track of when contracts need to be renewed and options exercised. Some labels arrange to have someone in this department handle the ling of mechanical copyright licenses for all new releases.
Artists and Repertoire (A&R)

Artists and Repertoire (A&R) people deal with the scouting and signing of artists, advise on song selection, and may sometimes produce recordings. A label stands or falls on the quality of its music, so this is another one of those critical functions. A&R personnel spend lots of time in clubs looking for and listening to new talent, listening to demo tapes, and auditioning performers. Some labels may utilize A&R stringers who live in different cities throughout the country. These are people who frequent local clubs and know whats happening musically in their region. They dont get paid much, but they should receive all of your releases, and one or two royalty points if they introduce an artist who you subsequently sign to a contract.
A&R Administration
Some labels have a person whose primary job it is to keep track of all recording budgets and actual expenses. This person will work with the producer and artist to establish the budget, then authorize the work by placing purchase orders for studio time, hiring of musicians, instrument rentals, etc., and should keep careful track of all expenditures as they occur. Its this persons responsibility to notify management should it appear that a project may go over budget.
Art Director
The art director (sometimes called Creative Director) is responsible for the visual look of a label and all that entails. The AD works with a photographer and/or illustrator and a designer (if he doesnt do the design himself) to achieve the desired image most appropriate to the artist and the music. The AD may also be responsible for the design of a labels logo and letterhead, as well as for all marketing materials and advertisements, and frequently will oversee music videos.
Production
Production takes care of all the nuts and bolts involved in getting the recording produced as a physical entity. This means seeing the project through from birth to release, gathering all materials for use in the booklet and inlay card (song titles, writers, publishers, album credits, etc.), coordinating graphics design, seeing that mastering is accomplished, ordering print and manufacturing runs, and controlling all inventories. This job requires someone with great attention to detail.
Product Manager
This job is similar to and may replace that of the A&R Administrator at some companies. Large labels have a staff of such people whose job it is to work with the artists during recording sessions, explain the artist and the music to the rest of the label, most particularly the marketing staff, and guide the artists career from the labels standpoint. Its kind of like being the artists ombudsman. At some labels, this is a function of the marketing department.
Ofce Manager
An ofce manager takes care of routine ofce functions and the supervision of the infrastructure, sometimes in very small companies including personnel matters.
Personnel (Human Resources)

Labels with a large staff will probably have a special department that deals with personnel and their issues. They will be responsible for maintaining personnel records and may deal with health insurance matters. The head of the department will be responsible for writing an employee manual and seeing that its signed by all staff members. Federal laws require that all employers, regardless of size, have written policy guidelines. The manual should cover all employee policies, benets, and responsibilities including terms and conditions of employment.
Mailroom
This department sorts the incoming mail and packs and sends out promotion disks, etc. They may also be responsible for maintaining a samples inventory of all current releases. Theyre frequently called upon to run errands and handle other miscellaneous ofce functions.
Sales and Marketing

This grouping falls under the P&L heading of Sales and Marketing. The fact that I address it after G&A does not detract from its importance to the effectiveness of a label. In fact, theres an entire chapter later in the book devoted to this crucial function.
Marketing Head
This person will determine how youll go about letting the public and the industry know about the great new music youll be releasing. Your head of marketing will be responsible for distribution, sales, publicity, promotion, etc. and will be the principal designer of your marketing plans and their execution. Its another critical position and requires someone who not only loves your music, but also is intimately familiar with all aspects of what it takes to market music in this time of complex retail distribution and online music sales. This individual needs to be industrious and highly creative, and must know how to accomplish a great deal with very limited budgets. Unless youre prepared to run the label and also be head of marketing yourself, be sure to hire someone whos not only on your wavelength, but is also a person who can add to the look and feel of the label.
Sales
As its name implies, the salesperson or sales team is responsible for all aspects of selling, working with distribution and retail accounts to get the labels message across about each new release. This person needs to ensure that your product is well spread throughout the marketplace in quantities appropriate to each account and geographical region.
International
Once a label has developed artists with potential for signicant overseas business, it should consider hiring someone to handle all the aspects of international sales and marketing. Its a complex task because your music will have more appeal in some territories than others, and youre likely to end up with a different distributor or licensee for each country. Keeping afliates informed of new releases, supplying them with samples, and motivating them is difcult. All this is made more complicated by language barriers and disparate customs.
Publicity (aka Public or Media Relations)

This person is responsible for getting news and information about the label and its artists to national and local press, as well as to such national radio magazines as All Things Considered, Morning Edition, and Fresh Air. The publicity person also attempts to place artists on local community and college (and in some cases high school) radio stations for on-air interviews and/or performances. She may also be responsible for interaction with social media such as Facebook, Twitter, etc.
Radio Promotion
Radio airplay is an essential need for most labels. The head of promotion will oversee the efforts of all those involved in getting local and national radio stations to play your music. This individual may make most of the necessary calls, but many labels farm out these functions to independent promoters who specialize in the genre of music your artist most closely approximates. Indie promoters range from relatively inexpensive in the case of jazz or classical music, to megadollars for rock and pop airplay. The latter is in a period of ux as I write this in late 2011 since radio play is no longer as effective a sales tool for independent labels as it used to be.
Advertising
Once an artist or his music has attained a certain amount of buzz, taking out ads in certain media may be advantageous. I suggest you only consider spending money and effort on advertising after a signicant buzz has started. Dont even think of wasting funds on advertising for an unknown or unproven artist. This function will in all likelihood be the responsibility of the head of marketing until such time as the label has sufcient budget and personnel to have a full-time advertising person on staff.
Artist Development
Some years ago, many large labels had a department devoted exclusively to furthering their artists careers helping them get gigs, guiding them to be more stage-worthy and exciting as performers, etc. These people would also advise the artists on how to look good and be effective when performing on stage or on television. This is still an important function of a record label, and I encourage you to do as much artist development as you can with a minimal operating staff. Later, when nances permit, you can add a development department.
Media
Labels that require many music videos may have a full-time person to coordinate all aspects of making them as well as getting them broadcast on TV and online outlets that routinely play them.
Additional Support
Assistants
Large companies may have many assistants in each department. However for a start-up (and, of course, depending on the initial size of your staff), one or more assistants will probably be necessary.
For example, if a label is started with just one, two, or three key people, its likely that youll need at least one helper if only part-time to deal with the myriad of tasks and details.
Interns
Bright and motivated older high school or college students can make great interns. They can be effective in many different roles, depending on their individual abilities and interests. Theyre usually unpaid, getting school credit for their work. Others receive modest hourly wages and copies of all new releases. It sure beats working at the local fast-food emporium!
Virtual Staff
And here is where what I term virtual staff comes into play. These are freelance professionals who provide services and handle certain responsibilities on an as needed basis. A label can be particularly effective in outsourcing such functions as graphic design, publicity, promotion, etc., for specic projects or for a specied period of time. Its absolutely essential in very small companies. Most start-up labels begin with the barest minimum of staff frequently the founder and perhaps a part-time or full-time assistant. This is not due to the fact that theres little work to be done in fact, the contrary just that theres usually not enough money to support anyone else. However, where sufcient funds are available, I suggest there be at least: A Label Head you; A Bookkeeper or similar financial person to do spreadsheet projections, pay the bills, and keep the books; can be a part-time function; A Marketing Person to be brought aboard sufficiently before the first release to effectively handle the rst and subsequent projects. When youre just beginning, the head of marketing may be sufcient for your marketing needs, as this is where the virtual staff comes in. For example, outside professionals could handle the functions of public relations and radio promotion. Theres a lot of such talent available, particularly as a result of recent layoffs in the music industry. These can be individuals or small rms whatever makes sense for your label and music. Ive known a number of labels whove worked very effectively with such experienced people, hiring them for certain projects for a limited and specied period of time. This also protects cash ow since you know at the outset of a project just how much youre committed to nancially. The following pages show sample organizational charts that suggest stafng for very small, medium, and large record labels. Again, these are suggestions, since every company sets themselves up differently.
Principal
Legal Counsel
Bookkeeper
VP Marketing
Graphics Designer Assistant
PR Firm
Indie Promoter
Small-Sized Label
Virtual Staff Designated by Dashed Lines
Principal
VP Business Affairs CFO A&R Director VP Marketing
Production Director Art Director Bookkeeper Sales Director
Publicity Director
Promotion Director
Media
Production Assistant Sales Asst.
Asst. Bookkeeper
Designer Designer Mail Room Clerk
PR Firm
Independent Promoter
Independent Promoter
Medium-Sized Label
CEO
General Manager
A&R VP
Business Affairs VP CFO
Production VP
Intl. Mrktng. VP
Marketing VP
Office Mgr.
A&R Asst.
Business Affairs Asst. Art Director Bookkeeper Sales Mgr.
Production Mgr.
Publicity Mgr.
Promotion Mgr.
Media
H.R. Mgr.
A&R Asst. Production Assistant Sales Asst. Asst. Art Director Asst. Bookkeeper
A&R Admin.
Artist Dev. Mgr. Sales Asst.
Publicity Asst.
Promotion Asst.
Mail Room Mgr.
Production Assistant Designer
Asst. Bookkeeper
Publicity Asst.
Promotion Asst.
Sales Asst Designer
Advertising Mgr. Indie Promotion Indie Promotion
Large Label
A Quick Take on Stafng

General & Administrative (G&A) Top Dog General Manager CFO, Accountant, Bookkeeper Business Affairs Artists and Repertoire (A&R) A&R Administration Art Director Production Product Manager Ofce Manager Personnel Manager Mail Room Sales & Marketing Marketing Head Sales International Publicity (Public Relations) Radio Promotion Advertising Artist Development Media Assistants Interns Virtual Staff
Chapter 8 Setting Up Your Ofce | 79
Chapter 8 Setting Up Your Ofce

This chapter deals with the realities of creating a physical home for your new label and attempts to include everything youll likely need to address. Of course, what you need, and how much, will be dictated by the size of your company.
The Ofce Space

Early in the labels development, youll need an ofce. Presumably youll rent space somewhere, unless you have a large home where you can work, or sufcient resources to buy ofce real estate. However, I dont recommend that you tie up cash buying space. Renting preserves capital and affords much greater exibility for future growth. Its a given that your requirement for space must be appropriate to the number of people needed to staff the label. But heres a word of advice from years of choosing ofce space try to get about 2030% more space than you think youll need at the outset. The reason is that most people underestimate future growth, and with any reasonable success, youll probably want to hire more people and will need some place to put them! Leasing sufcient space initially may save you from an expensive and time-consuming relocation. Locality may or may not be important to you, depending on the labels size, nature of the music, staff, image you wish to project, etc. If youre in a big city, consider accessibility to public transportation. If youre in a locale where most people drive to work, consider the access to major roads and thoroughfares and, even more important, adequate parking. Youll need a parking spot for each employee and extras for visiting artists and guests. Will additional parking spaces be available if you add to the staff? Such space may not always be available, so this is an item that needs to be checked. Also the parking site should be brightly lit as well as safe and secure for any late-working employees. In the previous chapter on stafng, you will have determined the optimal size of your staff and their responsibilities. Now, as you consider the space, think of the need for adjacencies who needs to be close to you or other key people, and who may not. Consider the size of various common ofce spaces you might want, such as a mailroom or conference room. Try to nd space thats already wired for telephones, computers, and the Internet. If not, ask the landlord to provide such wiring as part of your inducement to sign a lease. You might also be able to get the landlord to pay for whatever partitioning may be necessary to house your operation, or at least to provide some nancial consideration toward construction. Such requests are quite customary, and youd be amazed what you can get from an agreeable landlord through the gentle art of persuasion.
Private Ofces
Private ofces may not be possible in the very early days of a labels existence, but theyre extremely conducive to getting work done, particularly in a music company. They dont have to be large or lavish, but they need to be utilitarian. You may occasionally need to close a door just to think, or to have private meetings with staff, artists, managers, etc. Youre also going to want to play music sometimes very loud so being able to close a door becomes a necessity.
Conference Room
You may not think you need a conference room, but its a great place for staff meetings and for those who may have cubicles or small ofces to meet with artists, suppliers, etc. You might t it out with a good sound system (maybe even with surround sound), a television, DVD, and VCR for viewing videos, and even with a piano if thats appropriate to your artists music whatever amenities your budget can handle.
Mailroom
A mailroom is highly recommended as the place where incoming mail can be sorted, where outgoing mail can be assembled and stamped, and more important, as a storage space for the CDs, DVDs, etc., youll be releasing. Youll also need space for storage of mailing and packing materials. Provide as much shelving as possible, as well as a large work counter for sorting mail and assembly of mass mailings. You may be able to store materials under the counter, if you provide shelving or cabinets there.
Kitchenette
A small kitchenette is also a valuable and staff-friendly convenience, particularly if youre not located near a coffee shop or fast-food restaurant. It may be equipped with nothing more than a coffeemaker, small refrigerator, and microwave oven, but will surely repay its cost in staff convenience. The further youre located from an outside source of food, the better equipped the kitchenette should be. Its also a good location for a water cooler, or even one that supplies hot water as well as cold.
Storage Closet
A closet is great for storing ofce supplies, although they can be placed in the mailroom. A lockable, air-conditioned closet is ideal for storing safety-master tapes, special materials, and expensive ofce supplies.
Archive
Many labels forget about a valuable future resource that costs nothing other than space, and thats an archive of every record you release in all of its congurations. Keep a minimum of ve copies
of each title in each conguration, and dont let them leave the premises! You should store extra CD booklets and inlays, cassette J-cards (folders), and archive all printed catalogs, mailing pieces, promotional items, and selling materials. Keep it well-organized so you can easily nd what you need. Youd be amazed how often youll go to the archive to check something. The archive should be maintained in a locked, highly secure space, with access provided to only the most trusted staff. If it is climate-controlled, the space might also be a good location for temporary storage of master tapes. (Ideally, masters should be stored off-site in a secured, climate-controlled location. More about this in a later chapter.)
Facilities Closet
A lockable space is important for key equipment such as telephone switching gear, computer network server and backup storage, and the wiring and hubs for these critical infrastructure items. Be sure its accessible for repair and maintenance and not located anywhere that will make it difcult to get into. I almost put all of this on top of somebodys ofce once, which would have necessitated climbing a pull-out ladder and crawling over a catwalk to get to it. And in the summer, it was extremely hot up there. I was very glad that, in a sleepless 3:00 a.m. moment, it occurred to me that I had an ideal location for such a suitable space that was extremely accessible, and even air-conditioned. It saved countless climbs, since thats where we put the network server with its backup tape drive, routers, and patch bays, as well as the telephone and voice mail control computers and their cabling.
Soundproong
Since youre a music company, youre going to want to play a lot of music in your space, so try to soundproof it as much as possible. Of course, you wont want to annoy your neighbors, so consider placing any room where you may need to play loud music such as your conference room in the center of the space, or some other location whose walls are not adjacent to the neighbors. Where possible, build ofces for principal personnel with extra layers of sheetrock and separate the studs between ofce walls so that they dont touch. This will reduce noise considerably, as will solid-core doors, thick wall hangings, carpets, etc. Add as much soundproong as you can afford.
Decor
You dont need to spend a lot on decor. Paint comes in all kinds of colors that dont cost any more than plain old white. Consider letting all the infrastructure hang out something I learned from Frank Gehry when he was showing me ofce space hed designed years before becoming one of the best-known architects in the world! This means you may not need to cover or otherwise disguise ducts, cable, etc. Creative use of posters and other inexpensive materials can make an ofce feel very warm and welcoming. In fact, theres nothing wrong with funky or shabby chic, and you can even make cheap look good through cleverness.
Furniture
Youll need desks, chairs, le cabinets, etc. You may be able to lease them, but it will probably cost you more in the long run. Look for used desks and le cabinets at stores that specialize in second-hand ofce furniture, or at charity thrift shops. You can always upgrade later when youre protable. When it comes to ofce chairs, however, look for ones that are ergonomic, providing good back support for the many long days you and your staff will be sitting in them. Seating is one item not to do on the cheap. Your desks neednt be fancy. For years, Ive been using a large solid-core door placed on top of a couple of two-drawer le cabinets. I put a few coats of polyurethane on the door and have been using it for about twenty years a very inexpensive solution to a common need. Dont be concerned with image in furnishing the ofce. Amazon.coms early ofces, for example, were noted for their inexpensive ofce furniture. Before you acquire the furniture, draw up a simple diagram or oor plan for the entire ofce, and gure out just what youll need for each space. Then put all of this into a list, or ideally a database by person and department. This will provide a total of all the desks, chairs, le cabinets, etc. that youll have to get.
Furnishing Your Ofce

Private Ofces Desk Desk Chair Credenza for each ofce, where affordable File Cabinet for each ofce, plus some for the company at large. Those in open or public spaces should be lockable. Shelving for Books, CDs, etc. Optional: Visitor Chairs at least one or two in each closed or private ofce Sound System Cubicles Desk Desk Chair Optional: Visitor Chairs? Credenza? File Cabinet?
Conference Room Table Chairs Optional: Sound System with Speakers, a Television, VCR, a Piano
Ofce Equipment & Services

Communications
Phone System & Phones
You may decide to let the local phone company supply all of your phone equipment, which might be a good idea at the outset. Later on, youll probably save money by purchasing your own equipment or working out a lease-purchase plan. Consider carefully how many lines youre likely to need. A staff of six, for example, doesnt mean youll need six lines, although you might. Ask your phone company rep or other telephone adviser for their guidelines, keeping in mind that record labels are more phone-intensive than many other businesses. Just be sure that you provide for exibility in your equipment so if you need to add staff and additional lines, the equipment can handle it. You may also need a dedicated line for a fax machine. The phone company may be your best consultant initially, but there are a number of communications specialists who are excellent at estimating telephone needs and can supply or guide you to the equipment most appropriate for you. Think about who will be handling incoming calls. Will it be an automated attendant a device that automatically forwards calls to the appropriate person or a live person? Or will each person or department be responsible for their own calls that come in via direct dialing? If by one person, youll need some kind of switchboard or phone that can handle all the lines and be able to transfer them to the appropriate person without a lot of key-clicks, hassle, and inconvenience. Try to get some sort of conferencing feature so more than two people in the ofce can be talking to the same person simultaneously, or to enable you to conference-in two outside parties. Be sure theres some kind of intercom or paging feature on the system. Yelling down the hall may work, but its hard on the lungs, doesnt impress visitors, and is unprofessional (although Ive been known to do it).
Answering Machine or Voice Mail

Get an answering machine or voice mail feature either in on-premises hardware or the phone companys that can handle all the lines for those hours the ofce is closed.
Long Distance Carrier

Youll be making a tremendous amount of long distance calls more than you ever thought possible. So its best to shop around in order to get the most comprehensive, cheapest, and most favorable deal available to you. Check with friends and associates to see who theyre happy, or not happy, with. Also look for a plan that bills in fractions of minutes. Many long distance carriers round up to the next minute, which might not seem like much, but really adds up when you use the phone a lot, which you will. Look into a good long-distance carrier, such as Sprint, whose rates may be a lot cheaper than what the local phone company may charge. Shop around for the most favorable rates for small businesses. There are also a number of companies that use the Internet for long distance calls, such as Skype or TruPhone, but they tend to be complex and may require special equipment. Get long-distant calling cards or company-owned cell phones for anyone who travels frequently on company business, but be sure to occasionally audit the bills to ensure theyre being used legitimately. However, when youve sent someone on the road, I think its reasonable that they be able to keep in touch with their family on the company dime.
Toll-free Number
Be sure to get an 800 (toll-free to the user) number. Its important for your distributors, customers, etc., as it provides extra incentive for them to call, and keeps you from looking like a cheapskate! Its also useful for traveling staff to call in on, saving expensive toll calls from hotels in distant cities. Your local phone company and long-distance supplier (who may be the same) will itemize their bills, so its important that you check them carefully from time to time to be sure the phone company, or your staff, is not cheating you.
Online Access
Since the Internet has become such a vital part of our lives, online access is a necessity. Get as much capacity as you can afford, based on the number of people who need it for business purposes (as opposed to accessing the net for online shopping during company time). I suggest at least a DSL (Digital Subscriber Line). This comes in varying bandwidths, from 144 KBytes to 1.5 Mbps (megabits per second), depending on your location and the ISP you choose. Since it uses regular phone lines, youre not likely to be able to obtain the higher speeds unless youre very close
to the local phone node. ISDN, which stands for Integrated Services Digital Network, has been pretty much phased out in favor of DSL. DSL uses a special modem or router thats frequently supplied free by the ISP you sign up with. They sometimes even provide free installation as an incentive, and the company may offer you as many as ve or six separate email accounts. Of course, you can buy more if theyre needed. As a DSL subscriber, youll also have your own unique static IP (Internet Protocol) address. Larger labels might look into a T1 line for much greater bandwidth. This, too, comes in varying sizes up to 1.5 megabits, but you can get a fractional T1 if your needs dont require the higher speeds. If you plan to host your own website that is have it accessed from your own server youll denitely need an always-on DSL or T1 line with its own IP address, although I encourage you to have one of the many companies that specialize in hosting websites handle it for you. Costs start at no more than about $25 a month, and with their redundancy, its unlikely that technical problems would bring down your website, a much more likely occurrence if you host it on your own server. Some ofces may also be able to access the Internet using Digital Cable. The availability of this option depends a great deal on the cable company licensed for your location, and what your landlord may permit, since cable systems are not always allowed in conventional ofce buildings. However, despite their wide bandwidth capability (as high as 36 Mbps), youre actually sharing the line with others in your neighborhood, so access speed will vary considerably. And you wont get your own IP address, but a variable one, so it cant be used for a web server. But the best thing about DSL, T1, or cable is their always-on capability; 24/7, theres no need to wait for a modem to dial, connect, and handshake a remarkable convenience and time-saver.
Computers
Youll need to decide at the outset if youre going to be a PC or Apple Macintosh ofce (or both). PCs are made by Hewlett-Packard, Dell, and many others. http://www.apple.com/ http://www.hp.com/ http://www.dell.com/ I prefer the Mac since Ive been an Apple owner since 1979 and like their computers and the company, and because Macs tend to be easier and more intuitive for us creative types. Theyre particularly adept at graphics, music, and video work. All recent Macs not only run their own native MacOS (operating system) but are also capable of running Miscrosofts Windows. Once youve made your decision, buy as much computer power as you can afford, being aware that whatever you get will be technologically obsolete in two to three years!
Its particularly vital to buy additional RAM (random access memory), since its a lot more important for day-to-day work than CPU speed (central processing unit the heart of the unit). Word processing programs and email dont require a lot of CPU power. However, if you use a number of programs throughout the day, the additional RAM will save you from having to repeatedly open and close programs that youre not using this minute, but might use again a few moments later. In fact, once I open a program, I dont close it until I shut down at the end of the day. Im likely to have all of the following programs open simultaneously word processor, spreadsheet, email, web browser, Acrobat Reader, various utilities, and frequently such design-related programs as Illustrator, and Photoshop (a real memory hog). Its also helpful to have, at the least, a built-in CD burner, and if you intend to do videos, a DVD burner. Theres an exception to the above comment about CPU speed be sure that anyone on staff who deals with graphics, sound, or video processing has a computer thats as fast as your funds can provide, since these are functions that require very fast computers.
Network
Networking your computers is one of the most effective and efcient things you can do in even the smallest ofce. For example, I have two computers in use virtually every day, a laptop and a desktop. And theyre networked! It makes backing up very simple. Each days work on one machine is backed up to the other daily! (Not to mention also to an outboard hard drive and removable media that are stored off-site. See the section below about backups.) A LAN (Local Area Network) requires nothing more than a simple Ethernet hub and cables or a Wi-Fi (Wireless) device. My hub cost all of $35 a few years ago. If you get a DSL line, it may have an Ethernet hub and even WiFi built right into it. Most computers and many printers sold today have both Ethernet and WiFi capability, or it can be added with an adapter card. This also allows a number of computers to share a single printer. In addition to backing up your work and sharing a printer, the network will allow you to access les on each others computers. That is, provided youve set them up so that those certain les can be shared. Macintosh computers allow you to share only those les you permit to be shared, and then only by those people who should have access, via use of a secure password.
A network can reduce the use of what we used to call sneaker net in those days before networking computers became easy. This was simply taking a oppy disk down the hall with a copy of the le to be shared. Doesnt that floppy disk date this scenario?
The larger your staff the more computers youll have the greater your need will be for a wellfunctioning network.
Network Server
Related to the network is a server cleverly called a network server. This is a special computer (sometimes rack-mounted) with a very large hard drive thats used to store the many essential company les that need to be accessed by more than one person, sometimes simultaneously. For example, an accounting department might use a server to maintain the nancial les that the entire department uses. These les are password protected so that only those who require access are able to use them. A server may also contain such vital data as a company-wide contact list and/or calendar and other key databases. For example, one of my clients with about ten employees used their server to store all of their vital company and production information in a sophisticated database using FileMaker as the engine. All of the data was on the server, but could be accessed only by those who had a reason to view or to update it.
Printers
Youll need at least one printer, and depending on the company size, perhaps additional ones. I recommend at least one black-and-white laser printer with an Ethernet connection so it can be shared by many people. The more who share it, the more heavy-duty it should be. If itll be used for any graphics programs which make use of Adobe Postscript, be sure it has Postscript built in, preferably not via emulation. This will enable you to create professional-looking documents. And if the budget allows, you might want one that has additional paper trays as well as the capability for printing on envelopes, and 11 by 17 inch paper. Such printers are available from Hewlett-Packard, Brother, and GCC, among others. http://www.hewlettpackard.com/ http://www.brother.com/ http://gccprinters.com/ Color laser printers, should you require that capability, are available from Xerox and HP. A lessexpensive option is an ink-jet printer from Epson, Canon, Hewlett-Packard, etc. I think business correspondence from these doesnt look as good as that from a laser printer and it appears less professional. Still, it may be acceptable at the outset if, like most of us, youve got limited funds. Large-format models are particularly useful for graphic design. http://www.epson.com/ http://www.usa.canon.com/
Scanner
A scanner is not an essential item unless you do a lot of in-house graphics. Scanners are now available at prices about a fth of what they were some years ago, with quality many times better. Many major manufacturers make them.
Software
Youll have to supply your staff with a fair amount of software. Not everyone needs to have all thats available, but most of the staff will need certain standard products to be able to function. Be sure you buy or license separate programs for each person. Do not pirate software not just because its unethical, but because doing so could bite you in the tail. What follows is a description of an essential group of software that almost everybody needs.
Word Processor
Microsoft Word has become the industry standard and is a totally cross-platform program. That means a document saved in MS Word format can be read as easily on a PC or a Mac, and although other programs are available for both platforms, it has, by the might of Microsoft, become the de facto standard like it or not.
Spreadsheet
Microsoft Excel is the standard for nancial planning, budgets, and number crunching, and it is also great for creating tables, charts, and graphs. I used to keep track of all aspects of production in a large Excel le, and Ive also known it to be used for royalty accounting. It can also be used for lists, and for small at-le databases. Excel is cross-platform, a great convenience when sharing les with accountants and consultants. Both Word and Excel are bundled as part of Microsoft Ofce on both platforms, along with PowerPoint, which you might nd useful later on. Get the latest version for your operating system. http://www.Microsoft.com/
Email Client
Qualcomms Eudora and Microsofts Outlook Express (or Microsofts Entourage for some operating systems) are available for both platforms and in common use in many businesses and industries. Email is by nature cross-platform, so pick a program that allows you a lot of exibility in the way of storage mailboxes, to use Eudoras terminology. For example, I have mine set up with many
separate business mailboxes such as one box for each client, prospective clients, in-work projects, etc. and personal boxes for mail that I might want to refer to later. Eudora is pretty much obsolete these days, but it was a great program in its time and many of us still use it. http://www.eudora.com/products/ Email programs from Microsoft usually come bundled free with their Windows operating system or may be available as part of Microsoft Ofce. Apples Mac OS X operating system comes with its own free email program, appropriately called Mail.
Web Browser
The two standards are Microsofts Internet Explorer and Mozilla Firefox, and they are available for both platforms. Theyre free, but be certain to use the most recent version for your computer. http://www.mozilla.com/en-us/refox/new/ Apple bundles its own free browser called Safari, and is the fastest on the Mac. There are other browsers available, free or at modest cost, such as Google Chrome, Opera, and OmniWeb, should you prefer them.
Database
Microsoft Access for PCs is one option. A better bet, though, might be Panorama or FileMaker Pro, which although an Apple product, is cross-platform. Its a relational database and comes in a number of avors depending on your needs shorthand for saying you can make it do almost anything. Its become the current standard for database work. http://www.provue.com/panorama/ http://www.lemaker.com/ Youll use either of these to keep track of all kinds of vital and not-so-vital company information such as your artist roster, product line as it grows, your history of airplay by artist and title, etc. Some labels use it to massage sales data. I had a client that maintained its entire production schedule and detailed data in FileMaker, making it available for all the staff to access so theyd know what was happening in real time, with input of data only accessible to the people who handled production. Some databases are at le, such as looking at data in Excel. More sophisticated ones are relational in that they cross index data between relevant les. For example, you might have all of your radio stations listed in a le that relates to separate les containing airplay information by catalog number. Thus, if you want to know which stations played the last release by The Doorstops, youd
merely query the database to get the answer.
Contact Database & Calendar Program

There are many programs that handle these functions. Although Microsofts Outlook for PC and Mac is an email program, it can also keep track of contacts and calendars. Many Mac users prefer Apples Address Book and iCal. An additional advantage is that they can be synchronized with iPhones and iPads.
Anti-Virus Software
The Internet is rife with viruses that are frequently carried by email, or les and documents you may receive from others. Anti-virus software will tend to vaccinate you from such nasty bugs, but be sure to update the virus denitions (usually free or by subscription) on a regular and frequent basis. Typical programs are Norton Anti-Virus from Symantec and McAfees Virex. http://www.Symantec.com/ http://www.McAfee.com/
Firewall
One of the few disadvantages of always on Internet access is that your computers can conceivably be the recipients of a hacker attack. These attempts try to nd out what you may have on your computer, or even more malicious, aim to destroy some or all of the computers contents. A rewall program puts a software wall between your computer and the Internet, enabling you to get out through it, but keeping would-be intruders at bay. These utility programs are inexpensive, but essential. An example is Norton Personal Firewall for the PC and Doorstop X for the Macintosh, available from Open Door Networks. http://www.opendoor.com/
Accounting
A good accounting system for the record industry, and just about any other business, needs to handle all of the following functions: Invoicing of Sales Crediting of Returns Accounts Receivable Customer Statements Purchase Journal Accounts Payable General Ledger Trial Balance Income Statement Balance Sheet Profit and Loss Statement (P&L) Cost of Sales Product P&L (by Artist/Title) Cash Flow Payroll (plus W2s and 1099s) Customer Order Entry (optional but very helpful) Inventory Management (optional but extremely helpful) Most accountants recommend that you operate on an accrual rather than a cash basis. Using the latter, you account for income when you receive checks, and you account for expenses (outgo) when you write checks. This is sometimes called cigar box accounting because its like keeping your money in a small box putting it in and taking it out. Accrual accounting, on the other hand, keeps track of everything as it occurs. For example, as soon as you ship an order to a customer, you generate an invoice, which posts the amount to an accounts receivable journal and tells you, based on information in the invoice, or due to a prior account setup, exactly when you should be receiving payment. In other words, if you send an invoice on June 20th and have given 60-day terms, you will expect to receive payment on or shortly after August 20th. (Being in the record business however, you wont be holding your breath, and will probably be delighted to receive payment by the end of October!) In addition, the sales information entered earlier in invoices or even prior to that, in your order entry journal, if youre using one can be used to construct a sales report, by catalog number, quantity, customer, etc.
When you make a purchase by use of a purchase order, you would enter the purchase information into a purchase journal, noting when payment is expected to be due; for example, 30 days after receiving the goods and receipt of an invoice from your supplier. The accumulation of all purchases will generate an accounts payable ledger or aging which will tell you what youll have to pay out over the next week, or 30 days, 60 days, etc. The more detailed you make your entries (and you only have to do this once per event), the more information youll be able to extract. For example, at any given time, you should be able to know exactly what youve spent thus far on making your newest hit in studio costs, musician fees, print graphics, etc. Youll also know how much business youve done with your key accounts for each month and in aggregate since the beginning of the year, including how well theyre paying you, and what you can expect to receive in payment during the next month, and so forth. With a good Double-Entry accounting system, you should be able to maintain all the information a label needs to survive and prosper Accounts Receivable aging, Accounts Payable aging, Income Statement, Balance Sheet, Project or Release P&Ls, Cash Flow data, etc. In double-entry accounting, every transaction has two sides where the money comes from, and where it goes. For example, when you pay a bill, youll be deducting money from your checking account but also applying it to your suppliers account, reducing the amount you owe that company.
There are lots of accounting systems available. Some of them are very good, and some rather poor. Some are over-simplied, others way too complicated. Youll need to do research to nd out which ones just right for how you want to operate your business. Will you be using PCs or Macs? Will more than one person be needed to handle maintenance of your accounting? If so, youll need a LAN (local area network) so that two or more people can be entering data or running a report at the same time. Dont get a system thats too elementary. Although a simple package may seem right for a start-up, be sure it can grow as your business grows. You certainly dont want to have to change accounting software in a year or two, conceivably having to re-enter all of your data! Thats a nightmare, but Ive seen it happen many times. On the other hand, dont get a package thats too complicated for you and your staff to handle. Think like Goldilocks its got to be just right! Be sure the software you buy is from a well-established company one that looks as if itll be around for years to come. Youll likely need tech support from time to time, and you dont want to nd the company has gone out of business and your new software is unsupported.
In addition, before you settle on a particular system, consider using an accounting software specialist to assist in the installation and set-up. This may save you lots of grief. But be sure the specialist will be available for the rst few months youre using the new package to answer questions and troubleshoot problems. And be sure they know your chosen software cold! Although Im not recommending accounting software for your particular needs, you may want to look into one or more of the following before you settle on your purchase. Its likely that one of these will work for you. Quicken from Intuit might be the simplest system, but is not exible or sophisticated enough for a growing company, is not double entry, and doesnt provide an audit trail. A slightly better choice is QuickBooks, available for both PC and Mac. There are lots of different versions, at varied prices. http://www.intuit.com/ http://www.quickbooks.com/ Theres also AccountEdge as well as MoneyWorks Accounting Software (Cognito Systems). Both programs exist for Macs and Windows, and either of these will probably work well for a start-up that plans a few years of solid growth. Youll have to buy separate licenses for each additional user, but thats at considerably reduced prices. http://www.accountedge.com/products/ http://www.cognito.co.nz/ In addition, there are some PC-only offerings, but be sure the software you choose is compatible with the type of Windows operating system and/or server you have. Peachtree Accounting has a number of modules and versions depending on the complexity of your needs and the number of users. http://www.peachtree.com/ There are also web-based versions for some of these (QuickBooks and Peachtree), but I dont recommend them. The reason? If your ISP (Internet Service Provider) network is down, you wont be able to get to your data. Lots of research material is available on the web. So be sure to thoroughly review all available options. But its imperative that you discuss these with your accountant before you make a purchase. Its also a good idea to check with your friendly competitors to see what theyre having success with, or listen to horror stories about their experiences so youll know what to avoid.
Royalty Accounting
You can use a spreadsheet program during the rst years for a label with few releases and few royalty accounts. Larger labels with more sophisticated needs will require specialized software for royalty handling thatll be discussed in Chapter 14 on post-production.
Backup
Of course, youll want to back up your accounting data (and all other vital databases and business information) on a daily basis, rotating your backups and keeping them off-site. Backing up is an absolutely essential task. You can do simple backups to an outboard (external) hard drive, especially one you might take home at night. I used to use such removable media as Zip disks and Jaz cartridges. Now we can use miniature USB devices called thumb drives. Others back up to DVDs or CD-Rs. Its best to have a routine regimen for this vital task. For example, once a week, you might back up the entire network, including a server if you have one, to DVDs or special DAT Data drives used for computers, or to other common backup media. Then, each night, do incremental backups to a separate tape. This can be programmed to happen automatically. Once a week, the previous weeks backups should be moved off-site. Some companies alternate the responsibility between one or two trusted employees. This helps provide redundancy. Others put their backups in a reproof safe deposit box once a week. By the way, backing up to The Cloud is not advised due to the volume of data. Check online for more information about backing up, and for the most appropriate solution for your specic needs.
Additional Programs of Great Value

There are many more programs that youll nd can be highly helpful and utilitarian. The following, although used primarily by designers, will be of great benet to you if youre already familiar with them or can nd the time to learn them. Adobe InDesign and QuarkXPress are page layout products. They can be used to design anything from a one-page black-and-white yer to a multi-page full-color brochure, magazine, or book. Adobe Photoshop can manipulate photographs and illustrations in almost any conceivable way. Adobe Illustrator can be used to design logos, complex type, and as its name implies, illustrations of great complexity. http://www.adobe.com/ http://www.quark.com/
Website design can be accomplished using Adobes Dreamweaver or GoLive. The Adobe products are available in a series of complete packages called the Adobe Creative Suite. http://www.adobe.com/products/ Theres no end to great music creation and editing programs available, but theyre quite sophisticated and I think are beyond the scope of this book. A quick scan of the web using Google can provide the latest information on whats available.
Fax
A fax machine used to be an essential item in virtually every business. But with the emergence and subsequent heavy use of email, faxing is less essential, although very convenient. The least expensive machines use rolls of carbon paper to create a print image; others use ink-jets; and the most expensive use laser print technology. Thermal paper, which had been used for many years, is now all but obsolete, replaced by standard inexpensive multipurpose paper. If you can afford it, get a machine with memory storage capability. That way, if the machine runs out of paper, any incoming faxes get stored in memory until additional paper is installed and the fax can be printed. Almost all fax machines have some kind of fax number storage capability, and the more youre willing to pay, the more numbers can be stored. Some have a broadcasting mode which allows you to send a single fax to many numbers with the push of a single button. Its a great way to let your afliates know about your airplay, etc. With appropriate software, you can also send and receive faxes from your computer. However, this means it has to be powered on 24/7, which is not always desirable.
Copier
At Elektra in 1965, I signed one of the rst leases for a Xerox 914, the earliest readily available laser copier. The machine took up a signicant part of a room. Nineteen years later, when I was leaving Elektra, my wife wondered why in the world I was buying a copier for my home ofce. In point of fact, she ended up using it for her landscape design business almost as much as I did. The copier had become another essential of our normal work process. These machines vary considerably in size, capability, and price and you get what you pay for. Buy one, at minimum, that can copy to both letter size (81/2 by 10 inches) and legal (81/2 by 14). Tabloid size (11 by 17) is particularly helpful for large spreadsheets and for graphics layouts. Be sure to get a printer with an automatic document feeder. Also, a collator, if within your budget, is a mighty timesaver.
I like copiers that reduce to 50% and enlarge to 200% of the original, in varying increments, allowing great exibility. I also prefer machines that use very ne toner, which provides higher-quality reproduction. Manufacturers include Xerox, Canon, Minolta, Sharp, etc. You can purchase or lease from them, or any number of suppliers in your city. One advantage of leasing is that if something goes wrong a serviceman should be available to quickly x or replace it. Small copiers can also be bought from large ofce stationery and equipment suppliers such as Staples, Ofce Depot, etc., but theyll be less elaborate in capability and speed.
Postage Meter
If youre going to be doing a fair amount of day-to-day mailing, a postage meter becomes a time-saver and keeps you from having to worry about the quantity and value of stamps you need to keep in the ofce. These meters also come in varied size and capacity. Some have motors that slide the envelopes through quickly, some have scales that couple to the meter, and almost all allow postage to be printed on paper labels that can be easily applied to packages. Youll probably be doing frequent publicity mailings about new releases, and will also be sending lots of samples CDs to reviewers, radio stations, etc. That makes a postage meter almost a necessity. You can download postage from Pitney Bowes and add it to your meter as needed, saving frequent trips to the post ofce. http://www.pitneyworks.com/ Its a good idea to keep the meter locked when not in use, or maintain it in a secure location.
Post Ofce Box

Are you working out of your home and dont want to divulge your address? Or are you in a temporary rented space? In either case, a P. O. Box at a conveniently located U. S. Post Ofce can be extremely practical, and you can keep it for years at minimal cost. I dont recommended boxes in convenience stores because they dont offer the protection of the U. S. Government, are usually no cheaper, and may go out of business when you least expect it.
Ofce Set-up Check List

Ofce Space Private Ofces _____ Conference Room _____ Mailroom _____ Kitchenette _____ Storage Closet _____ Archive _____ Facilities Closet _____ Soundproong _____ Decor _____ Furniture Private Ofces Desk _____ Desk Chair _____ Credenza _____ File Cabinet _____ Shelving _____ Visitor Chairs (optional) _____ Sound System (optional) _____ Cubicles Desk _____ Desk Chair _____ Visitor Chair (optional) _____ Credenza (optional) _____ File Cabinet (optional) _____ Conference Room Table _____ Chairs _____ Sound System (optional) _____ Television w/ VCR (optional) _____ Ofce Equipment & Services Communications Phone System _____ Phones _____ Answering Machine or Voice Mail _____ Long Distance Carrier _____ Toll-Free Number _____ Online Access _____ Computers for each employee (PC, Apple Macintosh, or both) _____ Network _____ Server _____
Printers _____ Scanner _____ Fax _____ Copier _____ Postage Meter _____ Post Ofce Box _____ Software Word Processor _____ Spreadsheet _____ Email Client _____ Web Browser _____ Database _____ Contact Database & Calendar Program _____ Anti-Virus Software _____ Firewall _____ Accounting _____ Royalty Accounting _____ Backup _____ Design (optional) Page Layout _____ Image Manipulation _____ Web Design _____
Chapter 9 Planning the First Recording Project | 99
Chapter 9 Planning the First Recording Project

By now, you feel youre ready to get started with your very rst recording project as a new label. Youve presumably familiarized yourself with the studio process, and have attended as many sessions as you can, through friends or colleagues in the business. But before you go into the studio to enjoy the fun part of being in the music business, you must do that one thing that seems to be anathema to too many entrepreneurs, and thats plan, plan, and plan some more! You get the idea. Sit down with your artist or group and discuss in detail just what the artistic goal of the project should be. Its vital at the outset that artist and label agree as to the nature of the recording, the material to be recorded, the size of any ensemble and use of assisting musicians, and specics about the overall sound. Once theres artistic agreement, the nuts and bolts aspect of the planning can begin. For example, will the basic tracks be recorded in your artists home or home studio, if he has one, or will you have to rent time in a local professional studio? If the latter, youll need to find out what professional studios are charging for rental either by the hour or day. What equipment is normally included as part of that charge? Does it make sense to negotiate a lock out a provision that only your act will be using the studio during the agreed-upon dates? It usually costs more and is not advisable unless you need a lot of studio time something I dont recommend. Which brings me to another point. Be sure that the core musicians (those that are part of a signed act) are fully rehearsed before they step into a studio. Although major acts might be able to afford weeks or months of expensive studio time, thats not likely to be possible for you and your artists. The better rehearsed they are, the fewer hours of studio recording time will be required, and the better the result should be. Knowing the notes cold will allow for those ineffable nuances to make their way onto the recording. And even if you have to rent inexpensive space where musicians can rehearse, itll still a lot cheaper than doing it in the recording studio with the meter running. Who will be the producer? Will it be you, or someone you hire? An experienced producer can bring out the best in an artist or group, helping them shape the material and advising on arrangements, etc. A great producer can earn his fee many-fold. Think of the role of producer as you would the director of a great movie. Hes frequently that single person who turns raw material into magic, or base metal into gold! The producer is a creative talent in his own right who can mold an artists performance into greatness. Hes also frequently a skilled analyst, capable of dealing with the artistry, emotions, and aws of many a great musician. Ask colleagues for producer recommendations. Also, look for the producer credit on the liner notes of CDs that you think were particularly well made and whose music is in the same genre as what you plan to record.
The Studio
Before you look at studios, talk to your friends and colleagues in the business to get their recommendations. Visit as many studios as you can in order to nd out what kind of facilities they have. Some rooms, no matter the size, have a great recordable sound others arent worth the money they might charge. Does the room have a warm, spacious sound, or is there hardness or brittleness? Determine how large the room will need to be to accommodate your musicians and their instruments. Youll also need to consider the kind of music youre recording. Rock musicians usually require a room thats got a lot of isolation between instruments, whereas a small classical ensemble might prefer a large room with a warm, spacious ambiance. For classical music, theres a preference for no articial echo. A small jazz ensemble might also prefer the latter, whereas a large jazz band might not. There are countless variables. Does the studio have the type of microphones youre likely to need? Some have a wide assortment of all kinds of mikes to solve most any problem, and for almost any instrument. Does the studio have a good piano or other large instrument that you might need? If not and if you require it youll have to budget for a rental. Are there isolation rooms where you can put a soloist, string bass, etc.? This provides for separation and reduces sound leakage between instruments. Then consider the control room. Does it have all the equipment youre likely to need? Is there a lot of available outboard gear? Is there a decent producer desk or place where the producer can hear well and be close to the engineer? Does the studio supply good engineers? Most will provide a primary engineer who is in charge, and a second engineer who handles tape machines, records track information, etc. Are the engineers included as part of the rental fee? Will the studios engineers be able to work well with your producer? If you supply your own primary engineer, be sure to get references from your network of associates, and be sure that he will be compatible with your producer. Does the studio have a good mix-down facility, with computerized automation if you think thatll be helpful? If not, but its got a great sound, use it for tracking, and mix elsewhere. How flexible will they be with their prices? Will they provide a discount for a portion of payment up front, and in fact, do they require a deposit before you start recording? By the way, unless they know you well, many studios require payment in full before theyll let you remove your tapes or hard drives.
Will you have to rent any musical instruments or special electronic gear, and will you need to have them, or anything large and heavy, carted to the sessions, resulting in cartage fees? You also have to decide whether to record analog or digital, multi-track or two-track? These decisions will also your costs. There are many digital recording systems for both semiprofessional and studio use available these days. An advantage is that they allow for recording onto computer media, providing great exibility and control. The disadvantage is that they may be too complex to be used by an inexperienced engineer (which I dont recommend in any event.) And the equipment used may not be available in the future when you want to release your music in the then prevailing predominant medium whatever that may be! Im a great believer in an analog backup if youre recording digitally. Nowadays we can usually play back analog masters or multi-tracks from forty or more years ago. But try to nd or use one of the rst multi-track digital recorders, such as 3Ms Model M81 Digital Audio Mastering System, to play back multi-track session tapes from 1981, for example! Digital systems come and go, but analog tape decks tend to be around for years. Determine what kind of tape or other media, hard drive for example, youll be recording to, and mastering on. And no matter what you pick, dont consider that a DAT is appropriate for your nal master. DATs are all right for reference purposes but may have too many potential dropouts to be used for the nal master. Will the studio let you supply your own tape or hard drives? Most studios have a high mark-up when they sell tape, so you can save if they let you bring your own.
Recording Budget
Now that youve decided on a studio, its time to start putting a budget together. The process will require that you look carefully at all aspects of the recording process, and as a result, it will help you determine just what may or may not be affordable. I suggest that before you start, you decide on a not to exceed cost for the project. Thats a number that youre willing to commit funds for and that you feel you can afford. Which is not to say that you must use all that money since its always a good idea to spend as little as possible. Now start a new spreadsheet similar to the one on the next page.
RECORDING BUDGET
Number of Songs FEES Arranger Producer RECORDING & SWEETENING SESSIONS Musicians
(list each name) = Num of Songs times Fee per Song
Fee per Song
Estimated Cost
Actual Cost
Negotiated Fee Number of Sessions
"
Scales
Fee per Scale
Estimated Cost = Scales times Fee

times Num. of Sessions " " " " " "
Actual Cost
Vocalists
(list each name) " " "
Copyist Piano Tuning Tape Engineer (Hours) Studio (Hours) Equipment Rental Instrument Rental Cartage Food Miscellaneous MIXING SESSIONS Tape Engineer (Hours) Studio (Days) Equipment Rental Food Miscellaneous MASTERING Studio Tape Travel MISCELLANEOUS Total
(Days) (Days)
= Hours times Days = Hours times Days
2007 Keith Holzman, Solutions Unlimited
Note there are rows on the left for each item and category, with columns across the top for incremental amounts and their costs. Theres also an estimated column for the totals of each row, and a nal column where you can post the actual costs as you receive and pay your bills. You can even add a column that calculates unders and overages. Fees These include independent producer advances, if any, and fees for arrangers if required for the project. Recording Session Costs Musicians. List the artist or band members and other musicians either by name or instrument how many sessions theyll be recording, and the fee for each session. If theyre union (AFM) members, and youre agreeable to paying union wages, calculate the number of doubles involved. For example, someone who plays both clarinet and ute in a single session would count as a double. Additionally, under union rules, one musician has to be declared as leader and that person gets paid for two scales, one as a musician and one as leader. Vocalists. List as required. Many professional vocalists are union members afliated with AFTRA. That can add a lot to the cost of making a recording, so you might consider choosing non-union singers. Copyist. If an arranger is hired, a music copyist may also be necessary to copy all the parts. Theyre usually union members, so be aware of the high cost involved. Piano Tuning. If you plan to use a piano, be sure its tuned before each session. The studio may have a preference for whoever maintains their instrument, so consult with them on it, and be sure to budget for it. Tape or Hard Drives. Estimate the type and quantity of tape or size of hard drives youll need for multi-tracking. Try to provide your own if the studio will allow it. Engineer. This is the fee per session for any outside engineer you might hire. Studio. Calculate the number of hours or days multiplied by the per hour or daily rate. Rentals. Allow for any instruments or equipment you might need to rent and multiply by the cost per hour/day, etc. Cartage. You may need to pay to have large instruments or equipment moved into the studio. Dont forget to double the cost because youll have to pay for moving them out as well!
Food. Many artists and musicians expect the record company to pay for lunch, dinners, or snacks during recording sessions, so calculate that cost here should you be willing. Mixing Session Tape or Hard Drive, as above Engineer, as above Studio, as above Food, as above Mastering Check with your colleagues and shop around for the best mastering facility available to you. Since this is such a critical part of the creative process, its one area where you should plan to spend a bit more than you might think necessary in order to get the best person and facility for the job. Budget for it. Ill discuss mastering in more detail in the next chapter. Contingency Something always seems to come up that you havent been able to plan for, so this is where you allow for the unexpected, but necessary, expense. You might add 510% of the total budget as a hedge. Total Calculate all costs and total them. The result is what youll need to spend on the project. If it adds up to more than you bargained for a common occurrence then nows the time to nd that out. Then try to see where you can eliminate unnecessary or less important items. Once youve got a budget that works for you and your artist, be sure to follow it, revising as necessary should costs or circumstances require changes. I nd it very helpful to post the actual costs alongside the budgeted costs as theyre incurred. Its not only helpful for this project, but for when you plan future recordings.
Planning the First Recording Check List

Work out the artistic goal of the project in detail. ______ Choose the producer. ______ Research the studios appropriate to the project. ______ What does the studio charge per hour or per day? What microphones are available? Are isolation booths available? Is the control room well equipped? Does it have necessary outboard gear that you might require? Does the studio supply a primary engineer and second engineer? Check the mixing facility. Is there an automated mixing capability if you need it? How flexible is the pricing? Can you provide your own tape or hard drive? Choose the engineer if not supplied by the studio. ______ Are you going to record analog or digital? ______ Be sure the musicians are thoroughly rehearsed before going into studio. ______ Prepare a comprehensive recording budget, including: Fees for the producer, arranger, etc. ______ Recording Session costs: Musicians ______ Vocalists ______ Copyist ______ Piano Tuning ______ Tape/Hard Drive ______ Engineer ______ Studio ______ Rentals ______ Cartage ______ Food ______ Misc. ______ Mixing Session costs: Tape/Hard Drive ______ Engineer ______ Studio ______ Food ______ Misc. ______ Mastering ______ Contingency ______
Chapter 10 Recording the First Project | 107
Chapter 10 Recording the First Project

Now comes the fun part making the actual recording. How you go about it varies considerably based on the artists, genre of music, etc., all of which has been covered many times in a slew of good books, some of which are listed below. I wont attempt to duplicate their efforts here. (Also see the Recommended Reading section in the back of this book.) Sound Recording Practice edited by John Borwick, Assoc. of Professional Recording Services. Professional Microphone Techniques by David Miles-Huber The Recording Engineers Handbook and The Mixing Engineers Handbook both by Bobby Owsinski Temples of Sound: Inside the Great Recording Studios by William Clark, Jim Cogan, Quincy Jones. Sound Recording Advice for the Home Recording Studio by John J. Volanski. Off the Record: The Technology and Culture of Sound Recording in America by David Morton. There all also several magazines such as Electronic Musician, and Mix that you may nd helpful. http://www.emusician.com/ http://www.mixonline.com/
Depending on the type of music, you may rst lay down basic tracks with the core musicians. Later, you might sweeten the music by adding additional instrumentation such as percussion or strings for color. Some producers or engineers like to separate the musicians from each other in order to isolate them sonically, giving them great creative control in the subsequent mix-down process. Its a matter of the kind of music youre recording and the nal sound desired. For example, in rock sessions, the drums and bass are almost always kept well isolated from each other in order to provide separation between them and from the other musicians in order to reduce leakage into their microphones. And a somewhat dry sound is desired because echo and reverb will be added in mixing. On the other hand, in classical music, a real ensemble feel and a warm, natural environment is desired. The engineer will go to great extremes to record in a rather live space that provides as real a sound to the instruments and their environment as possible. The producer will usually try to create a warm and friendly atmosphere while the musicians are recording, enabling them to be comfortable and to work well together. Some producers have been known to make a studio feel much like a living room, bringing in rugs, candles, or other soft lighting. The theory is that the more at ease the musicians are, the better recording theyll make.
Before you begin, youll have to decide whether to record analog or digital, and if youll be using such digital audio workstations (DAWs) as ProTools, Logic, or Digital Performer http://www.avid.com/us/products/family/Pro-Tools http://www.apple.com/logicstudio/ http://www.motu.com/products/software/dp/ Later, when all the tracks are recorded, the producer and engineer will mix down to a two-track, stereo master, and if youre afuent and into the latest technology, perhaps make a 5.1 mix immediately thereafter for surround sound recordings released as DVD-Audio or SACD discs, although these formats seem to have fallen to the wayside. How many tracks youve used in the recording session will determine in part how difcult the mixing may be. Obviously the more tracks you have to deal with, the longer the process will take. Most engineers start with the drums, setting their internal balance and equalization. Then hell add any other rhythm instruments, such as a bass, one at a time, slowly building up the architecture. Lead instruments will come next, and nally a lead vocal if it exists. Some engineers and producers swear by (and at) automated mixing boards. Using automation should save time, but Ive known it to take more, or at least seem to take more. The decision to use automation is up to the producer, the engineer, and the budget. When the mixes are nished, youll have to sequence the release. This is the ordering of songs into a nal playback order, and is so critical a process that it can make or break the project. The best way to do this is thematically if there is a theme to the project, or in some way that compels and draws the listener through to the end. Vary the tempos and keys in such a way that the music ows freely. The sequencing of songs, and the intervals between them, will greatly impact the impression made on the listener. Too many slow songs in a row, for example, will impede a natural ow. Ive known otherwise good records that have been spoiled by a poor arrangement of the order of songs. Many producers like to place one or two key tracks up near the beginning. Apples iTunes program, available for both Macintosh and Windows, makes testing the sequencing of songs very easy. You can listen to different versions of a project merely by changing the order of songs in the iTunes window. I suggest you come up with a rst draft and then record it (using iTunes if you wish) onto a CD-R. Let it rest for a day or two and then try to listen to it with fresh ears, perhaps in your car or ofce. If the rst sequence doesnt work, then re-sequence it as many times as necessary until it works for you, and perhaps a few trusted people whose opinions you respect.
The Mastering Process

Mastering is one of the most aesthetically creative and technically important parts of making a record. You might think you can do a good job on your own computer using ProTools, BIAS Peak, or a similar program, but its best by far to have someone with great ears and whos well respected in the industry put the nishing touches on your project. Youd be amazed at what a Bob Ludwig (Gateway Mastering, Portland, Maine), a Doug Sax (The Mastering Lab, Los Angeles), or a Bernie Grundman (Bernie Grundman Mastering, Los Angeles) can do to bring out hidden depths in the recording that you may not even know are there. In addition, they also provide fresh, objective ears for a project theyve not previously heard. http://www.gatewaymastering.com/ http://www.themasteringlab.com/ http://www.berniegrundmanmastering.com/ Be careful in choosing your mastering engineer, and be prepared to spend some money because you pretty much get what you pay for. An experienced engineer might make a pretty-good record sound a lot better, possibly even great; but a poor one can make a great record sound much less than it is. When the producer and you have constructed a sequence youre all happy with, hell take the nal twotrack masters and the written-down sequence with timings (kind of like label copy) into the mastering studio, along with your mastering instructions. These instructions will specify catalog number, artists, title, ISRC codes (see below), the manufacturing plant that will receive the master, the quantity of reference disks required, quantity of safety disks or tapes, and any other special instructions. The mastering engineer will ne-tune the recordings, adding equalization and adjusting levels between songs as necessary. With the producers guidance, hell also set the intervals or times between each track so that theres a good ow. After he makes any sonic changes and sets levels and the desired intervals between songs, the mastering engineer will insert PQ codes. This is the information that determines where tracks start, contains control points, and provides all the timing information. When the process is complete, you should request a reference disk for you and your artist to listen to and review. This is so you can hear it where you customarily listen to music, and also because some mastering studios have such superb speakers that the music seems to sound better than life itself! Because of this, its best to listen to the ref in your usual environment. When youre happy with the results, the mastering studio will record the nal master(s) to be used in the manufacturing process. The manufacturer sometimes refers to this master as a pre-master.
ISRC Codes and GRid

I recommend that you include International Standard Recording Codes (ISRC) as a part of the mastering process. This is a unique global identier for each track on a sound recording or music video, and can be permanently encoded as a kind of digital ngerprint. Its one of the ways to protect your music against piracy. The ISRC is a 12-character code that remains with each track, regardless of any future changes of ownership. The twelve characters are: Country (2 characters) country of residence of registrant Registrant Code (3 characters) label at time the ISRC is allocated Year of Reference (2 characters) year in which the ISRC is allocated Designation Code (5 characters) number assigned sequentially by the label or producer For example, ISRC US-Z03-12-00212 corresponds to U.S. (country) -Z03 (registrant) -12 (year) -00212 (designation code). Each label has its own unique code, and you can apply for your new labels U.S. Registrant Code from the USIRC. See their website for details and to get the application form http://usisirc.org/ Still more information can be obtained from the International Federation of the Phonographic Industry (IFPI) website. They have an excellent handbook thats available on that page that has more information than you may even care to know! http://www.ifpi.org/content/section_resources/isrc.html Note: thats an underscore ( _ ) between section and resources in the above URL. Its important to keep track of the assignment of each songs 5-digit code by year, and its probably best to list them sequentially, starting with xxxx1 for the rst track on the disk. Use a simple spreadsheet or preferably a database, formatted by year, artist, album title, song title, and assigned ISRC number. I recommend that you allot 20 numbers per project to allow for singles and other variants such as special mixes, etc. In addition, consider using GRid which stands for Global Release Identier. This is an additinal protection for your intellectual property. Per their website GRid provides a system of unique identication of Releases of music over electronic networks....By assigning a unique GRid to each release it can be identied without amiguity in, for instance, reports of sales of products based on the Release.The GRid Standard and the GRid Handbook and are available from the IFPI website http://www.ifpi.org/ I know this all seems complicated, but proper maintenance of your intellectual property is necessary and vital to the well-being of your label.
Piracy
Piracy in the recording business has become a major industry problem and has resulted in the loss of billions to record labels, musicians, and copyrights owners throughout the world. Piracy is what happens when a company in a far-off country illegally manufactures CDs of music they dont have the rights to. A more common, and epidemic, form of piracy has resulted due to the proliferation of peer-to-peer le sharing (stealing) of songs over the Internet by people using such programs as the original Napster, Limewire, Gnutella, and Kazaa. Thankfully, a lot of that is now history!
Recording Project Check List

Read up on recording techniques if youre not familiar with them. _____ Record the basic tracks. _____ Sweeten the tracks. _____ Mix them all down to a two-track master. _____ Mix down to a 5.1 track master (optional). _____ Sequence the songs into the nal playback order. _____ Research ISRC codes and obtain your ISRC number. _____ Prepare your list of ISRC numbers for the project prior to mastering. _____ Prepare Mastering Instructions to include: Catalog Number. _____ Song Sequence with Timings._____ ISRC Codes. _____ GRid. _____ CD Manufacturer, with address and contact information. _____ Quantity of safety tapes required for backup. _____ Quantity of CD Reference Discs required. _____ Master the recording. _____
Chapter 11 The Ins & Outs of Pre-Production | 113
Chapter 11 The Ins & Outs of Pre-Production

Pre-Production is the process of preparing for the actual manufacture of recordings, including all commercial and promotional CDs, cassettes, vinyl LPs, DVDs, videos, or anything your business requires. It consists of the preparation of artwork for printing, the master for replication, and the coordination of all required matters with the artist, producer, designer, marketing department, etc., as appropriate. Youll need to know the following before you begin: What the artist and label would like the package to look like. Who the designer will be. Who the printer will be. What configuration(s) you will be manufacturing (CD, Cassette, LP, DVD, Videotape, Download exclusively, or in addition to other media, etc.) Which CD pressing plant or tape duplicator you will use. Lets address each of these matters. The prime physical medium for recorded music remains the Compact Disc, as imperfect as it is. CDs have improved greatly since their commercial debut in 1983, but remain somewhat constricted in sound quality due to their containing only 16-bits of information at a sampling frequency of only 44.1 kHz. They need to stay as such in order to be compatible with the millions of CD players now in existence. Newer recording processes, though, are capable of carrying up to 24-bits and 192 kHz of information. Thus the original sound can now be stored at considerably greater delity. Unfortunately such formats are incompatible with the existing standard CD (although such media as DVD-Audio, Super Audio CD, and Blue Ray, as well as downloads are capable of this higher degree of resolution). If you manufacture anything youll likely want to manufacture and sell CDs, since they remain the norm, at least for now. And if you manufacture anything, should you manufacture audio cassettes? Commerical cassettes are essentially a thing of the past. Determine whether cassette sales are meaningful for the genre of music youll be recording. For example, a few years ago it was primarily rap, hip-hop, and urban music that sold any quantity of cassettes. Some labels used cassettes for singles, while others manufactured CD singles when they felt there was sufcient potential. But you should know that cassette sales are but a tiny fraction of what they were twenty or so years ago. A few labels manufacture a limited quantity of 12-inch vinyl LPs for dance clubs when the music is appropriate. Others make audiophile LPs for that raried and specialized market. So what you manufacture will depend on your music and its audience.
Pressing/Manufacturing Plant
Take sufcient time to investigate the best manufacturer for your needs. Talk to your associates in the business to see who theyve had experience with and which plants theyd recommend. What youre looking for is a combination of the following: Good service with attention to your needs, and reasonable turn-around times. Stringent quality control. Fair, competitive prices. Reasonable business terms (timing for payment, etc.) Ability to give you speedy access to information about your order, such as how much has been manufactured thus far, etc., and when any remaining balance will be available for shipment. Facility to drop-ship on your behalf. Capacity to store your goods at no, or at least low, cost to you. Location could be one of the factors in making your decision. Where is the manufacturer located, and how close is it to the location of your primary distributor? How near or far is it from you? The distances involved will have a bearing on the freight costs from the manufacturer to the distributor, and to you, because youll likely be responsible for paying these costs. In regard to manufacturing costs be sure to get competitive quotes, nd out whats included in the quote, and what each plant charges for extras. These are some of the questions you should ask: Is their standard CD label printing silk-screened or offset? How many colors are normally allowed on the CD label (is it standard 4-color process?), and what are the charges for any additional color? Request samples. Are clear jewel cases and trays available, and at what additional cost, if any? Other than a standard folder or booklet, what additional charges apply for inserting extra material into the package, such as a bounce-back card or small catalog booklet? Can they print a top spine, and what do they charge? This is the plastic strip with artist name, album title, and bar code thats commonly placed on the top of the CD just prior to shrink-wrap. Its what you see rst as you browse through CDs in stores. How do they want you to supply them with the necessary information needed to print the top spine? (Fax, email, etc.) Do they charge extra for drop-shipping? What do they charge if anything to store your manufactured product if they agree to warehouse on your behalf?
Request samples of each suppliers work so that you can check quality of manufacturing and label printing. Some labels use a broker to handle their manufacturing and printing needs. This might be advantageous for a small start-up in that you have to talk to just one person about printing and manufacturing. It greatly simplies the task, but has some pitfalls. First, itll cost more because youll be paying for the brokers time, service, and experience. It also means that theres always a middleman between you and the manufacturer something I, as a hands-on type, dislike. I prefer to deal directly with the people actually responsible for the work. In the long run, direct contact with the supplier will enable you to ask questions and to learn more about the process, and will serve you in good stead as you grow large and prosper. Ive always valued my close relationships with the people at various printers, pressing plants, and duplicators. Many have become good and close friends. Therefore I recommend you take a deep breath and dive into the pool yourself. Note that many manufacturers, and printers too for that matter, may not require written contracts. These are some of the few remaining good faith relationships in the industry. Once youve decided on a manufacturer, youll need to nd out: What they require for manufacture from the Mastering Studio Fully encoded CD-R, or type and format of tape (PCM-1630 U-Matic, Exabyte, etc.) What media do they need to print a CD or cassette label from? Will they want separated lm or do they prefer an emailed le in InDesign, QuarkXPress, Illustrator, or PDF form? If its for a CD label, how many colors of ink will they allow without additional expense? How many days before your desired ship date will they require the various components listed above to be in their facility? No matter what they specify, however, schedule this delivery a few extra weeks (not days!) ahead of time on your calendar. Once the nished recording is mastered, youll have to see that the required component is sent to the supplier for manufacturing. When the master is received at a CD plant, it is used to generate a glass master. This is a glass disk covered with a photosensitive layer onto which a special laser engraves the minute pits of information that represents your music. A very thin silver coating is then applied in a vacuum evaporation process, after which the glass master is nickel-plated using an electrolytic process and a negative mold of nickel is grown from it. This negative is called a father. Positive parts, called mothers, are grown from the father, and then more negatives, called stampers, are grown from the mother. The nickel stamper is a negative mold, which is then placed in a press into which a liqueed polycarbonate material is injected. After a few seconds of this, a clear circle of plastic containing all the musical information is ejected from the press. The disk is then metalized with an extremely
thin layer of aluminum using a vacuum process. This is necessary so that a CD players laser can read the underside of the disk. The disk is then covered with a thin clear coat of varnish that envelops the aluminum, thereby protecting the disk. The label information is then printed right onto the disks upper surface by either a silkscreen or offset process using up to six quick-drying colors depending on the plant and what youre willing to pay. Finally the labeled disk is packaged with your booklet and inlay card (you may be supplying these separately well discuss this shortly) and placed into a plastic jewel box (or other form of package) which is then shrink wrapped for commercial release, probably with a printed top spine. Most manufacturers have minimum run requirements. This means that they may take orders of no less than 1,000 units for an initial pressing, with re-runs having a minimum of 500 units. Be aware that most manufacturers supply CDs in 25-count or 30-count cartons. You might have a choice, so you should ask your distributor which size carton they prefer to deal with. Be sure to request a test pressing. Some plants will supply a couple at no additional cost. Others will ship you a few of the rst copies off the press as soon as they start replicating. The purpose is so you can check the quality of the manufactured CD its sound, label printing, and correct packaging. Wikipedia has an excellent article on the manufacturing process. http://en.wikipedia.org/wiki/Compact_disc_manufacturing By the way, the DVD manufacturing process is very similar to that of CDs.
Tape Duplicator
If youre making cassettes or videotapes, youll need a tape duplicator. The duplicator will advise you about what materials theyll need for manufacturing. Its your responsibility to see that they get the necessary master and appropriate le/lm for label printing, and the printed J-cards, in sufcient time to meet your delivery date. J-cards are the printed folders typically wrapped around cassettes before theyre put into their jewel boxes. They look like the letter J in edge-on view. In all likelihood, the cassette duplicator will want at least a CD to master from, but may prefer a PCM-1630 digital tape, Exabyte, or 1/2-inch or 1/4-inch analog reel-to-reel tape. They will use a binloop process by copying your source material from the master you supplied onto a wide, 1/2-inch working master that, as an endless loop, is placed in a big bin. This is played back at high speed, recording from the bin onto pancakes of blank cassette tape. After recording, each blank is loaded into C-0 cassette shells, labeled, and packaged into a jewel box along with the pre-printed J-card youve supplied. If its to be videotape, again nd out what the manufacturer will need from you so you can supply the necessary materials in sufcient time.
Printer
Youll choose your printer in a similar fashion to how youll choose your manufacturer. Quality is a very important factor, but so is service and price. If the printer requires lm in order to print your CD booklet and inlay (tray) card or your cassette J-card (see above), youll need to send the electronic (computer graphic) le to a color separator. Again, nd out from your designer or colleagues who they recommend, or barring that, ask the printer for a recommendation. Many printers can do their own separations from your designers InDesign or QuarkXPress soft mechanical le. Be sure you see a color proof before lm is shipped or printing is started. It might be a Matchprint or similar laminated proof made from actual lm negatives before theyre sent to a printer. A separation is made for each negative representing one of the four process colors, and the four separate sheets are laminated together. The result will approximate what the printed job will look like. However, itll probably not look as good as it did on the computer screen due to the difference between an RGB image using light transmitted through the screen, and the CMYK look of reected light off four layers of lm and a layer of paper. On the other hand, dont be fooled by the high gloss surface and richness of color of a matchprint. They almost always look better than the nal, printed job due to the difference in process and the inks that offset printing uses. There are many different kinds of printed packaging used for CDs. There can be single pages with the cover image on one side, and other copy on the reverse. More common are folders or booklets. Folders can be 4, 6, 8 or even ten pages that can be barrel folded (each page folds inside the next like a snail) or folded in one direction and then the other (like a poster). Booklets can be from eight pages upwards, in multiples of 4 pages, and are usually stapled at the spine. Some labels prefer to print using four-color process on the outside of the folder or booklet, saving money by using just one color usually black on the inside. This is called four over one (4/1). If you have great graphics material available, and the budget, its nice to print four colors on all surfaces. Not surprisingly, this is called four over four (4/4). Some companies like the look of a simple cardboard sleeve, or a folded cardboard sleeve called a gatefold. Sometimes the simple sleeve is used for promos, but I think promotional items should have all the graphics that will be used in the commercial release. Some record labels like to use a Digipak. This is a patented package that grips the CD in a plastic tray thats attached to a cardboard frame. Sometimes theres a pocket provided for an additional insert. However, this is can be a rather expensive item and is economically feasible only if ordered in substantial quantities.
Be advised that your printer may end up with an under- or over-run. Standard printing industry practice allows for 10%. So if you order 5,000 graphics, your printer might ship as few as 4,500 or as many as 5,500, and youll be charged appropriately for the amount they ship. Your printer can usually supply you with the applicable template for the option (type of folder or varying sizes of booklet) you decide on, using InDesign, Illustrator, or QuarkXPress format. To learn more about printing and the processes involved, get your hands on a small paperback titled Pocket Pal: A Graphic Arts Production Handbook, which is published by International Paper and is updated every few years. The current 20th edition cost $19.95 at the time of this writing, and can be bought online from Bay Press Services. Its full of great information both for the novice and the experienced professional and includes all manner of information on traditional and more recent digital printing technology. http://www.baypressservices.com/ http://www.internationalpaper.com/us/en/business/cpip/pocketpal.html
Prices
Note that I havent discussed the costs for manufacturing of CDs, Cassettes, VHS tapes, and DVDs. Thats because theyre determined by many factors, including the size of the order, your anticipated annual volume, and many other things. Nor have I discussed what it costs to print such items as booklets, inlay cards, J-cards, stickers, etc. Again there are lots of variables, such as whether youre printing a folder or booklet, the number of pages, whether youre printing in four-color process on all pages, or just black ink on certain spreads, whether youre printing on one or both sides of the inlay (tray) card, and most important, the size of the order. In printing, the larger the quantity involved, the cheaper the unit price becomes. This is because a great portion of printing costs are determined by the labor involved to prepare the press for each job, and in cleaning the press after each run. Notwithstanding my statements in the previous two paragraphs, I will say that you should be able to print and manufacture a CD for no more than $1.00, which includes the folder or booklet, inlay card, the CD, jewel box, and assembly. This assumes that your print and press runs are between 1,000 to 5,000 units, and that your printing requirements are modest. However, if you decide you need larger quantities, the costs will be considerably less. My advice is to err on the lower side pressing fewer units, and spend any leftover money (you have leftover money?) on marketing your music.
Self-Manufacture
If youre going to be setting up a very modest label, you might consider purchasing your own CD duplicator. This is essentially a group of CD burners on a single chassis that can replicate a number of
CD-Rs at one pass, or that uses a single burner but changes the disks automatically. Thus this might be a useful option for artists who sell CDs only at their performances or from their websites, and who dont need to order 500 or 1,000 disks at a time. There are no minimum requirements because you burn as you go. Another possible use for such equipment is for short runs of promotional CDs. Theres a lot of CD duplication equipment available, so you might search the Internet to get more information about them. One of these is the Bravo Disk Publisher that can burn up to 25 disks at a time and print a full color label directly on the CD surface. http://www.primera.com/
Pre-Production Staff
You may decide to handle pre-production yourself, hire someone to take this responsibility on a permanent basis, or even have a bright, trusted assistant handle it. Its not rocket science, but it requires someone with substantial ability and attention to detail since its a nit-picky kind of job. Whoever does the work will need to know the niceties of the design and printing processes, or learn quickly. As I mentioned earlier, an excellent guide to this is the Pocket Pal, a Graphic Arts Production Handbook. To learn more about CD manufacturing and tape duplication, you should take the time to visit a replication plant in your area, if ones available. If not, ask your supplier lots of questions, explaining that youre a production novice and want to learn. Youd be amazed at how helpful some supplier personnel can be. Theres also a fair amount of information available on the web.
The Creative Process

In all likelihood, your artist will want to be deeply involved in the look of the cover, if not the entire package. This has both its good and bad points. Many artists, being creative folk by nature, have a good sense of themselves and think they know what their package should look like. They may also believe that they know all there is to know about art, design, esthetics, etc. In fact, they may or may not be right about this. Your staff will have to be very careful to see that the artists wishes are respected and that the cover reects the artists vision, assuming its not in conict with the labels. However, you dont want the artist running roughshod over the company. Many artists are very helpful with the design process, but they should also be open to accepting good ideas presented by the designer and/or the label.
Some artists can throw a designer and company into conniptions with unnecessary demands of staff time, and their desire for a package that may cost more than the label wants to spend. Youll have to handle any such situation with care and tact. In the long run, what you want is a very good package that well represents the music and helps to market and sell the project, but also one that both the artist and label are happy with.
The Designer
Some labels have a full-time art director on staff who may design album packages. Sometimes the head of the label or its art director will prefer to hire an independent to create a specic package. Either way, a person with design background will be in charge of conceiving and executing the graphics. Its important that this person be intuitive, creative and, above all, diplomatic. Hell have to work with and meet the demands of the artist, the producer, the head of the label, and hopefully, the marketing people. I mention marketing here, because the package has to reect not only whats on the recording, but also has to have sufcient sizzle to jump off record store bins and into consumers hands. In addition, it should also tie in directly with the marketing plan and work well as a display device when used on the web, on posters, club and window displays, in advertisements, etc. If youre a small start-up label, consider hiring an experienced and qualied freelance art director or graphics designer whose previous body of work is compatible with the look youre going for. The advantage is that you dont have to pay a weekly salary or fringes, but just a fee for the specic job. Ive had a lot of success with this. At my own small label, I used the same designer for all of my work, but on a freelance basis. With another label, I chose different talent for each job, depending on the nature of the project. However you decide to go, packaging is extremely critical to the eventual success of a project. A bad cover can denitely hurt sales, but a very good one will certainly help. So chose wisely.
The Package
For starters, you should know that printing graphics using the standard four-color process is less expensive than choosing two or three matched colors. The reason is that printers can gang your four-color job with others and print them on the same large sheet of paper using standard process inks. Use of specic, designer-designated colors requires that the press be thoroughly cleaned after each run before it can be used again. It also makes it impossible to be run with other jobs; therefore its more expensive. Almost any color, however, can be achieved by using the standard four CMYK process inks Cyan (a light blue), Magenta (a red), Yellow, and blacK.
As I wrote earlier, you can save money by using four-color process on the outside surfaces of a folder or booklet, and just black on the paper stock on the inside this is referred to as 4/1. If you want to splurge you can use four-color process on both sides of the paper called 4/4.
Cover Art
One of the rst decisions youll make, in conjunction with the designer and the artist, is about the overall look and presentation of the package, and what you want to include in it. One of the determinations will be whether you go for new photographs of the artist, or an illustration, or both. A striking likeness of the artist is almost always a good idea, particularly if the artist is attractive and photogenic. And, in most cases, youre going to need new photos for publicity and other marketing purposes. Therefore, if you decide to go for photos, be sure theres sufcient time during the photo session to take extra pictures for these ancillary needs. Remember that the look of an artist his image, if you will is a key marketing tool and is highly important in furthering the artists career. Be sure that you, the designer, the artist, and the photographer are in agreement about this look before the session is held. The photos you end up with should be used in a consistent manner through everything that positions the artists image all packaging, especially the cover, all marketing tools, advertisements, publicity stills, the website, etc. Should you decide to use people other that the recording artists in a photo shoot, such as friends or models, be sure to have them sign legal photo releases giving you authorization to use their likeness in the package, advertisements, and other marketing materials used in conjunction with the project. A sample photo release is on the next page. And if you decide to use existing illustrations or photos, be sure to get permission from the copyright owner for all usage in conjunction with the recording cover, marketing materials, website, etc. Its even necessary to request permission to reproduce old art masterpieces, because its more than likely that a museum or other institution or agency will own reproduction rights. Youll be surprised at how reasonable such fees frequently are, provided you print the required usage credits. When negotiating fees with a photographer or illustrator that youve decided to use, you need to discuss and agree on who ultimately will own the work product. Many star photographers and illustrators demand ownership of the materials, even though theyre a result of a commission or might be considered works for hire.
Sample Photo Release Form

I hereby grant to _____________________________________________ (Name of Record Label) the right to use photographs taken of me in conjunction with CD album art, publicity, and other related purposes from time to time. I hereby irrevocably grant to _____________________________________________ (Record Label) perpetually, exclusively, and for all media throughout the world (including print, CD-ROM, Internet, and any other electronic medium presently in existence or invented in the future), the right to use and incorporate (alone or together with other materials), in whole or in part, photographs taken of me. This agreement shall not obligate _____________________________________________ (Record Label) to use the photographs or to use any of the rights granted hereunder. _____________________________________________ (Record Label) shall have the right to assign its rights hereunder, without my consent, in whole or in part, to any person, rm or corporation.
AGREED TO AND ACCEPTED this ____________day of _____________________, 20_______
__________________________________________________ Participants Signature
______________________________________________________________________________________ Participants Printed Name, Address, City, State, Zip
__________________________________________________ Signature of Witness
______________________________________________________________________________________ Witnesss Printed Name, Address, City, State, Zip
Keeping Track of Everything

Pre-production will need to keep very careful track of all elements of the process, and at all times. Some years ago, I developed a few simple tools that aided me greatly. Ive always used some form of grid, expanded and revised over the years. I actually maintained two types of charts: one for each conguration of each release so it could be led in that catalog numbers production le, and another separate but consolidated one that tracked all projects in active production when I was juggling many projects simultaneously. Note: A sample of a CD Production Chart is on the next page.
CD Production Chart
This is a production chart by catalog number, artist, and title for keeping track of CDs, but I suggest you also maintain a separate, similar one for each cassette, LP, or other conguration such as videotape or DVD, that you manufacture. Its a simple grid prepared using Excel, and is maintained manually in pencil not in the computer, although you can do that if you prefer. (If youre skilled at designing databases such as Filemaker that could also work.) I keep each conguration and catalog number separate, so that the chart and all accompanying papers, can be kept led in its own folder. It eventually becomes a historic document, and youd be surprised at how often youre likely to refer to it months or even years after release. Youll maintain a separate le folder for each conguration (CD, cassette, etc.) of each catalog number, keeping all the paperwork involved for the production of that item, including the Production Chart (which I recommend you keep as the top document), the copy given to the designer for preparing type for the booklet, inlay card, label, etc., plus mastering instructions, reader proofs, and all other related documents. I think its extremely important to keep track of and note when each production step is completed and by whom (designer, suppliers, etc.) always lling in the appropriate box as events occur. You can adapt the form to suit your own needs and methods of working. Note that Ive indicated in a small type size the information I recommend you write in each box. For example, be sure you note the date you give the print copy for each item to the designer, and if the designer is a freelancer, put the designers name in the space provided. In the last column, you might note the date when you expect to see the designers completed work. On the same basis, if youre sending an electronic le (soft mechanical) to a separator for preparation of lms for printing, note the name of the separator, the date sent, the date you expect to see proofs and lm, the date the proof or matchprint is approved, and the date lm is shipped to your printer. Most of this form is self-explanatory. However, some items, such as the SR Form, will be discussed in a later chapter.
CD PRODUCTION CHART
CATALOG NUMBER ARTIST TITLE Supplier Graphics/Film Print Copy to Designer Design Approved Folder/Inlay Approved Matchprint/Proof: Received/Approved Folder/Inlay Soft-mechanical/Film to Printer Label File (soft-mech)/Film to CD Manufacturer Booklets (Folders) & Inlays to CD Mfg. Title Information to SoundScan
if applicable Printer Name CD Manufacturer Date Recd Date Sent Date Sent Date Sent Date Sent Date Approved Designer Name Date Sent
Date
Date Due/ Approved
CD Manufacturing Bill of Materials to Mfg. Final Mixes Received Final Mixes to Mastering Master to CD Mfg. Test Received from Mfg.
CD Manufacturer Mixing Studio Mastering Studio CD Manufacturer Date Sent Date Recd Date Sent Date Sent Date Recd Date Approved
Miscellaneous Mechanical Licenses Requested from Publishers Press and Radio Promo Copies (DJs) Shipped Copyright Form to Register of Copyrights
Date Sent Date Sent Date Sent Date Recd Dates Recd
2007 & 2012 Keith Holzman, Solutions Unlimited
Consolidated Production Tracking Chart

As you start working on a number of projects simultaneously, things will get complicated. I think youll nd that this chart will help you keep track of events, but more important, it will help you anticipate at a glance what next critical action you may have to take on any item in production that youre working on. Note: A sample Consolidated Production Tracking Chart is on the next page. This form is my suggested production bible. It too is maintained in a computer using Excel, but I always found it useful to keep a printout handy, and penciled in activity as it happened. About once a week, my assistant would update the form in the computer. I also kept a copy with me when I traveled on business, and my assistant would update me daily when I called the ofce. As production events occur, you just ll in the box with the date. It shows at a glance the status of every active project and gives visual clues of whats not yet accomplished just by looking at the blank boxes, especially after a lot of boxes become lled in. You can easily adapt it to your own needs.
Tapes to Vault Sample Service SR Form to Reg of Label Copy to Catalogs Mech Lic Requested Print/Press Orders 1st Run Sample Master Tape to Mfg. BOM to Mfg. New Release Info to Distrib Print Mtrls to Mfg. Label Film to Mfg. Film to Printer Matchprint Mech to Separator Copy to Designer
CONSOLIDATED PRODUCTION TRACKING
Catalog Num
Title
Artist D
Artist D
Artist C
Artist C
Artist A
Artist A
Artist B
Artist B
Artist B
Artist E
Artist E
Artist
2007, 2012 Keith Holzman, Solutions Unlimited
Ship Date
10002-2 Promo 10002-2 10002-4 10003-2 Promo 10003-2 10004-2 Promo 10004-2 10005-2 Promo 10001-2 Promo 10001-2 10005-2
STREET DATE
JUNE 12
Date
AUG 14
JULY 10
SEP 11
Production Calendar
Well ahead of time, its essential that you to put together a calendar grid for an entire year that shows all your key deadlines. These deadlines are determined by the monthly street (release) dates that are set by your distributor, who will usually supply you with a similar (but less detailed) chart a few months before the end of each year showing the due dates they require. This is because many independent distributors allow only one or two monthly releases always on a Tuesday whereas the majors release on almost every Tuesday. Note that the street dates determine everything that precedes them. For example, in the grid that follows, the distributor requires detailed information for the August 14th release to be supplied to them more than three months previous in this case, on March 3rd. You should then set your own deadlines accordingly, giving yourself sufcient extra time to meet all your commitments. You can expand on this chart by adding additional columns across the top for other important deadlines that you might require. Please note that the time periods at the bottom of the chart are arbitrary and shown as an example, but theyre illustrative of typical time periods needed for each item. Your distributor and your own requirements will determine the time periods for your own calendar chart. Note: An example of such a calendar is on the next page.
Typical Production Calendar Based on Distributor Street Dates
Month 9/26/11 10/31/11 11/28/11 12/26/11 1/23/12 2/27/12 3/26/12 4/30/12 4/30/12 5/28/12 6/25/12 7/23/12 7/30/12 8/8/12 7/2/12 7/11/12 6/4/12 6/13/12 7/2/12 7/30/12 8/27/12 5/7/12 5/16/12 6/4/12 5/7/12 5/16/12 6/4/12 4/2/12 4/11/12 4/30/12 5/8/12 6/12/12 6/12/12 7/10/12 8/7/12 9/4/12 3/5/12 3/14/12 4/2/12 4/10/12 1/30/12 2/8/12 2/27/12 3/6/12 3/9/12 4/13/12 5/11/12 6/15/12 6/15/12 7/13/12 8/10/12 9/7/12 1/2/12 1/11/12 1/30/12 2/7/12 2/10/12 12/5/11 12/14/11 1/2/12 1/10/12 1/13/12 2/20/12 3/19/12 4/16/12 5/21/12 6/18/12 7/23/12 7/23/12 8/20/12 9/17/12 10/15/12 11/7/11 11/16/11 12/5/11 12/13/11 12/16/11 1/23/12 10/3/11 10/12/11 10/31/11 11/8/11 11/11/11 12/19/11
Distributor New Release Information Deadlines Master to CD Plant Films to Printer Cover Art & Text due at Distributor Ship Promos to Distributor Label Promo Ship to Media 12/26/11 1/30/12 2/27/12 3/26/12 4/23/12 5/28/12 6/25/12 7/30/12 7/30/12 8/27/12 9/24/12 10/22/12 Distributor Media & Rep Promos Due Label Plant Ship Product due at Deadline Distributor
Distributor Street Date (Tuesdays) 1/10/12 2/14/12 3/13/12 4/10/12 5/8/12 6/12/12 7/10/12 8/14/12 8/14/12 9/11/12 10/9/12 11/6/12
January
10/4/11
February
11/8/11
March
12/6/11
April
1/3/12
May
1/31/12
June
3/6/12
July
4/3/12
August
5/8/12
Christmas
5/8/12
September
6/5/12
October
7/3/12
November
7/31/12
December 4 wks prior to promo ship 3 months before Street 8 days before due at Distrib 9 weeks prior to Street 60 days before Street 7 days before Street 15 days before Street
about 3 months 1 wk prior to film prior to Street ship
2007, 2012 Keith Holzman, Solutions Unlimited
Preparation of Package Graphics

When you actually begin production of your rst releases, youll need to set up a le for each catalog number and each variant as discussed earlier. For example, each CD should have its own folder. If you decide to ship a pre-release CD, or a DJ promo CD, each one of these is a variant. The same would apply to a cassette or LP. I recommend that each version have its own folder. The production person or department is usually responsible for compiling all the material that ends up being printed on the CD packaging. He will gather this material as best as he can, but its easiest if he starts the process as early as possible. Much of the information can be obtained from the artist and producer, and its important to lean on them to get it to you as soon as possible.
Pre-Release Materials
Most labels routinely ship pre-release CDs to their distributor about two and a half to three months before street date. This is so the distributor has samples to show to and play for their retail accounts as they solicit sales. Pre-release CDs are also essential in trying to get press and print attention for your artists. Many publicists like to send out their press kits (pre-release CD, artist biography, artist photo, tour information, etc. about two months or more before street date see Chapter 13.) These requirements will determine how far ahead youll need to have materials ready. Remember, its all keyed to, and derives from, the scheduled street date, so you should set the dates that work for your label into the chart.
Mechanical Licenses
Production, someone in business affairs, or another bright and capable assistant, can le for mechanical licenses for all the songs that will be on the nished release. This is in order to get permission required to record the songs if theyve not been previously recorded or mechanically reproduced, or to get licenses if they have been. The owner of a copyright determines who can have the right of rst publication or recording. Thereafter, anyone can record the copyright provided he requests and receives a license. If your artist has written the songs, the task should be somewhat easier as the basics may be included as part of the artist contract. However, youll still need to ofcially request the license from the publisher of the material, unless youre the publisher or co-publisher. If you have trouble determining the publisher of a song, check the websites of the Harry Fox Ofce, or ASCAP, BMI, or SESAC. Their website addresses (URLs) are listed in Chapter 6 on Music Publishing. If you and the artist want to print lyrics, special permission will be required from the publisher who owns the print rights. In such a case, they will usually require an acknowledgment that any lyrics appear courtesy of them, accompanied by their own legal wording, such as (Song Title) by
(Writers Name) (symbol or Copyright) 2012, ABCDEFG Publishing. All rights reserved. Used by permission. Whoever in the company is requesting mechanical licenses and lyric print permission should keep a le for each catalog number. It will probably be necessary to do frequent follow-ups since publishers are notoriously slow in handling their paperwork. Therefore, start the process as early as possible.
Sampling
Sampling pieces of existing music in new recordings has become extremely common, particularly for rap and hip-hop music. However, before you consider even using a sample of another work, be sure to obtain permission from the owner of the master recording, who will specify a usage fee, as well as from the owner of the written copyright, who will state what percentage of statutory they require. Sometimes theyll want full statutory, which would be more than 9 cents per disk. And if you fail to get written permission, the resulting lawsuit could wipe you out! Therefore its vital to negotiate the fees and get sample clearance as early as possible. Dont wait until the recording is nished! And be sure to do it yourself. Dont rely on an artists word that such samples have been cleared.
What Goes Where on a Typical CD

Theres frequently a lot of text that gets included in a CD package. How much or how little is up to the label head who should set his own standard. Most owners of folk, jazz, and classical labels try to be very comprehensive. Owners of rock labels may prefer to print less text. Its a matter of personal style and taste. Artists will frequently have their own preferences, in which case you should try to please as many people as possible. Heres a list of whats often printed: CD Booklet/Folder Front Artist Name (preferably near the top of the front cover) Title of the project CD Booklet/Folder Back Label Logo (helpful but not mandatory) Catalog Number (helpful particularly for the pressing plant, but not mandatory) Inside CD Booklet/Folder Song Titles Timing Songwriters Publisher of each title Public Performance Clearance Agency (e.g.: ASCAP, BMI, SESAC) Example: From Here to Oblivion 3:35, Able and Baker, ZZZZ Publishing (ASCAP)
Names of soloing musicians if a single group has recorded the entire album, and/or guest musicians; otherwise list each musician who performed on the track. If you print lyrics, be sure to get the publishers permission and their preferred legal language. Some labels opt not to print lyrics, particularly if permission to do so arrives late. They may instead place them on their website, listing permissions as appropriate. Or, they may not deal with them at all, although I think its a great benet to music lovers. Example of a lyric permission: 2012 Able and Baker, ZZZZ Publishing (ASCAP) All rights reserved. Used by Permission Producer Credit Engineering Credits Recording Studio and Location Mastering Engineer, Mastering Studio and Location Additional Credits, in any Thank-you Credits, if any Label Logo (not necessary if on back of folder) Catalog Number (not necessary, but suggested for back of folder since it makes things easier for the pressing plant)
and Notice (the package.)
protects the recorded performance; the is the copyright for the
Inlay (Tray) Card or Back Cover Artist Name Title All Song Titles (with optional Timings) Musicians Names (not necessary, but should be listed for Jazz or small ensembles) Producer Credit Label Logo UPC Bar Code Dont forget the bar code. It must be on the inlay card, preferably in the bottom right or upper right corner. You can make the bar code image slightly smaller than optimum, but dont overly truncate it or make it so small that it cant be scanned. Be sure that the bars and numbers are printed with black ink on a contrasting white or light-colored background so humans and machines can read them. Most important, do not use the color red anywhere in the bar code, because it cant be scanned. File Under ________________ (Insert Jazz or other appropriate suggestion so retailers will know where in the store to place the recording. This is optional, but is especially helpful for an unknown artist or if the musical genre is not obvious.)
A and Notice with year, owner of Disk Copyright (usually the label), Street Address, State, Zip Code, Legal Language. Example:
and 2012 YYYY Records, 11111 Main Street, Anywhere, CA 99999. All rights
reserved. Printed in U.S.A. Warning: Unauthorized reproduction of this recording is a violation of applicable laws. Spine of Inlay (Tray Card) Artist Name Album Title Label Logo or Name Catalog Number CD Label Artist Name Album Title Label Logo Catalog Number Song Titles (optional, but helpful) Timings (optional, but helpful)
and Notice with year, owner of Disk Copyright (usually the label), Street Address, State,
Zip Code, Legal Language. (Note: The address and legal language is suggested but not required.)
All the text that will be printed on the CD package and label should be compiled in a word processor Microsoft Word is the most commonly used so that the designer can ow the copy easily into his graphics software. Designers will usually use either Adobe InDesign or QuarkXPress. These programs can import Word documents with little difculty. You might even want to prepare a simple check list of all of the above, modifying it to your needs. The advantage is that youre less likely to forget a step or omit a credit to someone important. Its also a good idea for a few people who havent previously seen all of this copy to thoroughly proofread the nal credits before theyre sent to the designer. Eliminating errors at this stage will save time and money. Whatever you do, dont rely on spellcheckers in word processors. They can miss lots of things such as tot he when it should be to the.
Later, when the designer has set your copy into the booklet or folder, proofread it thoroughly. In fact, proofread it thoroughly every time you see a new version, checking to be sure that something hasnt been inadvertently omitted. Software and designers are known to make the occasional mistake. Sometimes, a slightly different version of a typeface from what your designer uses may cause weird things to happen with spacing, even causing lines to disappear. Many designers prefer to send PDF les for proong because this reduces such problems. In any event, you can never be too careful at each stage of production. Taking time to thoroughly proofread can save lots of dollars if you discover that a key item has been omitted from the printed job.
Miscellaneous Tasks
There are a number of additional items that will have to be taken care of and carefully tracked in the pre-production stage.
Mastering Instructions
Prepare instructions for the mastering studio. This will include letting the studio know what kind of source tapes or other material (such as disk drives) youre sending them, your purchase order number, catalog numbers, quantity and type of masters (CD-R or U-Matic tape) required, addresses of the plants where the masters are to be sent, etc. This is the time to order any backups or safety masters, reference disks, reference DATs, etc. Also provide your account number, and the name of your preferred freight carrier. Youll also need to send preliminary label copy to the mastering studio with all of the correct song titles in sequence and approximate timings when you send the instructions. When the mastering is completed, be sure that youve requested that the studio send you a song list with nal track times, and total times. These are the times that you should use on the CD label and Inlay (Tray) Card.
Bill of Material (BOM)
Most manufacturing facilities will request a Bill of Material (BOM) that provides them with all the information they need in order to manufacture your product. Your supplier may give you their preferred form; if not, I suggest you make one yourself. It will normally include the following information, for example: Date Type of Product (commercial or promotional CD) Label Name Your Name and Contact Information
Selection (Catalog) Number Artist and Title Number of Units in a Set if theres more than one Type of Jewel Box (standard or clear-case) Type of Graphics youre supplying (Folder and Inlay Card) Promotional Sticker, if any, to be used, with name of supplier Shrink-wrap (Yes or No. Pre-release and promo CDs are usually not shrinkwrapped.) Carton Count (25 or 30) Top Spine Copy Special Instructions Note: Samples of a blank BOM form, and a lled-in form, are on the next pages.
SAMPLE BILL OF MATERIALS COMPACT DISK Addressee at Manufacturer From: Your Name, Record Label, Email Address
To: Product Type: Label: Selection No: Artist / Title: Plant ID: Jewel Case: [ [ [ [ [ [ [ [ [ [ [ [ [ ] Plant A ] Single ] Digi Pack ] Spindles ] Std Graphite ] Crystal Clear ] ] ] ] ] [ [ [ [ [ ] Plant B (opt.) Plant Ship Date: ] Double ] Slimline [ [ ] Triple ] Other [ [ ] Commercial ] Maxi Single [ [ via Fax (if not Email):
xxx/xxx-xxxx Date: xx/xx/xx
] Promotional DJ ] Mini Single Number in set: Prefix:
Jewel Tray: Graphics:
] Clear/Frosted ] Colored (specify) [ [ ] Picture Front Insert ] Slimline Insert
Booklet [ ] Folder Back Inlay [ ] Universal Inlay None Misc Insert, type: Additional Components: ] Set-up box ] No ] After ] After ] No ] 30 / ctn Size: shrink-wrap. shrink-wrap. Other:
Box: Sticker: Apply
] Blisterpack [ ] Other, specify: [ [ [ [ [
[ ] Yes Location (use grid): [ ] Before
Location (use grid): Apply [ ] Before Shrink-wrap: [ Carton Count: [ ] Yes ] 25 / ctn
SPECIAL INSTRUCTIONS / PACKAGING
This is a complete Bill of Materials.
[ ] Yes
SAMPLE BILL OF MATERIALS COMPACT DISK

To: From:
Addressee at Manufacturer
via Fax (if not Email):
xxx/xxx-xxxx
Date:
Jane Doe, YYYY Records (Jane@YYYYRecords.com)

[ [ ] Commercial ] Maxi Single [ [ ] Promotional DJ ] Mini Single
xx/xx/xx
Product Type: Label: Selection No: Artist / Title: Plant ID: Jewel Case:
YYYY Records xxxxx-2 The Doorstops Keep It Open!

[ X ] Plant A [ X ] Single [ ] Digi Pack [ ] Spindles [ X ] Std Graphite [ ] Crystal Clear [ ] [X] [ ] [ ] [ ] [ [ [ [ [ [ [ ] Plant B (opt.) Plant Ship Date: ] Double ] Slimline [ [ ] Triple ] Other
Number in set: Prefix:
Jewel Tray: Graphics:
] Clear/Frosted ] Colored (specify) [ [ ] Picture Front Insert ] Slimline Insert
Booklet [ X ] Folder Back Inlay [ ] Universal Inlay None Misc Insert, type: Additional Components: ] Set-up box Size: shrink-wrap. shrink-wrap. Other:
Box: Sticker: Apply
] Blisterpack [ ] Other, specify:
[ ] Yes Location (use grid): [ ] Before
[ X ] No [ [ [ [ ] After ] After ] No ] 30 / ctn
Location (use grid): Apply [ ] Before Shrink-wrap: [ X ] Yes Carton Count: [ X ] 25 / ctn
SPECIAL INSTRUCTIONS / PACKAGING
Use Clear Tear Tape on wrapping
the Top Spine should be imprinted with the following copy: 2-xxxxx The Doorstops Keep It Open! bar code # x xxxx-xxxxx-2 x
This is a complete Bill of Materials.
[ X]
Yes
Quality Control
What your product sounds and looks like will be a direct reection on your label, so its critical that you take pains to be sure your graphics look great and that there are no errors or typos. Be sure your printer sends you a couple of dozen samples of everything they print for you as soon as possible. Look them over very carefully. If you dont like what you see, call the printer and have a discussion as to whats wrong. Perhaps its not their fault, or maybe it can be xed immediately at their expense, or in a subsequent re-run. The same applies to the sound quality of CDs, cassettes, or anything else you have manufactured on your behalf. Get your supplier to send you test pressings, or at the very least rst run samples, as soon as your item is manufactured. Listen to them carefully, checking for manufacturing aws. These are rare, but they do happen. You can then decide, in conjunction with your supplier, whether its worth re-pressing, or whether the aw is not important enough to delay a release. Also be sure to check the packaging. Plants have been known to forget putting in a required insert or applying a special sticker, even though youve sent a BOM. Ultimately, its your responsibility to check on all of these quality matters.
Notify SoundScan
Its important that you notify Nielsen SoundScan of the existence of each title and conguration (CD, cassette, etc.) you release so that sales of your product will show up in its system. SoundScan data is extraordinarily helpful if you can afford to purchase it since it can provide you with detailed sales information. Many distributors are subscribers to this service and may be willing to supply you with gures related to your own sales. http://titlereg.soundscan.com/soundscantitlereg/ Note: The form is lled out online on their website, and looks something like an older version as shown on the next page.
ONE NORTH LEXI NGTON AVE NUE, 14TH FL. WHITE PLAI NS , NY 1 0601 (914) 684-5500
TITLE ADDITION S HEET To add a title to the SOUNDSCAN database, each field on the title addition sheet must be completed in order for it to be accepted. Please use a separate form for each additional title. Title: ___________________________________________ Release Date: ____________________ Artist: __________________________________________ Label Information as it applies to this product Parent Label: ____________________________________ Distribution Co. Sub Label: ______________________________________ Label Abbr: __ __ __ __ Please enter all digits of the U. P.C. Code. (Including Prefix and Suffix) To enter identification codes on how your product should be listed please check the example below. PLEASE PRINT IN ONE CONFIGURATION FOR EACH LINE. U. P.C. Code EXAMPLE 9 _ _ _ _ _ _ 9999999999 __________ __________ __________ __________ __________ __________ 9 _ _ _ _ _ _
PRICE 9.99 ____ ____ ____ ____ ____ ____
TYPE _A_ ___ ___ ___ ___ ___ ___
Configuration Types ALBUM A= LP 12" ALBUM B=CASS.ALBUM C=CD ALBUM D= DVD AUDIO VIDEO M=VHS L=DVD SINGLES E=CD SINGLE F=LP 12 SINGLE G=CASS. SINGLE I=CD MAXI
PLEASE SELECT ONE GENRE WHICH APPLIES TO THIS PRODUCT:

____ 150 ____ 400 ____ 300 ____ 186 ____ 102 ____ 200 ____ 152 ____ 180 ____ 690 ____ 470 R&B COUNTRY JAZZ LATIN METAL CLASSICAL RAP REGGAE CHILDREN BLUES
____ 520 - SOUNDTRACK ____ 184 - WORLD VIDEO SUBMISSIONS ONLY ____ 100 - ROCK ____ 620 - COMEDY _____ 900 MUSICAL PERFORMANCE ____ 640 - GOSPEL _____ 901 SPORTS ____ 630 - CHRISTIAN _____ 907 MOVIE ____ 625 - KARAOKE _____ 905 OTHER (E.G. EXERCISE, DOCUMENTARY) ____ 360 - NEW AGE ____ 156 - DANCE/ELECTRONIC ____ 178 - SKA
Your Name: _____________________ Email:
PH# (
)_____-______
FAX# (
)_____-______
When you have completely filled out this form, please email it to d ba se@ so u n d scan.co m Please enter your name, phone number and email address in case we have any questions.
Inventory Ordering and Maintenance

Sooner or later, youre going to have to place print and manufacturing orders. This is very complex, but Ill suggest here how you might go about doing this in the simplest and most costefcient manner. The rst item of inventory youll need to order will be your CD print materials usually a booklet or folder plus its accompanying inlay card (also called a tray card). In order to determine how much to print, youll need to know how many CDs you intend to manufacture. And in order to know that, youll need to talk to your distributor(s) and discuss not just how many youd like them to ship to retailers, but how many they think they can realistically sell to the accounts. To this add the following the quantity of promotional or pre-release units for publicity to send to reviewers, and for the promotion staff to send to radio stations, the quantity the artist may get for free, the quantity the artist may wish to buy for friends and family, the quantity for sale to house accounts (specialized retailers who your distributor doesnt sell to), the quantity for direct sale at performance venues either by the artist or label, website and mail order needs and, nally, an additional quantity for your labels backup and other miscellaneous purposes. Total all of these estimates for nished, manufactured CDs and add to it sufcient graphics for one or two CD re-runs. Lets see how this works: (Note that these quantities are purely theoretical for the purpose of this exercise. Your needs will undoubtedly be different, and probably smaller.) Pre-release CDs for Distributor 500 Pre-release CDs for Publicity 750 Pre-release CDs for Promotion 600 Sub-total Pre-release CDs 1,850 Distributor for Retail Accounts 2,500 House Accounts 500 Artist (no charge depends on your agreement) 50 Artist (purchases for sale at gigs) 250 Mail Order And Website Sales 250 Spare for Contingency & Back-up 500 Sub-total Commercial CDs 4,050 Total to Manufacture
5,900
Therefore you see that youll need to press at least 5,900 CDs in one form or other. Now if you want to be able to make one or two additional CD re-runs of 500 each (the minimum quantity at most pressing plants), youll need to order at least 6,900 graphics sets. Since most printers require orders in increments of 2,500, you should probably place your rst print order for 7,500 sets. Review your printers price list very carefully. The cost to print 7,500 of an item may not be much higher than the cost to print 5,000. Some pressing plants and printers prices and requirements may vary from what Im suggesting here, so be sure to nd out as early as possible how your suppliers work, what they require, and their minimum runs.
Now, how will you go about keeping track of your purchase orders, shipping information, sales data, etc? Theres lots of ways. First, you might use an old-fashioned manual register. Picture Bob Cratchit wearing his mufer in a cold and drafty chamber, sitting at his ledgers, quill pen in hand. Well, your method may use simple printed forms and pencils, but its the same idea. In fact, I did that for years before spreadsheets and databases were in regular use. (Yes, there were such times in the Dark Ages!) Later on, I used a spreadsheet for keeping track of inventory and sales. Each day, an assistant posted that days sales orders, which in turn automatically agged any items that would fall below a theoretical re-order point. That called these items to our attention and we could decide whether or not to press or print additional quantities. Another good solution may be to use an accounting program. Some of the better ones have methods for dealing with inventory. And nally, you might use one of the better relational database programs such as FileMaker or Panorama to keep track of inventory and sales. Youll have to determine which system works best for you and your budget. Remember when posting press orders that you have to reduce the quantity of print materials by the same amount, just as shipments of sales orders will reduce your inventory. Also, factor in shrinkage. When a CD plant pulls print materials for a 500 piece re-run, it may actually use a few more. Theres a lot of potential for damage due to handling at a plant, so when posting new print materials into inventory, it might be a good idea to reduce the amount posted by 510%. Thus, if your printer claims to have shipped 7,550 pieces to your CD plant, consider reducing this amount by 375 to 750 pieces, and post the reduced quantity.
Bear in mind that inventory equals dollars that you wont have access to. Do not print or manufacture more than you realistically need, and dont base your decision on what you want to ship, or on hype. This is one of those areas where you need to be pragmatic and tight-sted. It could be your own money at risk.
Pre-production Check List

Research pressing plants and/or tape duplicators. ______ Reputation for good service? ______ Excellent quality control standards? ______ Competitive Prices? ______ Reasonable business terms? ______ Speedy access to information? ______ Drop-ship capability? ______ CD label printing: screened or offset? ______ Number of colors at standard price? ______ Charges per additional color? ______ Clear Cases: available, and at what additional cost? ______ Charges for extra inserts? ______ Top spine print capability? ______ Drop-ship charges, if any? ______ Storage charges, if any? ______ Media needed for manufacturing (CD-R, 1630 PCM tape, etc.)? ______ Media needed to print CD labels (film or computer file which program)? ______ Turn-around time to complete an order? ______ Test pressings supplied? ______
Research printers. ______ Many of the items above apply to printers. Is film or a computer file required? ______ The Production Process. Establish a Production Calendar. ______ Who will design the package? ______ Decide on the packaging look. ______ Photo or illustration? ______ Negotiate fee for photographer or illustrator. ______ Decide on package construction. ______ Decide on the number of pages in color and/or black & white. ______ Prepare a Production Chart for each conguration of each project. ______ File for mechanical licenses. ______ Prepare the text copy for CD (cassette, DVD) graphics. ______ Include items listed in section titled What Goes Where on a Typical CD. Proofread all copy thoroughly. ______ Prepare mastering instructions. ______ Prepare Bills of Material (BOM.) ______ Send release information to SoundScan. ______ Poll staff for quantity of commercial and promo CDs needed by each. ______ Calculate quantity of Commercial and Promotional CDs needed. ______
Calculate quantity of print materials needed. ______ Place print order. ______ Place manufacturing order. ______
Chapter 12 The Lowdown on Distribution | 145
Chapter 12 The Lowdown on Distribution

Domestic (United States)
Distribution has changed incredibly since the rst edition of this book in 2004. At that time distribution was primarily limited to CDs and to a lesser extent cassettes, LPs, and DVDs, with digital distribution representing a relatively small portion of sales of recorded music. Apple launched its iPod along with its iTunes Music Store in 2001 and 2002. By 2011 digital sales have come to represent about half of all music sold, either as individual tracks or track-equivalent albums. Although there are other many other companies that distribute music online, iTunes has remained foremost among them. Ill go into details of downloaded distribution shortly, but for now I want to discuss how distribution typically worked for many decades, up until the last few years when things became more complicated.
The Way It Used to Be

As youve gathered from reading many of the subjects discussed thus far, Im a great believer in doing your homework. This is certainly true when it comes to the matter of distribution. A good distributor can help make the most of a ne recording and its label, whereas a poor or inept one can ruin the marketing of a label, and dissemination of a great recording. Therefore its vital that you investigate this critical function to the fullest. A record distributors job is to get downloads, CDs, cassettes, DVDs, etc., of recorded music through the chain of distribution and to individual consumers in the case of downloads or into the retail pipeline for hard goods. Conventional distributors do this by using their sales staff to solicit orders from the buyers of retail, chain store, one-stop, exporter, and other accounts, by publishing extensive catalogs and updates of all the product they carry, and additionally, it is hoped, by extensive sales effort, promotion, and marketing to their customers. Some distributors are very good at this; others are less so. Bear in mind that some distributors specialize in certain genres of music whereas others are generalists and handle all kinds. So the kind of music you record will in part determine the best distributor for you, or at least help you narrow down the choice. Some distributors are local or regional and may specialize in music from their own locality New Orleans, for example or sell only within their local territory. The size of this territory might be as small as a city or county, or as large as a few regional states. Just be sure not to end up with regional distributors with overlapping territories. Itll be nothing but grief for them and you.
Other distributors are national (or may claim to be, but may not cover all accounts throughout the country) and might want an exclusive deal with you so they can have the entire U.S. as their territory. Some, with your permission, may also want to sell in Canada, using ofces and sales staff up North. Distributors sell to different types of accounts, not just to the small retailers that are usually called mom and pop accounts. Distributors who consider themselves national will also sell to chains such as Barnes & Noble, and to rack jobbers and one-stops all over the country. Rack Jobbers are rms that historically leased space in mass retail and department stores and racked major label hit product and best-sellers in these locations. The current major racks are Handleman Company and Anderson Merchandising, and they sell directly to very large chains such as Target and WalMart. These large accounts generally take very little product from independents until a lucky indie label develops a substantial hit. One-stops are accounts that carry a wide variety of product from almost all labels, in turn selling to small local retailers, mom and pops, small chain stores, etc. Theyre called by that name because a store can buy almost all the product it wants to stock from a single source the one-stop. One-stops are willing to sell one or two of an item, whereas large chains probably order in box lots of 25 or 30 directly from the distributor. Be aware that its extremely difcult to obtain a good distributor when you have only one title to offer. It becomes a lot easier when youve got four or more substantial releases for them to work with. This is because they wont want to put in a lot of effort on your rst release if they think its going to be a vanity project and the only one from you. Theyll want to know that youre in it for the long haul and that youll be having an even ow of new releases in the future. It takes a lot of effort on a distributors part to help launch a new label, with an artist probably no ones ever heard about, from a staff thats new to the business. Additionally, the distributor will want to be able to offset any returns against the sale of new releases. To nd out who might be the best distributor for your label, talk to your network of friends and colleagues in the business to see which companies theyve had good experience with and would recommend. Another way to nd out about distributors is by contacting The American Association of Independent Music (A2IM) or The National Association of Recording Merchandisers (NARM). A2IM was formed a few years ago following the demise of NAIRD and AFIM. Per their website they represent a broad coalition of music labels to promote sector opportunity and enhance the market share of its combined membership. Minimum dues are $1000 per year, which probably places it out of the reach of most startups. http://a2im.org/ NARM is a not-for-prot trade association founded in 1958 whose nearly thousand member companies
represent the retailers, wholesalers, and distributors of prerecorded music in the United States. Its associate members are major and independent record labels, and home video companies. http://www.narm.com/ Billboard Magazine publishes an International Buyers Guide, an annual directory which includes listings of both domestic and international distributors and one-stops, as well as lots of other valuable information such as print and manufacturing suppliers. Its rather expensive to buy, but is an excellent resource that may be available at your local library. http://www.billboard.com/ Another source for all things related to the recording industry is RecordLabelResource.com. They have an alphabetical list of domestic and international distributors. http://www.recordlabelresource.com/ I strongly recommend that you make a visit to one or more distributors who, after investigation, seem appropriate to your music. You may nd a lot of compatibility with your needs, or none at all. This is a business of personalities and connections as well as an interest in music, so its important that both sides create a favorable impression. Youll be working closely with your distributor, so be sure you feel comfortable with them. If possible, meet some of the staff as well as the bosses. You can learn a lot by talking to the sales people that call on accounts, and from the folks in the warehouse who pull orders. When youve narrowed down your preferred list, send samples of your CDs and marketing materials to the owner or sales manager at your rst choices. I suggest you call rst to establish a dialog and to let them know to expect a package from you. Distributors get solicited and unsolicited CDs every day, so you want to be sure yours are seen and heard. Then follow up with a phone call to be sure theyve received your package and have listened to the music. Remember, distributors want music that will sell. Before they consider carrying your product, the distributor will want to be sure that the artist and title as well as your label name and address are clearly listed on the product, along with a catalog number and UPC bar code. When you start marketing your releases, youll have to supply the distributor with a One-Sheet which theyll use in soliciting sales. This is a single 81/2 by 11 page with all key facts about the recording on it. Its usually just black and white, but Ive seen very effective four-color sheets used by some labels. Ill discuss this further in the chapter on Marketing. A diagram on the next page shows how the Chain of Distribution typically functions. A label sells to one or more domestic distributors and aggregators, any number of distributors or accounts overseas, and also to their artists. A distributor sells to many retailers, including chains, and to one-stops who, in turn, supply mom and pop accounts.
Record Label Domestic Distributor Download Aggregator Retailer A iTunes Retailer B Amazon. com House Acct. A OneStop International Distributor A International Distributor B International Distributor C International Distributor D
Amazon .com
Rack A
House Acct. B
Artist
Mom & Pop A
Mom & Pop B
Rack B
Consumers
(Label website, mail)
Chain A
Chain B
Chain of Distribution
The Distribution Deal

Now its time to consider price, payment, and all the other details of a distribution deal.
Pricing
Your label and the distributor will need to agree on the prices youll be charging for each category (full-price, mid-line, or budget) and conguration (CD, cassette, DVD) of product. These will be based on your suggested price at retail and will determine what price the distributor charges its accounts. Generally a label will charge its distributor about 50% of the Manufacturers Suggested Retail Price (MSRP). Some labels use the term Suggested Retail List Price (SRLP) but its the same thing. Therefore, if you decide you want the MSRP to be $15.98, you will charge the distributor about $8, but be prepared to settle for less perhaps as low as $7.25 or $7.50 (about 45-47%). You should be aware that percentage deals are becoming more common, particularly with larger indies. In that case, the distributor would then receive something between 2030% of the wholesale price. For example, if your wholesale price is $7.90 and the distributor wants a 25% markup, it would charge its account an additional $1.98 per unit about $9.88. A distributor will, of course, sell to its customers at a sufcient markup for it to make a reasonable prot. The retailer will also have to mark up to the customer who buys the product. Thats one reason records appear to be high priced, because everyone in the chain of distribution needs to make enough prot to stay in business.
Sidebar: Pricing and the Consumer

For some time now, public perception has been that prices for prerecorded music, specically CDs, are too high. Remember, I said perception, for the reality is that, in comparison with other commodities, or the cost of living for that matter, its really not the case. In May 2002, the RIAA commissioned a revealing report. It showed that, even though the public perceived CDs as being too expensive, CD prices fell 32% between their emergence in 1983 and the end of 2001. During that same, period the Consumer Price Index rose almost 78%. If CD prices had risen in the same proportion, the average price in 2002 would have been over $38. The cost of other forms of entertainment rose even more; for instance, the average price of admissions to entertainment and sport events increased by 142%! And these costs have gone up in the years since that survey, while CD prices remained about the same or were reduced increasing the divergence. In fact, CDs may be even more of a bargain now in 2012. In 1983, the average length of a CD was less than 42 minutes, whereas in 2001, the average length was 55 minutes a 30% increase. Notwithstanding these surprising numbers, the perception is that the music industry is charging too much for its music, and its something youll have to contend with.
Term
Another item to negotiate is the length or term of the distribution agreement whether its for one, two, or three years. After the first term, how long might it be extended? Frequently, such an agreement extends automatically from year to year, unless terminated in writing by either party with six months prior notice.
Payment
You must negotiate with your distributor as to when theyll pay you. Will they pay in 60 or 90 days from date of invoice (the old standard), or will they want to take your product on a consignment basis? The former is preferable but its unlikely that a distributor will agree to it for a new label. The latter is much more common of late. A retailer, rack jobber, or chain store normally pays for the items sold to them by a distributor within a specied time frame usually anywhere from 30 to 90 days. The distributor will, in turn, deduct from any of your due payments such items as returns, co-op advertising charges, and any other things they can think of returns processing fees, early payment discounts (theyll try to take the discounts even when they pay late), and retailer incentive discounts. Theyll also take a reserve for returns, even though you may own the inventory. The distributor essentially sits on the funds they collect for as long as they can before you end up getting paid. This creates a terribly difcult cash ow situation for independent labels, particularly start-ups. Distributors can also have cash ow problems, so labels with product that sells and turns inventory regularly are likely to get paid more quickly. New labels are a low priority to receive payment.
Consignment
What consignment means is that a distributor is acting as an agency to convey your music through their pipeline to their accounts. You retain title or ownership of your inventory, and your product (CD, cassette, etc.) is not considered sold until an end consumer actually buys it. If a store nds that your product isnt selling and is taking up valuable shelf space, it will ask for a Return Authorization (R.A.) from the distributor, allowing it to return the items for a full refund. You know who will take the hit you! So when the distributor thinks its overstocked, it too will request an R.A., and all the excess product will come home to mother! In theory, your ownership of the product under consignment means that it should be returned to you if your distributor, or any of their retailers, should declare bankruptcy. As a matter of fact, however, this doesnt always happen. When Valley Media, a major one-stop, and its wholly-owned distributor, Distribution North America (DNA), declared Chapter 11 in 2001, independents who had product at Valley and DNA were not able to recover their inventory or its value, delivering quite a nancial hit to the labels. Thats another reason to carefully and thoroughly research potential distributors!
Administrative Details
Discuss access to sales information with the distributor. Will they provide online access to their database for your account, or will they send you periodic sales reports by email or snail mail, and with what frequency (daily, weekly, or monthly)? You should ask them to show you samples of such sales data reports. Its vitally important that you have ready access to information in sufcient detail that you get a good sense of whats happening with your releases. This is not just in regard to the quantity of sales, but to which accounts and in what cities.
Distributor Promos
Most distributors will ask for a certain quantity of promo, pre-release, or what we used to term DJ copies of your releases. These copies are for their sales staff and their customers buyers two groups that need to hear your product. Promos used to be white-label pressings of CDs without the usual multi-color labels. Now theyre more commonly, non-shrink-wrapped CDs or cassettes with holes punched through the bar codes keeping them from being scanned thus not saleable. Promos are a necessity of doing business, so be prepared for them. Fully shrink-wrapped saleable products are called cleans and thats whats sold in stores.
Free Goods
Your distributor may also request a quantity of free goods clean commercial copies that you dont charge them for. These are used as incentives for retailers to carry your music and are common when soliciting new releases. It also reduces your sales and income, so go along with it only when you consider this extremely helpful to your release. For example, on a given new release, the distributor may want 10% of their order as free goods. So if they order 2,000 pieces, you may receive payment for only 1,800. You dont have to agree to free goods, but it may make matters more difcult. Also, be sure youre covered in your artist agreements for such discounts, so that youre not obligated to pay royalties on them. Many scams have been wrought in the industry through unsavory use of cleans, so be judicious in giving any away. In fact, I suggest you keep everything open and aboveboard and not make such deals. The decision is ultimately up to you.
Co-op Advertising
So-called co-op advertising is a common aid to marketing recordings. Its called co-op because historically a label, its distributor, and a chosen retailer jointly shared the cost of such advertising. Nowadays a distributor gets retailers or other accounts to advertise your product in certain newspapers or publications, usually at a special price. You, of course, get the privilege of paying for this, not
the distributor or retailer. But you gain the advantage of lower media rates due to the retailers large advertising volume. More common of late, co-op advertising will get your product better placement in stores for a limited period of time. Essentially its for price and positioning purposes without a media buy particularly for non-superstar titles. This is because retailers make greater prot from such in-store-only deals. In reality, simply being represented on the shelves of any major retailer will require co-op advertising, like a slotting fee. These can be good deals for the right artist and music, but can be incredibly expensive. So be careful how you utilize this frequently effective but costly tool. Only consider it when youve got positive action on a release, or when an artist has started receiving substantial attention on radio or in the press.
Freight
Another matter for discussion is who pays freight. It used to be customary that the distributor paid for freight both from the labels and to their accounts. With distributors having increasing negotiating clout, its become common for labels to pay the cost of freight for goods from their manufacturer or warehouse to the distributor (but not to the distributors accounts). On the other hand, any freight for returns should be borne by the distributor.
Contract
Another item you need to think about is what form your written agreement with your distributor might take. Will your distributor want a contract with you, and if so, will they want to use their own form? This is now common practice, whereas some years ago business with distributors was done with a handshake or maybe a simple appointment letter from a label stating terms and territory. If your distributor doesnt demand use of their contract, you should send an assignment letter or sales policy agreement detailing all the elements and items youve agreed on, such as prices, length of the agreement, payment terms, returns policy, ownership of inventory, who pays freight and in which direction. Request that he sign and return a copy to you. Whether the distributor provides their own contract, or you make up a letter, its important that you state clearly in the document that, if its a consignment relationship, you retain title to the inventory until its sold. You should also le a UCC-1 (Uniform Commercial Code) Financing Statement declaring your title to the inventory (not your distributors) and describing the consignment arrangement between the two of you. A sample form follows on the next page, but be sure to use the correct form for your state.
Print
Reset
Shipping
When it comes time for shipping your releases to the distributor, its essential that you or your supplier provide a detailed packing list showing your label name and address, plus quantity and catalog number by type (CD, cassette, etc.) of each item included. This will aid in your eventually receiving payment. If the distributor claims not to have received all or part of a shipment, be sure to check your copy of the packing slip, and put a trace on the shipment. Finally, dont oversell or overship on a new release. Ship only what you and your distributor think is actually necessary. This reduces the amount of returns, and makes it a lot more gratifying when you see re-orders.
House Accounts
If your distributor doesnt sell to small or specialized accounts that may be important for your releases, you should establish arrangements for direct sale or consignment to these house accounts. (You should allow for this in your distributor agreement.) Just be sure that the account always signs for receipt of each delivery on an accompanying packing slip or invoice that gets returned to you.
Special Markets
Special markets consist of unique entities such as the Army and Air Force Exchange Service (AAFES), which sells to PXs, plus record clubs, and other specialized entities. In addition there are special product compilations prepared for specic clients. Such projects includ a very successful series of CDs prepared by Concord Records for sale at Starbucks coffeehouses throughout the U.S. Other compilations might be prepared for large corporations to use as premiums or gifts to clients, or for retailers such as Whole Foods to sell at their many locations.
Digital Distribution
Digital distribution has changed markedly in the last few years, and has become quite complex. It requires a distributor or aggregator skilled in getting your music to as many online stores as you might want, with the capability to provide your music in the various formats required by those accounts. A digital distributor can handle sales of individual tracks and albums through various retail websites, but also tracks and ringtones for mobile devices such as cell phones. Most distributors of conventional goods want exclusive rights, or at least a piece of, your online sales. I dont recommend you grant them these potentially lucrative rights. The main reason is that whereas most conventional distributors are skilled in getting CDs into the marketplace, they are less experienced in matters of distributing digital tracks and albums. Most want your digital sales because it increases their income and their volume. Some do a ne job, performing a real service to which theyre entitled to a reasonable fee. Others perform little service but want a large percentage of the action. This is something youll need to thoroughly research. But it also means you might be putting all your domestic distribution eggs in a single basket, making it more difcult to get paid if youre having problems with the distributor. Heres another thought should you decide to have your physical distributor also handle your digital assets, do not allow them to cross-collateralize your digital sales with anything else, because thats a common subterfuge some distributors use to avoid paying. Im not recommending that you take a DIY approach by going it alone. Unless you have a sufciently large and experienced staff, this is a task to leave to the specialists, sometimes called aggregators. These companies are skilled at getting your music disseminated to a wide array of online digital music stores and can handle the logistics of formatting your tracks as appropriate for each. Lets take a look at the prevailing download retail websites. There are quite a few and I wont mention them all here. Some allow paid downloads of individual tracks, or of complete albums. The best known and most successful of these is, of course, Apples iTunes Music Store which represents by far the major percentage of all legal downloads, and which pays labels about 70 cents per downloaded track. Amazon.com has also been successful in selling downloaded tracks and albums. http://www.apple.com/itunes/ http://www.amazon.com/MP3/ Others sites use a subscription method whereby a consumer subscribes for a certain set fee per month which purportedly allows them to download as many tracks as they want. The catch here is that if they forget or neglect to pay a months fee, all the tracks theyve spent hours downloading will no longer be playable. RealNetworks Rhapsody now including Napster, and Yahoo Music are examples of these. Some allow individual track purchase as well. Another such site, particularly of interest to independent labels, is eMusic.com. http://www.emusic.com/
http://www.rhapsody.com/ http://music.yahoo.com/ The new kid on the bock is Spotify which requires its very own application rather than a URL. This service has been highly popular in Europe where it orginated, and was launched in the U.S. in July 2011. Many of the 1.4 million people who signed up in the rst week use the service just for streaming music, but at least 175,000 (12.5%) were premium subsribers who paid for the privilige of downloading as much as they wanted. http://www.spotify.com/us/ On which of these sites should a label try to have its music included? Why, all of course! The more the merrier since the more available a labels music is to a buying public, the more exposure itll get for its artists, along with the opportunity to reap nancial benet for all concerned. The key to your investigation are the aggregators. These are middlemen who can make your music available to all the primary sites, taking care of track preparation and distribution on your behalf. There are many, so Ill list just a few TuneCore, CD Baby, Ingrooves, IODA, Bandcamp, and The Orchard. Note that my mentioning them here does not imply an endorsement or a preference. Theyre here for illustrative purposes only. http://www.tunecore.com/ http://cdbaby.com/ http://ingrooves.com/ http://www.iodalliance.com/ http://bandcamp.com/ http://theorchard.com/ CD Baby is primarily a distributor, but it also performs the services of an aggregator. Small labels, especially those owned by artists, can kill two birds by selling their CDs through them, taking advantage of their online distribution as well. CD Baby supplies digital tracks to all the major online stores, and handles all the paperwork and creation of appropriate digital formats, taking a modest percentage to cover their costs. They do require exclusivity, however, in order to avoid confusion created by multiple aggregators attempting to sell to the same online retailer. In the relatively short time its been in existence, TuneCore has established an excellent reputation. With them you get to keep 100% of your royalties and all of your rights. TuneCore charges $9.99 per single, $9.99 per ringtone, and $49.98 per album per year storage and maintenance. Thats it! From a consumer standpoint there have been problems associated with many of these systems, the greatest ones being that of interoperability and digital rights management (DRM) which limited how users make use of what they bought. The four major label groups originally required Apple to use DRM before selling their music to consumers. It was transparent to buyers who loaded their music from the iTunes Store onto their iPods. Thankfully, DRM is pretty much a thing of the past.
iTunes, is cross-platform, but will work only with Apples iPods, iPhones, and iPads. eMusic is interesting in that it provides straightforward MP3 les without any form of DRM, making its downloads playable on virtually all portable players. Be aware that there are liable to be many territorial restrictions, so what Ive discussed here for domestic sales will in all likelihood have to be handled separately for each international territory. In any event, do your homework, and after youve thoroughly analyzed all of your options, decide which rm or method might be the best for you
Production & Distribution Deals

Some labels prefer to establish a production deal, or a production and distribution deal, with one of the major labels. This can be benecial if youve got great A&R artists youve signed who have a large potential for commercial sales. Its extremely difcult to set up such deals unless youve been in the business for some time and have established substantial industry connections and a reputation as a music person who can deliver hits, so Ill discuss these very briey.
The Production Deal

A Production Deal can be established between a producing entity and a major label. Its more like an imprint (essentially your label name,) in that the producer brings signed artists to the major, who then handles all the other aspects of running a label, including manufacturing, marketing, and distribution. The producer will probably receive a fairly sizable advance, either for his imprint as a whole, or for each artist he brings, plus royalties for each project. On the other hand, the major label does most of the work.
The Production & Distribution (P&D) Deal

A Production and Distribution (P&D) arrangement is considerably different from a production deal. What this entails is that the major label will handle manufacturing and distribution for you, but youll be responsible for all the other aspects of running your label. The major will probably pay you a substantial advance against future income, and take a percentage of what they earn on your releases, passing the balance to you. Everything else is your responsibility. Youll pay for the making of each recording, do all the marketing and pay those costs, plus all of your salaries and other overhead. What you gain is the majors clout in the marketplace and their ability to push records through the pipeline. What you lose is a portion of your independence. You may also be a low priority for their salespeople, who might likely pitch their own product before yours. Another negative is that youll have all of your eggs in one basket and can be at the mercy of a company that may not care much about you and your problems. I know of one independent label that almost went out of business because the major label found ingenious ways not to pay its P&D client.
International
Foreign Distribution
International distribution is a very complex subject, and something that a very new start-up has some time to think about. An overseas company is unlikely to be interested in product from a brand new label. This can change once youve got a half a dozen good-selling titles, or your rst release breaks out and gets signicant attention and sales. So dont expect much interest here unless your artist has toured overseas, or has created a substantial buzz domestically. Should you fall into such a situation, be very cautious about any deals you make. This is not to say that foreign accounts may try to take advantage of your newness to the business, but its been known to happen! This is another case when it makes sense to get as much information as possible from music industry friends to help determine which international distributors may be most appropriate for your label and music. Theres nothing like a positive recommendation and perhaps even a solid referral to suitable candidates. When youve become reasonably well-established in the U.S., you might consider attending MIDEM, which is an annual international music market event in Cannes, France, in late January or early February. A great many distributors attend from all over the world so its a great opportunity to make deals. Its important to try to set up meetings via email before you attend, because its also quite a zoo, and the most active distributors have busy schedules. MIDEM has a sales ofce in the U.S. at 360 Park Avenue South, New York, NY 10010, and their phone number is (212) 284-5145. http://www.midem.com/ Attending MIDEM is quite expensive when you consider cost of airfare, lodging, meals and MIDEM itself. The attendance fee for 2012 is 495 Euros (about $700) plus VAT, and hotels and restaurants in Cannes tend to raise their prices when these kinds of events occur. You might want to seek out exporters with ofces in the U.S. who ship overseas, because thats a good entry into international for a edgling label. Your distributor probably sells to these accounts and theyll tell you who they are or barring that, you should be able to directly ship and bill exporters who dont have accounts with your distributor. Youll invoice them and get paid thirty or sixty days from date of invoice (whatever you negotiate) in good old U.S. dollars. Be cautious, however, because records you might sell below your domestic price could end up in the domestic market; so dont sell at such a low price that this can happen. Also, be aware that there are few, if any, regional distributors that will cover an entire geographic area, such as all of Europe or all of Asia. The exceptions are the afliates of such multi-nationals as Sony, Warner Music, Universal, and EMI, but theyre unlikely to be interested, are very hard to deal with,
and would prefer to make licensing deals (see below). Its likely that, when the time comes, youll have to make separate deals for the U.K., France, Germany, Holland, etc. There are a few exceptions; some accounts may sell to all the Benelux countries (Belgium, the Netherlands, and Luxembourg), or the GAS territories (Germany, Austria, and Switzerland). The territories or countries most appropriate for your label will, to a great extent, be based on the kind of music you release. French-singing artists will have the greatest appeal to Francophone accounts in Quebec or France. Spanish-language musicians will have appeal to a wide variety of Spanish-speaking countries, but this will be determined by the style of music. For example Salsa is big in Puerto Rico and New York, but not in Mexico, for example. Asia, which consists of a great many countries, is another complex region. Some distributors may handle a number of countries in a territory such as Asia-Pacic. Such distributors sell to accounts in South-East Asia (Indonesia, Vietnam, Malaysia, Hong Kong, etc., but usually not China), and Taiwan. Asia-Pacic does not include Japan, which is the biggest Asian market. Japan is particularly receptive to certain kinds of American music, particularly jazz. Pricing to overseas accounts is another complexity. Since these accounts have to pay import duties as well as freight to faraway locations, youll have to reduce your charges to them in order for the rms to be able to sell competitively, yet still make a fair prot. Therefore be prepared to lower your expectations accordingly. Thats why most labels have a provision for foreign royalties in their artist contracts so that the artist, by receiving a smaller royalty, bears part of the burden of lower prices for foreign sales. In fact, you might consider basing your artist royalty for such foreign deals on a PPD (purchase price to the dealer) basis, although this adds to the complexity of rendering royalty statements. When dealing with smallish quantities, youll likely ship nished, packaged goods to your overseas accounts. And when you sell such goods, in addition to the artist royalty, you should pay mechanical royalties in the U.S. But check with the account rst in the unlikely event that they might already be paying them overseas.
Foreign Licensing
Another issue deals with licensing your music to companies overseas. In many cases, granting such a license to a foreign distributor is a license to steal! There are many unscrupulous accounts that will sell lots more units than theyll ever report to you or pay for. Your only protection is to ship them shrinkwrapped goods, or to sell them production components for packaging overseas. (More on this in a moment.) This will give you a limited form of protection, since theyll try to pirate your music only if youve got a title that sells well in their territory. And unfortunately, youre not likely to nd out! I once had an artist on my label who became a best-seller in Taiwan. And although I shipped a lot of product to Taiwan, someone was clever enough to pirate the titles. The counterfeits were so good that I had to look at one CD a couple of times before I noticed subtle errors and misspellings. Suing them
successfully resulted in moral satisfaction, but very little nancial remuneration. The single, major advantage to a licensing deal is when you can negotiate a large enough cash guarantee at the outset that makes it worth your while. Such guarantees will help your cash ow situation, and make it possible to record more artists and projects. But these types of deals are very difcult to come by. One suggestion for higher-selling titles is a hybrid distribution/licensing arrangement, which is not uncommon with accounts a label determines to be trustworthy. What this means is that youll sell them component parts (CDs on spindles plus print materials such as booklets and inlay cards) for an agreed-upon price thats lower than your standard foreign distributor price, but that covers your costs, plus perhaps 10%. They will locally assemble them in jewel boxes and shrink-wrap. Then the distributor will pay you the lower invoice price shortly after receipt of materials, followed by a royalty a short time after the records are sold. For example, lets say that your standard foreign price is $6.50 per CD. In this hybrid case, you may sell them components for $2.00 per unit and get paid 15 days after delivery. Additionally, youll receive a $4.50 royalty 30 days after the CDs are sold. The amounts and timing may vary, but you get the idea. The advantage to the overseas account is that they pay less customs duty and even out their cash ow. The advantage to you is you know the quantity of units you should get paid for. International sales are a great source of supplemental income; so dont discard such possibilities at the outset. Just take your time by studying and investigating the possibilities as you build a catalog of foreign-worthy titles. By the way, if you own the publishing or are a co-publisher, try to make a foreign co-publishing deal with your overseas account for the same territory, assuming that theyre also co-publishers.
A Quick Take on Distribution Issues

Domestic Pricing Term (Length) of Deal Consignment Arrangement Payment Terms Access to Sales Information Promotional Materials Free Goods Co-op Advertising Freight Contract Shipping House Accounts Special Markets Digital Distribution Do you want to go through an aggregator? Production & Distribution Deals Do you want to work with a major? International Distribute or License?
Chapter 13 The Complexities of Marketing | 163
Chapter 13 The Complexities of Marketing

The actual recording and making of records is usually a lot of fun. The marketing of music, on the other hand, is probably the most complex, expensive, and frustrating aspect of running a record label and the greatest potential hazard. This is true not only for large labels, but particularly for small ones with limited nancial resources. Unless youre very careful, marketing can be a bottomless pit a vast abyss into which your precious dollars can rapidly disappear. The purpose of marketing is to let the public know about your releases, to generate a buzz around it and the artists, to prepare the marketplace to receive stock, and ultimately to create sufcient demand so consumers buy your music. Achieving success for any music product is extremely difcult, due not only to economic reasons, but also to the way our industry tends to do business. Many traditional avenues of marketing recorded music have shrunk during the past few years for one reason or other. Also, because the major multinational music groups have tended to monopolize many of the media opportunities formerly available to smaller labels, going after what few opportunities remain has become very expensive. Creating a comprehensive marketing plan is thus absolutely essential for the ultimate success of any recording. If you dont know anything about marketing, but are starting a label because you love music, then youd better work with a music marketer who really knows what hes doing. If you plan to keep your staff down to the barest essentials, use an outside marketing specialist experienced in your eld of music. They exist, and can be very effective. Once again, you must do your research by talking to friends and colleagues to see who theyd recommend. But be cautious. Its possible to spend a lot of money to little effect if youve engaged the wrong person. On the other hand, a really good marketing individual can be the catalyst for selling lots of your music. So if you decide that you have sufcient funds to hire such a person full-time, and youve budgeted for it, then thats a great way to build a label. In the case of a brand-new start-up, it might be wise to use a professional with his own rm for your early releases. This way, you can begin to learn what music marketing is about. Later on, when you know more about marketing, you might hire someone to be on your staff. This can be a winwin scenario. Either way, whether on staff or virtual, put some energy into nding someone with lots of experience and prior success in marketing the genre of music youll be releasing, since the marketing specialist will be responsible for designing and supervising the marketing campaign.
The Marketing Plan

Its extremely important that you develop a marketing plan far in advance of the actual date you expect to ship a release. Start it as early as possible, even while the artist is recording in the studio. Ultimately, the marketing plan should focus on how best to present the artist and his music, and which specic songs to concentrate on. And, as part of the process, you should budget comprehensively for all departmental aspects and phases of the campaign. For example, in larger companies, each department (sales, publicity, radio promotion, online marketing, etc.) would develop marketing ideas related to the work they plan to do, and apply costs and a timeline to it. After that, all the valid concepts will be consolidated into the ofcial marketing plan. In a small label, there may just be one person devoted to each aspect. And an even smaller one may have just one person handling all of the marketing effort, and that person could be you! In such small companies, the key marketing person will create the plan, but on a departmental basis Publicity, Radio Promotion, etc., as addressed further on. As the plan is developed, each department should estimate when they should start working on the project. For example, its common practice that Publicity in-house or independent send a press kit (see below) to targeted national publications at least three to four months prior to street date. This is in order to obtain valuable national print coverage during the rst month or two of release, since most national magazines go to press many weeks prior to the actual date they hit newsstands andmailboxes. Radio Promotion will have to determine the add date for their rst efforts, and the projected cost to achieve success. The add date is the date you want a maximum of stations to start playing your new release. It can be from two weeks to many months prior to street date, but varies with the genre. (Ill go into more detail further on in this chapter.) For a small label, its necessary to brainstorm as if there were several departments determining what needs to be done for each aspect of marketing. As soon as possible, all of the proposed departmental marketing ideas and estimated budgets should be put together into a single comprehensive plan to see just what the combined effort might entail, and what the total cost could be. Management or you can then review all items and pare back the least essential elements until theres a workable plan and a budget thats nancially feasible. A marketing plan can be executed on a phased basis. For example, many ideas that might be cut or eliminated at the outset can be reinstated after initial goals are achieved and you have an idea as to whether youve got a release thats starting to generate reasonable sales. This is true particularly for
radio promotion. If the early efforts indicate theres signicant interest in a new release, or that it could develop into a hit, that would be the time to put additional effort and money into promotion. Or, if you see that the music is starting to sell in particular areas, you might consider putting additional funds into some form of artist tour in that area tied into local advertising. If it really seems to be taking off, consider national advertising. On the other hand, if you feel youre just spinning your wheels, change tactics. Pick another song to promote, or cease working the title. In addition to a budget, its important that a timeline of events be developed and followed. Be sure that all departments are working closely together, keeping each other, your distributor, and any independent specialists advised of new events as they occur, and that they stay coordinated in their efforts. But whatever the label size, the result is that a complete, comprehensive, and structured marketing plan will have been devised, including a budget as well as a timeline, delineating whats to be spent and whats to be accomplished in each and every aspect and phase of the campaign. Moreover, its important to track actual versus budgeted expenditures once the project has started. You might need to cut back if you nd youre starting to run over. On the other hand, if actual expenses are not as high as budgeted, and it seems worthwhile to spend more, sufcient funds should be available to do that. But its also very important to update and revise your plan as events occur and the situation warrants. Feel free to modify and make changes to the plan, budget, and timeline if you feel it will signicantly improve your overall efforts, and assuming you have the available funds. This roadmap of a structured marketing plan including a budget and timeline prepared well in advance will help you keep your costs under control, and it will enable you to more effectively market your music and manage your label for success. A sample plan for an already established act, The Doorstops Keep It Open! on YYYY Records, a mediumsize pop label, is on the following pages.
Sample Marketing Plan

YYYY Records Marketing Plan for The Doorstops: Keep it Open!
YY 12345-2 Projected Marketing Timeline Finished Product Due Press Kits Ship Press Starts Distributor Sales Solicitation Promo CDs to Targeted Radio Stations Targeted Add Dates for Radio Street Date Tour Dates
2/13/12 2/27/12 3/9/12 3/12/12 4/16/12 4/30/12 5/8/12 5/18 7/22/12
Project Overview The Doorstops, one of the most ingratiating and exciting musical acts to arrive on the scene since the Seventies, have created their best album yet the evocative Keep it Open! Filled with mellifluous melody and lilting lyrics, the quartet pulls out all the stops on this eight-tune wonder, including the 25-minute long gem, The Return. The ensemble begins its 20-city tour in Los Angeles on May 18th, ending in Boston on July 22nd . The Songs 1. 2. 3. 4. 5. 6. 7. 8. Through the Door The Other Side Back Again Down the Hatch Up the Kazoo Inside Straight Narrow Hallways The Return
All Songs by The Doorstops Oakley Wood: vocals, keyboards Cold Steel: guitars Broken Glass: drums Pumping Iron: bass
Target Audience Existing Doorstop fans Existing Oakley Wood fans Typical Rock n Roll audience Strategy Create awareness and heighten the profile of Oakley Wood and The Doorstops, promoting their image as a cohesive band, and as individual musicians. Spur sales via this marketing campaign, with emphasis on publicity, radio promotion, retailer co-op advertising, and micro-marketing in conjunction with tour dates. Create maximum presence at retail. Extensive Social Network outreach Reach established fan base, and add many new fans. Key Information Format List Price Item # UPC# Box Lot Quantity New Release Discount Street Date Sales Goals: Phase 1 (initial ship) Phase 2 (first 90 days) Phase 3 (first year) Compact Disc $13.98 YYY 12345-2 0 9999-12345-2 9 25 7% 5/8/08 10,000 30,000 75,000
Retail Co-op Advertising Budget: $20,000 Obtain listening stations at key retail locations. Obtain End-Caps in key retailer locations where group is touring. Merchandising, Sales, and Promotional Items: New Release One-Sheet Promo and Press Kits (include bios, photos, CD folder) Promo CDs to Distributor Promo CDs to selected radio station list Poster for in-store display and in support of tour performances Sticker on CD: featuring the hit Through the Door
National Advertising Entertainment Weekly (quarter page) Spin (quarter page) Rolling Stone (third page) The New Yorker (third page) Guitar (full page) 5/21/12 5/28/12 6/11/12 6/25/12 7/9/12
Publicity PR campaign for features and reviews in general national magazines Seek features and reviews in major newspapers: New York Times, Los Angeles Times, Wall Street Journal Seek features and reviews in important secondary newspapers. Seek features and reviews in major music publications. Seek features and reviews in important fanzines. Tour press Social Network Outreach Extensive Website Effort, including Chats with Band Members Radio Promotion Promo CDs to targeted stations Follow-up by Promotion Dept. Targeted Add Date at Radio: Raves for The Doorstops previous album Open A marvel! (Rolling Stone) Not since The White Album has there been such a combination of music, lyrics and energy. (Vibe) A must have CD to add to your collection. (Spin ) The Doorstops Discography Keep it Open! Open
YY 12345-2 YY 98765-2
YYYY Staff Contacts Jack Brown, Promotion 123-456-7890, ext. 35 Amy Mauve, Publicity 123-456-7890, ext. 46 Tony Green, Sales 123-456-7890, ext. 57 11111 Main Street, Anywhere, CA 99999
When to Ship a New Release

Once youve nished making a new recording, theres always a desire to see that it gets born as soon as possible. To the artist, its like having a new baby. Its gestated for a long period of time, and hes going to be anxious to introduce it to the world. However, its important that you plan for the birth, releasing it at the optimum time for acceptance. For example, its never a good idea to ship a release from a new or unknown artist between the middle of September and the end of December because itll be competing for sales, publicity, airplay, and marketing effort with Christmas items and hot releases from the major labels and other independents. In addition, the cost of co-op ads and other marketing promotions tend to be much more expensive in November and December. A particularly good time is the rst quarter of the year, especially mid-January to late February, because the holidays have passed and theres a greater likelihood of getting attention for your artist. May is an excellent release month for artists who will be performing at summer music festivals because it allows sufcient time to create interest in them and their music. If your new release will be pitched primarily to college students, try to avoid shipping it during midsummer when many college radio stations are closed or inactive.
Marketing Responsibilities
A well-ordered approach to music marketing usually entails the following departmental activities, which will be discussed below in more detail: Sales Publicity Radio Airplay Advertising Artists Tour Support Independent Marketing Specialists Social Network Outreach Video Street Teams Online Music Stores Website The diagram on the next page illustrates how these functions have an impact on sales.
Radio Airplay
Publicity
Artist Tours
Indie Marketing Specialists
$ALE$
Video
Street Teams Website, Social Networking, & Online Campaigns
Advertising
Marketing's Impact on Sales
Sales
The role of the sales department is to convey information about all releases to your distribution and retail network. The salesperson (or sales department in larger labels) has to provide the distributors with the materials necessary for them to solicit sales from their retail customers. The sales job includes overseeing of such marketing aids as the one-sheet (discussed later in this chapter), and ensuring that sample promotional CDs are sent to the distributors in sufcient time for them to do their job of selling. The salespeople are thus the key liaison between the label and the marketplace. The relationship between Sales and your distributor can be a tricky one. On the one hand, Sales must see that the distributors take in sufcient inventory to properly service all their accounts. On the other, they must be sure that distributors dont order more stock than retail can reasonably sell. On that last note, Im reminded of an occasion some years ago when Elektra was about to ship a major album by a very well-known artist at her peak of popularity. Our goal was to ship about 800,000 units. The distributors kept ordering and re-ordering to the point that we ended up shipping about 1,250,000. Well, of course, despite excellent airplay, we ended up taking back more than I thought wed shipped! Im exaggerating only slightly the volume of returns was large enough to have stocked a major landll. At many labels, the sales department will oversee the activities of independent marketing specialists, street teams, non-traditional retail, and website and online activities, all of which will be discussed later in this chapter.
Publicity
Publicity is also referred to as Public Relations or Media Relations. In my mind, theyre essentially the same function encouraging national and local newspapers, magazines, radio, and television to cover your artists. PR efforts can generate print articles as well as reviews and interviews that appear in print, broadcast, or online. Over the last number of years, many newspapers have reduced, if not totally eliminated, coverage of recording artists and their music, and its only the squeakiest wheels (the majors) that have tended to get the most of whatever space may be available. This is true even with large national publications whove not only reduced the space allotted to music, but, not surprisingly, have devoted their limited space to those who advertise the most (again, major labels). To make the matter worse, many national pop music magazines have tended to cater to a youthful demographic, making space scarce for more mature artists. Therefore, with the exception of supporting touring artists, publicity may be an area where youll want to spend comparatively little money. Thats not to say you shouldnt attempt to utilize publicity, just that this may not be a prime method to market music particularly for new and unknown artists.
However, while a national effort might not be effective in most cases at the outset, you could (and probably should) start on a local level where the artist lives and performs most frequently. Publicity is the kind of function that can easily be farmed out to an independent PR rm. And there are several such companies, small and large, that may be suitable to your needs. Many specialize in particular genres or types of music, and Ive known some to be remarkably effective in helping labels launch new artists, putting the best spin on them. The advantage to a small label is that youll pay only for what you need no payroll for a 52-week staff publicist. You will customarily pay a publicity rm a negotiated fee for a specic project for a stated period of time (probably a three to four month minimum,) plus necessary out-of-pocket expenses. These include long-distance phone calls, postage, and perhaps meals with editors to whom your artist is pitched. Such expenses should be pre-approved by the label. Discuss at the outset what you expect from the PR rm and be sure youre in agreement. Of course, the more work involved such as national and tour press the higher the cost, but at least youll know up front pretty much what to expect. Youll probably be invoiced monthly, with the rst months payment requested at the beginning of a project. When you consider a PR company, you might want to contact other artists and labels theyve represented, and perhaps even an editor or writer, in order to get a sense of the rms ability and reputation. Also, take a look at their website. Are there egregious misspellings and grammatical errors, or is the material clear, readable, and media-friendly? A publicists primary function is to get attention for your artists, and usually the company if its a label campaign. Shell do this by sending press kits to the media appropriate to the music involved. Media includes publications, writers, critics, and radio and TV show bookers and producers. She might also be the likeliest person to handle or direct all social networking elements of the campaign. You should discuss whether this is to be just a local or regional campaign, or national as well. Depending on the marketing plan, you may decide to start locally. Later, you can add regional or national efforts when certain initial goals are achieved and it looks as if a more substantial campaign might be worthwhile. You might also want to target unconventional media sport shows, the ethnic press, business press, city magazines, and other non-music outlets. Any publicist worth his salt will have an extensive up-to-date database (as many as eight to ten thousand names) of publications and radio programs that provide space, however limited it may be, for music. The database will have names, addresses, and phone numbers of editors, critics, and producers by the various genres of music that they cover. Its imperative that these lists are kept current. Usually a PR rms database will be custom-sculpted to those media outlets that they feel will have a predisposition to your specic artist. This custom list might consist of only 300 to 400 outlets. Be wary of rms who dont customize their lists for each project; theyre probably wasting your money and your product on materials that wont get to the right people.
Radio publicity is important because many artists have become known through such national radio programs as NPRs Morning Edition, All Things Considered, and Fresh Air. Additionally, certain local radio stations have been remarkably successful in helping to launch new artists. I think specically of NPR afliate KCRW-FM in my own back-yard of Santa Monica, a frequent bellwether for new recording artists in many genres. Talk radio is another venue to be considered, especially for articulate artists who do well with interviews. In addition to broadcasts of interviews with my own artists, Ive even had some of their music used as bumpers between segments of All Things Considered. The show posts a list of this music on their website so listeners can buy the recordings. Publicists also place interviews and performances on such satellite channels as SiriusXM, wire services like AP and UPI, syndicated radio outlets such as Westwood One, and morning television. They break news about the artists on online outlets like RollingStone.com, LiveDaily.com, and Billboard. com. And PR is not only about media placement. Publicists also place artists as panelists in industry conferences, as presenters on award shows, as attendees at premires, and nd other creative ways to get their artist exposure. Above all, you get out of a PR rm what you put into it. Publicists are grateful for ideas and leads. However, its their job to push the envelope and make the impossible occur. Above all, heed the experience of the rm. You might think an artist is ready for Rolling Stone, but in reality an early pitch to a top-circulation magazine may be premature. If the publicist pummeled an editor for coverage, it might impair the years of trust between them.
Press Kits
Many publicists today dont use fancy press kits, preferring to send stapled materials such as a bio, a track-by-track commentary, and previous key press-clips along with a CD. Most writers dont like receiving a lot of stuff. In the dark ages, a press kit consisted of the following a folder with promotional CD, a biography of the artist or group, an artist photo, and artist tour information with dates and locations. The folder may have been generic to the label with the label logo, address, and publicist contact information. An alternative was to buy folders from a big-box stationer such as Staples or Ofce Depot, and then to apply specially printed stickers with the necessary information. If you had a lot of budget money to spend, folders were designed for a specic project. Additional press kit materials included an interview with the artist, supplemental information about the recording, and sometimes track-by-track details or anecdotes. Some publicists included photos in the press kits, while others prefered to make them available to media on a password-protected website providing additional savings.
Very important try to have publicity photographs of the artist taken at the same time as the cover shoot. This will save some money and will tie better to the cover used during marketing. If your publicist wants to send photos, you can further save by sending 4x5 inch shots rather than 8x10s. Most publications print small photos anyway, so the size shouldnt cause any problems provided the images have good contrast and no halftone screens. If you still decide to send press kits, but have a limited budget, then very carefully chose the publications most likely to be interested in your release, and send your materials only to them. Later on, as you start achieving some success, send additional kits to those who may do the project the most good. Electronic Press Kits (EPKs) using DVDs ,and Digital Press Kits (DPKs) distributed via email are excellent tools when the budget permits. They can be made at relatively modest cost yet be of professional quality using pro-consumer video gear and edited on a computer. The kits can feature live performance video, interviews, an artist bio, etc. all delivered electronically. Press kits whether simple, elaborate, or electronic should always be directed to a person by name rather than just to a job title such as MusicEditor.
When to Send Out Press Kits

The timing of all events of a marketing campaign are interlinked and connected, so the publicist and the marketing specialist will determine the optimum time to mail out the press kits. Ideally, they should go out three to four months before the street date of the release, but unfortunately this isnt always possible. Ninety days is good, 120 days is even better. Editors work many months ahead, and these days, national magazines have a nite window for the week of your release, after which theyre on to the next thing. Just be sure all efforts are coordinated.
Follow-up
Of course, just sending out press kits isnt sufcient. Its essential that the publicist checks to be sure the kits have been received, and then pitches an editor or writer for a feature story, an interview, or at least a review. This requires constant bird-dogging but can be extraordinarily helpful. Theres nothing like a full-page feature in color, or an extensive interview with your act, to create a buzz and eventually sell some music.
Press Releases
Some labels have been able to generate interest in their efforts through the effective use of press releases. The releases are commonly sent via email, often to as many as 5,000 people. A press release delivered rst thing in the morning can be online that evening. And email costs next to nothing.
Record Release Parties

Holding a party in recognition of an artists new release can at times be worthwhile, particularly in the case of an artist whos already built enough of a reputation that tastemakers from the press and radio, and staff at local record retailers, are likely to actually show up. It should be held in a club, a recording studio, or other accessible location. However, if youre considering a party for a brand new artist whos not yet become known, you are wasting time and money, even though the artist and his family will be grateful.
Radio Promotion
Radio promotion is still one of the prime methods of marketing music. Of course, airplay and your promotion efforts will be based on the kind of music you record and release. The genre of your music will determine whether or not your new CD will be of interest to program and music directors at commercial radio stations. Unfortunately, there are many types of music that dont get much, if any, airplay on commercial radio. These include folk music, singer-songwriters, Americana, roots, blues, traditional jazz, classical, gospel, etc. For these genres, youll have to rely predominantly on Public Radio afliates and community and college radio stations. One plus is that the cost to promote to such stations is relatively small compared to promoting rock or country music for major commercial airplay. As mentioned in the publicity section, you should also consider the broadcast magazines such as NPRs Morning Edition, All Things Considered, and Fresh Air. Theyre all interested in new and unusual artists and music, and conduct frequent on-air artist interviews. Your publicist should be able to handle these efforts. Record stores make a lot of their buying decisions based on the airplay charts of Billboard, CMJ (formerly College Music Journal) in New York City, and Friday Morning Quarterback (FMQB) in Cherry Hill, New Jersey. Therefore its important that when you start getting airplay, you make maximum effectiveness of these charts. http://www.billboard.com/ http://www.CMJ.com/ http://www.FMQB.com/
Independent Promotion
One area youll likely have to budget for is independent promotion, whether in conjunction with your own internal promotion staff, should you have one, or the hiring of indie promoters who specialize in the particular genre of music youre releasing. Im very much in favor of a label having as small a staff as necessary, so I dont usually recommend that a start-up label hire a full-time promotion staff.
It happens that there are lots of solid independent promoters available, and for a wide variety of music. This is, yet again, one of those areas for which you should consult with reliable friends in the business for their recommendations. Another approach is to check with other small labels that seem to be getting good airplay in the same musical genre as your release. Ask the principals which promoters they used that got good results, and whether theyd use them again. Another way to nd out about promoters is to phone the stations you listen to the most that plays the kind of music youll be releasing, and speak to the music director. Ask him which promoters appear to be responsible and trustworthy and have provided the station with useful and programmable music without a lot of hype. In fact, local music directors are good people to get to know in any event, since such personal relationships will make it easier for you to get airplay and interviews for your artists. Some promoters operate only in selected regions of the country, but most work on a national basis, and thats what I recommend, unless your music is such that a regional effort makes sense. Some promoters focus on commercial stations in their genre, others may work only non-commercial (college, community, and public) radio, while still others promote to all. After youve done your homework, call or visit the recommended promoters and interview them thoroughly. Find out what other labels theyve assisted and check their references. Whether you end up using independents, or hiring your own staff, its essential that they work very hard to obtain and then track your radio airplay.
Add Dates
As part of your marketing campaign, youll have to determine what the most effective initial add date will be. This is the date youd like all stations to start playing the music. It can be anywhere from two weeks to six months prior to street date, depending on the genre and an artists previous history at radio, or perhaps on or after street date for a new or unknown artist. For example, add dates for smooth jazz radio occur four to eight weeks prior to street date. Those for country may be as much as half a year prior. Research whats most appropriate for each release. The purpose of working toward an add date is that all stations and consultants (such as Broadcast Architecture) who you can convince to play your music should be encouraged to add it to their airplay lists at more or less the same time. A greater impact is created when this occurs simultaneously, and it may make the activity noticeable to any trade publications that track such data. These publications include CMJ, Billboard, and FMQB. Once you start getting airplay, of course, youll have to continue to work hard to increase spin rotation (frequency of plays) and to see if you have music that radio and the public genuinely seems to like.
Servicing Stations
Stations should be serviced in much the same fashion as press. Send promo CDs along with such useful information as an artist bio, track-by-track commentary, etc. Use whatever youve got that makes the project interesting and helps it to stand out from all other CDs and promo items. This also helps a D.J. to be knowledgeable about the artist and the music. If youre not sending a specially prepared promotional CD single or album, then you might consider putting a suggested airplay sticker recommending particular cuts youd like stations to play. These can be printed by sticker specialists, or if youre not sending a great many, can be made on your own printer utilizing standard sticker materials that can be purchased at better stationers. Its also useful to have selected tracks be available for stations to download from a hidden page on your website.
Tracking Airplay
Once you start getting airplay, its important that you keep track of it. You could keep it simple and merely maintain a running list in a word processor, or, slightly better, use a straightforward spreadsheet format as might be created in Excel. But the best way is to use a database. The database can be a simple at-le, such as might be done in a spreadsheet, but an even better method is to use a relational database such as FileMaker Prp, which is conveniently cross-platform. (See the section on Software in Chapter 8 about setting up your ofce.) It can be on a single computer and be maintained by one person, or can be kept on a server and be used by many and even be made available over a secure intranet using a web browser. It depends on the size of your company and your needs. But the prime advantage is that its extremely exible and can be used for years, just by adding to it periodically as needed. You might start such a database with a list of radio stations. This would include call letters; addresses by city, state, and zip code; region (based on airplay as tracked by the trades and distributors); phone numbers, musical genre(s); names of program director, music director, and DJs, with their email addresses, and access times when these people can be reached by phone. A separate, but related, database le would be maintained for each project. This would contain the name of the artist, the title of a release, the catalog number, station and date added, rotation (low, medium, high,) spin count, etc. Most important is that airplay adds and spin changes should be tied to each adding station in the radio station database as a relation. What this means is that you dont have to repeat all of the station info, its just that theyre related by commonality. The common factor would be the stations call letters, or program name. Then, whenever you want a current list of airplay by artist and title, all youll have to do is search the database. You might previously have prepared a list format for such a purpose, and once thats
done, querying the list and printing it out is a simple matter. For example, you might want to send an email or fax to your distributor and its sales reps each week showing the stations where youre getting substantial airplay for each release. They, in turn, should be sure that retailers are properly stocked with your product in markets with respectable airplay. You could even post airplay data to your website in a password-protected location that can be reached only by those who should have such access, such as your distributors sales staff. As you add titles, the database will grow. And what makes it very worthwhile assuming its kept up to date (an essential in my mind) is that it becomes extraordinarily useful in the future. For example, when you want to release a title in a genre similar to one youve previously released, youll just have to search your database and lter those stations that play music in that genre. Those are the stations youll service with promo copies. Another example would be, when you issue a second title by an artist who received extensive airplay for their rst release. In this case youll poll the database and be sure you send the new CD to those same stations (as well as others of the genre), perhaps even reminding them in a nice way how well they did with the artists earlier release. But however you do it, be sure you maintain the database by always keeping it up to date. Dont let it get away from you because if you do, itll be useless. Weekly or preferably daily maintenance will save you lots of headaches later on.
Social Media Outreach

Social Media and Social Networking were essentially non-exisiting when I wrote the rst edition of this book. In the few years since, various forms of social networking have become essential tools that labels should use to market their music. In the U.S. Facebook, Twitter, Google+, LinkedIn and, to an increasingly lesser extent, MySpace, are some of the many tools that should be used to get word about your artists and their music to the public. Its become so important, in fact, that larger labels have staff that do nothing else but work them as essential marketing aids. The sites mentioned above allow individuals to create proles containing various info about themselves, including photos, videos, lists, and other information normally kept private. More recently it has become standard practice for record labels to set up pages or sections containing information about their artists and music. Facebook and Google+, for example, allow you to create groups around a common interest, and it makes sense to establish such for each artist and project.
Music Sharing Websites

There are a number of websites that allow people to listen to and occasionally download songs. Many of them have become incredibly popular, in particular Pandora, Shazam, Grooveshark, and as of July
2011 Spotify. Be sure to send your music to these and other relevant sites as they can be helpful in getting your music exposed and disseminated.
Advertising
Advertising is an expensive way to market music, so I dont recommend that most of you even consider it. The exceptions would be labels with an artist having substantial presence or whove achieved some form of buzz, either through airplay, good press, or other forms of recognition. Without these essentials in place, youd only be wasting your money. That said, the most effective use of any form of advertising is whats called co-op advertising, which is cooperative only in that you get to pay all the costs! With co-op, your distributor, usually in conjunction with specied retailers, makes use of your print (space) or radio (time) buys by using the money youve allocated to purchase a certain amount of newspaper or magazine space or radio time for your ads. The advantage to you is that retailers who advertise all the time can usually secure lower rates than what youd be able to get on your own. The co-op opportunity is for the distributor and retailer who your money goes through. But dont even consider this unless an ad buy is in useful support of an artist or project thats beginning to gather heat. It might be an ad in a local paper where theres already some degree of artist recognition. This ad might be in support of a local store and it should display the CD cover and list a suggested sale price. Another useful ad is one that includes mention of a local performance thats about to occur stating the time and venue and showing a picture of the band and/or the CD cover. Another form of co-op is for getting price and position in a stores end-cap (a special, prominent rack at the end of an aisle) or for buying space in a retailers listening station. Listening stations can be an effective marketing tool but have become quite expensive and, once again, shouldnt be considered until youve started to get some form of buzz. The reason is that a casual aisle-stroller in a record store is unlikely to listen to your music unless the artists name rings a bell, or the packaging is eye-catching and provocative enough to encourage further attention with a listen. You pay for positioning in many retail record stores, particularly the few remaining larger chains, so be sure that they buy sufcient stock to cover the cost of an end-cap or listening station co-op buy. Such deals with large retailers may not be cost-effective, so be wary of this tool. Use it only when theres sufcient attention being paid to the artist so that a campaign may pay for itself. The alternative to co-op is label-directed advertising in local and national media. This can be extremely expensive so you shouldnt consider it at the beginning of a marketing campaign unless your artist has already achieved substantial public recognition or renown. Its very rare that print advertising results in signicant sales, so I recommend it only to support artists while theyre performing on tour and have already shown some evidence of success. Artists love to see advertising for their music, but its an ego trip for them, and not cost-effective for the label until theres certain knowledge that reasonable public interest in the artist and his music exists.
Tour Support
All of this brings us to the next area you need to consider, and thats artist tour support. A good time for all artists to go on tour (especially emerging ones) is one to two months after release of their project. This allows some time for getting airplay and press attention. Such tours have become one of the most effective ways of building careers and for selling music. Major labels may spend fortunes supporting touring artists by paying money to musicians, for transportation and housing costs, and frequently even to a club or other venue. Most independent labels, however, cant afford to assist touring artists to such an extent. But labels can support their artists appearances by means other than nancial. One way is to help them obtain gigs, especially your artists who dont have a manager or agent. (Actually, I suggest you think twice before signing an artist without professional representation.) A label can do this by selecting appropriate performance spaces for an artist initially in towns or cities close to where the artist lives, and perhaps where the label is located. On this note, the label needs to get to know the bookers, being sure to send them CDs and press kits, and to chat them up. If youve got good live performance video, send it to potential venue bookers, make it available to local press and TV stations, and of course put it on YouTube. Labels havent customarily taken fees for this work, but a few labels have recently set up their own management staff to provide this function, and thus may be entitled to a fee or percentage. However, dont even consider this unless youve had extensive artist management experience and have the time to do it effectively. Also, I suggest you discuss such a venture with your attorney as it might result in a conict of interest, and youll want to avoid lawsuits. In any event, its imperative that you ensure that local press and radio are notied whenever your artist is about to be appearing in their area. See to it that someone on your staff, or an independent specialist hired for the project, arranges for interviews in local print media, both prior to, and while the artist is performing in town. Also strive to encourage publications to send reviewers to gigs so that they will print performance reviews. Be sure to set up interviews with appropriate D.J.s or radio personalities well before an artists appearance in their town. This might result in an interview pre-taped for broadcast prior to a gig, or while the artist is in town. Most effective might be a combined on-air live performance and interview. And in the way of thanks and support to the station, you might offer a few pair of free tickets to the rst few listeners who call in to the station after an interview. Another way is to offer a few free autographed promotional CDs to the stations listeners either by way of a contest or other on-air promotion. In the event that a station cant set up an interview or performance, its still a good idea for the artist to drop by. Its an opportunity for the artist to meet and shake hands with a D.J., music director, and/or program director, giving these folks a chance to get to know the artist.
Artist Development
Building artists and nurturing their careers can be a major part of a labels success. Therefore some aggressive independent labels have set up artist development departments whose responsibility is to help guide careers. Booking gigs is just a part of it. Other ways include suggesting appropriate music to perform for non-writing artists, what clothes to wear on stage, and even helping develop set lists.
Retail In-Store Performances

Its smart to combine touring with artist performances in record stores. These cost you and the artist nothing more than time and effort, but its a great way to build a fan base and to sell product. Be sure that the store has sufcient inventory on hand to meet the anticipated need. Some stores have a performance space (for example, the late, lamented Rhino Records Store in West Los Angeles not afliated with the label). In others, theres usually some modest space, if only a wide aisle. Discuss facilities with the store because its possible a band may have to perform with acoustic instruments if theres insufcient space for amps.
Independent Marketing Specialists

There are a number of independent specialists that you can engage to work with you on the campaign for a new release. A primary function might be to help you create your marketing plan. Perhaps youre able to do this yourself, but its frequently a great idea to work with someone who may be more experienced than you in marketing a particular genre of music. Good advice is a lot cheaper than expensive false starts. Another key purpose for hiring these professionals is to provide retail marketing support. By this, I mean that an indie marketing team might send out sample CDs to key retailers in essential markets to get them interested in your release and to stock the title. They then can check by phone that the retailers are sufciently covered with commercial inventory. In addition, indie marketers see that key stores are notied when an artist will be performing in their town, when signicant airplay is happening in their market, and to be sure retailers have enough CDs to cover anticipated demand. The retail specialist can also provide you with information on spread, sales movement, and compliance with co-op advertising and other label-directed promotions. Spread is information about just how widely (or narrowly) retailers are carrying your title. Talking about spread perhaps the most effective way of gathering information as to whats selling and where is through a subscription to Nielsen SoundScan, mentioned in previous chapters. They have special rates for independent labels. Its possible that your distributor may already be a subscriber and might be able to supply you with SoundScan data for your releases.
Video
Music videos dont make a lot of sense for most artists and projects with independent labels. First, they can be hugely expensive. More important, its extremely difcult to get video play for artists from indie labels, particularly for niche music. There arent a lot of stations thatll play your video, no matter how good it might be. So hold off on such an expense unless the muses demand it and the planets are in alignment. Then be sure that therell be sufcient stations willing to play the video. This assumes that the artist is already getting excellent airplay and press recognition. For these projects, budget cautiously and tightly, spending no more than you can afford, or that the project warrants. And be sure that it looks thoroughly professional, even though it might be made using inexpensive equipment and edited on your own computer. And nally, if you do make a video, exploit it to the utmost by getting it broadcast in frequent rotation, particularly in markets where theres heat. A good video can also be used in clubs and venues that customarily show them. All that being said, live performance and interview video can be an extremely useful tool to use as a promotional aid for publicity, on your website, and other suitable online locations such as YouTube. Plus, they can be made creatively and inexpensively.
Street Teams
Street teams can be useful for labels with repertoire that warrants the concept which tends to be alternative rock, hip-hop, rap, and such. Theyre like fan clubs, consisting of friends or lovers of the artists music who are willing to help out. They may promote, market, and sell records on high school or college campuses or elsewhere in their hometowns. Or they might put up yers that help promote artist performances. They could also pass out promotional CDs and uff at concerts of similar musicians. Fluff consists of such free materials as stickers, patches, and other inexpensive promotional items that the label supplies to team members. The teams work at the direction and coordination of someone on your marketing staff and are located throughout the country. Street team members are not usually paid, although they might receive a modest commission. They do it for the fun and experience, and for free CDs, concert tickets, clothing such as T-shirts, advance inside information, and the satisfaction of being involved in something personally worthwhile. You can get people interested in joining your street team effort by posting a notice on your website or other appropriate Internet newsgroup. For example, in July 2001, a message was posted in the Lost Highway Yahoo! Newsgroup about Lucinda Williams newest release, persuading her fans to get conversations going in various other newsgroups and message forums. Also e-cards promoting the CD were made available to fans to send to their friends. Each participant in this street effort was requested to initiate ten contacts on the topic and to forward their postings to a Lost Highway moderator as
proof of their work. A group of winners was selected at random and given free tickets to Lucinda Williams next performances. The total cost to the label was a few tickets and a bit of effort.
Sponsorships
When you have an artist starting to achieve real recognition and a sizeable buzz, you ought to think about looking for a sponsor whose product may have a natural tie-in to the artist or one of his songs. This sponsorship might be in the form of tour support, advertising, or anything else you can come up with. Its an excellent way to expose your artist and the music, yet at the same time reduce your marketing costs. Such a sponsorship can be a wonderful win-win opportunity for the sponsor, the artist, and the label.
Non-Traditional Retail
There are additional places where you may be able to sell your music. Such locations might include so-called lifestyle stores that sell clothing, coffee and tea, books, or other merchandise that may correlate well with the music youre selling. Think about places you frequent restaurants, books stores, convenience stores, dry cleaners and whether they might offer additional opportunity to expose your artist.
Artist/Venue Sales
Many artists sell their own recordings, particularly when theyre performing in clubs and other venues. This is another source of income for the label, which usually sell CDs to their artists for about ve or six dollars. Such venue sales can be reported as part of SoundScan data when a label faxes the information to them. Be aware that the label has to be in existence for at least two years, must have one or more artists, and must pay a $500 annual fee, for SoundScan to accept the information. Particulars and procedures can be obtained from their website. http://nielsen.com/us/en/industries/media-entertainment/music.html Then click on Nielsen SoundScan Venue Sales Prodedures. Most labels dont pay artist royalties on such sales because the artist has proted on the difference between what the label has charged and what the artist charges their fans. However, you must pay mechanical royalties if the artist is not the writer of the songs.
Mail Order
Dont neglect such seemingly old-fashioned concepts as mail order. Customers who may have difculty nding your CDs in big-box or mall retailers are likely to buy from your website, or may simply phone or write your ofce to make an order.
Always be sure that whoever answers your phones has a form handy to readily take such orders. The form should have all the information necessary to bill and ship to the customer, including name, address, phone number, email address, and credit card information, plus the artist, title, conguration, price, and quantity of the ordered items. Just remember that you want to make it as easy as possible for customers to buy your releases. When you receive such orders, its always a good idea to process them as soon as possible. If youre unable to complete the order for some reason, such as lack of stock, then let the customer know via email or letter when they can expect delivery.
Marketing Aids
Marketing Aids include such items as one-sheets, posters, bin cards, postcards, mobiles, stickers, and any other devices that help market music. There was once a time when record stores were happy to display attractive posters and mobiles that were supplied by labels. Nowadays the larger chain stores will only use such point of purchase (P.O.P.) materials if a label pays for display space. Therefore I recommend you go to the expense of printing such items only when you know they can be used to promote artist performances or if youve got other practical uses for them. Postcards can be effective when sent to known fans of an artist, and to let retailers know of the existence of an act you may be working. Street teams can also make good use of such materials. Just be sure you dont spend any more than you can afford.
One-Sheet
A One-Sheet is a single 81/2 by 11 page (frequently two-sided and usually three-hole, ring-binder punched) that shows all of the key facts and details of a new release. Its customarily provided to distributors eight to ten weeks before street date to use in soliciting sales. Check with your distributor as to when they require them to be available. Distributor sales staff will then use the one-sheet when they visit buyers, encouraging them to stock your title. Its usually just black and white, but Ive seen very effective four-color sheets used by some labels. Some distributors may not require that you supply them with actual printed materials, but may prefer instead to have the one-sheet artwork delivered to them in electronic form. This might be an Adobe Illustrator, Photoshop, InDesign, or QuarkXPress le, or an Acrobat PDF document. Check with the distributor for their requirements. One of the nice things about an electronic le is that itll save you a lot of printing and shipping costs. This is what needs to be on the one-sheet:
Artist Name Record Title Image of Cover Art Street (Release) Date Configurations Available (CD, cassette, etc.) Catalog Number for Each Configuration UPC Number with Scannable Bar Codes for Each Conguration Suggested Retail Price For Each Product Configuration Track List, Including Songwriters (If Not The Artist) And Timings Music Genre (such as Jazz) Names of Accompanying Musicians, where appropriate Marketing Plan Info: Key items such as radio promotion, press campaign, live performances, advertising, etc. Artist Live Performance Information, if available Artist Bio (short) and other helpful information pertinent to the release Label Name, Logo, Address, Phone Number, Website, and Contact Information The one-sheet is the rst manifestation of your artist and the release that distributors and retailers will see. For this reason, its vital that it be as attractive and eye-catching as possible, yet still convey all of the essential information. An example is illustrated on the next page.
The Doorstops Keep it Open!

Street Date: 5/8/12
The Songs 1. Through the Door 2. The Other Side 3. Back Again 4. Down the Hatch 5. Up the Kazoo 6. Inside Straight 7. Narrow Hallways 8. The Return All songs by The Doorstops Oakley Wood: vocals, keyboards Cold Steel: guitars Broken Glass: drums Pumping Iron: bass
The Doorstops, one of the most ingratiating and exciting musical acts to arrive on the scene since the Seventies, have created their best album yet the evocative Keep it Open! Filled with mellifluous melody and lilting lyrics, the quartet pulls out all the stops on this eight-tune wonder, including the 25-minute long gem, The Return. The ensemble begins its 20-city tour in Los Angeles on May 16th, ending in Boston on July 20th. Strategy Create awareness and heighten the profile of Oakley Wood and The Doorstops, promoting their image as a cohesive band, and as individual musicians Spur sales via this marketing campaign, with emphasis on publicity, radio promotion, retailer co-op advertising, and micro-marketing in conjunction with tour dates. Create maximum presence at retail. Reach established fan base, and add many new fans Retail Co-op Advertising Budget: $20,000 Obtain listening stations at key retail locations Obtain End-Caps in key retailer locations where group is touring Merchandising, Sales, and Promotional Items: New Release One-Sheet Promo and Press Kits (include bios, photos, CD folder) Promo CDs to Distributor Promo CDs to selected radio station list Poster for in-store display and in support of tour performances Sticker on CD: featuring the hit Through the Door National Advertising Entertainment Weekly (quarter page) Spin (quarter page) Rolling Stone (third page) The New Yorker (third page) Guitar (full page) 5/21/12 5/28/12 6/11/12 6/25/12 7/9/12
SRLP $13.98
the doorstops
keep it open!
Publicity PR campaign for features and reviews in general national magazines Seek features and reviews in major newspapers: New York Times, Los Angeles Times, Wall Street Journal Seek features and reviews in important secondary newspapers Seek features and reviews in major music publications Seek features and reviews in important fanzines Tour press Social Network Outreach Extensive Web Site Effort, including Chats with Band Members Radio Promotion Promo CDs to targeted stations Follow-up by Promotion Dept. Targeted Add Date at Radio: 4/30/12 Discography Keep it Open! Open YY 12345-2 YY 98765-2
File under ROCK
YYYY Records, 11111 Main Street, Anywhere, CA 99999

Phone (123) 456-7890 www.yyyyrecords.com Tony Green, Sales ext. 57
Online Marketing
Website
A labels website is an extremely important aspect of its marketing. It is one of the areas where you should expend a lot of effort, yet not necessarily at great expense. Its imperative that it contains loads of useful information, without excessive gimmicks or large graphics. In fact, I nd that use of animation, such as Flash, slows down casual surfers who just want information without bandwidthconsuming frills. The same holds true for large graphic images. You should have enough photos to make the site exciting, but be sure your designer keeps the images sufciently optimized to speed up page loading on users screens. Other things to avoid are anything that blinks or moves, animated GIFs, type thats difcult to read or that reverses out of a black or red background, or the use of frames. And dont use one of those unnecessary entry pages that display a logo or company graphic, and then require you to click on some word or object to enter. If someones gone to the trouble to visit the website, it can be assumed they want access so eliminate this annoying and unnecessary step. Your labels website should contain, at minimum, new release information, artist listings or pages, and details about every release. Each artist should have a page or section showing the artists recordings with reproduction of cover image and lists of song titles. Some, if not all, songs should have music samples. I recommend that they be limited to streaming les using RealAudio, QuickTime, or Windows Media or perhaps all three. Just dont allow them be to be downloaded for free. Samples should be no less than 30 seconds, and no longer than a minute. Your labels website should contain, at minimum: New Release Information Artist Listings or Artist Pages Details about Each Release, and A Way to Purchase the Music Each Artist Page should contain: All Recordings Available for the Artist Cover Graphic for Each Release Complete Song Lists for Each Release Music Samples, and A Way to Purchase the Music Additionally, you should have information about the label including any genre specialization, with contact data, history, and or purpose, your policy about A&R submissions and if you allow it the department that will receive submissions and to whom they should be sent. Also, feature artisttouring information so fans will know when and where they can see their favorites.
Be sure that no key information or statements are imbedded in the graphics since search engines wont be able to read them and itll hinder search engine web crawlers and therefore subsequent listings of your site in Google, Yahoo, etc. Most important, you should provide an easy way for customers to buy your music whether as CDs or online. You can set up your own shopping cart system on your own site, or post links where people can make a purchase, such as to Amazon.com, iTunes Music Store, etc. Shopping cart administration has become a lot easier, and many rms can handle this function for you anonymously if you prefer not to take it on yourself. In fact, this is one of those work-intensive areas thats best left to others. It can be made so transparent that your customers wont even know that youre using an independent contractor. The cart companies can handle all operational aspects for you, including paperwork, credit card transactions, and frequently even fulllment. Many such rms are available, so do your research by searching for shopping cart online, and with colleagues. Just be sure that the administrator has secure servers so that personal information is handled safely. Youll know that youre in secure mode when you see https (not http) at the beginning of a URL and a little closed lock sign in the outer frame of your browser window. I like shopping cart rms that can provide afnity capability. This means that, once a customer of yours had made a purchase, their information is kept on le. During their next visit to your site, you can then advise the customer of a new release by an artist whose music theyve previously bought, or other music they might like based on prior purchases. Amazon.com, for example, is brilliant at this. And no matter whether you handle fulllment yourself, or if others do it for you, be sure to maintain a database of your customers. This le should have the customers name, address, email address, what they bought, and when. Youll be amazed how useful a marketing tool this can be.
Email
Email is another way to market your music, and its extremely inexpensive. In fact, it costs practically nothing except the effort to maintain a database and to send occasional messages. You can get names and addresses for such a le in a number of ways. First, be sure to retain the email address and pertinent data of each and every purchaser of music from your website (see section above). Additionally, its a good idea to ask visitors to your website for their email address and city, state and zip code of residence, perhaps attracting them with some form of incentive such as a free newsletter, sticker, poster, artist autograph, or even a sampler CD. Third, request email addresses from people who attend your artists performances by putting sign-up sheets or return-mail postcards on tables or near the door. When you post these email addresses to your database, include the name of the artist and the venue attended.
Its become common practice to establish and post a Privacy Policy Notice on your email sign-up page indicating that you wont sell or lease their name to others. Theres so much junk hitting peoples email boxes that folks wont want you spamming them, or giving their names to entities who might. This notice should also be on the email solicitation lists and postcards offered at live venues. Make effective use of the email addresses by occasionally sending out newsletters or information about new releases, and about artists who might be touring near where they live. This is an incredibly effective marketing tool that costs nothing except effort.
Chat Rooms, Social Networking, etc.

A useful way to promote your artists is via chat rooms, user groups, newsgroups, online bulletin boards, social networking (as mentioned earlier), YouTube, etc. Try to have someone on staff keep current on these things, occasionally posting good gossip or other news relevant to your artists and their music.
Online Music Stores

There are a great many of these, which are discussed in Chapter 12 The important point is that you should try to have your music available for sale in as many online locations as possible.
A Quick Take on Marketing

Create a Comprehensive Marketing Plan by Department. Sales _____ Publicity _____ Radio Promotion _____ Social Media Outreach _____ Music Sharing Websites _____ Advertising _____ Artist Tour Support _____ Independent Marketing Specialists _____ Video _____ Street Teams _____ Website _____ Online _____ Marketing Responsibilities Sales _____ One-sheet _____ Publicity Press Kits _____ Follow-up _____ Press Releases _____
Chapter 14 Post-Production Basics | 191
Chapter 14 Post-Production Basics

Post-production includes all the things you should do after youve shipped a release. There are many tasks that are part of this clean-up process, but its really just a matter of putting everything in proper order. Housekeeping, if you will.
Sample Service
Its good form to send sample CDs to everyone involved in the making of a project, whether they were promised or not. So be sure to send complimentary samples to the producer, musicians, engineer, graphics designer, illustrator, photographer, mastering engineer, and anyone else who receives a credit in the liner notes. They may not be expecting to receive anything, so it can be a very pleasant surprise that costs very little except a bit of time and some postage. And its a great way to express thanks for a job well done. I used to maintain a list of who should be receiving gratis copies during the recording and production process, and then made note of the date of such mailings on the production checklist (see chapter on Pre-production). I also found it useful to post to the production checklist the date promotional CDs were shipped to the distributors, and to people involved in the publicity and promotion effort. Its frequently necessary to track such information.
File CO Form for Electronic Filing or SR Form

For each title you release, its essential that you le a Form CO via electronic ling (or a Form SR via mail) with the Register of Copyrights in the Library of Congress. These forms protect your copyright for the recorded work what the (circle P) stands for in your copyright notice, and its unique packaging. You can ll out the form and le electronically for $35, but you must register the rst time you try to access the system; afterwards youll just log in. There is an electronic tutorial that can be downloaded as a PDF. Note that there are certain browser requirements, as mentioned in the tutorial. http://www.copyright.gov/eco/ http://www.copyright.gov/eco/eco-tutorial.pdf Alternatively you can le an SR Form, which can be downloaded as a PDF from the following website. Also, download a copy of Circular 56. It explains how to use the form, and contains valuable information about copyright law as it applies to sound recordings. http://www.copyright.org/forms/formsr.pdf http://www.copyright.gov/circs/
A person in the Business Affairs department might process these forms at some labels. In others, its someone in Production. At least be sure that somebody possibly even you takes care of it. This is vitally important because it helps protect one of your labels most valuable assets. Fill out the form, providing all of the information required. Then send it to the address below, with two sample copies of the CD (or best edition as specied in Circular 56 and Circular 7b), plus a check payable to Register of Copyrights for $65.00 (as of 2011). Note that the CDs will not be returned to you. They stay on le with the copyright ofce. Library of Congress Copyright Ofce 101 Independence Avenue, SE Washington, DC 20559-6238 Ask Business Affairs or your attorney if the recording is considered to be a work for hire. This has become a sticky subject of late so you want to be sure youre in compliance with your artists contract. (This was discussed in the chapter on artist agreements.) In some cases, youll type record label as employer for hire on Line 2a of the form. Circular 9, also available as a PDF le, provides additional information about works for hire. Note that many labels handle the date of rst publication (Line 3b) differently. I think the most pertinent date is the date that the release rst ships from your pressing plant to your distributor. Other labels use the street date. This is another case where you might check with your attorney. Its also the reason why you cant complete the form until the relevant date has passed. The next two pages are a sample lled-out SR Form as a guide to how it might be done in the most common circumstances. Compilations, being somewhat more complex, are also addressed in Circular 56. If you need additional help, call the Copyright Ofce at (202) 707-3000. You should le for copyright protection if youre also the publisher of the underlying works as well as the recorded performance. In this case, you can use the same Form SR and protect the written compositions and the performed work in a single document. Type carefully and cleanly, since what you put on the form will end up being duplicated onto special paper with a red and blue U.S. Copyright Ofce logo, and this will be returned to you as proof that the registration has been completed. It will also show the effective date of registration. Note that an original signature is required on Line 8 not a rubber stamp or other facsimile. If there are problems with your submission, someone in the copyright ofce will usually phone or write requesting clarication. The staff is very helpful and cooperative, and once youve done this a couple of times, each succeeding release becomes easier.
Protect Your Masters

As soon as a recording has completed mastering and quality control checks, and is ready for release, round up all the tapes and other media used in the process. This means all multi-track masters and disk drives, whether analog or digital, any accompanying computer disks that may have been used in mixing, and all other relevant materials such as DATs, musical charts, arrangements, etc. Be sure that each tape box, and everything else, is clearly marked with appropriate legends, track layouts, etc. These masters are an extremely valuable asset to any record label, and are a signicant part of its value and heritage. Their worth can increase greatly over time, particularly in the case of a project that becomes a hit, or has achieved other historic importance. For instance, Elektra has frequently used and remixed the original Doors multi-tracks for various reissues and compilations since they were recorded more than forty years ago. They were also remixed for surround sound use for DVD-Audio. If the masters were in poor condition or had been lost, these re-issues would not have been possible. All materials should be logged in a computer database so you know the specics about each reel or item used, and its exact location. Then you can easily have tapes pulled when needed, but be certain to update the current location of such reels in your database. And of course its essential that you see that they get returned to storage and that the database gets updated and is kept current at all times. A closet in your ofce or home is not secure enough or conducive to the long-term storage and maintenance of such valuable property. Tapes must be shelved vertically, in a secure place thats kept at the proper temperature and humidity. The Library of Congress recommends the following criteria for storage of recording media. For short to medium term storage, maintain tapes at a temperature between 6570 degrees at a relative humidity of 4550%. For long-term storage temperatures should be between 4650 degrees (no lower than 46 degrees due to binder lubrication needs), at a relative humidity of 2030% for magnetic tapes, and 4550% for all other items about the same as for ne wine. http://www.loc.gov/preservation/care/record.html I recommend that all original tapes, drives, and related materials be maintained off-site in a secure, climate-controlled location that specializes in the storage of lm and recorded media. There are quite a few such rms around. Ive found Iron Mountain, for example, to be among the more reliable. http://www.ironmountain.com/ You might also want to keep a copy or two of the master in the form of a safety tape. They dont have to be stored off-site, but should be in a locked, climate-controlled location. And they, too, should be logged in the database.
Production Files
Now, gather together all the production les. Be sure theyre well organized and clearly marked with the catalog number and/or whatever production control number you may utilize. Then le them in a secure but readily accessible location in your ofce. A locked le cabinet is highly recommended. Youd be amazed at how many times you may need to refer to them, even a year or two after release. And in some cases, they may be needed years after a project has been rst issued. For years after I left Elektra, I would get calls from their production staff requesting details about projects Id been involved with many years earlier. Not only had the scrupulously maintained production les been mislaid some time after they were shipped to New York in 1983, but they also were unable to locate the two sets of microlm backup that had been kept separately in the production and accounting departments.
Mechanical Licenses
Check that mechanical licenses have been received from every publisher involved in a recording. Publishers are notoriously slow in responding to licensing requests, so follow up on the stragglers. Then be sure that copies are supplied to the accounting department for royalty statement purposes. They should also be led in the production les referred to above.
Archive
Many labels neglect to maintain an archive, but Im a rm believer in such a resource. The archive should consist of at least ve or six copies of everything you publish CDs, cassettes, LPs, videotapes, DVDs, and such components as CD booklets and inlays, folders, J-cards, posters, marketing materials, catalogs, even giveaway marketing aids such as T-shirts and other swag. These items are frequently referred to and should also be maintained in a secure environment, such as a locked closet, with access limited solely to those who require it. If youre ever in doubt whether or not to archive something, do it!
Extra Inventory
Of course you should have copies of all the CDs, DVDs, and everything you release in a readily available location in your ofce where you mail such materials to press people or radio stations. Always keep a reasonable quantity on hand, particularly just after a new release, because youll need them as back-ups for radio stations and publications that say they didnt receive the rst copy sent.
Artist/Venue Sales
Your artists will probably want to buy CDs for sale at their performances. Most labels sell CDs to their artists for between ve and six dollars. These artist or venue sales can be included in SoundScans accounting if the label faxes the information to them. Remember, every sale helps! To do this, however, the label will have to have been in business for two years, and must report sales for more than one artist. Note that theres a $500 fee per year ($900 for 2 years) to report these sales. http://nielsen.com/content/dam/corporate/us/en/public%20factsheets/Soundscan/SoundscanUS-Sales-Procedure.pdf Most labels dont pay royalties to artists on their own venue sales because the artist will prot from the difference between the price you charge them and what they charge their customers. However, you should pay mechanical royalties when the artist is not the writer of the songs.
Royalty Accounting
Royalty accounting is one of the most complicated aspects of running a label. At many, its become a black art, using not only smoke and mirrors, but all manner of arcane methods. The object, of course, is not just to thoroughly confuse the artist, but to pay out as little as possible. Preparing royalties statements is probably the most challenging function of a labels accounting department, due in great part to the complexity of most artist contracts. Deals tend to be labyrinthine, with curlicues of different royalty rates and furbelows of costs that labels consider as being recoupable from the artist. The resulting maze of deal points makes for, at best, a difcult statement to prepare even when a label is completely honest and forthright. Because of the intricacies of most deals, in the case where a label may be less than honest, theres room for a lot of chicanery. A statement may not, for example, show the actual quantity of royalty units that it knows were sold, it may take unreasonable reserves against returns (not just the contractual percentage), it may delay reporting of foreign sales, and may take charges against the royalty account beyond those that may be contractually justied. And even when a label is honest with its statements, theyre frequently difcult to read and understand because theyre not laid out clearly or rendered easily comprehensible. In fact, theres very little well-written and moderately priced software available thats been specically designed to handle royalty accounting. However, larger labels might want to investigate one of the following before they decide how theyll handle royalty accounting: Royalty Review Council per their website deliver a turnkey outsource royalty accounting solution... for content owners and distribution of creative works. http://www.royaltycouncil.com/
Royalty Share has a web-based system for royalty management that might be useful. http://royaltyshare.com/technology-solutions/ Note that Im not specically recommending the above choices because needs vary. They may be too complicated or costly for a small start-up, so be sure to thoroughly investigate the software, its methodology and function, technical hardware requirements, and your labels needs before you make your decision. In addition, some royalty software may work only on Wintel PCs. In fact, I know of some labels that use Macintoshes exclusively, but use a Windows partition on the Mac that has to handle royalties. Small labels might consider use of a spreadsheet program such as Excel or a relational database like FileMaker Pro (both programs work on Macs and PCs) to calculate and prepare statements. However, no matter which software is used, its extremely complicated, with lots of room for honest error, no less for the rendering of dishonest statements. In a case where not much is at stake, some labels assume that a royalty recipient wont spend the money to send in a qualied auditor, and frankly, there arent a lot of CPAs knowledgeable in the intricacies of recording industry accounting. Therefore the label may bury untold errors when they prepare their statements. Where a lot of money may be involved, an artist, publisher, or publishers representative, such as the Harry Fox Agency, may suspect theyll nd sufcient accounting errors whether honest or not to justify the rather high cost of an audit. One former major label CFO purposely placed relatively easytond errors in royalty statements so that an auditor would nd them rather than other betterhidden adjustments. Who customarily receives royalties? First, there are the artists, who may be an individual, a duo, or a group. The recording agreement, which artists or more likely their attorney or manager negotiates with a label, will clearly specify circumstances as to how and when the artist will be paid. These negotiations can get quite heated as each party tries to make the best deal possible. Points that are argued the most are royalty percentages, cash advances, recording funds or budgets, escalations, reserves for returns, free goods, and what costs the label may recoup. Such recoupable items are not just the cost of making a recording, but may also include tour support and videos, as well as part or all of independent promotion and/or publicity. Independent producers may also be royalty participants. In such an event, the producers royalty is usually deducted from the artists share. The label will then make a direct payment to the producer on behalf of the artist. This protects the producer and ensures that he receives his money.
Labels frequently license a song, a track, or an entire album from another label for a compilation, soundtrack, or re-issue. The licensor of this music will then be a royalty participant according to the terms of the negotiated license. Finally, almost all recordings contain copyrighted works. A common exception is classical music written by long-deceased composers. The publishers (not customarily the writers) are supposed to receive mechanical royalties for each song or copyrighted work. (The publisher will in turn pay the writers their share.) A tribunal appointed by Congress sets the statutory rates, which in 2011 is $.091 per song of less than ve minutes, or $.0175 per minute (a bit more than one and a half cents). This rate will probably be increased early in 2012 but had not been set at the time of writing. The new rates will be posted on the Updates page of this books website when theyre available. http://www.cgsrc.com/updates.htm Most publishers mechanical licenses state that royalties must be paid on all units manufactured and sold. Very few labels comply, and pay only for units shipped less a reserve for returns, thereby not paying for inventory that may be in the pipeline and which was not in fact sold to consumers. Frankly, I dont nd this unreasonable. Some labels base their statements on SoundScan data. Its standard practice that labels render royalty statements to artists, producers, and licensors semiannually, ninety days after the close of a calendar quarter. Thus you might be mailing these statements (and possibly checks) on March 31st and September 30th. Publisher statements, on the other hand, are usually rendered four times a year, forty-ve days after the close of a quarter or on February, May, August, and November 15th. Where possible, try to negotiate with your smaller, and possibly more-exible publishers, to let you render statements semi-annually rather than quarterly, halving the time and cost of preparation for your accounting people. This is particularly true in the case of small, artist-owned publishing companies. I believe its in the best interest of labels that they do whatever is possible to render honest and clearly understandable royalty statements. And if you keep your artist contracts simple, itll be easier to calculate and pay royalties, and for the artist to understand the statements. Samples of a typical Artist Royalty Statement and a typical Mechanical Royalty Statements are on the following pages.
SAMPLE ARTIST ROYALTY STATEMENT

YYYY Records
11111 Main Street Anywhere, CA 99999
Date: 3/31/12 Royalty Statement for: The Doorstops 2345 Hall Row Frame, CA 99988 For Period 7/1/11 through 12/31/11
Catalog Number 98765-2 CD Sales Domestic CD Returns Domestic
Title Open 7155 units -901 6254 units 1000 units 5254 $15.98 10% none $8,395.89 $4,560.00 (1/1/07 through 6/30/07) 2000 units $3,196.00 -$7,335.45
Net CD Sales Reserve for this Period CD Total Royalty-bearing Units Royalty Base Price Royalty Rate Royalty Deductions
Royalty Due this Period CD Online Sales Reserves Prior Period
Liquidation of Prior Reserves Balance from Prior Statement
Total Due Artist Payment to Artist

2008, 2012 Keith Holzman Solutions Unlimited
$8,816.44 $8,816.44
SAMPLE MECHANICAL ROYALTY STATEMENT

YYYY Records
11111 Main Street Anywhere, CA 99999
Date: 2/15/12 For Period 9/1/11 through 12/31/11
ABCDEFG Publishing 99 Alphabet Place Anywhere, NY 99998
Catalog Number 98765-2 Song Title Though the Door The Other Side And Back The Return
Artist/Title The Doorstops "Open" Composer Wood Steel Glass Iron % Owned 100 100 50 25 Rate 0.091 0.091 0.091 0.091 Net CD Sales 4120 4120 4120 4120 Net Online Sales 1945 1945 1945 1945 Amount Due $551.92 $551.92 $275.96 $137.98 $1,517.77
Total Album Mechanical Catalog Number 98767-2 Song Title I'm Free You're Not the One It's the Other Artist/Title Suzy Troubadoura "Two" Composer Troubadoura Troubadoura Troubadoura % Owned 100 100 100 Rate 0.091 0.091 0.091 Net CD Sales 3456 3456 3456 Net Online Sales 1227 1227 1227 Amount Due $426.15 $426.15 $426.15
Total Album Mechanical Total Due Publisher this Period Payment to Publisher
2007 & 2012 Keith Holzman Solutions Unlimited
$1,278.46 $2,796.23 $2,796.23
Post-Production Check List

Send samples to people connected with the project. _____ File the CO Form online or mail the SR Form. _____ Gather and protect all project masters. _____ Check production les for completeness and secure them in a safe place. _____ Check that all mechanical licenses have been received. _____ Place copies of appropriate materials in the Archive. _____ Make sure that accounting has all the necessary royalty data. _____ Deal Terms and Sales Information. ____
Chapter 15 Follow-up Marketing | 203
Chapter 15 Follow-up Marketing

Following up on the marketing of your releases is essential to the success of your label. Every single element of the marketing plan must be explored and developed thoroughly by those charged with their respective responsibilities, whether its by in-house staff or external freelance specialists such as public relation rms, independent promotion people, etc. And as head of the label, its ultimately your responsibility to see that everyone is properly pursuing their tasks and the labels goals. You need to be actively connected to be sure each person is following through on decisions made during the development stage. But, as you progress, if you nd that a particular strategy isnt working out as originally planned, be prepared to modify it and go in another direction. The marketing plan is merely a road map. If you come to an obstacle in the road, be ready to veer off onto a side route, just as long as you meet the ultimate destination success of the project!
Publicity
Are you starting to see a lot of newspaper and magazine articles written about your project? Are these articles in the publications initially targeted in your marketing plan? Are your artists getting interviewed on the radio? If your answer to any of these questions is No, then be sure that your publicity department or independent public relations rm is doing its job. Gentle prodding should encourage them to do what theyre supposed to do, and if that isnt sufcient, then push harder. Be sure they sent out press kits with CDs to the targeted publications. Then check that they followed up with the editors and writers encouraging them to print articles or interviews. It usually takes a lot of bird-dogging, but persistence and good music will usually result in some form of success. If your answer is Yes, be sure to let your distributor and all pertinent others know about the good news. Positive reactions help create more positive actions.
Airplay
Very much the same kind of pressure should be applied to the promotion people working your music at radio. Be sure that theyve gotten CDs to the initially targeted stations, and that theyve done everything possible short of payola to get music directors to broadcast your release. And be certain that when you start getting airplay in particular regions that the promotion people
convey that information to stations in other areas, spreading the word that your music is getting played, and encouraging additional stations to add your music to their lists. Always try to increase spin rotation to implant the music in listeners ears, and request that DJs let people know the name of the act theyre hearing. The promo staff should ask that each play is not only announced before it spins, but that its back-announced as well. Repetition of play and the artists name creates recognition in the minds of the public, and eventually sales of CDs and downloads. Of course, this is usually up to each stations protocol, but it doesnt hurt to ask. Note that some stations post their playlists on their websites.
Artist Tours
Presumably your marketing plan called for a lot of artist touring. Is your artist getting out there and are the performances going well? Are audiences being attracted to the performers and their music? Are CDs selling at venues and nearby record retailers? Are DJs and reviewers being invited to shows, and are they responding positively? Are the artists doing radio interviews prior to live performances? And are they getting reviews in the local papers afterwards? Assuming the answers are Yes, then this is the time to add more venues to the schedule. Its important that you keep artists working on the road, because the more shows an artist does, the better they get, and the more music youll sell. But if there are any No answers to the above questions, then quickly determine why and x them. If musicians are weak on stage, then have them woodshed until they inhabit their material. Of course, you should have known about this before signing the act, and either not contracted with the artist, or solved performance problems before release of the CD. As I wrote in the acquiring artists chapter, one of the criteria in signing an artist is the ability not only to record, but also to perform live in a thrilling manner. If artists are not selling CDs at gigs, nd out why and ask them to do so. The only time I discourage artists from selling CDs at performances is if theres a well-stocked retailer close to the performance venue, since its not a good idea to be in competition with a valued retailer. But if theyre out of stock, or havent even carried the title, then the artists should try to sell CDs at their gigs. On the other hand, be certain that nearby retailers have sufcient stock prior to the performance date, and even invite them to the venue. Its a great way to win friends and encourage good product placement in stores. Be sure that local print reviewers and key radio personnel are invited to concerts, and try to get them to do artist interviews prior to the performance. If you subsequently learn that one of these tastemakers didnt like a show, nd out why so it can be improved.
Always try to present your artist in the most positive light, xing what needs to be xed, and building on their unique qualities.
In-Store Performances
As mentioned earlier, artist in-stores can be very effective. They allow potential audiences to see an artist perform in a simple, relaxed fashion. Artists frequently use acoustic rather than electric instruments because most stores have little space for live performance. The informality helps an audience see the musicians up close and personal, and enhances the sale of CDs while the artists are there and can sign autographs.
Artist Development
A lot of what Ive just been discussing falls under the name of Artist Development. Im a strong advocate of artist development, whether done by someone on staff as a sole responsibility, or by the label head or marketing person as an additional task. What youre trying to achieve is the building of artists careers over the long term. This was common in medium to large labels some years ago, but is almost nonexistent with todays multi-national majors who tend to promote their latest hot artists whose careers rarely last beyond a second CD. And I think its remarkable that many artists who started out twenty or more years ago remain successful today because their labels and their management worked hard to build lasting careers. Think of Neil Young, Eric Clapton, Steely Dan, Paul Simon, Emmylou Harris, Bonnie Raitt, U2, B.B.King, and Dolly Parton all highly successful over multiple decades. Its more than simply talent. It was lots of hard work on their part and the part of their support teams. It was many months on the road each year, followed up by recurring releases of inspired new recordings.
Advertising
Ive always discouraged advertisements for new or unknown acts prior to the release of their CD. Its just wasted money. However, when you start achieving some level of success, very limited value. For example, if an artist has had a successful gig in a town and has substantial airplay in that town, then radio spots and small newspaper next local performance can be valuable. Nevertheless, dont spend a lot of incrementally as you build the artists career and increase sales of his CDs. advertising might be of gotten good reviews and adds touting the artists money on this, but do it
Video
Should the marketing plan call for production and release of a video, be sure not to do so prematurely. Video production can be costly, and video promotion is a signicant amount of work. Make one only when youre certain that stations will play it, when the artist has started to achieve substantial sales, and has received enough notice in the press and at radio to warrant the expense. And be certain of your timing, so that a video is not released too early in the trajectory of a release, or too late when the buzz youve created has died down. Then get as much mileage out of it as possible. However, considered purely as a marketing tool, video especially if made inexpensively can be extremely effective. YouTube is a great location for good performance videos and artist interviews, not to mention your own website.
Update the Marketing Plan

Follow the budget, actions, and ideas that were in the marketing plan established months earlier, modifying it to reect events as developing situations warrant. The plan is a guideline that was written in a word processor and spreadsheet, not in stone!
Website & Online Activity

Im presuming that your website was launched prior to a releases street date and that information on the site has been kept current. Details of every product should be available, including artist interviews. Good reviews should always be posted. Artists touring itineraries should be listed and updated frequently. Most important, there should be a way to allow visitors to the site to listen to short music samples that can be streamed but not downloaded. Purchase information should also be available whether from the labels own website, or by a link to where the music can be bought. Make it easy for a new fan to listen to, and buy your music whether its a CD or a digital download. And dont neglect Facebook, Twitter, and other outreach efforts.
Keep Everyone Informed

Its vital that all of your marketing staff and outside support people keep everyone involved in the project fully informed of developments. This means the label staff, the distributor, the artists management and agent, and each other. Of course, they should hear all the good news about great performances, should see all the good press whether of the CD or live shows and know about all the airplay the project is receiving, with details of station location, track name, and spin rotation. And if something goes wrong, be particularly sure that all relevant people are informed. For example, if a performance somewhere gets cancelled for whatever reason ood, illness, etc. then arrange to
cancel or preferably reschedule interviews, etc. The same would apply if youve taken advertisements supporting a gig. Cancel the ads, reschedule them, or repurpose them. (Of course, if youve followed my advice, you havent scheduled any ads at this early stage of a projects development.) Denitely, one of the most important things you should do is keep your distributors, retailers, and street teams up to date, particularly about good news. Be certain that they all know when an artist is doing live appearances, that the accounts are supplied with the latest tour information, and that retailers have any available support materials such as posters and iers. Most important, be assured that the retailers have sufcient inventory in all regions where theres a buzz happening either because of airplay, live performance, or print reviews. Also, be sure that distributors and their accounts are aware of the specics of airplay success by track, region, and spin rotation. Its a good idea to regularly send copies of all major press clippings whether interviews, CD reviews, or performance reviews to distributors and their key accounts via email. They all count as positives and help keep your artists name at the front of their consciousness. After all, it doesnt hurt to toot your horn a bit its just plain good business!
A Quick Take on Follow-up Marketing

See that all elements of the marketing plan are being followed: Publicity _____ Airplay _____ Artist Touring _____ In-Store Performances _____ Artist Development _____ Advertising _____ Video _____ Website _____ Revise and update the marketing plan as necessary. _____ Keep everyone informed. _____
Chapter 16 Ancillary Income | 209
Chapter 16 Ancillary Income

Most labels focus the greater part of their efforts on marketing their music primarily through traditional brick and mortar retail and digital download sites, all too often neglecting other potential sources of revenue. So just what is ancillary income, and how can a label earn some? What are the additional sources of income that you should be looking for? And what can it mean to the success of your label? Ancillary income is earned by making the most out of a labels existing assets. Such earnings might come from, but are not limited to: International Distribution and/or Licensing Music Publishing Online Sales Downloadable Music Licensing to Films, Television, Commercials Non-Traditional Retail Special Compilations Sponsorship & Underwriting Record Clubs AARC SoundExchange
International Distribution and/or Licensing

You can sell your music outside the United States, either by making distribution deals territory by territory, or by granting licensing rights to selected overseas companies known to be honest. I prefer distribution deals where you ship nished, packaged CDs to your foreign accounts. That way, you know exactly what youve sold and what you should get paid for. Such an approach may not yield as much income as you might expect based on your experience with domestic distribution, but it helps prevent under-reporting of sales. The overseas company has to deal with freight and import duties, for example. But any reduced income will be offset somewhat by lower artist royalties. This if, of course, assuming that you have a standard provision for reduced rates for foreign sales in your artist and publishing agreements. Licensing, on the other hand, is a license to steal if you grant rights to less than scrupulous companies. Be sure you know who youre dealing with by getting positive recommendations from trusted colleagues. And be sure to get substantial advances and guarantees up front. The reason is that youll never really know just how many disks a licensee may have actually manufactured and sold. Its frequently a lot more than may be shown on a royalty statement. And if you do decide to go this
route, endeavor to license a substantial portion of your catalog. In other words, dont let a licensee cherry-pick selected titles. Alternatively, you might be able to keep somewhat greater control with a hybrid or variant arrangement than with straight licensing. Using this approach, you sell nished CDs to your foreign distributor/ licensee at cost or a bit higher, say 10% more to cover your cost of tying up cash by carrying inventory. Subsequently, youll receive a negotiated per-unit royalty as product is sold each month or each quarter. This smoothes cash ow for your international afliate yet helps keep him honest because youll always know exactly how much product you shipped for subsequent sale.
Music Publishing
As discussed in Chapter 6, you should also contemplate establishing an afliated music publishing company. Not all labels do this, either through lack of expertise and experience, or insufcient time to deal with it. If youre facing either or both of these hurdles, consider having a qualied publisher handle the administration and licensing of your copyrights. Theres considerable money to be gained that you shouldnt leave on the table. And as your catalog grows, so will publishing income. In fact, over a period of time, publishing could yield greater income than record and download sales, and it enjoys better copyright protection.
Miscellaneous Fluff
There are many other items you can sell in addition to music products. T-shirts, caps, coffee mugs, etc., with your logo or an artists likeness on them, are great gift items that can generate additional income. There are many suppliers for such items. You can nd them by searching for promotional products using Google.
Online Sales
Many labels sell CDs, digital downloads and other catalog items such as DVDs, T-shirts, etc., on their own websites, but too many others dont. One major benet is that youll receive the entire suggested retail price, rather than the lesser amount youd get by selling via a third party or through a distributor. Parenthetically, as I wrote earlier, I dont think its a good idea to grant exclusive online (or downloadable) rights to a distributor, even though some request this right in their contracts. I urge that any such deals be non-exclusive.
Shopping Cart software is now available in various forms, so selling from your website has become relatively simple. This works most smoothly if you have the capability to handle your own fulllment. If you dont want to do fulllment, then consider generating a link to Amazon.com or a similar company, where youll at least pick up a small referral fee as an associate. Any approach is valid, so long as youre getting your music sold.
Downloadable Music
As I wrote in Chapter 12, this is primary income not ancillary. Its vital that you offer downloadable versions of all your music on your own website at a reasonable cost (between 75 and 99 cents) as well as with iTunes and other responsible companies. Do it in a way that doesnt inhibit the ability to burn it onto a CD-R if the download has been paid for. Nor should you set a limited time frame for how long the track remains viable on a customers hard drive. Both of these were current practice of some major labels just a few years ago.
Licensing to Films, Television, Commercials, Etc.

A great deal of supplemental income can be obtained through master use licensing of your music tracks to feature lms, television shows, documentaries, and radio and TV commercials. Feature lms are particularly advantageous because of the additional incremental usage fees for soundtrack recordings, subsequent television broadcast, and home video. You can collect for every one of these rights as each subsequent milestone event is reached. The dollars are usually negotiated in the original contract, occasionally with supplemental amounts that are projected on a sliding scale based on box ofce success. Television commercials are not only lucrative, but can also provide valuable wide-ranging exposure for your artists. And, in any of the above cases, if you also control the publishing, you will be able to receive synchronization license fees for the same song. Such synch licenses are generally made for the same dollar amounts as the master use license, so if you own the publishing, youre likely to double the income for the usage of a single track. The Film/Television Music Guide in the Recommended Reading section might be a valuable aid for placing your material.
Non-Traditional Retail
Depending on the type and genre of the music you release, consider selling to lifestyle retailers. Specialty-clothing stores, audiophile shops, surfer shops, and even hair salons may be potential customers. There are most likely many other outlets that can protably sell your music, and you may be able to obtain substantial income from this for relatively little work.
So have your entire staff, and even your friends, get out there and see what stores might be appropriate for your music and may be persuaded to carry it. Try to have them display your CDs in a prominent place, such as close to the cash register. Youll probably have to sell on a consignment basis so the accounts wont be out of pocket and thereby wont have to take any risk. Moreover, Ive observed that a buzz started at an alternative retail outlet has frequently crossed over to create signicant mainstream record store and online sales.
Special Compilations: Retail Premiums for Specialty Outlets

Im sure youve seen distinctive compilation CDs in Starbucks, Williams-Sonoma, Whole Foods, or Pottery Barn of music that appeals to these companys customers. The Special Products divisions of the majors create these compilations and usually supply their clients with turnkey CDs including everything (songs, royalties, CD, and packaging) for a set price. So depending on the nature of the music in your catalog, think of other chain retailers or companies whose products and clientele closely complement your music. For such projects, you should be able to make special deals with your artists and their publishers, and frequently even your suppliers, to hold down costs in order to achieve a reasonable prot for all involved. This becomes a lot easier to achieve once youve developed a sizeable catalog of good music.
Sponsorship & Underwriting

You may be able to persuade a company to sponsor an artists tour. Look for a business whose publicity and image matches the tenor of your artist and his music. This takes a lot of work to achieve, but it translates into a lot less money youll need to spend to keep your artist on the road. And, as a result of a successfully sponsored tour, you should be able to sell more product to a delighted public. Additionally, the sponsor will frequently buy CDs from you to use as gifts for clients and associates. You might seek such sponsorship from a large specialty company in your, or your artists, hometown or region. I also recommend that you try to discover and create other special tie-ins between your artists and appropriateproducts. You could also try to get underwriting for certain projects, such as from the National Endowment for the Arts (NEA). This is pertinent primarily for classical music, particularly contemporary composers, but also to jazz, folk, and indigenous artists. NEA grants must be applied for by the artist, and are given to them for a specied recording project. The label derives benet because the cost to make the recording is wholly or partially defrayed by the grant. http://www.nea.gov/
Bonus Benets
An additional source of income is the Alliance of Artists and Recording Companies (AARC), a nonprot organization that was formed to distribute royalties to recording artists and owners of sound recordings (usually record labels) as a result of the Audio Home Recording Act of 1992. The money they collect and distribute comes from manufacturers of digital audio recorders and blank disks and tapes as compensation for lost sales due to home taping. You should le an application with this organization because theres something to gain and nothing to lose. Forms can be obtained from their website. http://www.aarcroyalties.com/new/join.html Another source of virtually automatic income, however small it may be, is SoundExchange. This non-prot, quasi-governmental agency is responsible for taking advantage of the accuracy and efciency brought by modern technology. SoundExchange licenses, collects, and distributes public performance revenue for sound recording copyright holders within such digital channels as cable, satellite, internet radio, and web cast transmissions. http://www.soundexchange.com/ The Copyright Ofce recognized the benets of SoundExchanges administration of these royalties, and appointed it as the sole administrative entity for subscription servicesroyalties. SoundExchange is a benet to both indie and major labels as evidenced by SoundExchanges membership roster including more than 20,000 artists and 2,500 independent labels. These member companies understand the economic efciencies and benets of the cost-sharing associated with administering royalties. You can join by obtaining and lling out a few documents that are available on their website in PDF form. It costs you nothing, and youve got lots to gain, particularly as web casting and other forms of digital conveyance proliferate and thrive.
This doesnt pretend to be an exhaustive list of ways to earn additional income, but one or more of the above ideas might make the difference between your having a protable or unprotable year. As much fun as the traditional music business can be, do explore these supplementary non-traditional income-producing techniques.
A Quick Take on Ancillary Income

Get the most out of your assets by taking advantage of as many of the following as possible: International Distribution and/or Licensing. _____ Music Publishing. _____ Online Sales of miscellaneous merchandise such as T-shirts, etc. _____ Downloadable Music. _____ Licensing to Films, Television, Commercials. _____ Non-Traditional Retail. _____ Special Compilations. _____ Sponsorship & Underwriting. _____ AARC. _____ SoundExchange. _____
Chapter 17 Its a Wrap Almost | 215
Chapter 17 Its a Wrap Almost

By now, youre working hard on your rst release. And, if youve been thinking ahead, youll be well into the process of your second and succeeding follow-up projects. As Ive emphasized throughout this book, planning ahead is one of the keys to success in any business, and though it appears the record industry is weak in this regard (and for many labels thats indeed true), there are others whove had much success because theyve not been caught unaware by the calendar, or the vicissitudes of business life.
Planning Your Next Releases

Although this section comes at the end of the book, in actuality the planning for your second and later releases should have started well before you nished recording the rst project. Some start-ups wait until the rst project becomes either a success or a disaster (or somewhere in between) before they start dealing with another project. Thats a mistake! By the time you enter the studio with the rst project, you should have a pretty good idea of which artist you wish to record next. In fact, its ideal to have the artist agreement negotiated and signed, and be well into the planning stage for this second project, when you begin to record the rst. You might even be well into signing and planning the third and fourth projects by this time as well. All this assumes that youve carefully planned well in advance, and have secured sufcient funding to keep you in business for quite a long time ideally no less than two to three years, and hopefully even longer! (This was discussed in detail in the business plans chapter.) In any event, you should be well on the way to planning the marketing of the second and third releases before you even ship the rst. By doing this, you ensure an orderly ow of releases, which is not only good for the label, but also for your distributor and retailers. They like to know that a new label is not going to be a one-shot venture, and that new product will continue to ow at frequent intervals. My suggestion is to try to ship your second title three to four months after your rst, with the third following another three to four months after the second. In your rst year, try to publish at least three or four releases, and in the second year, anywhere from four to six with an even ow of at least six to eight new titles each year thereafter. In a few years, you will have built up a nice little catalog, and its steady and continual catalog sales that keep a label alive by generating respectable cash ow.
Crisis Management
What is crisis management? Sometimes called contingency planning, this is what you have to do to stay in business after unexpected circumstances occur and things have gone to hell be it a re, earthquake, tornado, ood, catastrophe, or terrorism. Its putting into effect the prior planning youve done should a crisis occur. And dont think it cant happen to you. Remember Hurricane Katrina? I still recall the aftermath of a severe Los Angeles earthquake in January 1994. I walked into my ofce in Santa Monica that day at around 8:30 a.m. only to nd a complete and utter mess. File cabinets had been thrown down, many twisted out of shape. The majority of the computers and monitors had been tossed onto the oor. (Amazingly, most of them worked when power was restored thanks to the ruggedness of Apple Macintosh designs; the PCs hadnt fared as well!) CDs and cassettes were all over the oor of the stock room. Paper supply cabinets had also been tossed to the oor, and paper was everywhere! Luckily, no glass had broken and we were structurally intact. Electricity existed in only part of the space. Telephones, because they were digital, were not working for lack of electricity, and we couldnt even get a dial tone on the emergency analog phone. Cell phone frequencies were clogged or barely functioning. When phone service was restored, we talked to everyone on staff that we could reach to check on their well-being, and requested they try to make it to work the next day. Since many freeways were down, it took some staffers three hours to get in. Others lived close enough to bike to work. Some brought their kids, who were a great help in straightening up the ofce space, including arranging the CDs and putting them back in their cartons. Luckily, a nearby pizza place was functioning so we were able to feed everyone. The following sections cover what you need to do to prepare for a similar unexpected incident.
Personnel
Be sure you have up-to-date, comprehensive contact information for everyone on your staff, including interns and freelancers, with a plan in place as to how to reach everybody in times of emergency. This list should be set up with as much information as possible so that you can use whatever postcrisis communications capability may be available. If the phones dont work, email might possibly function, but with power outages email may not be an option. And since most of us dont have a ready supply of carrier pigeons, you may have to rely on cars or bicycles. In a large company, the easiest approach is to develop a phone tree. For example, have the most senior person contact the department heads, whose responsibility it is to contact each and every person who works under them. You can rene this further, based on the size of your label.
Be sure that all key personnel have copies of this contact list as well as a procedures memo that states where people should assemble in the event they cant get into the ofce. In fact, encourage the staff to call their immediate supervisor to nd out if the company will be functioning, and where and when they should meet. If communication is dicey or just not available, then an arrangement should be made which is based on adjacency. In other words, the most senior person in a neighborhood would walk, bike, or drive to the next nearest person in order to ascertain the well-being of the employee, and to give out information. This info would include whether and how the company will be operating over the next many days, stating the alternative location if there is one, as well as materials or equipment needed, etc. Continue on down the line, either as a round robin, or through other pre-dened methods.
Infrastructure
Space
If you think your ofce or primary place of business may not be available to you, whether for a few days or indenitely, youll need to have a backup plan in place for another location. Perhaps youll work out of a conveniently located hotel, your living room, or a part of another staffers home which may be more centrally located and accessible to the most essential personnel. If possible, allow for additional alternate locations in your plan.
Equipment & Services

Be sure to have sufcient equipment and services available to support your key operating staff. Youll need all of the following, and dont forget extension cords, lights, etc. Furniture Based on the size of your essential staff, plan as to how youll house them with sufcient worksurface space. It may be folding chairs and tables, or empty cardboard cartons that can be pressed into service. Communications If phone systems are temporarily inoperative, try to rely on cellular phones but only for essential conversations. However, under certain circumstances, cellular transmitters may be incapacitated or temporarily non-functioning. Consider reasonable alternatives, short of smoke signals. Computer Hardware All reachable staff with company-owned portables or laptops must make them available. Other key personnel who have their own laptops should be requested to bring them, even if theyre not compatible with the ofce operating system.
In your backup space, have several Ethernet hubs and sufcient cables available to help you connect equipment. Otherwise, youll have to resort to sneaker-net, using thumb drives, or other removable media. Computer Software Prior to any crisis, be sure that all important and essential business programs have been installed on the laptops of people who may need them in the event of an emergency, and that theyre kept up to date. Printer, Copier and Fax Have at least one of each available in your backup space. The printer should be Ethernet or Wi-Fi capable so all who need this can share it. Internet Access You may have to rely on modems and phone lines (rather than DSL, T1, or cable) once telephone service is re-established. Mail & Courier Service Find out if the Post Ofce, UPS, FedEx, etc., are functioning, or how soon they expect to be back in business.
Systems
Use the most recent backups of all your essential accounting and operating data and databases, etc. You do have backups, dont you? And will they be readily accessible to you in an emergency? Planning for this is essential, because as likely as not, someday youll need them; perhaps it wont be during a crisis but when key les have somehow become corrupted. You might look at the myriad of backup information available on the web. Then copy your best and most appropriate backups onto the laptops of those who will need them, and resume work. But be careful how you maintain these newly updated les so that they can be reloaded onto your corporate computers when youre able to get back into your ofce. Besides software, youll likely have to reorganize any available staff, reassigning responsibilities as necessary in order for the company to continue to function. Occasionally emergencies occur during work hours when youre in the ofce power outages, for example. So dont forget to prepare for this. For instance, be sure that electronic door locks can be opened manually. Also, keep a battery-operated radio available and a few ashlights (checking their batteries frequently). In addition, keep sufcient extra petty cash on hand to be sure people have enough money for food and transportation.
Its also a good idea to have uninterruptible power supplies for all essential computers and servers. If theres a power failure, the built-in batteries will allow sufcient time to save your work and shut down the computers.
Ive made only a few, elemental suggestions here. Hopefully itll help you think about what youll have to do to protect your own business and your staff. Theres a lot of informative material available on the web, so I encourage you to dig into it, read it thoroughly, and then come up with a crisis management plan that works for you.
Possible Exit Strategy

Most readers will have started their label because of a love of music and a desire to get it disseminated to the public. However, a few may have also gotten into this hoping to strike it rich. However unlikely this may be, it is possible! So how can you reap the rewards of starting and building a successful record label? First, you can sell outright to the highest bidder. As improbable as it may seem, its not only possible, but has been accomplished many times. Many rap labels that were started on a shoestring have been sold to one of the majors for multiple millions. In other cases, owners who wished to stay involved have sold their labels to a larger entity, but with a guarantee that they could continue to run the company for a specied period of time. Some entrepreneurs left when their contracts were up, but others have continued to run their labels for many years after being acquired. Owners of other start-ups that became very successful continue to run their labels, but have sold a signicant portion of shares to independent investors or investing syndicates. If you exit and how is really up to you, should that be your goal. Id like to think, however, that youre not in it just for nancial rewards but that youll want to continue to record and release great music for many years to come.
Manage for Success

If youve read this far, youve gained a pretty good idea of how I think a start-up label should operate. As a reminder, here are some of the key points to managing your label for success. 1. Always plan ahead think about what comes next and what comes after that. 2. Be sure to raise sufcient capital so that you can remain in business for a couple of years, despite periods of slow sales or delays in getting paid. 3. Do your homework for all aspects of the label; for instance, thoroughly research any genre of music youre considering getting involved in. 4. Before you think about signing any artist, see them in live performance to ensure that theyre exciting to watch and hear. Also, be sure theyre willing to tour extensively in support of their release. And it helps a great deal if they have professional management. 5. Budget everything carefully, then keep close track of expenses to be sure youre staying within the budget. 6. Prepare extensive marketing plans for each release, and act on them. 7. Keep your artist contracts fair and uncomplicated. 8. Treat artists and employees and for that matter, everyone else with respect. 9. Work with the very best professionals attorneys, accountants, and consultants. Its cheaper in the long run, and youll learn more. 10. Keep track of all details particularly pre- and post-production. 11. Back up all vital computer data daily, and less essential data at least once a week. 12. Keep up to date with the latest information by subscribing to my free email newsletter Manage for Success, I suggest you do so now by emailing: mailto:join-solutionsunltd@mh.databack.com/ or by visiting my website and clicking on the subscribe button on most pages. Note that I will not lend, rent, or sell the names on this list to anyone. Its used only for my newsletters or occasional special messages from me. http://www.HolzmanSolutions.com/
Updates
Finally, I suggest that you check this books website from time to time for updates or corrections. http://www.cgsrc.com/updates.htm
Concluding Checklist
Plan your next releases. _____ Draft a Crisis Management Plan. _____ Personnel. _____ Infrastructure. _____ Systems. _____ Consider planning an Exit Strategy. _____ Check for updates to this book. _____ Manage for Success!
Recommended Reading | 223
Recommended Reading
This is a guide to what I think are some of the best books and publications about the music business, and business in general. Many of these books can be purchased from local bookstores, or online from Amazon.com. http://www.amazon.com/
Music Business Law

All You Need to Know About the Music Business, 7th Edition by Donald S. Passman. This is an absolutely essential guide to the legal and nancial aspects of the record industry. If youve got time to read only one book about the business, this should be it. Passman has a relaxed, conversational style of writing about what can be a very dry subject, and he updates the book about every three years. I suggest you buy your own copy and not borrow it from the library because youre likely to be referring to it frequently. What Theyll Never Tell You About the Music Business: The Myths, the Secrets, the Lies (& a Few Truths) Revised and Updated by Peter M. Thall. This is one of the newest of the legal books and is intended primarily for artists considering signing with a label, but it has great insight into the signing process. Legal Aspects of the Music Industry: An Insiders View by Richard Schulenberg. This book covers almost every aspect of music business law, particularly contracts, breaking down legalese into readily understandable language. Music, Money, and Success: The Insiders Guide to Making Money in the Music Business, 7th Edition by Jeffrey Brabec and Todd Brabec. Intended more for songwriters, composers, and those interested in music for lm and television, this is a good supplement to Passman. The Brabecs update it every couple of years.
Music Industry
The Plain and Simple Guide to Music Publishing by Randall D. Wixen. Ths is probably the clearest explanation of how music publishing works. Indie Power by Peter Spellman. This is a good complement to The Complete Guide. Spellman approaches the subject from a somewhat different angle that I do, and he has an interesting outlook on the Indie label scene.
Indie Marketing Power (The Resource Guide to Making Money in the Music Business) by Peter Spellman. This is an excellent companion to the above that suggests up-to-date approaches to marketing music. Indie Business Power by Peter Spellman. All three Spellman books are available at the following site: http://www.MBSolutions.com/ The Musicians Handbook, Revised Edition by Bobby Borg. Directed more to musicians than label owners, Borgs book has many helpful suggestions about building a career in the music business. http://www.bobbyborg.com/ How to Promote Your Music Successfully on the Internet by David Nevue. An excellent source of upto-date information on internet marketing. Theres a recent 2011 edition. http://www.musicbizacademy.com/bookstore/htpromotemusic.htm Guerilla Music Marketing Handbook by Bob Baker. http://www.bob-baker.com/buzz/index.html This Business of Music Marketing and Promotion (Revised and Updated) by Tad Lathrop
Music Industry Biographies and Histories

Fire and Rain: The Beatles, Simon and Garfunkel, James Taylor, CSNY, and the Lost Story of 1970 by David Browne. Hit Men: Power Brokers & Fast Money Inside the Music Business by Fredric Dannen. Follow the Music: The Life and High Times of Elektra Records in the Great Years of American Pop Culture by Jac Holzman and Gavan Daws. Not coincidentally by my brother, Jac. Who says nepotism is bad? And it includes lots of interesting comments from the artists and others involved in Elektras success. Exploding: The Highs, Hits, Hype, Heroes, and Hustlers of the Warner Music Group by Stan Cornyn with Paul Scanlon. Reading this, I discovered a number of things about the inner workings of Warner Music that, despite my thirty year connection, Id never known about. I had lots of laughs as well. Little LabelsBig Sound: Small Record Companies and the Rise of American Music by Rick Kennedy and Randy McNutt.
Recording Studio Practice

Sound Recording Practice, edited by John Borwick, Association of Professional Recording Services. Professional Microphone Techniques by David Miles-Huber. The Recording Engineers Handbook The Mixing Engineers Handbook both by Bobby Owsinski. Temples of Sound: Inside the Great Recording Studios by William Clark, Jim Cogan, Quincy Jones. Sound Recording Advice for the Home Recording Studio by John J. Volanski. Off the Record: The Technology and Culture of Sound Recording in America by David Morton.
Management and Business

There are more than 330,000 books listed under Business Management on Amazon.coms web site! These are some that you may nd particularly useful. The Essential Drucker (In One Volume, The Best of Sixty Years of Peter Druckers Essential Writings on Management) by Peter F. Drucker The Effective Executive Revised by Peter F. Drucker The Practice of Management by Peter F. Drucker Management Challenges for the 21st Century by Peter F. Drucker Drucker has been one of the most inuential writers on business and management for the last many decades. He helped develop management consulting as a profession. Seven Habits of Highly Effective People: Powerful Lessons in Personal Change by Stephen Covey. Ethical Theory and Business (8th edition) by Tom L. Beauchamp, Norman E. Bowie and David Arnold. Essential Managers: Managing Budgets by Stephen Brookson. Part of the Essential Managers series by reference publisher Dorling-Kindersley. Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher, William Ury, and Bruce Patton. Getting Past No: Negotiating in Difcult Situations by William Ury. Good to Great: Why Some Companies Make the Leap... and Others Dont by Jim Collins.
How to Become a Great Boss: The Rules for Getting and Keeping the Best Employees by Jeffrey J. Fox. The Long Tail: Why the Future of Business is Selling Less of More by Chris Anderson. The value of building a large catalog thats salable for many years.
General Interest Publications

The New York Times http://www.nytimes.com/ The Wall Street Journal http://www.wsj.com/ Time Magazine http://www.time.com/ Newsweek http://www.newsweek.com/ U.S. News and World Report http://www.usnews.com/
Business Publications
Forbes http://www.forbes.com/ Fortune http://www.fortune.com/ Business Week http://www.businessweek.com/
Music and Entertainment Industry Publications

Billboard http://www.billboard.com/ http://www.billboard.biz CMJ New Music Report http://www.cmj.com/ Rolling Stone http://www.rollingstone.com/ Variety and Daily Variety http://www.variety.com/
The Hollywood Reporter http://www.hollywoodreporter.com/
Magazines about Recording

Electronic Musician http://www.emusician.com/ Mix http://www.mixonline.com
Online Publications
Music Industry News Network http://www.mi2n.com/ Music Dish http://www.musicdish.com/ All Access Music Group http://www.allaccess.com/ All Music Guide http://www.allmusic.com/ Music Think Tank http://www.musicthinktank.com/ For a comprehensive list of music journals, newspapers and periodicals (although it may be a little out of date), see: http://library.music.indiana.edu/music_resources/journals.html
Miscellaneous Music Publications

A&R Registry. Updated every eight weeks, includes A&R contacts not listed in any other directory; lists all major and indie labels in New York, Los Angeles, Nashville, London, and Toronto. Film/Television Music Guide. Published every June lists all movie studio, TV network, and independent production company music departments, record and publishing lm/TV departments, music supervisors, etc. This is particularly useful if youre interested in getting your masters and/or copyrights used in movies or television shows. Music Publisher Registry. Published twice a year at the end of January and June, lists all major publishers and signicant independents in LA, NY, Nashville, Toronto, and London, entire creative staff, direct dial numbers and assistant names.
Music Attorney, Legal and Business Affairs Guide. Published every May, lists music business attorneys, record company legal and business affairs departments, etc. All four of the above are available from Music Business Registry. Call 800-552-7411 to place an order or get additional information. http://www.musicregistry.com/
Miscellaneous
The New York Times Manual of Style and Usage: The Ofcial Style Guide Used by the Writers and Editors of the Worlds Most Authoritative Newspaper by Allan M. Siegal and William G. Connolly. The Elements of Style by William Strunk, Jr. and E. B. White (Foreward by Roger Angell). The above two books are invaluable in determining editorial style, and are extremely useful references for writing press releases, formatting text in CD booklets, etc. Pocket Pal: A Graphic Arts Production Handbook, 19th edition, published by International Paper. http://internationalpaper.com/US/EN/Business/CPIP/PocketPal.html
Index | 229
Index
Symbols
3M 101 4/1 117 4/4 117 5.1 108, 112 360 Deals 41 800 number 84 All Things Considered 71, 173, 175 All You Need to Know About the Music Business 10, 38, 223 Amazon.com 10, 82, 155, 188, 211, 223 Americana 175 American Association of Independent Music 146 American Federation of Musicians 22, 54 American Federation of Television and Radio Artists 54 ancillary income 209 Anderson, Chris 226 Anderson Merchandising 146 Angell, Roger 228 answering machine 84 anti-virus software 90 AP 173 Apocalypse Now 239 Apple 85, 89, 145, 216 Apples iTunes 108 Apples iTunes Store 155 approvals 54 A&R 69 A&R administration 69 A&R administrator 70 archive 80, 196 Army and Air Force Exchange Service 48, 154 A&R Registry 227 art director 69, 120 artist advances 43 artist agreements 41 artist approval 54 artist contract 38 artist development 72, 181, 205 artist royalty statement 55, 199 artist sales 183 artists and repertoire 69 Artist Share 34 artist tours, follow-up 204 artist tour support 180 artist/venue sales 183, 197 ASCAP 22, 59, 61, 63, 129 Asia-Pacic 159 assistants 72 Association for Classical Music 239 Atlantic 4 attorney fees 9 attorneys 37 Audio Home Recording Act of 1992 213 audiophile shops 211 audit 198 Austria 159 automated attendant 83 automated mixing boards 108
and Notice 131
A2IM 146 AAFES 48, 154 AARC 213 Access 89 accountant 17, 68 AccountEdge 17, 93 accounting 9, 91, 218 accounting system 91 acquiring talent 37 Acrobat 184 add date 164, 176 Address Book 90 administrative details 151 Adobe 94 Adobe Acrobat 63 Adobe Creative Suite 95 advances 43 advertising 72, 179, 205 AFIM 146 AFM 22, 54, 103 AFTRA 22, 54, 103 airplay 203 airplay tracking 177 All Access Music Group 227 Alliance of Artists & Recording Companies 213 All Music Guide 227
B
backup 94 backups 218 Baker, Bob 224 balance sheet 29 Bandcamp 156 bank account 17 bar code 15, 16, 114, 147, 151, 185 Barnes & Noble 146 Barnes&Noble.com 10 basic rate 48 basic tracks 107 Bay Press Services 118 B Coder Pro 16 Beauchamp, Tom L. 225 Belgium 159
Benelux 159 Bernie Grundman Mastering 109 Berra, Yogi 2 Billboard 3, 7, 16, 147, 175, 176, 226 Billboard.com 173 bill of material 133 blues 175 BMI 22, 59, 61, 63, 129 BOM 133, 134 bonus benets 213 bookkeeper 68 booklet 117 book updates 220 Borg, Bobby 224 Borwick, John 107, 225 Brabec, Jeffrey 10, 223 Brabec, Todd 10, 223 Bravo Disk Publisher 119 Bread 239 break-even 30 break-even analyses 24 broker 115 Brooks, Mel 63 Brookson, Stephen 225 Brother 87 Brown, Alison 2 Browne, David 224 Browne, Jackson 239 browser 89 budget items 27 budget, marketing 164 budget, recording 101 Bug Music 64 business affairs 69, 192 business essentials 17 business license 15 business plan 21 business publications 226 Business Week 226
C
C-0 cassette 116 cable 218 Canon 87, 96 capital requirements 25 caps 210 Cars, The 239 cartage 103 cash ow 30 cash ow problems 150 cash ow projections 24 cassettes 196 catastrophe 216 C-Corp 11, 22 C-Corporation 11 CD Baby 3, 156 CD booklet 117 CD burner 86 CD label 114 CD Production Chart 123 CD-R 108, 133, 211 CDs 196 CEO 68 Certied Public Accountant 9 CFO 68 Chain of Distribution 147, 148 chain store 150 Chapin, Harry 37, 239 Chapter 11 150 chat rooms 189 checking account 17 China 159 Chrome 89 Circular 7b 192 Circular 9 192 Circular 56 191, 192 Clapton, Eric 205 Clark, William 107, 225 classical 175 cleans 151 Cloud, The 94 CMJ 175, 176
CMJ New Music Report 7, 226 CMRRA 62 CMYK 117, 120 coffee mugs 210 Cogan, Jim 107, 225 Cognito Systems 93 College Music Journal 175 college radio 175 Collins, Jim 225 Collins, Judy 239 Columbia 4 commercials 211 commitment 42 communications 83, 217 community radio 175 company overview 22 Compass Records 2 competition 23 compilations 212 compulsory right 62 CompuMark 13 Computalabel 16 computer 217 computers 85 Concord Records 154 conference room 79, 80 Connolly, William G. 228 consignment 150 Consolidated Production Tracking Chart 125 Consumer Price Index 149 contingency 104 contingency planning 216 contract, distribution 152 controllable expenses 28 controlled compositions 49 control room 100 COO 68 co-op advertising 151, 152, 179 copier 95, 218 co-publisher 160 copyist 103
Index | 231
Copyright Act of 1976 45 copyright law 191 Copyright Ofce 59, 61, 192 copyright owner, locating 63 Copyright Rotalty Board 61 Cornyn, Stan 224 corporation 11 Costs of Goods Sold 28 courier 218 COVAD 14 cover art 121 Covey, Stephen 225 Coyright Notice 131 C.P.A. 9, 50, 68 CPU 86 creative control 107 creative director 69 creative process 119 crisis management 216 cross-collateralization 51 crowdfunding 34 current assets 29
D
Dannen, Fredric 224 DAT 101, 133 database 89, 177, 195 databases 218 DATs 195 DAW 108 Daws, Gavan 224 D/B/A 14 deal memo 39 deal terms 64 Decca 4 decor 81 delivery requirements 42 Dell 85 demo deal 39 designer 120 DiFranco, Ani 2 Digipak 117
Digital Distribution 155 Digital Performer 108 digital print rights 61, 63, 66 digital recording systems 101 digital rights management 156 Discovery Records 239 distribution 145 distribution contract 152 distribution deal 149 distribution, international 209 distribution/licensing arrangement 160 Distribution North America 150 DJ 151 DNA 150 documentaries 211 Doing Business As 14 Dolly Parton 4 Dolly Records 4 domain name 12, 13 domestic distribution 145 Doors, The 43, 195, 239 Doorstops, The 25, 89, 165 Doorstop X 90 double-entry accounting 92 downloadable music 211 downloads 49, 145 Dreamweaver 95 DRM 156, 157 Drucker, Peter F. 225 DSL 84, 218 DVD-Audio 108, 195 DVD burner 86 DVDs 196
Electronic Musician 107, 227 electronic press kits 174 Elektra/Asylum/Nonesuch 12 Elektra Records 1, 4, 43, 47, 57, 95, 171, 195, 196, 239 email 188, 216 EMI 3, 158 Employee Identication Number 67 Employment Eligibility Verication 67 eMusic 157 eMusic.com 155 engineer 100, 103 Entourage 88 EP 48 EPK 174 Epson 87 equity 29 Essential Drucker, The 225 Essential Managers: Managing Budgets 225 Ethernet 86, 87, 218 Ethical Theory and Business 225 Eudora 88, 89 Exabyte 115, 116 Excel 17, 88, 89, 125, 198 exclusivity 41 executive summary 22 exit plan 25 exit strategy 25, 219 Exploding 224 Explorer 89 extra inventory 196
F E
Eagles, The 239 Early Music Academy 239 Earthlink 14 earthquake 216 EIS 67 Facebook 71, 178, 206 facilities closet 81 fairness 57 fan-funding 34 father 115 fax 95, 218
feature lms 211 FedEx 218 fees 103 ctitious business name 14 FileMaker Pro 89, 177, 198 lms 211 Film/Television Music Guide 211, 227 nancial plan 24 re 216 Fire and Rain 224 rewall 90 rst recording project 99 Fisher, Roger 225 xed assets 29 Fixed Expenses 27 Flash 187 at fee 48 at le 89 ood 216 FMQB 175, 176 folders 117 folk music 175 Folkways 4, 12 Follow the Music 224 Forbes 226 foreign distribution 158 foreign licensing 159 foreign subpublishing 65 Form PA 59 Form SR 191 Fortune 226 four over four 117 four over one 117 Fox 62 Fox, Jeffrey J 226 France 159 free goods 51, 151 freight 152 Fresh Air 71, 173, 175 Friday Morning Quarterback 175 furniture 82, 217
G
G&A 68 Garage Technology Ventures 33 GAS territories 159 Gateway Mastering 109 GCC 87 Geffen, David 12 Gehry, Frank 81 GEMA 61, 65 general and administrative 68 general interest publications 226 general manager 68 Germany 159 Getting Past No 225 Getting to Yes 225 glass master 115 Global Release Identier 110 GM 68 Gnutella 111 GoDaddy 13 GoLive 95 Goodman, Steve 239 Good to Great 225 Google 12, 21, 210 Google+ 178 Google Chrome 89 gospel 175 GRid 110 Grooveshark 178 group provisions 55 Grundman, Bernie 109 GS1 16 Guerilla Music Marketing Handbook 224
Harris, Emmylou 205 Harry Fox Agency 62, 198 Harry Fox Ofce 129 Hewlett-Packard 85, 87 HFA 62 Hit Men 224 Holland 159 Hollywood Reporter 227 Holzman, Jac 47, 57, 224 Holzman, Keith 239 home studio 99 Hong Kong 159 house accounts 154 How to Become a Great Boss 226 How to Promote Your Music Successfully on the Internet 224 human resources 70 Hurricane 239 Hurricane Katrina 216 hybrid distribution/licensing arrangement 160
I
I-9 67 iCal 90 IFPI 110 Illustrator 94, 115, 184 income 27 income, ancillary 209 income projections 27 independent marketing specialist 181 independent promotion 53, 175 InDesign 94, 115, 117, 132, 184 Indie Business Power 224 Indie Marketing Power 224 Indie Power 223 Indonesia 159 infrastructure 23, 217
H
Handleman 146 hard drive 101 hard drives 103
Index | 233
Ingrooves 156 initial decisions 5 inlay 117 Institute of Management Consultants 239 in-store performances 181, 205 insurance 17 intercom 83 International 71, 158 International Buyers Guide 147 international distribution 158, 209 International Federation of the Phonographic Industry 110 International Paper 118 Internet 84, 218 Internet Explorer 89 Internet Service Provider 14 interns 73 Intuit 17, 93 inventory, extra 196 Inventory maintenance 139 inventory ordering 139 IODA 156 iPad 157 iPhone 157 iPod 145, 157 Iron Mountain 195 IRS 67 ISDN 85 ISP 14, 84 ISRC Code 110, 112 iTunes Music Store 145, 155, 188
Jones, Quincy 107, 225
K
Kawasaki, Guy 33 Kazaa 111 KCRW 173 Kennedy, Rick 224 key man 55 Kickstarter 34 kitchenette 80
L
label name 12 label size 2 LAN 86 lawyer 17 lawyer fees 9 leakage 107 legal advice 8 Legal Aspects of the Music Industry 10, 223 legal fees 9 legal structure 11 LegalZoom 11 letterhead 15 liabilities 29 Liabilities & Equity 29 Library of Congress 191, 192, 195 licensing 209, 211 licensing, master use 211 lifestyle retailers 211 Limewire 111 limited liability corporation 11, 22 LinkedIn 178 listening posts 5 Little LabelsBig Sound 224 LiveDaily.com 173 live performance and interview video 182
LLC 11 local area network 86 locating copyright owner 63 lock out 99 Logic 108 logo 15, 210 long distance 84 Los Angeles Venture Association 34 Lost Highway 12, 182 Love and Affection Clause 57 LPs 196 Ludwig, Bob 109 Luxembourg 159
M
Macintosh 17, 85, 108, 216 mail (service) 218 Mail (Apple program) 89 mail order 183 mailroom 70, 79, 80 Malaysia 159 Manage for Success iv, 7, 220 management 24 management and business 225 management plan 22 managing director 68 Manufacturers Suggested Retail Price 149 manufacturing plant 114 market analysis 23 marketing 23, 163, 215 marketing aids 184 marketing budget 164 marketing, follow-up 203 marketing head 71 marketing materials 121 marketing, online 185 marketing plan 164 marketing plan, update 206 marketing specialist, independent 181
J
Japan 159 JASRAC 61 jazz 175 J-card 116, 117 jewel box 116
mastering 104, 109 mastering instructions 133 Mastering Lab 109 mastering studio 115 masters, ownership of 45 master use 211 master use licensing 211 matchprint 117, 123 McNutt, Randy 224 mechanical licenses 129, 196 mechanical rights 61, 62, 66 mechanical royalties 49 mechanical royalty statement 55, 199 media 72 media relations 71, 171 Mexico 159 microphones 100 Microsoft Ofce 88 MIDEM 158 MIDI 63 Miles-Huber, David 107, 225 minimum run 116 Minolta 96 miscellaneous rights 64 mission statement 22 Mitchell, Joni 239 Mix 107, 227 mix-down facility 100 Mixing Engineers Handbook 225 mixing session 104 mom and pop accounts 146, 147 MoneyWorks Accounting Software 93 Morning Edition 71, 173, 175 Morton, David 107, 225 mothers 115 MP3 157 MSRP 149 mugs 210 multi-track masters 195 MusiCalc 198
Music Attorney, Legal and Business Affairs Guide 228 music business attorneys 37 music business law 223 Music Business Registry 228 Music Dish 227 music, downloadable 211 music & entertainment industry publications 226 musicians 103 Musicians Handbook, The 224 music industry 223 music industry biographies 224 Music Industry News Network 227 Music, Money, and Success 10, 223 music publications, miscellaneous 227 Music Publisher Registry 227 music publishing 22, 59, 210 music stores, online 189 Music Think Tank 227 music video 53, 182 MYOB 17, 93 MySpace 37, 178
network server 87 Nevue, David 224 New Orleans 145 new release - when to ship 169 newsgroups 189 Newsweek 226 new technology 48 New York 159 New York Times 7, 226 New York Times Manual of Style and Usage 228 Nielsen 137, 181 Nielsen SoundScan 3, 137, 181, 183 NMPA 62 Nolo.com 11 Nonesuch Records 1, 239 non-traditional retail 183, 211 Norton Anti-Virus 90 Norton Personal Firewall 90 notice of copyright 59 NPR 173, 175
O
Ofce Depot 96, 173 ofce manager 70 ofce set-up 79 ofce space 23, 79 Off the Record 107, 225 OmniWeb 89 one-sheet 147, 184 one-stops 146 online 206 online access 84 online bulletin boards 189 online marketing 185 Online Marketing 187 online music stores 189 online publications 227 online sales 210 Opera 89 operating budget 27
N
NAIRD 146 Napster 111, 155 NARM 146 National Endowment for the Arts 212, 239 National Music Publishers Association 62 NEA 212 negotiating the deal 38 Netherlands 159 network 86 networking 7, 37
Index | 235
operations 23 opportunities 24 options 43 Orchard 156 outboard gear 100 Outlook 88, 90 over-run 118 ownership of masters 45 Owsinski, Bobby 107, 225
P
package 120 package graphics 129 packaging deductions 51 pancakes 116 Pandora 178 Panorama 89 partnership 11, 22 Parton, Dolly 4, 205 Passman, Donald S. 10, 38, 59, 64, 223 payment 150 PC 17, 85, 216 PCM-1630 115, 116 P&D deal 4, 33, 157 PDF 63, 115, 133, 184, 191, 192 Peachtree Accounting 93 performing rights 61 performing rights agencies 59 personnel 70, 216 phone, long distance 84 phone system 83 phone tree 216 phonorecord 56 photographer 121 photo release 121 Photo Release Form 122 Photoshop 94, 184 piano tuning 103 piracy 111 Pirates of Penzance 239
Pitney Bowes 96 P&L 27 Plain And Simple Guide to Music Publishing 59, 223 planning ahead 215 planning next releases 215 P&L Statement 68 Plumstead Theatre Society 239 P. O. Box 96 Pocket Pal 118, 119, 228 postage meter 96 Post Ofce 218 post ofce box 96 post-production 191 Pottery Barn 212 power outages 216, 218 PPD 46, 159 PQ 109 PR 172 premiums 48, 212 pre-production 113 pre-production staff 119 pre-release 151 pre-release CDs 139 pre-release materials 129 president 68 pressing plant 114 press kit 173 press kits, electronic 174 press releases 174 prices 118 pricing 23, 149 Prine, John 239 printer 87, 117, 218 print rights 61, 63, 66 private ofce 80 process inks 120 producer 45, 99 producer approval 54 producer desk 100 production 70, 192 production and distribution deal 157
Production Calendar 127 Production Chart 123 production deal 157 production les 196 product manager 70 professional advice 8 Professional Microphone Techniques 107, 225 Prot and Loss Statement 68 prot & loss statement 27 promos 151 promotion 72 promotion, independent 175 promotion, radio 175 ProTools 108 PRS 65 PRS for Music 61 publicity 71, 164, 171 publicity, follow-up 203 Public Radio 175 public relations 71, 171 Published Price Per Distributor 46 publisher rights 61 publishing administration 64 publishing, music 59 publishing rights 60 Puerto Rico 159 PX 48
Q
Qualcomm 88 quality control 137 QuarkXPress 94, 115, 117, 118, 132, 184 Queen 239 QuickBooks 17, 93 Quicken 17, 93
R
R.A. 150 rack jobber 146, 150 radio 211 radio promotion 72, 164, 175 Raitt, Bonnie 205 RAM 86 RCA Victor 4 RealNetwork 155 record club 48 RecordCompanyStartup.com 14 RecordCoStartup.com 14 record distributor 145 Recording Artists Coalition 45 recording budget 43, 101 Recording Costs 28 Recording Engineers Handbook 225 recording rst project 107 recording fund 43 recording session costs 103 recording studio 100 recording studio practice 225 RecordLabelResource.com 147 record release parties 175 reference disk 109 Register of Copyrights 191, 192 Registrant Code 110 rentals 103 re-recording restrictions 54 reserves 50 retailer 150 retailers, lifestyle 211 retail, non-traditional 183, 211 return authorization 150 return on investment 24 revenue 27 reversion of rights 55 RGB 117 Rhapsody 155 Rhino Records Store 181
RIAA 149 Righteous Babe 2 risks 24 ROI 24, 34 Rolling Stone 226 RollingStone.com 173 ROM Records 1, 8, 59, 60, 239 Ronstadt, Linda 239 roots 175 royalties 46 royalty accounting 94, 197 Royalty Review Council 197
S
SACD 108 SACEM 61 Safari 89 safety tape 195 sales 71, 171 sales and marketing 71 sales department 171 sales, online 210 sales strategy 23 Salsa 159 sample marketing plan 165 sample service 191 sampling 130 Sax, Doug 109 SBA 8, 11 Scanlon, Paul 224 scanner 88 Schulenberg, Richard 10, 223 S-Corp 11, 22 self-manufacture 118 sequence 108 server 87 servicing radio 177 servicing stations 177 SESAC 59, 61, 62, 63, 129 Seven Habits of Highly Effective People 225 Sharp 96
Shazam 178 shipping 154 shopping cart 210 shopping cart software 210, 211 Siegal, Allan M. 228 Simon, Carly 239 Simon, Paul 205 singer-songwriters 175 Singles 48 SiriusXM 173 Skype 84 Small Business Administration 8, 11 sneaker net 86 SOCAN 61 Social Media 178 social networking 178, 189 soft mechanical 117, 123 software 88, 218 sole proprietorship 11, 22 Solutions Unlimited 239 Sony 158 Sony Music 3 SoundExchange 213 soundproong 81 Sound Recording Advice for the Home Recording Studio 107, 225 Sound Recording Practice 107, 225 SoundScan 3, 16, 50, 137, 181, 183, 199 South-East Asia 159 space 217 specialty-clothing stores 211 Spellman, Peter 223, 224 sponsorship 183, 212 Spotify 156, 179 spreadsheet 24, 88, 140, 177 Sprint 84 SR Form 191 SRLP 46, 149
Index | 237
stafng 67 stampers 115 Staples 96, 173 Starbucks 154, 212 start-up costs 27 start-up money 33 stationery 15 statutory rate 49, 60, 66 Steely Dan 205 storage closet 80 stores, specialty-clothing 211 street teams 182 Strunk, William Jr. 228 studio 100, 103 Subchapter S-Corp 11 Suggested Retail List Price 46, 149 surfer shops 211 suspense le 69 sweeten 107 Switzerland 159 synch license 211 synch rights 61 synchronization license 211 synchronization rights 61, 63, 64, 66 systems 218
The Long Tail 226 The Mixing Engineers Handbook 107 The Recording Engineers Handbook 107 The Wall Street Journal 7 The Witches of Eastwick 239 This Business of Music Marketing and Promotion 224 Thomson CompuMark 13 thumb drives 218 tickler le 69 Time Magazine 226 toll-free number 84 top dog 68 top sheet 24 tornado 216 tour support 52, 180 tracking airplay 177 trademark 12 tray card 117 TruPhone 84 T-shirts 196, 210 TuneCore 156 turnkey CDs 212 TV 211 Twitter 71, 178, 206
United States Copyright Ofce 59 Universal 158 Universal Music Group 3 UPC bar code 15, 147, 185 updates 220 UPI 173 UPS 218 URLs 129 Ury, William 225 U.S. Copyright Ofce 13, 59, 192 user groups 189 USIRC 110 U.S. News and World Report 226 U.S. Patent and Trademark Ofce 13 U.S. Registrant Code 110
V
Valley Media 150 Vanguard 4 Variety 226 VAT 158 venture capitalists 34 venue sales 183 video 53, 206 videotapes 196 Vietnam 159 Virex 90 virtual ofce 67 virtual staff 6, 73 vocalists 103 voice mail 84 Volanski, John J. 107, 225
T U
T1 85, 218 Taiwan 159 TalTech 16 tape 103 tape duplicator 116 television 211 television commercials 211 Temples of Sound 107, 225 term 42, 60, 150 term of copyright 66 territory 41 test pressing 116 Thall, Peter M. 10, 59, 64, 223 UCC-1 152 UCC-1 Financing Statement 152 UCLA Extension 239 U.K. 159 U-Matic 115, 133 under-run 118 underwriting 212 Uniform Commercial Code 152 unions 54
W
Waits, Tom 239 Wall Street Journal 226 WalMart 146 Warner Brothers Records 44
Warner Music 3, 158 warranties and representations 55 web browser 89 web site 121, 187, 206 West, Garry 2 Westwood One 173 what goes where 130 What Theyll Never Tell You About the Music Business 10, 223 when to ship new release 169 White, E. B. 228 whois 12 Whole Foods 154, 212 Wi-Fi 86 Wikipedia 116 Wilco 44 Williams, Lucinda 182 Williams-Sonoma 212 Windows 108 Wixen Music Publishing 64 Wixen, Randall D. 59, 223 Wizard Music 239 Word 88 word processor 88 workers compensation insurance 67 work for hire 45, 192 wrap 215
X
Xerox 87, 95, 96
Y
Yahoo Music 155 Young, Neil 205 YouTube 180, 182, 189, 206
About the Author | 239
About the Author
Keith Holzman is the Principal of Solutions Unlimited, a management consulting rm specializing in the recording industry. He is a trusted adviser and troubleshooter, skilled in providing solutions tailored to his clients specic requirements. A seasoned music industry senior executive with extensive experience in all aspects of running a label, Keith was President of ROM Records, an eclectic pop music label specializing in new and unusual artists, and was also Managing Director of Discovery Records, a label specializing in pop, rock, jazz, and lm music. At Discovery, he managed a staff of more than thirty-ve employees, including Production and Administration, while simultaneously handling Business Affairs and International Marketing. In the early Eighties, Keith served as Director of Nonesuch Records, one of Americas most prestigious classical music labels. He was responsible for the entire label, and oversaw the production of over 150 recordings. Concurrent to his position with Nonesuch, and for the fteen prior years, he was Senior Vice President of Elektra Records, responsible for the running of the Production, Art, Studio and Engineering, Manufacturing, and Administration Departments, as well as ofce design and facilities management. Over the years, Keith has overseen production of hundreds of recordings, by such artists as Jackson Browne, The Doors, Carly Simon, Joni Mitchell, The Eagles, Linda Ronstadt, Judy Collins, Queen, Steve Goodman, John Prine, Bread, The Cars, Tom Waits, and Harry Chapin, and supervised such soundtrack and show recordings as Apocalypse Now, Hurricane, and The Pirates of Penzance. He was Music Supervisor of The Witches of Eastwick. He has taught the Independent Record Label course at UCLA Extension, was a member of the Institute of Management Consultants, and has served as a panelist for the National Endowment for the Arts, and as a board member of the Plumstead Theatre Society, Association for Classical Music, Early Music Academy, and Wizard Music.

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The

Complete Guide to Starting a Record Company

The Complete Guide to Starting a Record Company

Note to the Reader

2 | The Complete Guide to Starting a Record Company

Who Should Read This Book

4 | The Complete Guide to Starting a Record Company

6 | The Complete Guide to Starting a Record Company

A Few More Thoughts

Chapter 1 First Steps | 7

Chapter 1 First Steps

8 | The Complete Guide to Starting a Record Company

Chapter 1 First Steps | 9

10 | The Complete Guide to Starting a Record Company

Legal Books for Study

Chapter 1 First Steps | 11

Your Legal Structure

12 | The Complete Guide to Starting a Record Company

Trademark & Domain Name Checks

Chapter 1 First Steps | 13

Domain Name Registration

14 | The Complete Guide to Starting a Record Company

Your D/B/A (Fictitious Business Name)

Chapter 1 First Steps | 15

Business Licenses & Tax Registration Certicate

Logo & Business Stationery

UPC Bar Code

16 | The Complete Guide to Starting a Record Company

Chapter 1 First Steps | 17

18 | The Complete Guide to Starting a Record Company

Chapter 1 First Steps | 19

First Steps Check List

20 | The Complete Guide to Starting a Record Company

Chapter 2 The Business Plan | 21

Chapter 2 The Business Plan

22 | The Complete Guide to Starting a Record Company

A Model Business Plan

2. Products and Mission Statement

3. Management Plan (Company Overview)

Chapter 2 The Business Plan | 23

4. Market Analysis and Competition

5. Marketing and Sales Strategy

24 | The Complete Guide to Starting a Record Company

8. Potential Risks and Opportunities

Chapter 2 The Business Plan | 25

10. Capital Requirements (optional) & Exit Plan

26 | The Complete Guide to Starting a Record Company

Chapter 2 The Business Plan | 27

Typical Budget Items for the Business Plan

28 | The Complete Guide to Starting a Record Company

Chapter 2 The Business Plan | 29

30 | The Complete Guide to Starting a Record Company

Chapter 2 The Business Plan | 31

Business Plan Check List

32 | The Complete Guide to Starting a Record Company

Chapter 3 Raising Start-up Money | 33

Chapter 3 Raising Start-up Money

34 | The Complete Guide to Starting a Record Company

Chapter 3 Raising Start-up Money | 35

A Quick Take on Raising Money