Artist Survival Manual VIII
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Page 107
Graduate School Course
© 2004-2005 All rights reserved
"If you've already finished your album, and your product is ready for distribution to the public,
Pacer Radio Network Promotions - Nashville
"Here is where the serious money and financial backing gets an artist noticed by the majors
BOB GATES - Country Parade Magazine- New York City
© CAPITOL MANAGEMENT & TALENT GROUP
If you already have an established financial career in the music business, this section if for you!"
This section is not for the faint of heart, but for those who don't mind pouring over a 10 figure income in the future.
If you've made it this far, you're one of the chosen few that never give up on reaching superstardom!"
1214 16th Avenue South
Nashville, TN 37212-2902
800-767-4984 (toll-free)
615-321-0600 (work)
615-321-0182 (fax)
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Page 108
Publishing Company with Imprint Label
(Five Year) Business Plan
What is music publishing?
Why are copyrights a good investment?
Billboard June Issue
The function of a publisher is to sign talented songwriters, make demonstration recordings of their songs, and then pitch those songs to major recording artists. This is an on-going process and publishing offers one of the highest rates of return on the dollar of any investment made with most of the money recoupable out of either songwriter advances or record sales of artists.
Typically, a publisher and a songwriter split the money generated by a song copyright. Royalties are paid on the following:
1. Performance Royalties: Radio, Television, Concerts, Clubs, etc.
2. Sync License Fees: Movies, TV Movies, Commercials, Jingels, etc.
3. Printed Music: Sheet Music, Arrangements, Printed Music Books, etc.
4. Mechanicals: Individual song royalties paid on sales of various records, cd’s, cassettes
5. Arrangements: Royalties paid on various arrangements of the same song
Songs are completely protected by the United States Copyright Statues, and the holders of those copyrights own the songs for the composers lifetime plus 70 years or usually a total of come 150 years. You can leave your songs to your heirs and successors. American music has always been one of the most lucrative of all investments for the dollar and with the continued westernization of the rest of the world, the market for American music is growing every day in Canada, Europe, and worldwide.
Some operating costs are fixed for publishers, but writer’s salaries and demo costs are totally recoupable from the mechanical royalties and performance royalties generated by their songs. Writers are paid as independent contractors, so there is no payroll costs. Each song costs about $2,500.00 to demo fully and that is charged back against the writer’s account. Each song has the potential to literally make millions of dollars. “Friends in Low Places,” recorded by Garth Brooks has made over $6 million dollars to date.
The long term objective of publishing is to build a song catalog, get songs recorded that earn money year after year. The goal of a publisher is to have a positive net publisher’s share (NPS) at the end of five years. We are estimating that the company can operate out of its own profits by year four. After five years, the catalog is evaluated to determine if selling or holding on to the catalog is more pofitable. If sold, the price is based on a rate from the “Time Earnings Scale (TE)” which is currently a 10-14 multiple of the NPS. If a company is showing a NPS of $350,000 per year, then that company would sell for no less than $3.5 million dollars, and could sell for as much as $4.9 million.
A publisher doesn’t always own 100% of every song they are involved in. For reference, I’ve enclosed an overview of one small company that recently sold to another major publisher.
Our company has three distinct advantages for investors:
1. We already have proven and talented songwriters that have a winning track record
2. There is no debt/no liens, and no draws to songwriters so the advances are small
3. We are partners in a record label imprint with a major label. This label is distributed and marketed with national distribution as an outlet for our songs.
4. We already have proven and talented artists to sing and develop the company into an extremely profitable enterprise within five years.
5. We already have over 1000 titles in the current catalog for distribution immediately
Imprint labels are the most profitable enterprises in the music business. They compile titles that sell well to the public, such as “Greatest Hits Albums, “ Greatest Love Songs,” and other compilations of various songs that the public wants to buy.
Costs for the development of imprint labels involve licensing fees, production fees in the studio of various compilation masters and the marketing costs of distributing them by a major label to the marketplace. Many historic best sellers are classical songs, piano albums, jazz albums, patriotic albums, and such “thematic” presentations of various groups of popular songs in one compilation. Imprint labels historically show a profit immediately and also are sold in multiples of 6-8 times their annual net earnings.
For the cautious investor, music publishing is one of the safest investments for the future, earning many times over the actual investment within a short period of time. The best combination of earnings come from a company with both a publishing and an imprint label operation.
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Page 109
PUBLISHING & IMPRINT
LABEL PROPOSAL (5 YEARS)
YEAR ONE AS FOLLOWS:
PRODUCTION MANUFACTURING MARKETING PROMOTION
$50,000.00 $15,000.00 $25,000.00 $35,000.00
(imprint one)
$50,000.00 $15,000.00 $25,000.00 $35,000.00
(imprint two)
TOTAL COSTS IN YEAR ONE IMPRINTS $250,000.00
All Recoupable Costs
PERSONNEL SALARY INSURANCE TAXES
General Manager
..............................................$51,000.00 $5,500.00 $3,500.00
Writer One
.............................................$25,000.00 $3,500.00 $1,500.00
Writer Two
.............................................$25,000.00 $3,500.00 $1,500.00
Writer Three
.............................................$25,000.00 $3,500.00 $1,500.00
TOTAL COSTS IN YEAR ONE
Writers
...................................................................................................$150,000.00
ALL RECOUPABLE COSTS
FIXED EXPENSES
Office Lease
....................................................................................................$36,000.00
Phone Maintenance
....................................................................................................$00,450.00
Office Supplies
....................................................................................................$02,300.00
Cable Services
....................................................................................................$00,390.00
Photocopies
....................................................................................................$01,825.00
Pitney Bowes
....................................................................................................$00,525.00
Phones(Local Service)
....................................................................................................$05,400.00
Postage
....................................................................................................$00,500.00
Phones (Long Distance)
....................................................................................................$12,000.00
Federal Express
....................................................................................................$01,000.00
Printing Materials
....................................................................................................$01,625.00
Security Systems
....................................................................................................$00,500.00
Trade Magazine Advertisements
....................................................................................................$10,000.00
Tape (R-DATS)
....................................................................................................$03,000.00
Business Taxes
.....................................................................................................$00,500.00
Record Demos
....................................................................................................$15,000.00
TOTAL FIXED EXPENSES
COSTS $100,000
TOTAL YEAR ONE COSTS
COSTS $500,000
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Page 110
PUBLISHING & IMPRINT
LABEL PROPOSAL (5 YEARS)
YEAR TWO AS FOLLOWS:
PRODUCTION MANUFACTURING MARKETING PROMOTION
$50,000.00 $15,000.00 $25,000.00 $35,000.00
(imprint one)
$50,000.00 $15,000.00 $25,000.00 $35,000.00
(imprint two)
TOTAL COSTS IN YEAR TWO IMPRINTS $250,000.00
All Recoupable Costs
PERSONNEL SALARY INSURANCE TAXES
General Manager
..............................................$51,000.00 $5,500.00 $3,500.00
Writer One
.............................................$25,000.00 $3,500.00 $1,500.00
Writer Two
.............................................$25,000.00 $3,500.00 $1,500.00
Writer Three
.............................................$25,000.00 $3,500.00 $1,500.00
TOTAL COSTS IN YEAR TWO
Writers
...................................................................................................$150,000.00
ALL RECOUPABLE COSTS
FIXED EXPENSES
Office Lease
....................................................................................................$36,000.00
Phone Maintenance
....................................................................................................$00,450.00
Office Supplies
....................................................................................................$02,300.00
Cable Services
....................................................................................................$00,390.00
Photocopies
....................................................................................................$01,825.00
Pitney Bowes
....................................................................................................$00,525.00
Phones(Local Service)
....................................................................................................$05,400.00
Postage
....................................................................................................$00,500.00
Phones (Long Distance)
....................................................................................................$12,000.00
Federal Express
....................................................................................................$01,000.00
Printing Materials
....................................................................................................$01,625.00
Security Systems
....................................................................................................$00,500.00
Trade Magazine Advertisements
....................................................................................................$10,000.00
Tape (R-DATS)
....................................................................................................$03,000.00
Business Taxes
.....................................................................................................$00,500.00
Record Demos
....................................................................................................$15,000.00
TOTAL FIXED EXPENSES
COSTS $100,000
TOTAL YEAR TWO COSTS
COSTS $500,000
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Page 111
PUBLISHING & IMPRINT
LABEL PROPOSAL (5 YEARS)
YEAR THREE AS FOLLOWS:
PRODUCTION MANUFACTURING MARKETING PROMOTION
$50,000.00 $15,000.00 $25,000.00 $35,000.00
(imprint one)
$50,000.00 $15,000.00 $25,000.00 $35,000.00
(imprint two)
TOTAL COSTS IN YEAR THREE IMPRINTS $250,000.00
All Recoupable Costs
PERSONNEL SALARY INSURANCE TAXES
General Manager
..............................................$51,000.00 $5,500.00 $3,500.00
Writer One
.............................................$25,000.00 $3,500.00 $1,500.00
Writer Two
.............................................$25,000.00 $3,500.00 $1,500.00
Writer Three
.............................................$25,000.00 $3,500.00 $1,500.00
TOTAL COSTS IN YEAR THREE
Writers
...................................................................................................$150,000.00
ALL RECOUPABLE COSTS
FIXED EXPENSES
Office Lease
....................................................................................................$36,000.00
Phone Maintenance
....................................................................................................$00,450.00
Office Supplies
....................................................................................................$02,300.00
Cable Services
....................................................................................................$00,390.00
Photocopies
....................................................................................................$01,825.00
Pitney Bowes
....................................................................................................$00,525.00
Phones(Local Service)
....................................................................................................$05,400.00
Postage
....................................................................................................$00,500.00
Phones (Long Distance)
....................................................................................................$12,000.00
Federal Express
....................................................................................................$01,000.00
Printing Materials
....................................................................................................$01,625.00
Security Systems
....................................................................................................$00,500.00
Trade Magazine Advertisements
....................................................................................................$10,000.00
Tape (R-DATS)
....................................................................................................$03,000.00
Business Taxes
.....................................................................................................$00,500.00
Record Demos
....................................................................................................$15,000.00
TOTAL FIXED EXPENSES
COSTS $100,000
TOTAL YEAR THREE COSTS
COSTS $500,000
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Page 112
PUBLISHING & IMPRINT
LABEL PROPOSAL (5 YEARS)
YEAR FOUR AS FOLLOWS:
PRODUCTION MANUFACTURING MARKETING PROMOTION
$50,000.00 $15,000.00 $25,000.00 $35,000.00
(imprint one)
$50,000.00 $15,000.00 $25,000.00 $35,000.00
(imprint two)
TOTAL COSTS IN YEAR FOUR IMPRINTS $250,000.00
All Recoupable Costs
PERSONNEL SALARY INSURANCE TAXES
General Manager
..............................................$51,000.00 $5,500.00 $3,500.00
Writer One
.............................................$25,000.00 $3,500.00 $1,500.00
Writer Two
.............................................$25,000.00 $3,500.00 $1,500.00
Writer Three
.............................................$25,000.00 $3,500.00 $1,500.00
TOTAL COSTS IN YEAR FOUR
Writers
...................................................................................................$150,000.00
ALL RECOUPABLE COSTS
FIXED EXPENSES
Office Lease
....................................................................................................$36,000.00
Phone Maintenance
....................................................................................................$00,450.00
Office Supplies
....................................................................................................$02,300.00
Cable Services
....................................................................................................$00,390.00
Photocopies
....................................................................................................$01,825.00
Pitney Bowes
....................................................................................................$00,525.00
Phones(Local Service)
....................................................................................................$05,400.00
Postage
....................................................................................................$00,500.00
Phones (Long Distance)
....................................................................................................$12,000.00
Federal Express
....................................................................................................$01,000.00
Printing Materials
....................................................................................................$01,625.00
Security Systems
....................................................................................................$00,500.00
Trade Magazine Advertisements
....................................................................................................$10,000.00
Tape (R-DATS)
....................................................................................................$03,000.00
Business Taxes
.....................................................................................................$00,500.00
Record Demos
....................................................................................................$15,000.00
TOTAL FIXED EXPENSES
COSTS $100,000
TOTAL YEAR FOUR COSTS
COSTS $500,000
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Page 113
PUBLISHING & IMPRINT
LABEL PROPOSAL (5 YEARS)
YEAR FIVE AS FOLLOWS:
PRODUCTION MANUFACTURING MARKETING PROMOTION
$50,000.00 $15,000.00 $25,000.00 $35,000.00
(imprint one)
$50,000.00 $15,000.00 $25,000.00 $35,000.00
(imprint two)
TOTAL COSTS IN YEAR FIVE IMPRINTS $250,000.00
All Recoupable Costs
PERSONNEL SALARY INSURANCE TAXES
General Manager
..............................................$51,000.00 $5,500.00 $3,500.00
Writer One
.............................................$25,000.00 $3,500.00 $1,500.00
Writer Two
.............................................$25,000.00 $3,500.00 $1,500.00
Writer Three
.............................................$25,000.00 $3,500.00 $1,500.00
TOTAL COSTS IN YEAR FIVE
Writers
...................................................................................................$150,000.00
ALL RECOUPABLE COSTS
FIXED EXPENSES
Office Lease
....................................................................................................$36,000.00
Phone Maintenance
....................................................................................................$00,450.00
Office Supplies
....................................................................................................$02,300.00
Cable Services
....................................................................................................$00,390.00
Photocopies
....................................................................................................$01,825.00
Pitney Bowes
....................................................................................................$00,525.00
Phones(Local Service)
....................................................................................................$05,400.00
Postage
....................................................................................................$00,500.00
Phones (Long Distance)
....................................................................................................$12,000.00
Federal Express
....................................................................................................$01,000.00
Printing Materials
....................................................................................................$01,625.00
Security Systems
....................................................................................................$00,500.00
Trade Magazine Advertisements
....................................................................................................$10,000.00
Tape (R-DATS)
....................................................................................................$03,000.00
Business Taxes
.....................................................................................................$00,500.00
Record Demos
....................................................................................................$15,000.00
TOTAL FIXED EXPENSES
COSTS $100,000
TOTAL YEAR FIVE COSTS
COSTS $500,000
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Page 114
REVENUE PROJECTIONS
FIVE YEAR PLAN
YEAR ONE
INVESTOR PAY BACK
FIVE YEAR PLAN
YEAR ONE
COMPANY ASSETS
FIVE YEAR PLAN
Copyrights Value Of Copyright Sales Price
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Page 115
So, you are beginning to get the big picture where entertainment is concerned. It's a multi-million dollar business and when you get into this business, you have to make up your mind to seek out qualified financial backing that has very deep pockets. Industry estimates for starting small publishing ventures now run in the neighborhood of $2 million dollars needed in actual capital funding for smaller start-ups.
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Page 116
Million Dollar Schedule
1. Production Budget (12 songs)
Producer's Fee @$5,000 per side
2. Promotion Budget (12 months)
Manufacturing Costs
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Page 117
If you read the biographies of people like Clint Black, Tracy Lawrence and others, you will find that each of these superstars had a financial combine behind them with several million dollars of "tour support" that went along with their record deal at the major label level. In other words, they brought according to the authors of their books, about $5 million dollars to Nashville with them, to get the attention of the labels. It obviously worked for them as well as others.
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Page 118
Concept Video Costs
Record Sales
(Imprints one & two)
Royalty Payments/All Kinds
In-house custom sessions
Totals From All Sources
...................................................................................................$350,000.00
YEAR TWO
Record Sales
(Imprints one, two, three & four)
Royalty Payments/All Kinds
In-house custom sessions
Totals From All Sources
...................................................................................................$550,000.00
Net profits in Year Two [$50,000]
YEAR THREE
Record Sales
(Imprints one, two, three, four, five & six)
Royalty Payments/All Kinds
In-house custom sessions
Totals From All Sources
...................................................................................................$850,00.000
Net Profits in Year Three [$350,000]
YEAR FOUR
Record Sales
(Imprints one through eight)
Royalty Payments/All Kinds
In-house custom sessions
Totals From All Sources
....................................................................................................$950,00.00
Net Profits in Year Four [$450,000]
YEAR FIVE
Record Sales
(Imprints one through ten)
Royalty Payments/All Kinds
In-house custom sessions
Totals From All Sources
.................................................................................................$1,250,000.00
Net Profits In Year Five [$750,000]
Interest on $500,000 @ 10%
...................................................................................................$050,000.00
Equity Achieved [50% copyrights]
Equity Achieved [50% imprint sales]
Equity Achieved [50% company profits]
Principal Pay Back [none]
...................................................................................................$200,000.00
Carry over
YEAR TWO
Interest on $500,000 @ 10%
...................................................................................................$050,000.00
Equity Achieved [50% copyrights]
Equity Achieved [50% imprint sales]
Equity Achieved [50% company profits]
Principal Pay Back [20%]
...................................................................................................$100,000.00
Carry Over
YEAR THREE
Interest on $400,000 @ 10%
...................................................................................................$040,000.00
Equity Achieved [50% copyrights]
Equity Achieved [50% imprint sales]
Equity Achieved [50% of company profits]
Principal Pay Back [20%]
...................................................................................................$100,000.00
Carry Over
YEAR FOUR
Interest On $300,000 @10%
...................................................................................................$030,000.00
Equity Achieved [50% copyrights]
Equity Achieved [50% imprint sales]
Equity Achieved [50% of company profits]
Principal Pay Back [20%]
...................................................................................................$100,000.00
Carry Over
YEAR FIVE
Interest On $200,000 @ 10%
...................................................................................................$020,000.00
Equity Achieved [50% copyrights]
Equity Achieved [50% imprint sales]
Equity Achieved [50% of company profits]
Principal Pay Back [Finished]
...................................................................................................$200,000.00
Carry Over
500 Masters @$ 4,000.00 per master
.........................................................................................................$2.00 Million
@ Market Multiple
10 Imprints @$ 50,000.00 per master
.........................................................................................................$0.50 Million
@ Market Multiple
Revenue Streams @ $150,000.00 per year
.........................................................................................................$1.50 Million
@ Market Multiple
Total Value
.........................................................................................................$4.00 Million
The average start up record label imprint that forms in the entertainment business has no less than $25 million dollars in actual liquid money that it spends in only 3 years with financial reserves to back up those first three years of another $25 million dollars if necessary. If that label is successful, then the artists and people involved in the label are lauded. However, if like many labels that have started with even greater sums of money and gone under, it's difficult to say what the public will want in the future. It's even more difficult for a label to be as successful as it needs to be to pay the people back who have created it.
You're probably not very interested in the cost of publishing companies and record labels. What you really want to know is the amount of money that it takes in the first year at a major label to break a new artist. The major labels who sign artists to "production and development" deals have options on that artist for several years. These deals, like the LeAnn Rimes deal are affectionately referred to as the "P & D Deal." The total needed to currently break a new artist out in the marketplace is approximately $1.25 million dollars in the first year with a label commitment of no less than $10 million dollars over a 4-5 year period.
In times past, an artist like Faith Hill could wait through four albums to have her first hit and become a major star. Labels were committed to certain artists and their future even if they lost money. However, in recent times, labels have simply not stayed the course with the artists that they sign. If an artist doesn't sell a lot of records (usually 500,000 units) almost immediately out of the box, then they are dropped and go the way of so many artists who have one hit and then you never hear from them again. The break even point for a record label on a production and development deal is the sale of at least 500,000 units. At that point, they figure they have gotten back to zero and will start to make money on this artist in the future.
As a successful artist, you have already completed your album at a substantial cost. Actual figures for a "limited pressing album" project are available by simply logging on to our web site. The average artist that gets noticed by the major labels here in Nashville will have spent at least $25K on their album project, and an additional $10K on their product and distribution of that product. Finally, they will have spent at least $15K on radio promotion of their first single record.
Now, you've got the hottest single record out there as an independent artist and your producer has submitted your project to the major labels for consideration and the phone rings. It's one of the A & R people from a major label that wants to discuss a "production and development" deal with you. Here is what the budget will look like for the first year with a major label.
It will cost that label at least $1.75 million dollars for a first year break out record on a national level.
These are extremely conservative figures published in Music Row Magazine as well as the local Nashville paper taken from actual record deals.
Production & Development Deal
...................................................................................................$060,000.00
Digital Studio Costs
...................................................................................................$024,750.00
Tape, Supplies, Mastering
...................................................................................................$002,750.00
Rentals
...................................................................................................$002,500.00
Session Musicians
...................................................................................................$024,000.00
Contractor/Leader AFM Local #257
...................................................................................................$004,800.00
Background Vocalist AFTRA/SAG Union
...................................................................................................$006,500.00
Overdub Sessions
...................................................................................................$010,000.00
Artist Advance
...................................................................................................$035,000.00
Digital Pro-tuning & Post Mastering Engineers
...................................................................................................$012,780.00
Management & Label Fees
...................................................................................................$035,000.00
Miscellaneous overage
...................................................................................................$006,920.00
Total Album Production Costs
...................................................................................................$225,000.00
...................................................................................................$025,000.00
Mailing & Radio services
...................................................................................................$007,500.00
Press Kits (6 months)
...................................................................................................$010,000.00
Image Development Consultant
...................................................................................................$030,000.00
Publicist
...................................................................................................$050,000.00
Office (12 months)
...................................................................................................$025,000.00
Promotion Team (5 promoters)
...................................................................................................$175,000.00
Secondary Radio Station Promoters
...................................................................................................$070,000.00
Travel Expenses Radio Tour
...................................................................................................$090,000.00
"Meet the Artist" parties
...................................................................................................$135,000.00
Photo Sessions
...................................................................................................$010,000.00
Seminars, airfare, hotels, meals
...................................................................................................$045,000.00
Management Expenses (12 months)
...................................................................................................$075,000.00
Single Video Costs
...................................................................................................$120,000.00
Choreography, wardrobe, rehearsals
...................................................................................................$025,000.00
Band & Tour Salaries
...................................................................................................$290,000.00
Bus Transportation (12 months)
...................................................................................................$125,000.00
Total Promotional Costs (12 months)
.................................................................................................$1,307,500.00
Total Production & Album costs (12 months)
.................................................................................................$0,225,000.00
Other Associated Costs
.................................................................................................$0,250,000.00
Grand Totals
.................................................................................................$1,782,500.00
If you were a record label, and you had ten artists all with the same qualifications standing in front of you, and you had one of those artists that had $5 million dollars in financial backing, which one would you choose to sign? You would always choose the artist with the financial backing. That way, your job and your label aren't on the line if the artist fails in some way. However, with those type of budgets, it's hard to fail even if you are an independent.
During the glory days of Step One Records, they had millions of dollars in backing from a family in Abilene, Texas. Even this independent label was able to break artists into Billboard Magazine's major label chart nationally with the right money behind them. Clinton Gregory, who had so many hits during this period of time was later signed by a major label and shelved almost immediately. You may have better luck bringing your financial combine to town and staying with your smaller independent label. Just because you are signed to a major label, doesn't mean you are going to become a priority act there.
While we are here, let's look at some video cost projections for a concept video shot on film here in Nashville. This budget is not near the budget that the major labels are going to use, but it will serve our purpose to acquaint you with the cost of shooting such videos and then getting them promoted to all of the various television and video outlets nationally.
Video Promotion Projections
1. Production
Production staff
....................................................................................................$02,500.00
Producer & Director Fees
....................................................................................................$22,000.00
2. Technical Personnel
Camera Operator
....................................................................................................$00,375.00
Camera Assistants
....................................................................................................$00,500.00
Audio Engineer
....................................................................................................$00,500.00
Barber Boom
....................................................................................................$00,950.00
Gaffer
....................................................................................................$00,700.00
Grip 1
....................................................................................................$00,500.00
Grip 2
....................................................................................................$00,500.00
3. Technical Equipment
Grip Truck/Lights
....................................................................................................$02,000.00
NAGRA & Accessories
....................................................................................................$00,500.00
Camera Package
....................................................................................................$00,700.00
Dolly
....................................................................................................$00,350.00
Studio Rentals
....................................................................................................$00,400.00
Tape Stock
....................................................................................................$00,200.00
Film Stock
....................................................................................................$00,990.00
4. Post Production Costs
Film Processing
....................................................................................................$00,400.00
Film Transfer to Video
....................................................................................................$01,200.00
Editing Time
....................................................................................................$01,600.00
5. Personnel & Salaries
Actors
....................................................................................................$00,500.00
Extras
....................................................................................................$00,500.00
Set Design
....................................................................................................$02,000.00
Make-up & Hair
....................................................................................................$00,500.00
6. Other Expenses
Props
....................................................................................................$00,300.00
Set Rentals
....................................................................................................$00,300.00
Miscellaneous FX
....................................................................................................$00,150.00
Wardrobe Person
....................................................................................................$00,200.00
Audio Preparation & Set up
....................................................................................................$00,175.00
Location Fees
....................................................................................................$00,500.00
Catering
....................................................................................................$00,550.00
Union, Association & Contingency Fees
....................................................................................................$00,963.25
7. Subtotals Each Section
Production
....................................................................................................$24,500.00
Technical Personnel
....................................................................................................$04,025.00
Technical Equipment
....................................................................................................$05,140.00
Post Production Costs
....................................................................................................$03,200.00
Personnel & Salaries
....................................................................................................$03,500.00
Cost & Expenses
....................................................................................................$03,138.25
Video Copies For Distribution
....................................................................................................$05,875.00
Grand Totals
....................................................................................................$49,378.25
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These are cost estimates on perhaps the least expensive video that can be shot and still make the grade and requirements for TNN, CMT, MTV, and other networks that show such videos. The cost involved in making some of the most famous videos as you already know such as Michael Jackson's "Thriller," goes into the millions of dollars. These figures are given so that the artist will realize that this business of making a career for an entertainer is as costly as making a career for a politician or anyone else on a national level.
In the first issue of the "Artist Survival Manual," that was printed as "edition one" in January 1990, during the height of the country music craze that swept the country, I correctly predicted that country radio would shrink with a Top-30 playlist. That year, there were 3400 radio stations that listed country music as their format. Today, there are less than 2000 radio stations that list country music as their format. The public gets tired of hearing the same 30 records over and over for long periods of time.
Also in that first issue was the prediction that the labels here in Nashville that were supported by money out of New York and Los Angeles, would lose interest in traditional country music and move the format towards the pop culture that they were more familiar with. This controversy has not only struck the record labels, but also the very heart of our business with the sale of TNN, the re-naming of the network without country music or Nashville as a part of the title, and the final days of some eleven major label imprints here in the city that are now closed.
In an effort to change the demographic that made them so popular, the labels forgot the artists that took them to the top of the world and soon rode the same train back, they rode to their destination. Only, now it seems with the advent of MP3 files, WAV files, and the Internet, it will be their "final" destination. Artists in the future, must look to the independent labels for their support and development. The major labels have lost so much money since the turn of the Millennium that they are now simply trying to downsize and combine their strength to survive the technology age. Their rosters shattered to the bone, and with no plans to grow in sight, they seem continually caught between the dot.com crash and the new technology.
The only breath of fresh air on the horizon of real music is for artists to look to "indie" labels and producers for a future in this business. The litigation over Napster and related sites will continue to cause the spread of illegal music files that will proliferate the Internet for years to come.
What a sad day for the major labels who simply never saw technology as the power source for the next generation.
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The Million Dollar Investor
If you happen to be one of the fortunate artists that have landed corporate sponsorships, individual financial backing or even personally have the type of money to compete with the major labels one on one, then this information is for the people you have enlisted to back your career. Read through it carefully before you sign an agreement as many of you will do to give your backers up to 35% of your career and probably at least 50% of your record label deal.
1. A great producer 2. A great studio production 3. A great promotional plan 4. Great stage appearance by the artist 5. Great financial backing for the future 6. Great commitments from each member of the team that surrounds the artist 7. Great overall magic that happens with the public
There are many steps that must be followed to create a major recording artist. Each artist has to be given his or her own unique promotional image and plan. Before the promotional plan can go into effect, the artist much record the most commerical product that can be obtained from the greatest hit songwriters in Nashville. How do you get "hit" material?
Your producer will go in person to the various hit songwriters in Nashville and get it in person. Please don't waste your money recording songs that have been written by unknown people. Only record songs written by the hit songwriters from major publishing houses in Nashville. Songwriters are not going to give their "hit" material to someone who isn't going to promote that material. Once the artist has gone into the studio and recorded incredible songs, and they have a product that is viable for making the labels money, then a label is going to want to meet with them and consider signing them.
Major labels always associate themselves with winners. They want great artists, great songs, and people who have the financial backing to go places. Stars are manufactured using promotional money and hit song material. Very seldom does someone come along that everyone in the country goes to see, purchases a ticket and buys their product unless they know them ahead of time through great promotional efforts that are well funded. A comprehensive promotional plan must be enacted and planned out for an artist to acheive the success that his investors and his label want in order to make the type of money needed to become a superstar.
Promotion of the artist only goes so far. All the great promotion people in the world, can't make the public go out and buy the records or request the single at radio. The quality of the record and artist has got to take over at some point. That is why the big acts record 40-50 songs a year and only keep 12 for their albums. An artist must be ready to get into the studio at any time his or her producer feels like they've found an incredible hit song for them. In the studio, some songs come off with an artist and some songs just don't. You never know until you get in the studio and try to work a song up, if it's going to really fit you or someone else.
A video must accompany each and every single release at a major label. And, it can't be an ordinary video. That is a whole science in and of itself. These videos need to be creatively produced. The latest Trisha Yearwood video was filmed entirely on location in Spain. Can you imagine the cost of that video? The video story must be well written, and the video must be shot like a major motion picture on film.
Normally, 35mm film is not going to work anymore. Today's superstars shoot their videos on 70mm film and do it in surround sound. It's like a mini-motion picture with about the same budget as a three day motion picture shoot. Major labels videos now start at $125,000 and go as high as in the millions to complete.
Radio, television and the industry must know that there is a long term financial commitment to this particular artist from his investors, label and promotional team. So many times, you have artists that get involved with financial backers who talk a big game, have great ideas and then get into the promotional campaign and their funds dry up and they leave the artist stranded in the middle of their plan. It is essential for the artist to get with people who have deep pockets and staying power. Again, here's the ingredients necessary for superstar power.
The game plan will vary from artist to artist, but the ingredients remain the same. Getting the plan started is half the battle. If you've never recorded a $25,000 album and promoted it, how in the world can you know how to promote and work through a multi-million dollar plan like the one above? Make your mistakes early on with smaller sums of money. Get yourself ready and poised to take control of your destiny and the money will come to you. If your hand is not open to give, then it's not open to receive anything. A closed fist and a cheap deal will never lead you anywhere. You get what you pay for in the music business.
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At the end of twelve months, an artist should be solidly planted in the Country Music Entertainment business with $2.5 million dollars in financial backing behind him. That investment normally turns around after he has sold 500,000 units of product to the buying public at retail. A hit record today, pays over $250K to the publisher and writer, if it goes number one in Billboard. Investments clearly turn around quickly if you look at the average act that makes approximately $1.5 million dollars a month from their career. If the artist doesn't have the finances, or staying power to get him through the difficult times, his chances are almost none that he will ever acheive superstar status.
The risks in the entertainment business are great. However, there are few investors who have the kind of deep pockets to support an artist like we have discussed above. No one should ever invest any money in the music business unless they can truly afford the loss of all of that money. The return on a hit artist is like hitting an oil well, the jackpot in Vegas, or winning the lottery. The questions that the investor has to ask are as follows.
1. Do I have the funds to complete this project in behalf of the artist? 2. Do I really believe that this artist is going to be a superstar? 3. Is this business something that I'm really serious about? 4. Do I understand the full potential of how much money can be lost or made in this venture?
Before anyone spends any money in the millions of dollars, they will want to consult with their entertainment attorney and professionals to make sure that they are doing the right thing. All the due diligence in the world won't give you a hit artist if you put your money into someone who has no "track record" to begin with. Look for someone who is already successful with limited resources and get behind them and support their efforts. Competition is fierce in the music business. Let the buyer beware!
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