You missed the bit where he points out that 90% that Warner take off the CD sales are not deducted from the advance. In his figures Warner only had to sell 15,000 of each CD to break even (which the author seems to suggest they did). At this point the band will still be in the red with the label but the label wont be in the red with the band.
You don't get it. Why does WB deserve to earn any money from sales, if they don't put in a single cent of their own? Every cent they put in, they charge to the artists. So why do they deserve to make any money at all?
Sure, it's in the contact. But it's morally wrong.
LOL! Lecturing me on "not getting it" is not a nice or effective tactic.
--
WB put in advance money to make the albums in the first place. Nothing morally wrong there.
Further, lets say that 90% fee on current sales goes into the pool of money for signing new bands who might be successful. Nothing morally wrong there.
WB does not necessarily blow it all on Cocaine binges and executive Porsches.
The numbers are scary: WB claims to be $300k out but they're not accounting for a sizable revenue stream. The post mentions the band earned $12k in 5 years from albums they control, and they expected the albums WB control to earn 2-5X more. Assume 5x$12, and you'll get closer to $200k.
Do that over quite a few years, and they'll end up owing the band money while the band members are alive. Keep telling them $62 over five years and they'll never ever need to write them a cheque.
Sounds more like a court case with WB and not a blog post whinging about the terms. HN Post calculations are worth the paper they're written on.
If anyone is owed multiple $100K, for any reason, there should be motivation to hire a legal team to ask for it. Those sorts of cases happen successfully all the time, and the band guy should start his own action.
But he'd need to be nursing circa $500K loss for him to be $100K in credit by the time the settlement was awarded
There is an interesting interview with the producer of Babylon 5 where in theory he is owed 10's of millions because he traded salary for a large slice of whatever profit showed up.
However, the contract was written so they could do some accounting tricks and make it look like the show was a net loss. He knows the game well enough to know he was never going to see the money. But there was an odd moment where an executive happened to mention the actual billion in profit from the show. And he said something about his cut. At which point the executive said something about how it was still in the red. Even though as a producer he know how much the show cost, he could read the subtext and in the interview he said "I want to keep working in Hollywood and I know the game."
However, if he took them to court he could probably get a large payout at the cost of never working in Hollywood again.
They apparently tried to pull something similar with Peter Jackson and the billions of dollars from LOTR, though Jackson did end up taking them to court.
A mortgage has an interest rate set (in part) by an idependant body. This is generally below 10%. You will find that this deal we're discussing is the other way round the label slicing off 90% off the actual sales. That is their "interest charge" for the loan they provided.
If we're going to stick to this mortgage comparison: do you think it would be fair if all the banks colluded to charge interest rates starting at 90%?
Right/wrong, morally/legally that doesn't bother me. Is it fair? That's the question. The answer IMO is "No".
This is what riles me, especially when as a consumer it is very difficult to find this kind of information so it is difficult to make "fair" purchases to stop this kind of thing.
The difference between a home mortgage and a record label's advance is that the value of the home being mortgaged is relatively stable. If I borrow $450K to purchase a $500K house, and then I can't make my payments, I am likely to still have a house with a market value close to $450K. (OK, in many parts of the US today this is not true, but at least that was the bank's expectation when they authorized the mortgage.)
If a new band approaches a record label for a contract, the label knows how much it will cost to produce and promote their album, but given the fickleness of the public taste, they don't know whether that album will sell ten thousand copies or ten million. And after the band has sold ten million albums, it will have a lot more negotiating leverage in the next round of contract negotiations.
So the record label has every incentive to lock the band into a contract that grabs as much as possible for the label. Bands that only sell a modest number of copies get screwed by this arrangement, but if the band members only expected to sell a modest number of copies of their album, they wouldn't be seeking a deal with a major record label to begin with, right?
> A mortgage has an interest rate set (in part) by an idependant body.
That's typically not true in the US....
> This is what riles me, especially when as a consumer it is very difficult to find this kind of information so it is difficult to make "fair" purchases to stop this kind of thing.
Actually, it's pretty easy. If you're buying in a store, it's almost certainly from a "rip-off record company".
The base interest rate is set by the government and the banks can whack on whatever margin they want (including negative for a period)
Do you think it's "fair" that banks offer Interest Only[1] mortgages, where you the householder can pay off 100% of the price of the house... and then owe the bank the same amount again?
I understand why you are riled... but see my other post about my friend who offered better terms to bands and got no business[2]
Yea, I used to work in the mortgage industry. Interest only mortgages are there for people who have investments to cover the cost but just to want to ensure the liability doesn't increase.
What is unfair is selling these mortgages with endowment plans as a "dead cert" to consumers like banks did in the 80s in the UK. They were all successfully sued and settled in the late 90's / 2000s.
In the UK the council that sets interest rates is an independant entity.
