The people into
music and recording are bound together by a common goal. Whether it is an up-front
drive or a back-of-the-mind-pipedream, we all want a hit record. Everyone
"wants to be a star," a national music success, a regional hit or at least a
neighborhood mega-star. They want to be part of the production in the role of
musician, singer, songwriter, engineer, promoter, performer or "all of the
above." |
The starting point of a hit
record is to understand and take care of your "music business." Most people work hard at their music, their playing,
songwriting, performing and recording. In their mind, the plan is to develop their
talent and their music will be magically "discovered" by some national record
company. In their mind this company will give them mega-bucks and take care of any
other action needed to make them a star. They're so busy doing their music that they
don't take the time to learn anything about how the music business really works and are
headed for failure no matter how good their music is. The
first thing to understand is that beyond the music, there is business that needs to be
done to get a hit. You will need to do your part both in the creation &
performance of your music and in the "taking care of business." |
So the
business end is half of your activities and demands no less than
half of your time to achieve success. Although you need to
spend 50% of your time on taking care of business, this is the
important half your activities. Your obtaining a hit will be
33% dependent on how well you do your music and 66% dependent on how
well you do your business. |
| There are many areas of the business that
needs to be addressed. A large part of it is in the promotion, the distribution and
marketing of recorded product. This is the area of the business that I know well and
is the subject of this article. |
As I said
earlier, many feel that if they are "talented enough" that a record company will
sign them to a recording contract and take care of everything. The chances of this
happening, are so small that you need a microscope to see them. But let's say you
are one of the unlucky handful that did have this happen to. What would be next?
Well the record company would spend somewhere near $100,000 to get your release
ready and then put it out. You would be signing a "standard"
new-artist contract. Under this contract, you would be paying for all of the
production expenses out of royalties earned from record sales. You would get a new
artist royalty rate, maybe half or two-thirds what an established artist would
receive. In other words you would receive no royalty payments until
the production costs were paid for and you would be paying them out of a reduced rate.
Even more madding would be the fact that you would have little or no say
about how the production budget was spent. |
Lets say that you
get a rate of 10% of sales. Doesn't sound too bad, does it? A CD sells for $15
so you get $1.50 for each one sold, right? Wrong. First of all,
you're being paid off wholesale, which brings the figure down to $0.75. But then the
company deducts a "packaging charge" bringing the amount per record sold down to
57 cents. But the record company sells on consignment and those "sold"
records can come back. To protect itself from "returns" the company will
withhold another 25% to cover these costs - bringing your net down to 42 cents per copy
sold. This means you have to sell about 235,000 copies to break even. But
Record Companies sell lots of records - even off the flops - right? Wrong -read
on. |
Record Companies
have two stacks of releases. The first stack (we'll call it stack A) are the top 8%
of their releases. These releases are hugely "successful." The
second stack (we'll call it stack B) are the rest of their releases (92%). These
releases are not successful. According to a recent article in EQ Magazine, major
companies average about 750 unit sales per release for this B stack.
|
| As time advances with more
alternative marketing tactics being used and more records on the market, there is a
decrease in the number of extremely successful records. To verify this one only
needs to visit www.billboard.com and count the
number of albums in the charts that have received gold or platinum awards, compared to 5
years ago. In a recent survey done by REQ, the number of these hits is 50% compared
to the number in the charts five years ago. This may well mean that only about4% of
national record company releases fall into the "hugely successful" category.
|
So how does one
get a hit record with all of these odds stacked against you? The answer is to test
market. A successful test marketing in a local region can result in the
record company being convinced that your release belongs in the "A" stack.
So you put out the record yourself and attempt to sell 5000 to 10,000 units
yourself, keeping records of the sales. If you achieve this level, you have
"proven" to a record company that you deserve the "established artist"
royalties and contract terms. You should at this point be able to show them that you
can direct the expenditures in production, and you should get partial or even complete
control on the production budget to spend on the next release. |
| Although test-marketing is all
but essential, it is not an easy job to sell records in the kind of volume necessary.
Almost all artists can't sell the target number of copies on their first release.
As a general guideline I would want to see at least 1000 copies sold on the first
release (in a six month period) and work towards the 5000 - 10,000 copy level on the
second or third release. To give you a real-life example, the artist Kid Rock broke
out of Detroit with 10,000,000 sales on the 1999 release of the "Devil With A
Cause". Many don't know that this was the artist's 5th release - his sales
numbers on his first release were in the range we are talking about for a first release. |
| While you are trying to achieve
good sales numbers, you need to realize that your test market release will encounter stiff
competition from major artists' releases. If a radio station program director could
add 3 new songs to his play list this week and he had received 5 major label releases on
national artists with past hit record performance, 3 of those are going into
"rotation" on the station and your test release will get buried. |
| The thing to know is the
timing. Mis-timing will bury your test release in major competition and proper
timing of your release will give you the best chance for success. You want to give
your test release time to become established before the semi-annual flood of releases on
major artists. If your record is established by that time it has a fighting chance
with the competition. The schedule is like this: |
MAJOR ARTIST RELEASE SCHEDULE |
TEST RELEASE SCHEDULE |
APRIL |
JANUARY - FEBRUARY |
SEPTEMBER - OCTOBER |
JUNE - JULY |
|
| In order to sell records, they
have to be available to people that buy records. Although I don't have room in this
article to go into all of the details, your main test release outlets and how they work
are as follows: |
RECORD STORES |
| Record stores accept
independent releases on a "consignment" basis. They accept the product at the
price they normally pay for product that has a retail price that you establish.
After the consignment period (usually 6 months) they will return unsold product and pay
you for what they have sold. If you "sell out" before the consignment
period ends, they will want additional stock and pay you on the amount that they first
accepted. |
|
AT PERFORMANCES |
| You sell product by
setting up a display, announcing the availability of the records on stage and possibly
having someone talking to the customers between sets in the club. |
|
THE INTERNET |
| Establishing an
Internet site promoting the artist is standard procedure today. In addition to
promoting the band/artist with pictures and notices about where the performances are,
provide a means for the people to buy the product through the mail - or better yet, though
e-commerce. |
| Besides establishing
your own site, there are scores of sites that offer bands the opportunity to be listed and
to even put up an "artist page." |
|
ARTIST NEWSLETTER |
| Regular mailings to
fans is also a standard action that artists do. Include in these notices an order
form for the fan to obtain your record by mail order. |
|
|
| When you get the record stores to
accept your product, you are doing something called "selling-in." When the
public goes to the store to buy your record, you are doing something called
"selling-through." There is the selling-in and selling-though for the test
release, but ultimately you are trying to sell-in to a national record company and hoping
you will sell-though a million copies. |
| When you are trying to get signed
to a record label, the sell-in becomes a bit more complex. There are really three
people that you have to sell-in to before getting a record company offer. You will
be dealing with an A&R Director for the company, but that person cannot authorize you
being signed. You are really working through the A&R Director
selling into the president and the head sales/marketing guy. When the A&R
representative presents you, the president will turn to the chief sales/marketing guy and
ask: "Can we make any money off this artist?" You, at that point, will
want a resounding "Yes" to get a contract. |
|
| In your presentation to the
A&R director include as much marketing data and strategy as you can. Try and get
quotable endorsements of DJ's and radio personalities. After you get him/her on your
side, ask the A&R Director if there is anything you can provide or help with in
his/her presentation to the other record company executives. |
| This is an interesting industry
we have here. Artists are hot and outselling everyone one week and disappearing the
next. There are many "one-hit wonders" out there that have a hit record
and never have a second one. There are many reasons for this, including "letting the
hit go to your head," drug and alcohol abuse, "deciding you don't like the
lifestyle," and last but not least, only having one good tune in you. |
| Some artists and producers work
hard to get that first hit and then think they can sit back and relax. The truth of
the matter is that whatever you did to get there has to be repeated. If you want a
hit career, you can't expect someone else to do it for you. After (or even during)
your "first" hit is a time where you really go into action selling, promoting
and working your next record. When you present a record to anyone in the industry,
it is met with heavy doubts that it will do anything. If you manage to convince someone
that you have a hit, the heavy doubt becomes doubt that you can have more than one. |
I strongly recommend that the
newcomer sit down and plan the next five years. Where do you want to be in 5 years?
What are the steps you need to accomplish to get there? Doing this will prepare you
to counteract the doubts that everyone will have about your long term potential.
Record companies are pretty happy to "break even" or "make a little
money" on your first release. They are looking, however, for the "home
run" that could happen release #2,#3 or even #4. |
| We recommend an "action
plan" which is really a business plan for your career. In doing the plan,
however, realize you really need two plans - one for the immediate future (this release)
and one long-term plan. In your presentation to the A&R director include a one
page write-up of your 5 year plan. It will be impressive that you are thinking in
these terms and the fact that you have a 5 year plan will be much more
important than what is in the plan. What are you selling to the record company? It's
not just one release, but YOU. |
| I started this article by stating
that there is much more to getting a hit record than just being good at your music.
I stated that a full 50% of your time must be spent on taking care of business, rather
than making music. Some of you probably wondered what there was to do that took such
a large percentage of your time. If this was the case, hopefully I have opened your
eyes a bit with this article. |
