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Get the Money

Lesson 7 from: Dream it, Do it: Breaking Into The Music Industry

Steve Rennie

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Lesson Info

7. Get the Money

Lesson Info

Get the Money

One of my favorite topics for business folks sometimes not the favorite topic of musicians it's money and one of my favorite thoughts get the money and in the interest of keeping the creative live thanks squeaky clean we left off it f out of that one too, because in my office in for years whenever I've hired a new associate or assistant or somebody help out in the office always make him put a dollar bill over their desk and if you become kid, maybe cody's there he'll take a picture of hiss right? And it says get the money because not to be crass but when you're a manager particularly when you're an artist trying to make a living as being able to get the money is important because as we talked about when you're thinking about is it a career or a hobby? The defining issue is whether you make money is this your living? Is this what you do to pay the bill? So getting the money isan important thing to think about not in craster and but in practical terms no matter where you are so sorry abo...

ut money in the context of the music business just like a lot of things you need money to do just about everything, right? Um you may not have the money to buy a studio, but you won't make money unless you have money to buy a laptop that at least had garage being right um yeah a little bit extra money you might have your laptop and graduated what we're talking about able tenor or or you know, if you're really high rolling, you get yourself a road case and you bring in your pro tools rig play we got one of those okay um you know those kind of things out there so you need money even for the very start of this whole music business to make make the music even before you make the music best I can tell the musicians don't rent instruments it's like golfers don't rent their golf clubs, you have your sticks, you have your guitars or your guitar player keyboards so you have your keyboards and I'm betting I'm going to go out a limb in bed you got more than one at home there you go okay? Because most musicians I meet are all they're all gear junkies he's smiling, I bet you've got a room full of stuff too more more than I cared and definitely more than my fiancee likes way don't need to make this the you know, the creative life confessional I don't want to get in trouble with the wife god, I know that goes so anyway the point is is that you need money just for even the act of creating music right and that's, not that's. Not an insignificant thing. If you're like michael and you like making the music, you know what? You know that's really need to have it played around the world. That's ok, but if you want to go out and have it be heard, then you need to spend even more money, okay? Promoting it just to give it a chance to see if people will like it in enough numbers to pay for the whole process. So whether you love talking about money or not it's out there I find the lots of musicians are uncomfortable talking about money. It kind of feels tawdry, you know, our little dirty and, you know, like I'm an artist. I don't that's your job, steve, to think about the money. You guys are musicians. You uncomfortable with thinking about money? Uh, not when I'm trying to get paid at the end of a gig. That's, for sure. Okay, good that's. Good. Okay. Um michael, the reason why I'm here, uh, that's your seminars because I am thinking about money now, ok, good. Okay. And then twenty guys, I meet some of the younger artists around. You know, this next generation of artists are maybe delicate are much less precious than some of the folks that I work with you know they kind of grown up in a new world where commercial sponsorship and endorsements and the labels didn't have the big swing and that that they used to have so they have grown up in a world that I've transitioned through so I in some ways carry some of the baggage of the way it used to be on dh in some ways also had the benefit of the experience of things that maybe some young post today haven't discovered but anyway money is there no matter what if you're lucky enough to make it I'm going to suggest that you should spend some time trying to keep it or use it wisely because it is is the blood running through the veins of the music business so understanding them the value of money in any number of context is important so if you're both the professional or on artists in the music business and you want to make this your living and you understand and you can treat your career and your art is a business then I suppose the next obvious question of get the money is the mantra then somebody's going to ask where is the money in the music business right um in the old days and I say that affectionately but with dismissal of the past is it means nothing today there was a day when the recording side of the equation record sales was the mother lode of the business okay, um I can think of days when atlantis moore said who had won big song one and a half maybe on one record that caught the wind and the lightning in the bottle sold thirty million copies okay, thirty million copies there is no record company on the planet that could hide that much of royalty income when you get the thirty million you can charge the videos, the promotion and the publicist and everybody's making a boatload adele last year in the record business, I believe the number one selling album in america um was justin timberlake's record pretty good record sold two point three million copies, so if thirty million was mount everest, you know, two point three feels like the on ramp coming up the hill definitely not even halfway up the mountain, so when you're talking about where is the money in the record business it's not in record sales anymore right on and it's important because when you're trying to be exposed out there in the past, we didn't the record business didn't think about giving away music is a way to do something else and if you are record companies certainly weren't doing that because that's where you made your dough, if you were a band who had touring and some of these I think you might have thought differently that so the recording income side of it has been wounded you know, and whether that kind of money that was generated by a thirty million seller michael jackson, we're talking about lunch fifty million of thriller around the world, whether those days ever come back through streaming where instead of getting big payments, you know, maybe you're making a buck and a half a record on something that was sold, and you never worry about what happened after now you're getting these tiny little slivers that may ultimately add up, but the business that I grew up in was used to getting big chunks of dough, not chasing a bunch of little pennies. Ok, so one of those big sources of where you would find the money is gone publishing, right. Anyway, I'm sure every musician you know that they know anything they go, I'm going to hold on to my publishing. Anybody ever tell you that we'll keep publishing, but if I ask people, why do you keep their publishing? Nobody really knew it, just watching just keep publishing. Why, okay, well, here's, why? Because in the old days and even today when you had a publishing deal. Unless we'll do some easy arithmetic, the numbers are slightly off having his nine point something sentiments imagine you got ten cents a song and let's imagine you had ten songs on your record, so that would be a bucker record and publishing royalties right? S o if you had a record deal and sold a million records and you had a buck royalty, you'd had to recoup the costs of the record, maybe that's three, four hundred grand bite. You would have had all those videos that you loved all those bands, lovemaking. Many movies then realize that about ninety percent of the cost of that video was going against there, recording royalty. So now let's take another three hundred grand off and they go. Yeah, I would be on the radio city let's make it happen bad, right? So we go spend one hundred fifty grand and promotion money. Those were three. Recoup a ble items. So if you sell a million records, this would have with my friends in an incubus sell a million records and the record coming guys good man, you should just about be recouped on the next minute. It was a lie because we're going to spend that same money again, but the publishing that million dollars in publishing income, so remember that record world million and royalties and then deductions the lie of the record business now I made nothing but I'm a million so all my friends think I'm ranch, but I made nothing okay publishing was the salve on the wound because you made a buck per record a million dollars and they were very there were little, if any, deductions against in the only deductions would be if you took in advance from the publisher and your manager and the label wasn't doing something, so I might go to the public say, advance me fifty grand so I can hire this independent promotion person because the label's not paying attention, but if I don't get this fifty thousand to get us on the radio, then the label will pay attention, right? This is how the real business go, so publishing was a huge part of it. So now we're just doing some easy arithmetic, and I said to you, forget how much atlantis moore said made on those thirty million records sold because she made something right. How much did she make on publishing thirty million records? A buck, a record thirty million you guys rob c not mathematicians from scaring you write, but thirty million would have been there, right? But last year, the biggest record in the world, america sold two point three million copies, ok, I'm good, I'm betting the justin's knows how to spend two million bet tougher times, men and thirty. So the punch line is the decline in record sales for where you look for the money has been followed by a decline in publishing income, so the two arguably biggest sources of income for artists have been wounded in a big, big freakin way, right? So how did you make this money up licensing, which was a smaller piece of the publishing side of things and also the record because if you're not familiar, don't we get t tactical when you license a song? The record company is giving a license for the actual recording that you're have, right? And the publisher is giving the right to use the underlying song, right? So if I did a recording of thriller, michael jackson would get the money for the publisher, but they might license my recording, but the record company owns it. That makes sense. So what you've seen is in my generation artists, we're precious, they didn't want to license their music the honda or budweiser or, you know, apple computer or you know that mercury, the phoenix guys did that commercial all these things, so it was a small piece of the puzzle. Right now is these other things have gone away, licensing has become the fastest growing piece or one of the faster growing pieces of the of the publishing income, and I say that because they're songwriters out there that may never get a record deal that could get a great placement in a tv show a movie ah, video game, right? Unheard of I'm sitting there at home, listening to all this music I wonder where the hell it's coming out of what? I'm trying to watch golf? And is my kid playing a video game? We're all this music and stuff that you wouldn't hear on the radio, so licensing is one of these places where there is money and you've got to go out and get it right. I always manage rock band, so for rock bands in particular touring, I was always a big source of income, right? When I started, you know, there was no prospect that the label is going to have a three six deal the label got the recording on income, the publisher got the publishing, the merch was the merch sky and the tour guys with the tour guys. So when people say ready, how do you feel about a three sixteen year? You already have a three sixty I got four partners having one person be a part of that the record company would get me nervous. Why? Because I could make the case that the record company screwed up the record business what the hell they're gonna tell me about the touring business so the touring business is still a great moneymaker but artists today the artists were signing today are having to give up a piece of that income to the record labels and I understand why they used to make thirty million records now they're doing too there used to be a lot of funny room in that thirty million ain't nearly as much funny move money in the in the two point three does that make sense for everybody? So the touring becomes a big part of where you get the money these days okay merchandise like I say, you know, merge you know in most cases would sold it venues and there'll be some odd ones that little boy bands can sell them everywhere but in general, most of the merch and most of the merged companies were geared toward selling merchandise is part of the concert touring experience, right? One of things I've seen happened over the last few years and it's proliferating it's just unbelievable pace for me is this whole product endorsement thing right? You know I try to imagine with led zeppelin have had ah fragrance and if they did, what would it have smelled like? Okay it's, nirvana I had had a fragrance what would it have smelled like? Well, of course teen spirit thank you okay about supreme shot plays uh but the point of it is those folks weren't doing that kind of put today if you're a pop star particularly right whether you're justin timberlake you know maroon five you know britney spears jennifer lopez jesus you know there's so many they all got for perfumes and this and that you know, country guys they're all starting vodkas and beers in san diego com awhile about tequila you know, so that's where some of this money is coming I suspect it's for a very small sliver of people but those were the sources of where the money is today and it takes all kinds of different approaches to get there and any questions on that this is just all kind of setting up where the money so good there's one question that we had actually before lunch gary tough wanted to know if I'm looking into licensing as one of the main sources of income what should I focus on building relationships with music supervisors were trying to get a publishing deal like between those two things? Well, I'm going to see at the top level um should you be building relationships mercilessly at every corner with anybody and everybody if I were going to wear my mercenary manager had I'd say particularly true for the people that have the money, but that's, where I spent most of my time, okay, because my job was to get the money, all right, so the answer to that question is yes, should you go with a publisher or just go do licensing opportunities if it was may, the best answer is with a publisher. Why? Because if you had a proper publishing deal, somebody is going to advance you money, which is a cz we like to say in the museum's puts him a little skin in the game. They got their money on the table. Most people, when they put money up, want to get back and so that tend to work a little bit harder. Publishing coming. Big publishing companies, you know, have people that go out and have already built in relationships with soundtrack supervisors, tv show game developers that are looking for music. And they're all kinds of new licensing opportunism thing government shows you see on cable tv. All of them have music in it, in some form or another. Right, so, you know, your preference would be to go with the publisher for the same reason that I say, don't be an independent artist. If you can be signed to a major label, take your shot with your major label, take the shot that you can get a motivated, because even a half dimwitted, motivated label is better than having the most motivated kid in the world has got no money. That's just got love. I'll take the guy with money, and I'll work on the love. I'll try to make my idea his idea, right? So, you know, that said getting a publishing deal is not a lay down, and we can talk about that in our four segment about how you put together some of these big pieces I wanted, probably how do I make that happen? The good news is, is that the licensing business has changed a little bit. There are web sites out there that will take your music and at least put it in the conversation. Arguably, they're not necessarily going to pay you in advance, but they at least have some level of access to the the buyers of those licenses, right? There is a great video on our website by demint by the name of jake, first loose if you go in the guest list and go to v jake pursuit. He is a guy who used to work for me this now making a name for himself in this licensing business where they go out with independent artists by and large put their music into their world. And then they package it, and they take it out to music supervisors and so fourth and plan that music. And if they get a placement, they split the money the artist's own. Their publishers don't have to give up their their active agents were right. So that's a phenomenon that wasn't there fifteen, twenty years ago. And it's, one of the great benefits of the web is that the web makes this location issue go away. You can now put all this music in one place. You could send the link to that buyer of your stuff and say here's, some things for you. And so it like a lot of things. And the technology is that it's making transactional stuff easier, right? Here's something to think about. You're not the only guy out there that thinks he wants to license his music. There's still two seats at the table, and ten thousand people want to get in, okay. And so being in the game, being in the room and being at the table or two different items, okay, and so, but publisher first go on your own secondly, but just understand that you're going to have lots of competition. And when we when you think about picking your part is that we just talked about this is you pick the right publisher you picked the right placement can have a huge impact that all makes sense is startinto come together? I love if I could just tell with just is getting a question brewed up in her mind here. I know that there's a lot of services online that help with music, licensing things like audio socket and jungle punks. Eso non exclusive deals? Do you think that it's worth it for artists is sign as many non exclusive deals as possible and just put their music and as many outlets as they can? Or should they be more selective and look for something that is maybe an exclusive deal with a boutique outlet? I think if I had my druthers right and again some this is painted by my experience here, right in, and I'm not saying it to glow, but I've dealt at this level of the game where it's not where lots of independent artists are playing here today, so I'm going to show my biases to give me a big, well funded, big, ugly corporation, right that has re sources that has infrastructure and that has experienced people okay versus some kid that could put up or somebody could put up an online billy to make it easy. The technology has put your song up here, but do the meta tagging and all this stuff so they take the text side of it, which is a lot of work that the big publishers do for you, and they make it easy, but they may not have the contacts yet. Those places the same is being on itunes, and now you've got to compete with everybody else. So if you couldn't for may I always with my my premise iseman, figure out who you want to be in business with first, what are you going to do next? Asked the question, right? Not be afraid of the no easy buddy thought a step it. I want to be in business with michael if he says no, I'm going to go, I'm not enough start moving down the food chain, right? So exclusive is better because typically means somebody is vested, not exclusive. Putting it out everywhere makes you feel good, I think. But when you need is somebody that's motivating? Otherwise you're waiting for the lightning in the bottle, right? So that's that's, my signature question he's still looking well now, okay? All right anyway, so I was going to say if you're a professional, we're talking about getting the money your number one job is to go out and get that money so we just talked about identifying and figure out who the players are, figure out what it takes to make that happen and and for managers it's really simple, right? And you know, people ask about that I was a manager. Get paid was that here is the main imagine that they no money for the artist how much money for steve zero I'll get a salary right? You get a percent and so same for everybody the more skin they have in the game time or money, the better off you are for professionals. It's your job to help those artists get the money I got knows the anthonys guys heard me talk about money a million times and I'll say to their credit I want to get into much of their business. There was probably no band out there that put more of the money in their pocket then they did for the amount of success they had in part of it was because they understood very clearly that they had a window they felt comfortable with their professional team to go out and get that money and it allowed them to focus on hey steve will make the music you get the money perfect. Okay, but now that we're in a touring let's be smart are we going to put that eighteen trucks where the crap and cairo and all the stuff in the name of we wanted to be the greatest show in the world but no in our heart of hearts that if you sing this song as they want and close your eyes and do it with meaning the rest is just fluff and so bands they're smart about the presentation side of it make more money so we talked a little about this idea of artists being uncomfortable in an artist shouldn't be uncomfortable about it's what you do and but it's okay to be thinking about hey steve what I do is make songs and I need somebody to handle this for me as soon as possible because it's horrible for the business types to be dealing with an artist on money you know better to have the business hacks hacking about the money because it's days it's business it's not personal right? Um it's going to I would just kind of hinted at this whole notion of balancing creative vision versus I want to make some money doing this right you can spend the police spent eighteen thousand dollars reportedly to make zenyatta monda yatta head roxanne which has been played a gazillion freakin time okay eighteen thousand you know why? Because they were the tiny little label that didn't have a ton of money they were offering opportunities that was again one of those triumphs of imagination and inspiration versus budget right the same man once they started selling record because easily pissed through million and have two million dollars fleetwood mac making tusk the one after they sold the thirty million just for a glorified wank is what it wind up being so you know understanding you know that there's a balance to be struck between spending money to get the best product and being honest and realistic and practical about it versus allowing your indulgence to drive you off the cliff is is something to be considered right I'll give you an example lady gaga is not watching I know my buddy troy carter isn't but you heard recently that lady gaga got split with her longtime manager troy carter and so I recall being at staples center tio see the lady gaga show and I she was my guilty pleasure I really liked her stuff and she you know brought her own songs so unlike madonna who kind of quote rights or song as other people doesn't choose gloms on lady gaga really rights or song so anyway I go to see this show and I was a concert promoter for years we did everything from clubs to stadium rock show so I know what a big shell eggs and I sat there and try goes what do you think I said wow this is the biggest arena show I've ever seen in fact, this looks like a stadium show shoved them a marina she had god knows how many trucks to seven forty seven's worth of equipment must have been fifty, sixty people that were part of the show and if you've been in the business, you know, for every person on there on that stage there's typically at least one other support body, if not mohr right? So this is the way this why can't go to shows because I look at him, I started counting the dollars because I know too much, right? And so I'm looking around going holy shit, this is the most expensive thing I've ever seen in my life, right? So fast forward and managers in this position is trying to support their artist, so you know, I know how this kind of wanted you my vision that would have been the greatest show in the world, the movement ok, fast forward, she goes out and puts this whole montross together and it was pretty entertaining, but the songs were what I came for the rest of us just kind of fluff, right is like disneyland on acid um and, uh, I don't know what that is and where that came from, you know, any way fast forward she has problem with her hip you know and the tour gets canceled and when you're canceled a big tour like that there's insurance too cozy but I'll just tell you that's another one of these that's just a cluster something right of major proportions so she regroups and then six months later you see lady gaga going I fired my manager and all the people I trusted betrayed me you want my translation of that lady gaga went off the deep end in the name of giving the greatest show on the planet I am absolutely certain that there were people in her camp that were willing and capable and actually did suggest that maybe you know do we need to go all this way? But I had my vision and then when the train crashed art east didn't want accept responsibility for the decisions she made after she made the music sound familiar right? So what's the answer do I take responsible? Do I fire? My manager fires the manager right in the last six day nine months you two parts with their manager my friend jim garrow nine inch nails no doubt part with their manager john mayer's mandarin fires his manager right um somebody else you have farther and then if you look at all of those different scenarios of the common denominator is the artist is on the back end of their career it's certainly not at the peak and usually it has to do with things like this so the punch line of this story is you know, be careful about that whether you're spending money on videos for the artist that spent a million dollars on the video and didn't take a look at their contract, which is you're paying for about ninety percent of the videos and when you sold that three million records and all your friends think you're rich and you don't have any money and all you have to do is tell him out when I made this many movie and then some kid went out made the greatest video in the plan for five hundred bucks you get my drift don't let inspiration drive you off the cliff when it comes to money because here's what I've learned about money once money goes away it didn't come back you need to find new money so if it turns out that the book of all that lady gaga money went this way and now I get religion, I'm going with you that money gone water under the bridge there goes and now we're looking for the new money and now it's just a little creek I don't do that I got to be smart about it and uh and take care of business not sexy stuff, but riel um questions lady got guys on the phone man she was to talk to you uh so earlier you were talking about touring, being a major revenue source for can be for artists that are just getting started. It's not promoters, diskettes talk right? How important is touring to getting to the next level? Even when that's, not a revenue source, let me this is a conversation I had earlier with because I'm going to give the in the short term it's like building a business, so you're putting out the time, the energy in the money to develop an audience, ok? And it's not profitable, and this is again the change in how business goes when in cuba started, we made a conscious decision that we weren't going to make videos. We weren't going to even go to radio with the same because there was a thought that we didn't really have a single on their right, and we spent epic records spent at the time, and I was the guy in charge of the tour support since I was the manager type in the company, we spent probably three hundred thousand dollars of marketing money, but was all tour support made one ten thousand dollars? You never went to radio on that first record science, right? But they went out and did three hundred ten shows around the country now we had an agent, you know, we had a well connected record company guy and for all intents and purposes I was the manager from the day they signed that label and that it just took a while for it to actually become official right? So I would call up friends and now their managers and you know, the manager of corn and I need some tourism board for you go to europe and I said, well, good, you know, I'll tell you what you have you got the money but you got to take this little band incubus out during a work down so way did all that stuff and they developed a touring business but they had a partner to do it right, which was sony music we went around the world doing that I remember sitting in australia once in one of our difficulty moments all the girlfriends were there with the band, which is always a mess that will be a whole different segment going I don't know, steve, while we're here doing this, you know, we're not even making any money I'm ever seen one of the guys were doing it for the same reason we did in america you're investing in your future so fast well, how important is it? Incubus didn't have a big hit on their last record or certainly not compared to some of their other seven. I want to pick on interest. Kids have been true across a number of freaking bands. Okay, you, too hasn't had a big hit a longtime rolling stones haven't had a big hit forty freaking years okay, aerosmith hasn't had getting in twenty years. Bruce springsteen has an added yet in twenty years. There's still doing unbelievable live business. Why? Because the songs that they wrote that got them in the game become the snapshots of the life of memory the first time you kissed the first time he did this the first time you did that there these snapshots to your life, right? So long after the hits have dried up, you're still coming back for those moments you if I see the rolling stones and they play a song, it takes me back to when I was sixteen, right? That's, what touring gets you and when I think about all these pop axe, okay, that just have a moment in the sun, I wonder. Are people coming back to see katy perry when she seventy? I don't think so are people coming back to see madonna when she's fifty yes, they are, but I wish madonna wouldn't do the things that rhianna gets away with, you know? Moments like that gotta stop, okay, you you own these people. They died to be you because you're still doing the pop thing, but it's tough, but the point of it is, is that a great band or a great artist that wrote great songs? That's, a great performance, took the time to build a live business. The live business can take you to your grave, okay, record sales, not so much publishing. Yes, that makes sense now that said, difficult to dio, expensive to do, but green day did it. Okay, there's, ways to do, and we'll talk a little bit more about it later.

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Hands down the best music course I've ever seen. I couldn't have asked for a better "realistic" explanation of how the music industry really works. The analogies and stories were awesome! Thank you to Steve Rennie and the CreativeLive team for an awesome production, straight teamwork! -SkyPoint

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Awesome, hope to see more in the future.

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