The Business Of Music

If you want to make a living as a producer, masterminding great recordings is not the end of your obligations. You'll have to deal with lawyers, managers, and the business end of record companies — all in the interests of finding work, and ensuring you're paid for it! David Mellor invites you into his parlour...

Think of the music business as a spider's web. All around are dotted the carcasses of unwary flies, some formerly fat and juicy, others so small that they were eaten up and spat out in an instant. The flies in my metaphorical web are musicians, songwriters, arrangers, producers, managers, A&R people, record company executives, music publishers, record, cassette and CD manufacturers, pluggers and marketers, DJs, radio stations, record shops, royalty collection agencies, and others. That pretty well covers the whole of the music industry (except the music journalists, who are far too agile ever to get trapped!). So what kind of beast is it that sits at the centre of the web, growing fat at the expense of all the other poor creatures who have no option but to succumb to his deadly embrace? The music business lawyer, of course!

Let's Be Careful Out There

You may have realised this already, but nothing happens in the music business without a lawyer as the go‑between in the transaction. A few enlightened souls have discovered that it really is possible to do business on a handshake between honourable people, but for the vast majority, the only way is the legal way. A record producer will definitely need to have a music business lawyer to examine his contract with a record company. The consequences of not doing so could be dire, from a potential loss of all royalties (royalties are often known as 'points' in the business, points being a percentage of sales revenue) through to responsibility for budget overruns and possibly even worse. Thus advice from a specialist music business lawyer is pretty much a necessity.

In the past, record companies have dreamed up all kinds of schemes for protecting their own interests against the interests of the creative people who actually earn the money. Although there seems to be a much more responsible attitude developing in the record companies these days, all the old clauses are pre‑loaded into their word processors, ready to be dropped into a contract. One old favourite trick is known as 'cross collateralisation'. This typically would allow a record company to offset profits earned on one album against losses made on another. Suppose as a producer you made two albums with a band. The first sold well, but the other bombed. If cross collateralisation was allowed, there would be no overall profit, so your points would add up to zero. If your contract, however, specifically disallowed cross collateralisation, as it should, then you would receive all the royalties you were entitled to on the first album, while receiving nothing for the second (because you didn't do your job properly, did you?). The funniest thing is that, despite my opening paragraph, the lawyers aren't the bad guys — it's all the people who have tried to screw each other (financially, I mean) throughout the entire history of the music business since year zero. Despite many people's current best intentions, this tradition of distrust means that almost every word has to be inscribed on parchment, signed and sealed, and whether a project succeeds or fails, the lawyer always benefits.

Money Go Round

Money, in the music industry, is made from the exploitation of copyrights. 'Exploit' in this context is a good word; it means that your work is being promoted well and is generating revenues. There are three basic types of copyright involved here: in a musical work of any kind there is a performing right and a mechanical right. The performing right means that the owner of the copyright can allow performances of the music to take place, whether live or recorded, in return for a fee. The mechanical right means that the owner of the copyright can allow the music to be recorded, and copies of that recording to be made and sold, once again for a fee. The third copyright is one that exists in the actual recording of the music rather than the music itself, and once again, owners of this copyright can allow the recording to be performed or broadcast in return for a fee. There are other copyrights involved in music, such as a musician's right in his or her own performance, but we'll stick to basics.

As a producer, you will not be entitled to any of these copyrights. The performing and mechanical rights belong to the writer or his publisher, and the rights in the recording belong to the record company. (Of course, if you helped to write a song, then you will be entitled to a share of the performing and mechanical royalties). It is important, however, that you understand these methods of generating income, because your livelihood will be very closely linked to them. At the moment it is virtually certain that your income as a producer will come from a combination of a flat fee and points. (Some producers, particularly remixers, only get a fee, with no points). The points will be a percentage of actual sales of records, cassettes and CDs. The more the record company sells, the more you'll earn. If you consider that a top producer may be on something like three points, and a top act can sell millions of copies worldwide, you can estimate for yourself how much you could make when your production career really takes off!

The only snag with this arrangement is that sales are only one way in which recordings can be exploited. Performance royalties are a major component of any songwriter's or composer's income, in some cases making mechanicals look meagre in comparison. But do producers get points on performances of their work? They do not. This is a major issue in the music world since, despite a recent upturn in sales, many people think that performance royalties are going to become the number one income generator for the entire record industry. Although you may be very keen to buy the latest CD by your favourite act right now, how will you feel about going to the trouble of buying a physical object when you can have the music delivered to you directly via the information superhighway, at the cost of maybe a few pence a play? Actually, that's still very much a debatable point, but producers certainly do have to debate it now, rather than waiting until their sales have declined into oblivion before they do anything about it.

Management

You may be a brilliant musician, writer, engineer or producer, but:

• Are you also a brilliant self‑publicist, able to charm your way into A&R departments and get to work with the top acts?
• Can you be bothered to attend lengthy meetings with your lawyer, making sure that every last comma in the contract with the record company is in the place most favourable to your interests?
• Do you want to break off work every time the phone rings, in case it's someone really important that you have to talk to?
• Do you think you could check a record company's books to make sure that your points have been correctly calculated, and that funds haven't been siphoned off in a manner not allowed by your contract?
• Do you think it's worth paying 20% of your income to make sure all these things are properly and professionally handled, leaving you free to get on and produce?

Any sensible person will know the correct answer to the first four questions. The answer to the fifth is yes, because even though giving up 20% of your hard‑earned production fees and points seems like a high percentage, at least it's a percentage of something. Without a good manager, you may be able to console yourself that you are keeping 100% of your income, but it may just be 100% of no income at all! Your manager may even, through his music business‑aware accountant, be able to recoup much of that 20% by making savings on your tax bill!

To become a record producer, you're going to have to be able to promote yourself in the early stages before you have established a track record of any kind. You won't find it difficult to find a band to produce, or a singer to work with, because producers have the natural ability to get on well with musicians, and they are the kind of people that musicians instinctively trust. I have to say that if you don't think you are this kind of person, you're going to find it difficult to become a record producer — although domineering, autocratic producers are not entirely unknown in the industry! Selling yourself to a record company isn't going to be quite so easy, but if you're doing good work, the opportunities are there. Once you have produced a few records that have sold reasonably well, then you are in a position to approach a manager.

In the past, record companies have dreamed up all kinds of schemes for protecting their own interests against the interests of the creative people who actually earn the money.

Once you have made an agreement with a manager, whether it's a handshake deal or a formal contract, the manager will make sure that A&R departments are aware of you and the type of music you work with. Your manager will keep his finger on the pulse of the business far more firmly than you would have time to do, and he'll know which acts are planning recording projects, and whether they are shopping around for a new producer. If an A&R manager becomes interested in you, then he will enter into a lengthy three‑way discussion between himself, your manager and the artist's manager. You will be relieved of all the nit‑picking business details, so that you only have to discuss the strictly musical aspects of the forthcoming recording. If the record company thinks you are the right man or woman for the job, then your manager will negotiate your remuneration. Your manager will have a good idea of your current market value, and of how much the record company is likely to be willing to pay. You will get a better deal by going through a manager simply because he knows the business. If you think you might consider doing the negotiating yourself, pause for a moment to imagine how good a record producer the manager would be!

When the project gets under way, you will need to devote your entire attention to it during virtually all of your waking hours, for a period of possibly two months or more for an album. Without a manager, how would you find time to line up your next job? It just isn't possible. Everyone in the industry has their own schedule — the record company has a certain number of releases to make, certain types of music sell better according to the time of year, the band has touring commitments, and you've booked two weeks in Bognor in the middle of August! Juggling all of these is a full‑time occupation — your manager will let you get on and produce great music, which is probably all you ever wanted to do.

Collecting The Cash

When the recording is finished, in the shops, and at the top of the charts, you will be able to sit back and count the money flowing in. Or will you? Collection agencies like the Performing Right Society, the Mechanical Copyright Protection Society and Phonographic Performance Limited look after virtually everyone's interest apart from the producer. The producer is paid according to what is received by the record company, after whatever deductions are specified in the contract. No reputable record company would intentionally pay a producer even a penny less than he was entitled to in the contract (although they might haggle over even these tiny amounts during the negotiation), but the complexity of the music retail industry means that opportunities for making large accounting errors exist in abundance. Any music business contract should include a clause stating that an independent accountant can be appointed to inspect the record company's relevant books and paperwork to make absolutely sure that no errors are made. This will keep the record company on their toes, and ensure that every last penny goes to its intended recipient.

Becoming A Record Producer

Since this is the final instalment in the series, I suppose I should actually tell you how to become a producer, since you've been waiting so long! For your benefit, I have distilled the information I have obtained from top producers into a simple list of instructions:

• If you want to learn how to produce, just get in a studio and do it. You can learn a lot from books, your regular copy of Sound On Sound and recording courses, but you can only really learn how to produce by working in a commercial studio.
• To become a producer through the engineering route, get into a good recording studio by writing lots of letters to every studio you hear of. When you have written to them all with no success, wait three months and write again. You may have to write hundreds of letters to get one interview.
• To become a producer through the musician route, get in with a band or other musicians who are regularly recording in good studios. Observe everything and learn.
• Approach a band and offer them studio time at your expense, with an agreement to share in any profits, of course. When you take the recordings to a record company, make sure the A&R manager knows that you are the producer and it is you that has made the band sound great. Liaise with the band's management and try to get them to share recording costs.
• Find a singer and arrange and produce the instrumental backing, preferably in a professional studio. Take the tapes to a record company, or use them to get professional management for the artist. Record companies prefer acts who already have management.
• Make a recording and release it yourself on your own label. If it sells a couple of thousand or more, it's enough to make a record company take you seriously.
• Once again, just do it!

So that's it. How to become a record producer is no big secret. If you have talent and determination you can start to become one today by saving some money towards your first session in a pro studio with a pro engineer. At this very first session, you will indeed be a producer and you will be doing exactly the work that a successful record producer does. How far you get in the business is up to you — only a very few can carve out a successful, continuing career. But when you do achieve recognised producer status, make sure you write to me via Sound On Sound. You don't have to thank me because I haven't done anything except to point you in the right direction. Send me a copy of the record or CD and I will have the satisfaction of knowing that I played a very, very small part in its creation. You will have the satisfaction of achieving something that is the ambition of probably hundreds of thousands of people the world over, with an interest in recording music. You will have become a record producer!