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Hey All,
It's Connie from Hiphopbiz.com coming at you again with a new set of answers to some of the questions some of you have. So enjoy and I'll get back at 'cha next week, same place, same channel.
Name: Nile from Miami
Connie,
Thanks for your feedback to my initial question regarding starting a label. I've read several accounts recently regarding the overall economic losses within the recording industry. It seems to be the common thought that music downloads account in large measure for these economic losses. I'm certain that the
overall economic recession also has a hand in it.
That being said, is there to your knowledge a source be it online or elsewhere, where there exist a chart or some kind of analytical display of over- all industry profit and loss, or performance illustration based on "Genres" of music, and preferably even subcategories of those genres. I hope my question is coherent enough. I'm asking this because I'm presently in a situation where I'm considering creating a small label for the purpose of funding a group of "conscious rappers" they vibe like Lauren Hill or Ms. Dynamite, in short they are MCs with conscious concerns. I'm keenly aware of how within URBAN music, the most commercially successful music is not ordinarily conscious. The collective marketplace (for the sake of longevity) seems to prefer the Jay Z's, 50 cents, Lil Kims of the game, and it's all good. But my key concern Connie is that if I fund this type of conscious music, I have the ability to see clearly how it has demonstrated and performed for itself in terms !
of raw dollars and sense from an accounting perspective. This way I can go into this with both eyes open.
Moreover I would like to have the ability to fund or involve myself with a variety of genres in order to hedge my bet so to speak and profit from my investment. If I fund this, this funding would certainly be a labor of love TO AN EXTENT!
At the end of the day no one likes losing money! I know there are no guarantees especially in the music game, but I would like the ability to minimize my risk at every turn if possible.
Thanks in advance for your feedback,
Nile in rainy Miami
Dear Nile,
First let me say that this is an excellent question and I applaud your vision and your willingness to do your homework. Too many people jump into the industry unprepared and quickly find that they are ill-equipped to run a music company, let alone have one that thrives in this climate.
Second, I think it is a great idea for you to want a diverse record company. In doing so, you can reach different markets and increase your chances of becoming a success. I do not however, suggest that you start attacking different genres immediately. When you are just starting out, it’s a good idea to focus on the genre that you would consider your strong point. Trying to do too many things will only make you lose focus. So tread carefully and make sure you do the market research first.
As far as an industry profit & loss analytical display, I don’t know of one that is broken down by genre. One chart that I do know of is Billboard magazine’s Weekly National Music Sales Report. This chart shows how much the music industry has made as a whole versus how much it made the year before. It then goes a step further by breaking down how many albums and singles sold in a given week versus how many they sold the same week last year. Lastly, it charts year-to-date album sales broken down by geographic region.
For something more specific, you can subscribe to Soundscan. This is a weekly chart that tells you how many albums an artist has sold (the exact number). Using this you can see how well a genre is doing by looking for the artists that make a certain type of music and seeing how they are selling.
Hope I’ve been able to help,
Connie M. Howell
Name: Quietstorm
Question: If someone wanted to start their own record label what should be the first thing that should be done? How and where to get investments? What should the business plan consist of?
Honestly, the first thing you should do is make sure you really, really want to do this because it will not be easy. If the answer is yes, the next thing is to learn everything you can about BUSINESS, not just the music business, though you will need to learn all you can about that as well. But keep in mind that at the end of the day you are running a business so you will need to learn fields like accounting, management and marketing, to name a few. After that then you create your business plan.
One of the things that a business plan can do for you is show prospective investors why it would be in their best interest to invest in you and your company. You have to make people want to be a part of your project, make the deal to good for them to refuse. As for what you should be in your business plan, here is a list of SOME of what you should include:
What is your objective? Will you be a record label only? Will you publish music as well? Will you handle your own promotion? Will you seek a distribution deal or will you press and distribute the CDs yourself? The list goes on but you see where I am going.
Market Analysis - Who are you targeting with your music and are they the right demographic for you based on research?
What is your promotion strategy? - How will you get word out about your music?
What is your sales forecast and what outlets will you use to sell the music?
Lastly, and this is most important:
Outline a detailed financial plan. This is where you put your projected profit and loss statements, projected cash flow and balance sheet. Take into consideration how much money you will need, how you plan to use it and how you will turn it into profit.
The financial plan is the part that the prospective investors or loan officers will be most interested in and it will determine whether or not they see your company as a sound investment. So make sure you do the research and keep things as real as possible. This means don’t go overboard with the numbers, i.e. you probably won’t make five million in the first year. But with hard work and a little luck you will someday.
Hope this will get you started,
Connie M. Howell
Name: Wills Felin
wills@jitterflix.com
I manage a hot record producer who’s had regional success with various
artists in the South Florida area. He's also worked with some major
recording acts as well...Trick Daddy, Mr. Cheeks, Lord Tariq & Peter Gunz,
etc. However, it's been extremely difficult to get that major break. Getting
an appointment with A&Rs has been next to impossible. I've gone as far to
try and hire agents to shop the beats, but haven't found anyone credible...I
know he's the next big thing. What steps should I take to get his music out
there?
Thank you,
Wills J. Felin
What’s up Wills,
It is extremely difficult to get any appointment with an A&R because they
are very busy, though you wouldn’t know it based on some of the crap they
put out but that’s neither here nor there (smile). But yes, this is a very
hard time to blow up. This business is based on cliques, most people don’t
get any shine unless the album is being A&R-ed by their “mans and them”.
So, you sir, are going to have to get out there and make some friends.
Start networking, go to industry events and meet people. And I mean the
right people, the one that will help you get ahead. Don’t just stand in the
corner and look at the girls).
I find myself giving out this advice a lot. It seems very few people
understand the importance and the impact of getting out there and showing
your face. Here’s a little something I learned about people, if they keep
seeing you at certain events they will start to wonder who you are and why
they don’t know you, then all of a sudden THEY will want to meet YOU. So
find some events you think you should attend, there are always seminars and
networking opportunities in NY, LA and places in between. If you have to
travel make it happen man. Most events offer discounts at nearby hotels so
you have no excuse. I may attend a few events myself, so maybe I’ll see you
there.
Happy Networking
Connie M. Howell
Name: Micah
Micahr2003@aol.com
Dear Connie,
I have a question for you. How can I get studio time so I can record a demo?
I have been trying to ask all kinds of ladles on the net but you are the
only one to respond. If I record the demo where would send it? Do you know
any addresses to send them to?
Thank You,
Micah
Hey Micah,
Studio time is fairly easy, I don't know where you are located but I'm sure
there are studios in your town. You should pull out your local phone book
and do a search. I don't know how much they will charge because different
studios have different rates depending on the room you want. If you speak
directly with the studio manager you may be able to work something out with
him/her. You won't know if you don't ask. Next, for a list of people you
may want to send you songs to visit www.hiphopbiz.com and pick up a copy of
The 2003 Hip Hop Entrepreneur Lists of Exposure. Inside you will find radio
station addresses, phone numbers and DJ information. As well as contact
info for distributors and wholesalers. For a listing of record companies
you can get that on line, so with the click of a few keys you’ll be in
business.
Happy hunting,
Connie M. Howell
Name: Natasha Hankins / Raymele
natasharaymele@prodigy.net
Hi Connie,
Thank you for all of the great information, I am definitely storing these
e-mails. I hope to be able to help others as you do in this business some
day. I am a Artist manager in my third year of practice and study and my
group is ready!! We are working with a production company who has a lot
more connections than I do. There is a possibility that he may put us in
front of some major opportunities. He is asking for a finder's fee which is
fair, however he wants me to propose a percentage. I will draw up a
contract and negotiate but I need a little advice. From my readings I hear
10 % finder's fee is average, is this true? If not what is average? Should
I start low and then, thru negotiations let him come up to the average?
Should his percentage be based on the amount of proposed contract, i.e. 5 %
for 2 hundred thousand or less, 7% for 201 thousand to 5 hundred thousand,
and so on and so forth. Please point me into the right direction so that my
Group will not be hurting for certain when we get a deal.
Thank You,
Raymele
Hey Raymele,
I’m glad you enjoy the answers I’ve been giving and I’m grateful for the
opportunity to help people. Let me first say that you are very smart to
hook up with someone that can help you reach your goal of getting a deal for
your artist. So many people get caught up in wanting to do everything alone
(in order to keep all the money), that they miss out on golden
opportunities. They are only hurting themselves and they soon learn that
100% of nothing is NOTHING.
Now, most producers in this situation usually ask for a finder’s fee of
about 15%, but the fact that he wants you to propose the percentage makes me
wonder. Either he’s inexperienced and doesn’t know what he should get (but
sees a chance to get in on the ground floor of something that is about to
break) or he’s trying to see where your head is. Either way, I would start
low, maybe around 5%. This way you can see what he counters with and that
will tell you where HIS head is.
As far as offering an escalating percentage based on the advance you
receive, I say if he goes for it, do it. Your goal is to walk away from
this deal without having given away the farm. You don’t want him to get the
majority of your advance and leave your artist with nothing.
This brings me to my last point, and this is very important. Make sure that
in your contract with the producer (I would suggest you see a lawyer) you
outline what monies he is entitled to get a percentage of. Is his cut to
come out of the advance alone, or is he going to get a piece of the album
sales money as well? What I’m trying to say is, be SPECIFIC in your
agreement. You don’t want to think that all is said and done after you pay
him and have the guy come back after a year or two demanding more money. It
will probably take a few back and forth exchanges and a lot of thinking, but
the more you iron out ahead of time, the better off all parties will be.
So good luck and send me a copy of the album when it comes out,
Connie M. Howell
Name: Erica M. Wilson
l00ni@hotmail.com
How hear: i'm a member of hiphopbiz
I am looking to get into the business in A&R or artist management. I have a
Music Industry degree from Middle Tennessee State University. I didn't get
the chance to have an internship in school and I know the majority of
companies won't give me one without receiving college credit for it. I'm now
back home in Memphis, is there any way I can get started here? There aren't
many places that jump out at you like in Atlanta or NY and I don't have
enough money to move to a bigger music mecca. I'm looking for some
experience while I'm here in Memphis. Any suggestions?
Hey Erica,
It is unfortunate that you didn’t get a chance to intern while you were in
college because that would have been the best time to do it and based on
your performance you probably could have walked away from it with a job
offer. But let’s live in the now, first I would check around Memphis. I’m
sure there are some labels you could ask for internship at, or better yet
why not ask for a paying job. After all, you won’t know if you don’t ask.
If the opportunities in Memphis are few and far between, try Nashville.
Nashville is a music mecca in and of itself. Granted, you may end up at a
label who’s music you aren’t necessarily into (or maybe you will like it, I
don’t know) but keep in mind that you are there for the experience and
knowledge. Once you get that you will be better equipped to move on to
bigger and better things.
So get on out there and make it happen
Connie M. Howell
Name: William Gaffney
MzkChmbrEnt@aol.com
I am the sole controller of my own record label.... I will have 4 different
VP's running depts for me. My question is do I put them on paperwork for
the company as far as with the state and its other branches as if they were
additional partners? Do I consider them as employees and negotiate on the
contracts and its perks? I'm stuck on this too!!!! Please help... Peace and
Love!!!!!
Part 2 (same guy)
Ok... This can get confusing so bear with me. I own my own Record Label and
at I will be the sole controller of it 100%. But, I have a VP of
A&R/Production, 2 VP's of Mktg/Promo and a VP of Artist Mgmt. Now I know
all these people will be relying on commissions, royalties, CD sales, etc.
I just want to know how do organize the percentage disbursement for each VP?
Or, do I just offer them a certain percentage of company profits to
compensate the hassle of percentage of CD sales, Royalties, commissions,
etc? Should I give a small percentage of company profits and still give
incentives regarding percentage of CD sales, commission, royalties, etc???
Which do you feel is the best move? And how should i disburse percentages
with each? This is my only problem I'm stuck on!!!
Thanks for all your help.... Peace and Love to All!!!!
Hey William:
As you stated in both parts of your question, you are the SOLE controller of
your label. Therefore, anyone that YOU bring onboard to work with YOU is an
employee of YOUR company, unless YOU decide otherwise (Get it, got it,
good). This is the joy and the responsibility of controlling 100%. And now
is the time to address this because you don’t want your VPs thinking they
are entitled to something that in fact they are not. UNLESS of course, you
want to share with them and I applaud your unselfishness if that is the
case.
I hesitate to delve into financial matters that are not my own because it is
a very sensitive and sticky subject. But since you asked for my opinion
here is what I would do. I would view the four VPs as my employees and I
would pay them as such, on salary. The VP of A&R/Production (I assume he is
producing all of the tracks) would also retain his publishing royalties as
well as 3 points/song on the album. The other three would receive their
salary and depending on how well the album did I would offer bonuses based
on sales plateaus.
But the most important thing I would say to you is this: GET AN ATTORNEY
NOW! And make sure it is an entertainment lawyer (please don’t take a
meeting with your cousin’s divorce lawyer, he will not do). You need to
obtain a credible attorney and sit down with him and map out a plan for your
business. He/she will be better equipped to help you with a percentage and
commission breakdown between you and your employees.
Good luck,
Connie M. Howell
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