“I haven't yet found an alternative to working hard for money unless you're in soft-porn or the Senate,” deadpans local musician and producer Sven-Erik Seaholm. “In San Diego, original music doesn't really pay well, if at all. If I can leave with $200 at the end of the night, drinks are on me!”
One of the few San Diego musicians to successfully piece together a living, Seaholm is a dwindling minority. Every career in the music industry is built by an elaborate, questionably symbiotic union of producers, managers, studio moguls, engineers, talent buyers, promoters and, of course, musicians. Too often, it's least beneficial to the people who actually create the music. The mechanics and intricacies of this union are mind-blowing.
It's no less daunting considering the industry's current economic nosedive. CD sales fell 11 percent last year, and other products (especially video games) are proving formidable competitors in the dogfight for disposable income. So today's musician finds her or himself with an acute need to multitask in order to survive.
“There really aren't a lot of ways to make money in music,” says Ron Fountenberry, driving force of local indie pop band Incredible Moses Leroy. “Street corner hustling-that's always been a favorite.”
Fountenberry, however, hardly lacks business savvy. Though record sales of his debut album on Los Angeles-based Ultimatum Records were modest, the mop-headed rocker found corporate sugar daddies in The Gap (he became one of their poster children two years ago, with billboards from San Diego to Tokyo) and Vespa (IML's song “Fuzzy” was used as the official anthem of the nostalgic scooter's current comeback).
Through hard work and good connections-not to mention a pretty face-Fountenberry's been able to milk these corporate cows for licensing cash. Which, of course, helps him attain the ultimate goal: making music full-time.
While we know that Fountenberry made a significant amount from these advertisements, the old maxim of “never ask someone how much they make” holds true. He's not talking. Neither are The Gap or Vespa.
Similarly, local rockers Convoy have been cast as the stars of the new commercials for Sheraton hotels with their remake of the Rolling Stones' classic, “Let's Spend the Night Together.” Smaller-name bands like Convoy are able to take advantage of the fact that big-name stars won't do commercials for cheap. It's a lot more cost-effective for Sheraton to hire Convoy to re-record a Stones song than to phone Mick's lawyers and haggle over how many millions they want for use of the original tune.
On the hotel chain's website, under a classy photo of all five members of Convoy on a doublewide hotel bed, is the caption: “View the commercial that's giving Sheraton a new spin.” For Convoy, the television ads serve as a mini-video. Regardless of context (corporate alignment is always dicey in terms of an indie band's “cred”), their sound and look will be broadcast nationally thousands of times a day. With MTV airplay not currently forthcoming, they will be seen and heard.
At the band's request, CityBeat won't divulge how much they were paid for the spots. But suffice to say, their next album and a tour or two are paid for.
Musicians like Fountenberry and Convoy commonly combine live shows, royalties, album sales, advertising and merchandise sales to produce a profit. It seems San Diego bands have left not one of these stones unturned.
Live shows and touring: less is more
When Dave Brown booked the recent “Can You Hear Me Now?” tour-which included both local musicians and artisans-the head boss man at local PR firm Holiday Matinee decided to play it simple.
“I set it up so every venue fed us and paid us enough to get to our next destination,” Brown explains. “Holiday Matinee paid for the posters, street-team expenses and handled the booking and publicity on the tour. I also handled the tour managing and overall organization of the tour.
“I'd say it was a great success, especially considering no one has attempted to book a tour consisting of two unknown bands (outside of the San Diego-Tijuana region) as well as the inclusion of artists, filmmakers, jewelry designers, etc.”
With independent artists and smaller labels, this direct management approach is ideal, says industry guru and ex-San Diegan Bill Silva, who manages both Unwritten Law and Jason Mraz. Silva should know-the man has been involved in more hits than Tony Soprano.
“Popular bands that are prudent in their spending make the most money,” says Silva, noting that the Dave Matthews Band is probably the most profitable touring act in the country. The band's ability to charge higher ticket prices, sell out shows, tour consistently, cater to younger consumers (the most attractive to advertisers) and produce top-level shows at low-level cost, is the key to their longevity, Silva says.
Last year, Dave Matthews Band moved relatively few album units-close to 2 million CDs-but topped the Pollstar chart of most popular touring artists. With a net worth of $31.3 million, the band kept ticket prices down to a (relatively) low $40 and still grossed $60 million in 2002 because they were able to sell 1.5 million tickets. Compare DMB's ticket price with the $100 to $500 range on billets for artists like Paul McCartney and the Rolling Stones, and you'll understand why Matthews is a consistent touring draw and third on Rolling Stone magazine's list of “Rock's 50 Richest” (behind McCartney at $72.1 million net worth and the Stones at $44 million).
No San Diego artists made the list, but blink-182's tour with Green Day was the seventh-ranked tour and sold more tickets-at lower prices-than any other act last summer. With a $30 ticket price, they sold 622,950 tickets to 45 shows. Now there's good business.
“There's no question that the Rolling Stones and Paul McCartney, when they're able to charge up to $500 for tickets, can gross more money and net more money than an artist like Dave Matthews,” Silva says. “However, Matthews can do it year in and year out; Stones and McCartney tour not nearly as frequently.”
Spending the last few years as part of the House of Blues organization-he's since bought back his company, Bill Silva Presents, from HOB-Silva was privy to the going rates at venues across the country as well as local clubs.
“Rock bands start at the low end of the pay scale when touring, anywhere from $100 to $500 a night until they can headline clubs,” Silva says. “Country, urban and pop artists have usually been able to command higher performance fees more quickly in their careers.”
Silva approximates this breakdown for headlining artists at San Diego venues:
* At coffeehouses: $50 to $1,000 a night, depending on ticket price, sales and the artist's take of the cover charge. * At 'Canes, 4th and B or SOMA: $2,000 to $20,000. * At Humphrey's or Viejas: $25,000 to $75,000. * At RIMAC or Open Air Theatre: $15,000 to $50.000. * At Coors Amphitheatre, Cox Arena or the San Diego Sports Arena: $75,000 to $750,000.
Silva says Sports Arena headliners are few and far between (this summer, only Pearl Jam and Iron Maiden are booked for the Arena), leaving the cracks to be filled by hometown workhorses like Seaholm and his coffeehouse brethren.
“If you're a really good musician who loves and plays all kinds of music, your chances of making a living are extremely improved,” Seaholm says. “I know ‘originals' artists who have a firm price they'll charge or they won't play. Guess what? They don't play much.”
Those who fail to get in on a current stylistic trend, says Seaholm, play even less.
“Those that can fill a certain musical niche at the precise moment that the powers-that-be are looking for it stand the best chance of making ludicrous amounts of money,” he explains. “As talented as Jewel is, for example, she might still be in her van if that stylistic vacancy had already been filled by another equally talented individual.”
Silva agrees, explaining that the success of Jason Mraz' single, “The Remedy,” was partially aided by the fact that the song was released at a time when singles by similar artists, such as John Mayer or Dave Matthews Band, had run their course. In other words, radio stations had a “genre hole” to fill.
Seaholm says musicians who multitask with cover tunes, corporate events, theater productions, union-musician gigs and studio sessions stand the best chance of making a substantial living in San Diego.
Lou Niles, former 91X disc jockey and manager for Rochelle, Rochelle, views the same finances from a different vantage point. “When you step up to major labels and major [radio] airplay... you are finally truly making your money,” Niles says. “National touring acts, if they are on the Billboard charts, are probably making a few thousand to tens of thousands a show. The top acts are making $40,000 to $1 million.”
Niles then points out the ultimate paradox. Once an artist has reached the level where money is no longer an issue, the free stuff and financial support comes rolling in.
“Kinda funny,” he muses, “like Tom Cruise getting free Prada and he can actually afford it.”
Album sales, royalties and publishing: inflated numbers
For the last five years, musicians have been compensated through outlets that fall under three umbrellas: mechanical royalties (paid to a songwriter per unit sold), artist royalties (paid to the performing artist per unit sold) and performance royalties (paid to the songwriter when the song is broadcast on radio, TV or jukebox).
Confusing? Yes. Complicated? Yes.
It's no wonder that many artists sign their lives away in contracts that guarantee them little or none of these profits. According to Brown, bands signed on smaller, indie labels such as his Better Looking Records stand a better chance at reaping the fruits of their musical labor.
The drawback of indie labels, however, is that artists don't get the push that major labels offer: teams of publicists nagging MTV to play their video, nagging radio to play the song and nagging press to write about the artist. Full color posters in record store windows, premium display spots in record store bins, and so on. In fact, one of the major complaints about indie labels is that consumers often can't find the album in stores at all. That's because indie labels often lack the finances to pay a company to distribute the albums effectively.
It's a Catch-22: if you sign with a major label, you could make millions, but odds are you'll end up in debt. If you sign with an indie, you'll make money but probably not enough to pay rent.
Silva explains that major-label artists are paid anywhere from $1 to $2.50 per CD sold (newer artists on the lower end, superstars at the higher). Out of that royalty, he says, the artists must pay:
* Cost of recording the album (anywhere from $50,000 to $1 million-plus) * 50 percent of video costs * 50 percent of radio promotion costs * 100 percent of any money they borrowed from the label to help finance tours when they weren't earning enough money to break even or make money on concerts.
The labels sell albums to retailers at a wholesale price of between $6 and $11; the retailers then sell them to consumers at anywhere from $6.99 to $18.99.
“The artist's royalty is normally calculated as a percentage of the suggested retail list price, but my guess is that most majors will move to a wholesale calculation for royalties in the next 24 months,” Silva says.
Even at indie labels, the label asks that all expenses be recouped before the band can begin taking in profits.
“On indie labels, the artist's share will be in the same $1 to $2.50 per unit range, but typically the costs spent to make and promote the album are substantially less, thus allowing the label and artist to start making a profit on fewer albums sold,” Silva continues, noting that most indie labels sell their albums to retailers at a wholesale price between $6 and $8.50.
Seaholm further elucidates how record deals are loans, rather than free money, as they're commonly and erroneously thought of.
“Usually, an artist will find themselves thousands and thousands of dollars in debt to the Bank of Sony or whomever when it's time to make the next album,” he explains. “Based upon the band's momentum and other issues, the label will then decide if it's prudent to pick up the option on your contract or not. Obviously, the less money you spend on expenses and receive as an advance, the better your financial picture looks upon review.
“Ironically, the advance may be the only money the artist ever sees from their association with a label.”
Many artists go bankrupt on this scheme. In 1990, James Taylor, lead singer for Kool and the Gang, filed a Chapter 11 bankruptcy petition and tried to squirm out of his contract with Polygram. In trial it was found that he had incurred debts of up to $3 million and had a remaining million-dollar balance.
Similar situations happen all the time. Grunge band Gruntruck went bankrupt in 1996 from their contract with Roadrunner Records. Rapper Ricardo Brown, a.k.a. Kurupt, had to file bankruptcy to get away from Death Row Records in 1997. Also in 1997, R&B trio TLC faced bankruptcy from debts owed to LaFace Records after signing a contract that granted them a measly 7 percent royalty rate that went up to 9 percent after eight albums (the average is 15 percent.) Toni Braxton, another LaFace artist, filed bankruptcy around the same time despite record revenue in the range of $170 million.
In an attempt to keep more of their own profits and to empower artists with a do-it-yourself work ethic, industry folk like Seaholm form companies that allow artists to not only fund their own endeavors, but to also make an affordable album. If an artist can fulfill her artistic goals without the need for outside funding, her future-and financial ledger-looks a lot healthier.
But local artists aren't going to find their goldmine at area record stores. Music Trader allows artists to sell in its stores based on consignment-the artist doesn't get paid till the discs are bought-and the stores mark up the disc $1.99 to make a profit.
Mark Schmidt at the Midway Music Trader says that movement of consigned units depends purely on the artist. Local Latin band Agua Dulce is the best selling artist at his store. At any given time, Schmidt says, there are hundreds of artists attempting to sell their discs in-store on consignment-not exactly an exclusive club.
That's why artists like Fountenberry would rather focus their limited energies on bigger game.
“We had a song on Malcolm in the Middle and with that one song millions of people recognize our stuff and hear it in one shot,” he says. “That's worth it. I'm more about the fast track because radio isn't really a factor or a part of the puzzle that we are able to conquer right now.”
Sprung Monkey also caught the soundtrack bug. The band's label, Encinitas-based Surfdog Records, set up their song “So Cal Loco (Party Like a Rock Star)” with a sweet, final-credits spot on the soundtrack to the film Dude, Where's My Car? The band also starred in the very first episode of Buffy the Vampire Slayer and were asked to return for the last episode, says manager Al Guerra, but couldn't make it due to a scheduling conflict. They also re-recorded AC/DC's “Thunderstruck” for Varsity Blues and placed five songs in Not Another Teen Movie.
“I can't give you an exact figure [of how much Sprung Monkey made on Dude, Where's My Car?],” says Guerra, “but they will continue to get paid from BMI, on the publishing side of things, as long as the movie continues to play.”
Advertising revenue: like a rock
In the two years since The Incredible Moses Leroy's Electric Pocket Radio was released, the singer's mug and the band's hit single “Fuzzy” have pulled in some serious dough through advertising licenses.
While idealism and artistic purity are fine and dandy, artists like Fountenberry are smart to consider the bottom line, even in advance.
“I'm always thinking about that when we're making music-it's basically the only way I've been able to make any money,” he explains. “We've licensed so many things that I can't even keep track. It's more about the exposure at this point because I would say that... radio is not going to break this band, so if we can get any other ways of exposing our music, it's more than about the money.”
Becky Chambers, director of marketing for Vespa, refused to comment on the amount of money the company budgets for licensing music like “Fuzzy.”
“We used the song and we liked how the commercial turned out and that's that. We just can't disclose those numbers to the public,” she says.
She's not alone in her coyness. Artists who are just trying to make a living and still maintain some “indie cred” are generally not thrilled about discussing their income tax status with the general public.
However, Kenseth Thibideau at San Diego's advertising production studio, Singing Serpent, told CityBeat that musicians who compose jingles for ads generally make 25 percent of the gross cost. If Serpent gets paid $8,000 for an ad, the composer will take home $2,000.
The folks at Singing Serpent spend their days creating spots for local and national clients. They have four in-house composers who work on commercials. Translated into dollars, Thibideau explains, the 25 percent cut “can range from $1,000 to $30,000. Some composers contribute from out-of-house and receive between $100 and $2,000, depending on the type of spot and whether the musician is union or independent.”
Most of Serpent's employees are in local bands: Bunky, Black Heart Procession, Pinback and Roots of Orchis, to name a few. They often choose to compose radio spots for local businesses (Hyundai of Escondido and Pacific Honda are regular Serpent customers), and usually pull home between $1,500 and $3,000 per spot.
“An artist can see a licensing fee from zero to $1 million,” Niles says of commercial work. Niles got one of Rochelle, Rochelle's songs to be used during a transition segment of last year's Grammy Awards, as well as in Chevrolet's “Like a Rock” campaign.
“[From the] ‘Like A Rock' Chevy advert to a simple snippet used in an indie film for exposure, it all depends on the popularity of the artist, the song and the amount of use going on and its position,” Niles explains. “If you have a publishing deal with a publisher or tied into your indie label's deal, the fund will go toward paying back any advances paid to you by the publisher first.”
In general, Niles says, for a new artist he looks to get anywhere from $250 to $5,000 from the company licensing the song. With a major label artist contributing to a national ad campaign, the rate is closer to $25,000.
Dave Brown also knows from experience that licensing his bands' tunes is effective, if not always profitable. Better Looking Records has secured tunes on MTV shows like The Real World, Road Rules and Sorority Life-for which, Brown says, the network offered no compensation. When he landed songs by local rockers No Knife and Australia's Ides of Space on the TV series Dawson's Creek, however, he was able to pull in close to $1,500 for the bands.
“I think it's less about what they're licensing versus who it is that wants it,” Fountenberry explains. “In other words, Vespa isn't going to pay as much as The Gap because The Gap is a huge company with lots of money. Within the structure of doing things, we didn't make as much money as other people that were in that ad, like Natalie Imbruglia. It's all based on how relevant you are.”
Silva bases estimated fees on a number of factors: “What's the advertiser's budget for the campaign and the longevity of it? Will the campaign center its message around the artist's song and image or are those secondary and supporting a message?”
From there, it gets a bit technical.
Advertisers pay a record label a fee for use of the label's music (yes, most labels own their artists' songs). It's called a “master use fee,” Silva explains, and the price can range from zilch to a “good, six-figure payday.” They'll also pay a commensurate “synch fee” for rights to use the song. The artist will typically receive 50 percent of the master use fee and 75 percent of the synch fee. The synch fee is divided among all of the songwriters.
This is where the interesting intra-band politics come into play: whoever gets songwriting credit within the band is the one making the money. It's one of the reasons, besides being stifled artistically, that George Harrison was incensed by John Lennon and Paul McCartney's unwillingness to record many of the songs the guitarist wrote.
To prevent economic resentment, some bands go the route of San Diego's Buck-O-Nine, which split songwriting credit equally among all six members, even though frontman John Pebsworth wrote a bulk of their tunes. So while the author of their hit “My Town” got, say, a dime instead of 60 cents, there was greater harmony within the band.
Silva explains: “Songwriting revenue generates: Mechanical royalties (a royalty to the songwriter for every album sold, separate from the royalty paid for the same of the album) which are paid at a rate of 8 cents per song divided among all of the songwriters for a particular track; performance royalties, also paid to the songwriters for a track and paid for every public performance of the work from radio airplay, MTV play and internet broadcast; and synch fees.”
“Companies wanting to associate their product to an artist's audience can also seek artists for endorsements,” Silva says. These deals can be as simple as Hurley giving blink-182 some free t-shirts to Pepsi sponsoring the entire Britney Spears tour. “That involves huge fees and national advertising support for the tour,” Silva explains.
Merchandise sales: why we should all buy t-shirts
It's not easy to decipher the fine print. Even in simplified form, artists' contracts can involve hundreds of pages of terms and conditions whereby they owe someone or someone owes them. In the end, one constant remains: The almighty merchandise gods.
“I had the privilege of opening for Tower of Power,” Seaholm remembers. “I spoke with them about how they were able to make a living and support such a large band. They said one thing: ‘t-shirts.'
“If you're spending $7 a piece for shirts and selling them for $12 to $20, it's easy to see how profitable it is. Plus, they're an effective form of advertising for the artist and an added value for the fans.”
So that's why every music fan should buy a t-shirt, right? All the money goes to the artist, with no middleman siphoning off lunch money. Niles says that, yes, merch sales are the “bread and butter” of the indie touring industry. However, once bands sign to a major label, “merch deals” are often set up so that the labels have their hands in that cookie jar as well. Even some venues and promoters get into the game.
“At the major level, bands have usually done a merch deal, which is where you sell off the rights to your merch to get a lump sum advance,” Niles explains. “The reason major bands' merch is so darn high is these merch deals and all the fees that the venues and the promoters tack on top of the selling price. So when you get mad at the Foo Fighters for having $22 shirts, they are really selling them for about $10 to $12 and all the fees on top make them $22.”
Good deals at artist-centered labels usually allow musicians to rake in most of their money during tours. If bands pay for their own merchandise, Brown explains, they'll make more money selling t-shirts than they will selling albums. That's why bands that may only have one album to sell often have 10 different forms of merchandise (shirts, jackets, panties, buttons, etc.). Brown even recalls a band throwing a snow-cone fundraiser.
“Bottom line is that it really depends on how artist-friendly the label is that the band is signed to,” Brown says. “Better Looking is all about our artists, so we offer really good deals to our bands. We also offer incentive to our bands to tour. Indie bands make anywhere from gas money or just a meal at a show to $1,000 per show. Add merchandise to that and you're doing pretty well.”
Niles points to San Francisco band Creeper Lagoon as an example. “[They have] low, low album sales,” he explains, “but are probably making OK money touring at $1,000 to $3,000 per show at 250 shows a year plus merch sales. Then, divided up and percentages taken, maybe each of four guys takes home $35,000 to $40,000 before taxes.
“[It's] not much, but if that is the lifestyle you have planned for yourself then you could be pretty happy with that.”
Endgame: ‘Getting by'
So can San Diego artists like Sven-Erik Seaholm claim profits?
“If ‘profitable' means that I am able to continue doing what I love to do without working an office job, then yes, I'm getting by,” he says. “Getting rich? No, not at all. But I'm confident that at the end of my career I will have brought a whole lot of great music into the world, and hopeful that someone will have noticed. Preferably someone with a fat sack of thick stacks, and I ain't talking pancakes!”
With profits in the music industry this arbitrary and hard to generate, a sense of humor is apparently a requisite.
“Next to being a painter, music is the hardest artistic profession,” Fountenberry says. “It's very difficult to do this job and it's a very difficult profession. And now you've completely depressed me.
“I'm going to stop and throw my hat down and say, ‘That's it, no more! Back to the street corner.'”