Are Platinum Rappers Reallly Making Platinum Dollars?
Recording contracts with major music corporations are one of the harshest hurdles for any band to lope in their quest for commercial success. This document forms the seed of what basic financial potential a band has with the corporation. A system of points or percentages is calculated to determine what an artist receives from the retail profit of a CD. According to Wendy Day, founder of the Rap Coalition, the average contract offers the artist anywhere from 8 to 13 points.
A platinum artist may earn two dollars off every CD sold but the money diminishes significantly after the costs for management, legal representation, the accountant and the label are subtracted. Considerable amounts of money have to be spent in order for an artists’ record to chance becoming a hit. Whatever is not paid back to the label on the first release will be recouped from the next one, a provision known as cross-collaterizing. . Lastly there is the issue of taxes from the government.
New cars, jewelry, expensive clothing, travel, and the ubiquitous glittering video envelops the artist, simulating success while debt grows. A showy veneer conceals the seemingly paradoxical truth that artists are the last one to get paid for making the product. Major record companies subtract numerous costs from the gross earnings of a sound recording. Artists swiftly learn that touring, merchandising, publishing and branding their likeness for larger ventures is the true spring of financial success. CD sales are entrees for tours where they can make their performance fees, sell merchandise and develop a closer relationship with fans. Unfortunately rap artists do not tour as much as other genre performers such as guitar rockers or country musicians.
Publishing and royalties are muddled areas where a platinum artist can possibly earn huge sums if they own most of their music. Mechanical royalties on record sales are determined by a statutory rate that became 9.1 cents per song as of January 1, 2006. For each song on the album the artist is paid that rate multiplied by the songs on an album however, record companies place limits on the number of songs at 12 regardless of the albums’ length. Twelve songs multiplied by 9.1 cents equals 109.20 per album and that figure times one million units sold equals a 1,104,000 gross. Because most record contracts only pay the artist on 85 percent of CDs sold that number is broken down so that the true earnings are 928,000. Of that amount the owners of the publishing and the producers must be paid.
The good thing about mechanical royalties is that the label does not recoup expenses from them. An artist will be paid their mechanical fees if they wrote the song. Entities who broadcast music in concert halls, airlines, clubs, television, radio, and the internet have to pay a fee to ASCAP, BMI, and SESAC for licensing the music. Charges collected supply the artist with performance royalties also divided among those who own the song. If the artist wrote the lyrics but the producer made the music they share the royalties. There are synchronization royalties paid to the artist anytime the music is used with a visual. And there are copyright fees also paid to the composers of a song
Financial pillaging, and the formulaic demands of the major label contract influences some artists to go the independent route. Financing their own projects gives them more money and control over their creative vision. Major labels like dominant movie studios have business plans that function much like factories, expecting artists to produce blockbuster appeal after one album.
Method Man, confirmed the lesser status of artist compared to management in an interview from the ’90s when he said he eventually wanted to be “the mack in the back instead of the chump in the front.” Wu-Tang’s second most popular member was making a visionary statement because his rap crew was the first hip-hop collective to uses its base to release successful albums as launching pads for solo careers. The Staten Island sound alchemists aggressively approached the world of hip-hop entrepreneurship with their clothing line presaging the licensing deals of posses like G-unit. Business savvy rappers learn quickly that expanding their enterprises beyond music is almost necessary in a fickle industry that is structured for the record company to prosper the most.
Rock musician and widow of Curt Cobain, Courtney Love outlined the general ineptitude of the music industry in her pithy essay on the poor financial treatment of successful musicians. She notes the way actors are compensated by the Screen Actors Guild for their work compared to recording artists who have no guaranteed income or health insurance after their hit songs fade away. Movie actors are paid secured advances, plus royalties from ticket sales, DVD and VHS releases.
She illuminates the way record companies have a five percent success rate and are sketchy when it comes to paying royalties. Her example of platinum selling performers TLC and Toni Braxton are cases of people who sold millions of records but had to file for bankruptcy. Megasuccessful rapper and Def Jam CEO Shawn “Jay-Z” Carter explained the actuality of the platinum artist when speaking to high school students- ‘Keep it real-there are about 200 or more NBA players getting a check. There are only about 10 to 20 rappers that are in the game making money with album after album. Do the math and get your education’.”
