Courtney Love Does the Math for You

Ten years ago Courtney Love gave a talk on music technology and piracy. It's mostly a coherent argument, which destroys many of my prejudices about Courtney Love, and honestly the less-coherent portions of it may be because this Salon article is a transcript of a speech.

Here's my favorite quote from her:

Don't tell me I'm a brand. I'm famous and people recognize me, but I can't look in the mirror and see my brand identity.

Keep talking about brands and you know what you'll get? Bad clothes. Bad hair. Bad books. Bad movies. And bad records

That's not actually the crux of what she's talking about though. Courtney goes over some of the numbers for a major-label record contract. Here she talks about the "million dollar" record contract for a 4-piece band.

They spend half a million to record their album. That leaves the band with $500,000. They pay $100,000 to their manager for 20 percent commission. They pay $25,000 each to their lawyer and business manager.

That leaves $350,000 for the four band members to split. After $170,000 in taxes, there's $180,000 left. That comes out to $45,000 per person.

That's $45,000 to live on for a year until the record gets released. 

So of course things aren't quite that simple. The odd thing, from an economic standpoint, is that the record company itself is getting ripped off. That's right. They would love to see 10%. They're lucky if, overall, they're seeing a percent and-a-half. If you read on, Ms. Love goes over the record company expenses for this act which "got" a million dollars and sold a million records.

Add it up and the record company has spent about $4.4 million.

So their profit is $6.6 million; the band may as well be working at a 7-Eleven. 

Yes, that's what this band got (note that the record company also spent $750K in publishing, some of that presumably goes back to at least some member of the band.) But that's not how well the record company does. No no no.
Instead, the record company has a lot of acts out there. A very small percentage are profitable. Essentially what is paying for the development of the many acts which do not sell a million records is the blood, sweat, and tears, of the few acts which do. As she notes later:

More Irony Please

Of the 32,000 new releases each year, only 250 sell more than 10,000 copies. And less than 30 go platinum.

So another way to put this is that the "surplus labor" (that's the Marxist way to think about it) of some rock stars goes to develop some smaller, newer acts which may or may not go anywhere.
As far as the systematic exploitation of rock stars goes, I have difficulty caring.  Sure, back in the day they used to pay for an executive's private jet (those days are long gone). But now they're mostly paying for the failed endeavors of hundreds of other acts.
It might be more fair, and clear, for the record company to simply tell the band "We're putting you on salary at $45,000/year -- make whatever else you can with concerts and publishing. Everyone who is in a band at our company makes $45K/year for the run of their first contract. Those of you who are hit artists end up paying for those of you who aren't. Get over it."

But that would make all the bands whiny and complainy. They'd much rather be a band with a million dollar record contract. Wouldn't you?

Ooh. Special note: classical musicians apparently have much clearer record contracts. I read that in a book on the music business once. They make vastly less money but none of the expenses are "recoupable". They make a small royalty on each record sold, starting with the first record.
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As for the rest of Courtney's argument about "works for hire" I'm not exactly sure what she's talking about. I was under the impression that any work could be a "work for hire" -- what she's talking about is probably a very specific nuance in the law, not that record companies automatically own in perpetuity any works without a contract.

Actually, after that she either goes a bit off the rails and/or she's talking from 10 years ago and either "we already know this stuff" or "yeah, that's not how it worked out."
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I heard a funny story once about why the second Men Without Hats record didn't do so well. The record company decided that the manager of the band was getting too much of an attitude and decided to teach him a lesson -- by not pushing the band's second release.