Millions Of Records Sold Does Not Always Equate To Success!!

Walk into most recording studios, entertainment lawyers offices, distribution companies, media companies and you more than likely see numerous plaques on the wall of gold, platinum, and multi-platinum plaques. Does this always equate to success for the artists, or the folks whose walls are decorated with these trinkets? You can go to Ebay, and purchase these same plaques and adorn your walls with them as well it you wanted to.

The fact that an artist sells millions of records does not equate to success in the business just because their face and persona is plastered all over global media and a few have proclaimed them as the queen of pop!! How did so many of you fail to miss the story of Miss Lady Gaga filing for bankruptcy?? This is the fourth time as that! http://www.totalbankruptcy.com/bankruptcy-news/personal-bankruptcy/lady-gaga-says-she-went-bankrupt-fr-800522260.aspx Tony Braxton, Willie Nelson, Ronald Isley, TLC, and the list goes on for so many artists that eventually file bankruptcy after selling millions of records. Extravagant spending, not knowing the infrastructure of the music business or how to run a business, and personal problems lead the reason behind these bankruptcies.

BUT THE BIGGEST REASON IS CONTRACTUAL

Simply put, artists sign one sided contracts, of which most of the top artists get into these 360 deals that allow the record distributor to realize profit not only from record sales (song royalties), music publishing print rights (sheet music), and mechanical licensing rights, but to also share in the revenue from branding contracts, touring, and other revenue.

These artists are given contracts that are so one sided it amazes me that any of them sign them. For instance, the majority of artists today are in what is called a non recoupable state". This simply means the distributor will put up millions of dollars for recording, paying producers, videos, promotion, marketing and creating an image for the artist, and advanced royalties to the artist, and often tour support to support the album pre-release appearances on mini tours, special performances on talk shows, in store signings, etc.. All this goes into an "artist account' and this money is held in escrow against future earnings, until the artist's financial obligation to the distributor has been met. Sadly, most never get out of this situation.

The majority of these artists never earn one red penny because they have to sell an exorbitant amount of albums in order to "recoup" the cost of putting the album out. If the costs are not recouped, then the balance of what was not recouped goes to the next album, and the process starts all over again. Celine Dion, Nas, Willie Nelson, Rick Ross, The Jonas Brothers, and yes even your Lady Gaga finds herself in this situation as well, as well as numerous other artists in the industry.

A large majority of them never even realize music publishing revenue, because they don't know what it is, and sign it away to the major record distributors, managers, or other deviant folks in their inner circle, when it is the largest source of income for an artist. Music publishing is an artists "performance rights", and only if they contributed to the writing, composing, arranging or producing of the song itself. Royalties are paid for each single performance of the song, on radio, television, in videos, on commercials, in movies, on airplane radios networks, in night clubs, etc. The standard royalty set by Congress is currently 9.1 cents per play. What seems like a small amount of money, quickly can become millions if the artist has a hot song like Lady Gaga surely does have a few.

To give you an example of the importance of music publishing to an artist, Dr. Dre has not put out an album in years, yet still collects a cool $40-$50 million every year for his past work with artists and his own music.

Michael Jackson struck a deal in 1995 to merge ATV music publishing which owned a portion of the Beatle's catalog, and Jackson had purchased for 47$ million in 1985, with the SONY music publishing wing, SONY gave him a %50 share (of SONY's share), in all of the music publishing of every single artist on SONY's massive catalog. This meant that Jackson would earn money from every album that SONY released, the back catalog, and future catalogs that SONY would purchase. This was an unheard of deal for any artist in the industry then and even now. Jackson's estate now collects publishing revenue from Gretchen Wilson, Celine Dion, Elvis Presley, Eminem, Willie Nelson, Lady Gaga, the Jonas Brothers, Justin Bieber, etc., etc. http://books.google.com/books?id=MDsDAAAAMBAJ&pg=PA36&dq=Sony/ATV+%22michael+jackson%22&lr=&num=100&as_brr=3&as_pt=ALLTYPES&ei=-JHYSY-XJYbEzQSywKCgCg#v=onepage&q=Sony%2FATV%20%22michael%20jackson%22&f=false

The value of Sony/ATV Music Publishing has varied in reports. Industry experts have estimated the company to be worth as much as between $450 million to $1.5 billion. http://www.forbes.com/forbes/2002/0812/054_print.html

Although some believe that Michael Jackson's Jackson's "so called" financial problems cost him a %50 share of the Beatle's cataog to SONY in 1995, http://www.usatoday.com/life/people/2004-04-27-jackson-finances_x.htm Michael Jackson's estate last year alone will collect in music publishing royalties approximately $300 million, not including another $300-$400 million in revenue from other sources.. This revenue for the MJ estate is not only his music, but a number of elaborate deals the gloved one has made over the course of his illustrious career, not including the infamous purchase of ATV music publishing, which owned a portion of the Beatle's catalog, after being schooled in a studio session by Sir Paul McCartney himself, on the importance of owning and purchasing music publishing catalogs, but numerous other deals that the new SONY/ATV company would realize after the merger. http://articles.nydailynews.com/2010-06-21/entertainment/27067766_1_top-earning-dead-celebrities-yearly-profits-michael-jackson

Some of those deals were purchasing Tony Martin's Baby Mae Music catalog of 600 songs, country music publisher Acuff-Rose's music publishing rights to 55,000 country music songs, including the music of Hank Williams, The Everly Brothers and Roy Orbison, Famous Music, a music publishing business with song catalogue of more than 125,000 songs including "Moon River" and "Footloose", and the catalogs of Eminem, Akon, Linda Perry, Bjork, Shakira, Beck, etc. Jackson's other publishing firm, Mijac, which publishes songs written by Jackson himself and which is administered by SONY Music competitor Warner/Chappell Music, is valued to be worth at least $75 million.


So while Lady Gaga has been financing extravagant over the top tours and going bankrupt, and other artists just sit in limbo in one sided contracts, Michael Jackson proved himself to be the most intelligent artist of them all.