Mention no names but I was involved in discourse with an owner of a record label , I made the crude accusation that to take 90% of earnings away from the artist in this day and age was unacceptable , the label guy said that I was naive and lacking in understanding , ‘It’s not as simple as that.’ he complained .
Well I guess it isn’t , the royalty rate which is a method of profit sharing is the most abused element of a record company contract , it is the method of hooking a collective of individuals to a low rate of return for thier art.
The royalty rate for recording artists has always been low but in an age when recordings sold in high volume the accumulative gains compensated for the abysmally low rate .
The problem is that as time moved on the royalty rate for musicians has remained frozen in time seemingly unaffected by factors such as inflation , economic and social change .
The record company man suggested 10% lo-20% hi as his current rate , which illustrates my point of record companies holding on to an anachronistic protocol.
A fair deal ? 80-90 % of money returning back to the label and the 10-20% to the band , comparable to the rate of value added tax !
The record company man had a big problem accepting my view , why? because without this hi rate of return he cannot support his label and pay these beautiful people who roll up for work each day , the infrastructure that he has built needs to be sustained by the 80-90% of earnings generated from his artists.
It is a business built on foundations of sand and one day it will be gone , as music struggles to exist in todays climate so does the infrastructure around it , in my opinion it is cracked and frayed at the edges and like the royalty rate it hardly makes sense anymore .