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Feedback on FTC/Labels Settlement
By MusicDish
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Great article.

I have come across a few facts that undermine the RIAA's position on pricing. Here is a good thing for you to read:

It explains how little the music companies actually pay out to support new bands.

If blanks CDs are less than $1 retail, you KNOW the companies are paying less than a $1 for them. So the plastic really is negligible.

Just thought the link above would help.

Later, Scott Lewis

I found your article interesting and informative, particularly in its clear explanation of the MAP issue and its ramifications. I do feel, however, that you let the record companies off the hook a bit towards the end of the article.

First, the RIAA is a highly biased music industry advocate/mouthpiece that exists solely to protect the interests of the major labels. The RIAA simply cannot be trusted to offer a objective explanation--or even a largely truthful one--for the excessively high prices of compact discs. Second, as a former employee of one of the five major labels, I can tell you first hand that the record companies do very little to rein in excessive expenditures in both the recording and promotion processes. Simply put: consumers are made to pay for the industry's inability to control expenditures. Third, for the RIAA to point to the efforts and time spent by artists is a little disingenuous. The RIAA is far from being an advocate on behalf of recording artists. Of course, Hillary Rosen and her hypocritical crew are happy to raise the flag of the artist when it suits their purpose, but remember, this is the same organization that is lobbying on behalf of awarding the copyright ownership of master recordings to the labels in perpetuity. The RIAA wants music artists to be labeled 'work for hire' so the labels can walk away with all intellectual property. What a joke.

The labels spend too much money on recording (did you know that one day of studio time at a major-label studio in NY costs around $2500-3000? This is just one day. And this price doesn't include engineer fees, producer fees, studio musician fees, and any rental equipment that might be used), too much money on videos (a $100,000 video is considered a cheap video), too much money on radio promotion ($50,000 per week to keep the song on radio). And guess who's expected to make up for this profligacy? That's right, it's us, the consumers. If only they knew what I know...

Basically, I am the source for the info (which may not be helpful to you). But I'll try to break down the costs for you. Mind you, these are major label prices we're talking here. You can record an album, make a video, and effectively promote a record for far less than the numbers I mentioned. But these are the prices I dealt with as a production manager for an independent music production company funded by Sony Music International.

Studio costs: Most major recording studios here in NYC work on a 'lock-out' system. You rent the studio, which includes the control room and any equipment in it (recording console, some outboard recording gear, etc.) and the live room, where the music is performed, for a 14-hr day, and no other artists are able to access the studio while you have locked it out. The recording device itself, i.e., the device onto which the music is recorded, is extra, as are the other costs I outlined in my original letter. Studios including The Hit Factory, Sony Music Studios, Right Track Recording, and Quad all routinely charge $2500 to $3000 per 'lock out' day. Now, it is possible to make deals, but these studios have huge overhead, and they won't go much further down than, say, $2200 per day. Even the mid-line studios, which are perfectly acceptable for most recording artists but lack some of the niceties and luxuries of the top-level studios, are no cheaper than, say $1700 per lock out day. How do I know? I've set up recordings and negotiated prices at almost all of these places. And remember, while a punk band can crank out a full album in a week or two, most major label acts take that long to record two or three songs. The more successful you are, the more likely you are to take your time in the studio. One act I worked with (great guy, don't get me wrong) would routinely take 2 weeks to record one song, plus a day or two to mix it. Big bucks.

Videos. Of course, there are a million ways to make a video, from hand-held 8mm cameras to Super Beta to Film. For a major label artist, the costs are almost always high, and more and more directors prefer to shoot on film for a more professional look. Directorial fees can be $100,000 all by themselves, particularly when you're talking about the directors who make the vast majority of the videos seen on MTV today. Again, I'm not quoting a source. I know because I've had to help produce a few of them, and it gets real expensive real quick. Renting post-production facilities to edit the videos is almost expensive as renting recording studio time, so you get the picture.

Radio promotion. Here's where it gets a little tricky. Labels don't pay radio stations to get airplay. At least not directly. They pay 'radio promoters,' perhaps the most corrupt and powerful group of folks in the biz. They routinely get paid 6 figures to use their influence on radio program directors. This influence can take the shape of cash gifts, free vacations, etc. But, as the labels themselves do not actually 'pay' anyone off, it's very hard to prove guilt. Payola never went away, it just migrated to a buffer class of former record executives--thugs, if you will--who will get the job done for you. If you'd like to read a seminal account of these folks, read the book Hit Men by Fredric Dannen. It describes the influence of these promoters (along with providing a great history of the development of the modern record biz).

Hope this has been helpful and not too vague!


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