Recoupable Expenses
There are several big temptations when a representative from a major label comes knocking on the door of an indie band. One of the biggest is, of course, the chance to get the music out to a much broader audience than indie status could ever hope to achieve. The other is money.
Signing with a big label may seem like the key to riches, but in fact it may actually leave a band in a deeper financial hole than when they started out. To begin with, although big labels try to offer increased promotion to the acts they sign due to the clout gained by merger after merger and a general lack of diversity in terms of ownership in the radio market, the fact remains that most albums signed produced by a major label fail to generate any revenue.
So, if you are among the acts who does not make money for a big label, well at least you gave it a shot. No harm done, right? Wrong. You may not have sold your soul to get that deal, but big labels are all about a sneaky little thing called recoupable expenses. That’s right; in the end, all of the production, the touring support, the marketing are going to come out of the artists’ pocket anyway. If you happen to be in the greater percentage of artists who do not sell a ton of records, your debt will carry over to the next album.
Indie artists need to be very careful when the shark is circling in the water. The benefits of signing with a major label are generally not worth the risks. Remember, all of the “big” artists you hear about are success stories of the labels: those who end up indebted are never heard from.
January 6th, 2008 at 6:47 am
If you do get offered a deal, I think it would be a good idea to have someone who knows the jargon look over it first - to make sure you aren’t going to get stung.
What happens when your second album doesn’t cover all its expenses, then the third? I think you could end up in big trouble!