View Full Version : Royalties question


KingJeremy
04-05-2005, 03:02 PM
Has anyone ever heard a rumor how the Pumpkins royalties were divided amongst the band?

I read in a book that of the royalties that the members of Nirvana received that Kurt got 92%, Dave 4 %, Krist 4%.

RockLobster
04-05-2005, 03:12 PM
Obviously as the songwritter, billy would get a bigger percentage than the rest of the band.
The rest of the band members would get the same as eachother because they are just musicians.(well james might make a little more because of the few songs he wrote/co-wrote with billy) Billy would also get more money because he is a musician too. Not to mention he also co-produced and produced some of the albums.
Hmm I should search my notes through school, I had a breakdown for contract stuff like this.

ZackZ
04-05-2005, 03:15 PM
Billy as the songwriter would get more, but I don't think it would be as big of a disparity as you think it was in Nirvana.

And what about merchandise? Would the royalties from that be split evenly?

RockLobster
04-05-2005, 03:19 PM
Originally posted by ZackZ


And what about merchandise? Would the royalties from that be split evenly?

most likely.

douglas78
04-05-2005, 03:57 PM
i bet everyone got an equal split. ya right. billy prob got the most.

spank_thru101
04-05-2005, 08:02 PM
Billy got the most, no question there. There are two kinds of royalties in music, production and songwriting and these are split evenly (for instance if you get 50 cents an album 25 would be for production and 25 would be for songwriting). Billy would get the most of the songwriting cause he wrote most of the songs, and as for the production he would get a chunk of that to as would Darcy, Jimmy, James and the producer (who quite often happened to be Billy...so he would get EVEN MORE!).

But what most people don't understand about royalties is that bands don't recieve a dime of it until they pay off their advance from the record company using their roryalties. For instance, if you signed a contract and you get a dollar and album and you got a million in cash up front, you have to use that million to pay the producer, pay for the recording studio time, equipment, your first video, housing while you record, food, and basic living expenses, and taxes...and once your album is released you would have to sell a million albums before you would se a dime in royalties cause you have to pay back what you got from the record company. This is how record companies screw over bands, cause most bands never see a royalty from an album sale, but taking cash up front is safer cause if the album flopped...they would see nothing.

Someone on this board said that most musicians make money from album sales, that is incorrect...record companies make money from album sales, bands get paid from touring, having their song on the radio (yes everytime you hear a pumpkins song Billy gets paid for songwriting) and merchandise.

For more info on record contracts and royalties, etc... check out this link...it explains why most musicians end up bankrupt if they don't score platnium albums...

http://www.csun.edu/CommunicationStudies/ben/news/albini.html

It was written by Steve Albini (he priduced Nirvana's In Utero, Bush's Razor Blade Suitcase and numerous other albums...he also gets $100,000 upfront for producing for a major label band...)

ZackZ
04-05-2005, 08:43 PM
Originally posted by spank_thru101
Billy got the most, no question there. There are two kinds of royalties in music, production and songwriting and these are split evenly (for instance if you get 50 cents an album 25 would be for production and 25 would be for songwriting). Billy would get the most of the songwriting cause he wrote most of the songs, and as for the production he would get a chunk of that to as would Darcy, Jimmy, James and the producer (who quite often happened to be Billy...so he would get EVEN MORE!).

But what most people don't understand about royalties is that bands don't recieve a dime of it until they pay off their advance from the record company using their roryalties. For instance, if you signed a contract and you get a dollar and album and you got a million in cash up front, you have to use that million to pay the producer, pay for the recording studio time, equipment, your first video, housing while you record, food, and basic living expenses, and taxes...and once your album is released you would have to sell a million albums before you would se a dime in royalties cause you have to pay back what you got from the record company. This is how record companies screw over bands, cause most bands never see a royalty from an album sale, but taking cash up front is safer cause if the album flopped...they would see nothing.

Someone on this board said that most musicians make money from album sales, that is incorrect...record companies make money from album sales, bands get paid from touring, having their song on the radio (yes everytime you hear a pumpkins song Billy gets paid for songwriting) and merchandise.

For more info on record contracts and royalties, etc... check out this link...it explains why most musicians end up bankrupt if they don't score platnium albums...

http://www.csun.edu/CommunicationStudies/ben/news/albini.html

It was written by Steve Albini (he priduced Nirvana's In Utero, Bush's Razor Blade Suitcase and numerous other albums...he also gets $100,000 upfront for producing for a major label band...)

That's true, but you have to be a pretty huge band to make money off touring as well. A buddy of mine who has been trying to break it big said most smaller bands make the most off merchandise.

Ever heard of the band Superdrag? They played a no-cover show in my school's union courtyard for a crowd of about 50-75 people. Didn't sell a dime of merchandise either. They had a huge hit with "Sucked Out" and probably got a lot of money, but my friend clued me in that they probably had to pay the record company back for all the money spent on their first two albums that didn't make squat.

Andrew_Pakula
04-05-2005, 11:40 PM
I saw Superdrag open for Green Day once like almost 10 years ago i think.... They got booed off the stage which was quite funny.

wHATcOLOR
04-05-2005, 11:43 PM
i'm not sure i like your sense of humor, Andrew_Pakula!

The machine of god
04-06-2005, 02:58 AM
You're all wrong.

Billy got all royalties for the songs he wrote, that is he recieves money everytime there is airplay, live performance, ad use, covers (by another band) etc. The record company also pays a percentage for every album sold (based on his song share) and all of this money is given to Billy by his performing rights organistion, BMI. Co-written songs like Mayonaise are split between Billy and James but there is no way of saying what the split is, the money is earned as above.

However there are also royalties paid by the record company directly to the artist for the sales by unit of actual cds and the advance the band recieves when they are signed. If the whole band signed the agreement, it is split equally. If Billy was the only one that actually signed with Virgin, he splits it however he wants. Same with tour money etc, the band could split everything or Billy could be effectively the 'employer' paying them on a percentage or wage basis.

Basically other than what Billy earns off BMI from HIS songs, who knows how everyones been paid?!

Gollum
04-06-2005, 03:09 AM
Originally posted by KingJeremy
I read in a book that of the royalties that the members of Nirvana received that Kurt got 92%, Dave 4 %, Krist 4%.

I always thought that Dave and Krist got a lot of money for having Smells Like Teen Spirit credited to everyone in the band.

ZWANPHONY
04-06-2005, 03:44 AM
Originally posted by ZackZ

Ever heard of the band Superdrag? [...] They had a huge hit with "Sucked Out"

oh man i love that song, except when it got overplayed and the scratchy voice began to make me want to punch him in the face...otherwise great song.

KingJeremy
04-06-2005, 03:38 PM
Would royalties on a co-written song be split evenly if one of the co-writers only contributed 1 or 2 lines of lyrics?

The machine of god
04-06-2005, 06:49 PM
No, it is down the writers, so again with co-written songs, they're really the only ones that know what share they got.
One with about non performing rights royalties, I think its pretty obvious that all the Pumpkins earnings went through Smashing Pumpkins Inc, find out who are the shareholders in that company, and if US company law permits, what their shares are, and you should be able to begin to work out everyones earnings.

spank_thru101
04-06-2005, 09:08 PM
Originally posted by The machine of god
You're all wrong.

Billy got all royalties for the songs he wrote, that is he recieves money everytime there is airplay, live performance, ad use, covers (by another band) etc. The record company also pays a percentage for every album sold (based on his song share) and all of this money is given to Billy by his performing rights organistion, BMI. Co-written songs like Mayonaise are split between Billy and James but there is no way of saying what the split is, the money is earned as above.

However there are also royalties paid by the record company directly to the artist for the sales by unit of actual cds and the advance the band recieves when they are signed. If the whole band signed the agreement, it is split equally. If Billy was the only one that actually signed with Virgin, he splits it however he wants. Same with tour money etc, the band could split everything or Billy could be effectively the 'employer' paying them on a percentage or wage basis.

Basically other than what Billy earns off BMI from HIS songs, who knows how everyones been paid?!

Your are correct on a few things and off on a few others...

Billy does collect all the cash from his songs that her wrote, but only songwriting royalties, since the other band members played the music on the album to the songs he wrote they would collect production royalties. Also if the band signed a contract it is not split equally, they may all have signed the agreement but the split could be something different for each member (i.e. Janes Addiction, Perry Ferrell collects all the song writing royalties and a quarter of the production royalties so Perry sees 62.5% of all royalties and the other three members only see 12.5% each). Also live performances vary, I doubt Billy would collect all the cash and then choose to pay them as he pleased. Bands usually get paid an upfront amount to play a venue and then will recieve a percentage of the ticket sales and a percentage of the merchandise sales. The venue will also collect a percentage of the merchandise sales and the promoter will collect a chunk of the ticket sales....think how the other memebrs would react if Billy said "I wanna put you on a salary or how I please" that just isn't likely and record companies wouldn't even advise it let alone lawyers for the artists. I think live wise they split the cash equally (Billy aint that big of an asshole). Also you are correct that whenever a cover is liscened to another band, whenever one of there songs is played on the radio, etc...Billy gets cash...but as for the album sales thing, the memebers only get paid for album royalties after they have paid back their advance to the record company through their royalties...so it is very likely that Billy and Co. have yet to see a dime for actual album sales of Machina or Adore or MCIS considering that Siamese dream was such a hit they probably reworked their contract to recieve a large advance (which again is used to pay for everything to make the album, producer, housing, taxes, equipment, studio time, first video, etc...)

Also you oughtta do some reading on what BMI actually does, your correct, but a bit misleading.

As for the person who said that bands make the majority of their cash from merchandise, yes most small bands make their only cash through merchandise, but big bands get the majority of their paycheck through touring...for instance when Blink 182 were at the height of their carreer touring for Enema of the State, they were getting $250,000 upfront to play arenas...they of course then have to use that cash to pay for ALL their touring expenses (buses, roadies, stage equipment, etc...) since promoters only PROMOTE the concert. But then again last year Nirvana made over 20 million with merchandise sales...as according the contracts signed after Kurts death merchandise sales are split equally between the three parties.

spank_thru101
04-07-2005, 06:35 AM
One thing that is nice about contracts and album royalties (I dont wanna sound like I am completely bashing the record companies) is that if the album flops and the record companies dont make any cash from the album the band NEVER has to pay cash out of their own pocket to make up for what they borrowed/got in advance from the record comapny, only from album sales and occasionally touring (this is only common with small label deals)

TIMb
04-07-2005, 06:49 AM
good thread. i learned a lot.

DeviousJ
04-07-2005, 05:07 PM
Originally posted by spank_thru101
One thing that is nice about contracts and album royalties (I dont wanna sound like I am completely bashing the record companies) is that if the album flops and the record companies dont make any cash from the album the band NEVER has to pay cash out of their own pocket to make up for what they borrowed/got in advance from the record comapny, only from album sales and occasionally touring (this is only common with small label deals)

Except they're in the hole as far as repaying that advance goes (because it is a loan) and they're in a very bad position to negotiate with the label for the next album, and may even have to break up the band

spank_thru101
04-07-2005, 07:11 PM
Not really, yes they are in the hole, but this is how record companies work. For Example, you sign a deal, you get 25cents an album and you get a million in advance, the album sells 3 million copies. This mean that the record company only gets 750,000 back on their 1 million that they gave you, but the record company will still recieve a chunk of the album sales outside of your royalties, like $2.50 an album so in actuallity they made 7.5 million on the album. So the record company will more than gladly want to rework the contract if you threaten to break up and walk away from the music. And again you never have to pay the advance out of your own pocket only from the royalties of that particular album.

DeviousJ
04-08-2005, 03:07 AM
Originally posted by spank_thru101
Not really, yes they are in the hole, but this is how record companies work. For Example, you sign a deal, you get 25cents an album and you get a million in advance, the album sells 3 million copies. This mean that the record company only gets 750,000 back on their 1 million that they gave you, but the record company will still recieve a chunk of the album sales outside of your royalties, like $2.50 an album so in actuallity they made 7.5 million on the album. So the record company will more than gladly want to rework the contract if you threaten to break up and walk away from the music.

I think you're overestimating the importance of an individual band to a label. Like you said, labels start making back their money immediately, and break even way earlier than the artist does, so losing one band is not going to be a big issue to them, unless the band is very successful. Even then, labels are averse to re-negotiate contracts up until around the penultimate album option (5th, 6th or 7th album usually, depending on the deal). And negotiations are still very much give and take.

They're in a very strong position at that point, whereas the artist is not - breaking up would the dissolution of the band, a loss of the record deal they'd worked so hard for, and wasting all the time they'd invested (most artists don't even begin to see any royalties until say the 4th album, which in a 2-year album cycle means 8 years put into it). The artist doesn't really have a hand to force, and being in a hole as far as royalties go means the label is in a better position to say on the next album 'well you didn't recoup so well last time, so you're getting a smaller advance for this one' and exert more pressure in general. Obviously this applies more strongly to major labels (which we're talking about given the advance sizes you mentioned), and they are very very much businesses. This is why they have 60+ page standard contracts. They don't screw around, and some band isn't going to tell them what to do unfortunately, especially not one which hasn't even started to recoup.

Originally posted by spank_thru101
And again you never have to pay the advance out of your own pocket only from the royalties of that particular album.

That's not true at all, they can use royalties from any album to pay for any outstanding advance - it's called cross-recoupment. Sometimes artists can negotiate certain limitations on this but it's rare. This is why artists rarely see any royalties until the 4th album or so - they're still paying off the un-recouped advances from previous albums, on top of the advance for the current one. Assuming they even get successful, that is.

spank_thru101
04-08-2005, 07:01 AM
You are very right on the point that artists can use royalties from other albums to pay back advance for different albums, but if you look in the industry, most bands that break it big (like the pumpkins with SD) are always gonna want to rework their album ASAP (since their contracts prior to getting big are shitty as the ycome) and a label is not gonna let the band walk away when they can resign the band with a few more dollars and then make 100 fold that for the next 50 years off album sales and on top of that a label is not gonna let go a money maker unless they are asking godlike amounts, every year over 250,000 different albums are released in the industry (this *******s small label, singles, box sets, independent release,etc...) and out of those only 10,000 sell more than 10,000 copies and out of those an average of only 300 sell more than 500,000, do the math a record company aint gonna let an artist that just sold X million albums worldwide walk away...yes you are correct, but so am I...so lets finally drop it......also on a side not most bands never get to the 5th or 6th or 7th album, most contracts are for 3 albums with an option up to 7 ...hopefully the dinosaurs in the industry will finally die...

daydreamer999
04-08-2005, 07:04 AM
until about 1992 or 1993 nirvana's royalties were, 1/3, 1/3, 1/3.

DeviousJ
04-08-2005, 09:46 AM
Originally posted by spank_thru101
You are very right on the point that artists can use royalties from other albums to pay back advance for different albums, but if you look in the industry, most bands that break it big (like the pumpkins with SD) are always gonna want to rework their album ASAP (since their contracts prior to getting big are shitty as the ycome) and a label is not gonna let the band walk away when they can resign the band with a few more dollars and then make 100 fold that for the next 50 years off album sales and on top of that a label is not gonna let go a money maker unless they are asking godlike amounts, every year over 250,000 different albums are released in the industry (this *******s small label, singles, box sets, independent release,etc...) and out of those only 10,000 sell more than 10,000 copies and out of those an average of only 300 sell more than 500,000, do the math a record company aint gonna let an artist that just sold X million albums worldwide walk away...yes you are correct, but so am I...so lets finally drop it......also on a side not most bands never get to the 5th or 6th or 7th album, most contracts are for 3 albums with an option up to 7 ...hopefully the dinosaurs in the industry will finally die...

How are they going to walk away when they're under contract? When you sign a contract with a label you can't just say 'oh hey, forget it guys I quit' - you're in a binding business agreement with them. If someone leaves, the record company's contract with that individual is still in effect, and it's up to them whether to release them or keep them bound in. The same goes for a whole band breaking up - they're all considered leaving members and it's up to the record company whether to release them or not. If they're intending to move to another label then often the first label will release them in exchange for points on the next album. But they don't need to - they can hold onto them forever, or until they produce as many albums as the label wants to exercise options on.

I mean come on, would you consider Prince popular? I would. Why do you think he went through all that nonsense with his label instead of just leaving if it were that simple? A successful band has more influence on a label yes, but only to the extent of negotiating for higher royalties or more artistic control - and that's almost always in exchange for a concession, like additional album options. Major labels don't let the artists push them around, and the contracts are heavily weighted in their favor. Why do you think so many musicians complain about the record industry?

And correct me if I'm wrong, but most recording contracts are based entirely on options (usually 6-8 albums) with no commitment beyond the first album. Options mean the label can say 'yep, we want another album' whereas a contractual commitment means they're bound into a fixed number, no matter how well the band does. It's not in the label's interest to do that at all, and the artists are almost never in a position to demand that commitment from the outset. And I don't know where you pulled those sales numbers from, but you have to understand that the industry is long-running and a profitable business, and the successes absorb the failures. They know what they're doing, and their profits are based around the status quo (not the band). If they give way, every band will push for a better deal, and then the whole business model gets shaky. In the current state of things it's not gonna happen.

spank_thru101
04-08-2005, 10:25 AM
You are completely right in everything you said, I am not saying that record companies aren't the ones who have the contracts heavily weighed in their favor, I am saying that they are, but most contracts made with GROUPS have a clause that states that if the group dissolves (breaks up) that the groups responsibility to release the remainder of the albums is void...this doesn't mean that the group can leave and sign with another label, but this threat alone is why most major label deals are reworked after a band breaks it big. Also yes its true that a lot of contracts are completely options outside of the first album, but some aren't, for instance The Cure have a new contract for 2 albums with an option of 1. Mariah Carey also was under contract for to release albums on her former label and after her bout of craziness was offered 50 million to walk away from her contract (her contract was worth something like 70 million and she later resigned with Def Jam for 20 million) Also with solo artists (like Prince) its tougher to threaten to leave the label if you are still under contract since you cannot break yourself up, and while under contract a musician can not sign with another label or release music on another label with out the consent of the record label.

I got those figures from testimony given in a court transcript in Courtney Love lawsuit against her former record label a few years ago (GDC) and if I come across it i will post a link here.

DeviousJ
04-08-2005, 11:05 AM
Nope, every group contract makes provisions for leaving members - they're binding and very restrictive, and the record label retains the right to keep whichever members they please and drop whoever they like (including anyone who didn't quit, if they want). Being in a group isn't a shield, the record contract is with the members, not the group entity itself. In fact, the group concept makes it easier for them to decide who does what, since they'd consider any changes to be a new project, requiring re-evaluation. And the agreement doesn't become void at all, it's entirely enforceable, and the record labels argue it's there to protect their interests and investment. Artists say the provisions are far too restrictive, and they are, but them's the breaks at the moment unfortunately.

I said most artists aren't given a commitment on albums - obviously the Cure have been through more than one record deal by now and are in a position to wrangle a commitment in the interests of their own security. The Mariah Carey thing is a prime example of why they don't like to commit and prefer options - because of the contract, they HAD to record more albums with her. Had they taken options instead, after one album bombed they could quite easily say 'we'll pass on any more, bye'. Instead they had to sink more money into her, and they knew it was a bad situation and they were going to lose a lot. They had to buy her off and get her to agree to tear up the contract, for a huge amount of money, and it was still better than going ahead and fulfilling the contract. Labels are committing less and less these days, and are less interested in cultivating a talent long-term than making money in the short term with flavors of the month. That's why options are more common, and that's why artists are mostly unable to weigh in with effective threats

KingJeremy
04-09-2005, 03:47 PM
Originally posted by daydreamer999
until about 1992 or 1993 nirvana's royalties were, 1/3, 1/3, 1/3. Yes and then Kurt pulled an Axl Rose and demanded that he receive the lion's share of the money or he would take his ball and go home. This all coincidentally happened around the same time things got serious between him and Courtney Love.

spank_thru101
04-09-2005, 06:32 PM
No being in a group ins't a shield, but being able to say "we aren't going to record anymore albums with you" can have power if the group ins't specifically required to by contract, while yes I know that the reocrd labels can then turn around and say "well then you gotta wait the next seven years before you can go and find a new label cause you signed with us"...but this is exactly what The White Stripes, Toni Braxton, Coal Chamber (they even broke up for a period due to label disputes and inband disputes) Nickleback, and NSYNC all did in order to rework their contracts after they had their repsective "big albums".

As for that Kurt Cobain thing, yeah he did pull an axel rose, but I think it may only be with the songwriting royalties...though I may be wrong...I read Heavier than Heaven and in it it qoutes a fax that Kurt got from his manager and his manager says that they expected In Utero to sell 2 million copies and kurt was expected to make 200,000 from royalties from that...thats 10 cents an album...which is quite low even for then, I read that one of the reasons that they turned down some of the major label seven figure deals was cause they were recieving a higher royalty rate from geffen...along with full creative control.

DeviousJ
04-11-2005, 10:51 AM
Originally posted by spank_thru101
No being in a group ins't a shield, but being able to say "we aren't going to record anymore albums with you" can have power if the group ins't specifically required to by contract, while yes I know that the reocrd labels can then turn around and say "well then you gotta wait the next seven years before you can go and find a new label cause you signed with us"...but this is exactly what The White Stripes, Toni Braxton, Coal Chamber (they even broke up for a period due to label disputes and inband disputes) Nickleback, and NSYNC all did in order to rework their contracts after they had their repsective "big albums".

Of course they're required to record albums - that's what a record contract is for :confused: It has weight near the end of the contract, since the label might want to re-sign the band, but since most contracts are for 6+ albums it can be a ways into an artist's career. Also, it's not measured in years - I'm guessing you're talking about the provision in the Labor Code which says that you can only be bound into a personal contract for 7 years, except that it was amended specifically for the record industry so that artists do not have the right to break a contract after that period. They're bound in until all required albums are delivered, and seeing as the usual album release cycle is 2-3 years, a 7-album contract can end up being 21 years. If you decide to stop making albums for whatever reason, you're still under contract until they're all delivered. This is <a href="http://www.lamn.com/modules.php?op=modload&name=News&file=article&sid=20&mode=thread&order=0&thold=0">exactly what Courtney Love was suing over.</a>

I don't know where you're getting the details of private contract negotiations but feel free to link me. Everything I've read on the subject states that the labels are in the position of power in any standard contract, and there's very little the artists can do to change things unless they're nearing the end of their contract and the label wants to re-sign them, or if the label wants to offload them for whatever reason. This could be because they committed to an album they no longer want, or (like with Nirvana) a bigger label offers them a sweet deal to let them go over. The vast majority of bands have no real power to renegotiate their contracts other than an overall rebalancing (which is never against the interests of the label). If a band goes on hiatus to try and hold the label hostage, it's much more damaging to them than the label.

There seems to be a lot of confusion in here - anyone who's interested in the way record contracts (and royalties especially) work should have a quick look at this
http://www.futureofmusic.org/contractcrit.cfm

spank_thru101
04-11-2005, 04:15 PM
Yes there must be some confusion

check out this link for some info also

http://www.music-law.com/home.htm

One thing that I learned here that was interesting is if bands get a buisness lisence and declare there band as a buisness on taxes they can write off almost everyhting as a buisness expense (from recording to buying equipment, to touring expenses) I consulted a tas lawyer on this a couple years back when I was recording with some friends in the hopes of independly releasing some stuff (nothing ever came of that by the way).