Business Basics

By, Wendy Day from Rap Coalition (www.rap-coalition.com)

I never thought I’d ever have to devote a column to this topic, but apparently it needs addressing based upon how most folks seem to operate a business in this industry. Here are some basics:

1. Set up a phone for business calls, KEEP the phone in service, and return phone calls. Changing your phone number every few weeks may be the way you normally operate, but when people can’t reach you for business you lose money, opportunity, and momentum. No one could possibly imagine how many calls I get from retail stores, radio stations, and distributors asking me if I know how to find a certain label or artist because all the numbers they have are disconnected. My tolerance for this is very low. I’m not talking about artists and labels who expand from one office to another and transfer their calls to a new number, I’m talking about the hoards of folks who have even placed ads in magazines with numbers that have been disconnected before the magazine hits the streets. Spend the money for a number that stays on and available, even if you have to forward it to an answering service or check the voicemail everyday. Vonage is $25 a month people—there is NO excuse! They even email your damn messages to you and you can forward the calls to any phone number.

2. This is a small industry. Word spreads very quickly. Major labels know which small indie labels and artists are unprofessional and hard to work with, and rarely do the better major labels approach these unprofessional indies and artists for deals--it makes sense really, they just don’t need to. You’d be surprised what is said behind closed doors about indies and artists. In a perfect world, an indie would have many distribution opportunities from which to choose, but with some distributors not making offers because of an indie’s reputation the choices are severely reduced to mediocre distributors, especially with the amount of labels competing in today’s marketplace. I got a call last week from one of my favorite A&R Research guys (a major label’s frontline to find new artists to sign) who told me about a label that I’ve worked with on and off in the past few years. He explained how he left messages at the label, and never got a return call. He had pitched the president of the major label he works for, why he thought they should sign the indie label’s artist. Meanwhile, no one called him back. Go figure!

3. Pay your artists. It amazes me how someone who thinks they have a good business mind could be stupid enough to not pay the artists who have made them money, but somehow this happens enough that I have to mention it. If you are an indie label, pay your artists and producers. They signed contracts with your label, and in those contracts it stipulates when and how much. This ain’t rocket science. For every unit sold, your artist gets a cut. It isn’t much to begin with, and if you mismanage your money, or spend it elsewhere, you STILL owe them what you owe them. So set enough money aside EVERYTIME you receive payment from your distributor, retailer, or customer, etc. You owe them a percent of sales (usually around 12% AFTER they recoup what you spent making the record and on advances) and mechanical royalties (roughly seventy cents for every album sold). We’ve all heard the alleged rumors of No Limit and Cash Money not paying their artists and the artists leaving; don’t let this happen to you. Contracts keep your artists there; paying them keeps them happy and keeps their lawyers from breaking their contracts. If you’re selling units, it’s because of the music and the artist, NOT because of your logo. A logo brand may help, but a record without a logo still sells, a logo without a record does not. Pay your artists. Get the point?

4. If you don’t know what you are doing, seek help and information from those who do. The music industry can be a very expensive place for trial and error. I’ve seen labels waste $50,000 to $200,000 learning this business. It’s not worth the aggravation. Find someone who has done it before, preferably successfully, and ask questions. Or hire an experienced consultant. Or work with another label to learn the way it is done, or hire someone COMPETANT who has. This game is full of people skilled in the art of hype, however, so do extensive research before hiring anyone!!! I also believe the majority of folks in this business to be inept, so make certain you hire someone competent. Ask for references and check them--every single one. In the past, every label that has ever hired me (and I am expensive) lost a grip of money to some idiot who worked the project before me, unsuccessfully. It’s usually the same few people taking folks’ money, and then I am stuck cleaning up a mess. I no longer clean up messes (I don’t have to-- there are too many new people without drama to work with), and I don’t know anyone else who does either, so get it together on the first try.

This is a business, and although it would be nice to have your boys around you since you trust them, that’s not smart business. Hire the best person for the job. You will make more money and then you can hire your boy to do whatever he’s good at, which will hopefully make you even more money. The earliest lesson I learned was to not try to fit a square peg in a round hole: this means don’t put someone into a position they are not right for, just because they are available.

5. Do what you say you are going to do. Do I really need to explain this one? If you tell someone you are going to do something, do it. If for some reason you can’t, call them immediately and explain the situation. Don’t just leave everyone hanging and wondering. This is a business. A BUSINESS! Act like it.

6. Write shit down. Keep track of important information! I was talking to the guy at Ozone who was booking all of the artists’ flights for their annual Ozone Awards. Of all of the managers and teams that he dealt with, only a handful didn’t lose their flight info or itineraries. Maybe this is why artists miss flights and don’t show up? They have teams that are clueless behind them. You are only as strong as your weakest team member. You are making 20% of your artists’ income. Do the work! It’s not free money. And artists: choose the right people to represent you. Maybe your career is short-lived because you chose idiots to propel you forward. And they couldn’t.

Thanks for reading this far, I know it was the basics but I see these mistakes being made everyday in this business. People come and go quickly in this business, and although to outsiders this looks like easy money and an easy game, that is so far from the truth. Labels that were at the top five short years ago, don’t even exist anymore--a true case of killing the golden goose.