A music company just asked YOU for money...is it a Scam?
“The music business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There's also a negative side.”
This iconic quote, most often attributed to legendary novelist Hunter S. Thompson, is widely known even to those just starting their music careers. Whether the quote actually came from Thomson is debatable. Less controversial is the notion that most people in the music business actually agree with the premise, no matter who may have come up with it. And while those who choose to venture into the music industry are regarded as quite the cynical lot, most of us would agree that there are plenty of shady characters to watch out for, especially if you’re a DIY artist with a tight budget. Consequently, if you’re an artist and a so-called music executive asks YOU for money, like say $500 or more, read these guidelines below before forking over your hard-earned cash..
Yes - It’s Definitely It’s a Scam
Any huckster in possession of a business card with “(FiLLInTheBlank) Records” on it can claim to be a “record label”. Fact is, most of these claims are pure bunk. So how does an artist determine which “record label’ is legit, and which are scammers? Easy - if the so-called record label asks YOU for money upfront, they’re not for real.
Here’s the basic business model for a legitimate record label: Labels make an investment in you (the band) in the form of an advanced payment, or covering your costs and/or living expenses. In return, you (the band) offer the label your rights to your songs’ or albums’ master recordings. It’s that simple. Now, whether a band wants to accept these terms is another matter. But if a guy is telling you he owns or represents a record label, then turns around and asks YOU for money, say, to cover expenses or for other “services”, then he’s not really a label. And the fact he’s representing himself as a “record label” makes him a scammer.
Music Managers are among the shadiest scoundrels in the music industry. Under no circumstances does a legitimate music manager collect upfront “fees for services” from a band. No way. Never. Legitimate Managers make their money as a percentage of what the band makes - usually between 10-20% of everything. Some “super-Managers” may charge more, perhaps up to 25% - expensive, yes, but probably still legit. However, if a so-called Manager is asking you for money, run. And, don’t sign any contracts where the Manager is raking in 50% or more of your money, like Justin Timberlake did. Unfortunately, this happens all the time in the music business.
A real Booking Agent, like Music Managers, earn their money as a percentage of what the band makes. The only relevant difference is, while a Manager usually earns a percentage on all income from the band, a Booking Agent earns a fee from touring only. The Agent books a show, gets roughly 10% of the gross, paid by the venue and/or promoter. Booking Agent then pays the band. Pretty simple. If a “booking agent” is asking you for money to cover costs or fees, they are not for real. Chances are, it’s just a guy with no connections and needs a job.
Music Publishers work for artists in a similar fashion as do Record Labels. The Publisher advances you money; in return, you share the songwriting rights with the publisher. At most, it’s a 50/50 split. There are many types of publishing deals, but any deal that requires an artist to invest upfront fees is not legitimate.
Might Not Be A Scam - But Watch Out
For the “pay-to-play” Venues that ask bands for money upfront before taking the stage, most music industry experts will advise you to stay away. Perhaps as a result, most of these types of deals have been slowly phased out. Still, there are still some “brand name” Venues, namely on L.A.’s Sunset Strip, that require bands to attract a minimum number of fans, or else pay the difference. If you don’t draw enough warm bodies to your show, you can probably still get out of paying the Venue. Just don’t expect to be invited back anytime soon. In any case, you don’t have to take the gig, and that’s probably a good idea. This deal is just not good.
True, Radio Promoters take no backend or share in the band’s success, as do managers and record labels. But Radio Promoters need to get paid somehow. Just don’t let that “somehow” be you. Most legit Radio Promoters charge fees well out of reach for a typical band’s budget. In other words, legit Radio Promoters usually work for major labels and not DIY bands. If a guy says he’s a “radio promoter” and asks you for a large sum of money, and to justify this arrangement he’s guaranteeing your song will receive heavy airplay on major FM radio stations, this is your red flag. Run for the hills.
Most music producers require upfront fees to work on your record - this is normal. Many will take back-end point along with fees, reducing the amount of scratch you need to come up with upfront. This should be a negotiation, so if a producer asks for fees before you start, don’t be alarmed. You can reduce this fee by offering more points on your record. It’s only a “scam” if the producer is asking for an obscene amount of money for your acoustic record. It just doesn’t cost that much to record a an album these days.
Yes, you’ll need to budget and pay upfront before a music publicist lifts a finger. Usually you can spread payments for a campaign over a few months, but it’s not cheap, and the minute your check is late, work stops. Music publicists don’t guaranteed results - also normal - but this doesn’t mean you shouldn’t shop around. Get a referral from a band you trust before working with a publicist.
**Probably Not A Scam**
Most digital distributors will charge bands modest upfront “set-up” costs and maybe a percentage of your sales. This is standard practice. There are many players crowding this space these days, so shop around and get the best deal for your music and strategy.
Yes, recording your record in a place other than a basement is something you need to budget for. Even basement studios are pretty nice these days. Be prepared to come out of your pocket before setting foot inside any studio, or you could run into problems.
***Final Word of Caution***:
There are plenty of music companies not listed above for which bands may have questions regarding the legitimacy of services offered, especially if it’s a relatively small amount of money, say $100 or less. This doesn’t mean some vulture isn’t scamming you, even if you won’t exactly lose your shirt. As always, write or forward any deal you’ve come across to firstname.lastname@example.org and I’ll be glad to offer my take. This offer goes to any “label”, “manager” or other music industry scoundrel who believes this article is way off base and you’d like to tell me off. I’m all ears.