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Business Basics
By Wendy Day of Rap Coalition

I never thought Iíd have to devote a column to this topic, but apparently it needs addressing based upon feedback to me from major labels, distributors, artists, and indie labels themselves. 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 canít 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 because all the numbers they have are disconnected. My tolerance for this is very low. Iím not talking about artists and labels who expand from one office to another and transfer their calls to a new number, Iím talking about the hoards of folks who have even placed ads in this magazine with numbers that have been disconnected even before the magazine hits the streets. I understand the value of disposable cell phones with free chips, but can we please spend the $25 a month to have a voice mail service or a phone line dedicated just to business that remains in service! One of my favorite rappers, KRS-1, has changed numbers (business numbers) so much in the ten years Iíve been running Rap Coalition, that about 5 years ago, I stopped keeping track of him and to this day donít even try. It has become a joke in the music business about Krisí numbers changing. When people call me with opportunities for artists, and many do, I call those I know I can find.

This is a small industry. Word spreads very quickly. Major labels know which small indie labels are unprofessional and hard to work with, and rarely do the better major labels approach these unprofessional indies for deals--it makes sense really, they just donít need to. Youíd be surprised what is said behind closed doors about indies. 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 indieís reputation the choices are severely reduced to mediocre distributors, especially with the amount of labels competing in todayís marketplace. I got a call last week from one of my favorite A&R Research guys (a major labelís frontline to find new artists to sign) who told me about a label that Iíve worked with on and off in the past few years. He explained how he left a message at the label, twice, 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 from the Midwest. Meanwhile, no one called him back. Go figure! Gee, whoíd want a deal from Def Jam anyway!

2. 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. Pay your artists. They signed contracts with your label, and in those contracts it stipulates when and how much. This ainít rocket science. For every unit sold, your artist gets a cut. It isnít 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). Weíve all heard the alleged rumors of No Limit and Cash Money not paying their artists and the artists leaving; donít let this happen to you. Contracts keep your artists there; paying them keeps them happy and keeps their lawyers from breaking their contracts. If youíre selling units, itís 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?

3. If you donít 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. Iíve seen labels waste $50,000 to $75,000 in a few weeks time learning this business. Itís 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 COMPETENT 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.

This is a business, and although it would be nice to have your boys around you since you trust them, thatís 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 heís 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 donít put someone into a position they are not right for, just because they are available.

Thanks for reading this far, I know it was the basics but I see these mistakes being made everyday in this business. Since I started in this industry in 1992, there are less than 50 people still doing something worthwhile ten years later. People come and go quickly, and although to outsiders this looks like easy money and an easy game, that is so far from the truth. Labels who were at the top five short years ago, donít even exist anymore. A true case of killing the golden goose.
 

About the author: Wendy Day is an American entrepreneur, writer and founder of Rap Coalition, the not-for-profit entity created to protect artists from exploitation in the music industry.   Please visit her Rap Coalition blog at http://wendyday.blogspot.com/
 

 

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