Ugly Facts & Figures of Christian Rock

One of the most sobering things to look at these days – no matter the profession – is the numbers. Dollars, budgets, expenses, income, and that bottom line are often a frightening puzzle that never seems to make sense. In order for our story (“The Ugly Truth Behind Christian Rock”) to make more sense, we have to do a little math. One reason we made this companion article an online document is that often times these facts and figures make it a chore for the eyes to plow through as our creative minds check out. We didn’t want our cover story for the Nov/Dec issue (#104) to be boring, so we separated the #’s from the words.

We’ll look at two major parts involved in the business of Christian rock and roll:

Album Sales and Artist Royalties
and
Touring Expenses and Income

As Bruce Fitzhugh so accurately points out in “The Ugly Bruce Fitzhugh Interview,” most of the legal points in recording contracts being issued today date back almost half a century ago and favor the recording company far and away over the artist. One point that often goes without saying here is the “art of negotiation” and the “business of haggling.” Like that market haggling scene in Monty Python’s Life of Brian, you can’t just buy something, you’ve got to haggle for it and settle on a price. In a generalized sense, so it goes with record contracts. More than likely, the first draft of the contract is grossly overweighted in the record company’s favor. If you don’t counter offer and simply accept the first proposal, then you’re stuck with a low-end deal and you have no one to blame (and what motivation does the record company have to offer you more?).

The “typical” recording contract offers the artist “10 points,” which is the equivalent of 10 percent of wholesale, or 75 cents from the sale of that $15 CD. (Some contracts specify 10 % of net retail sales, which could just as well be reduced to the 75 cent range* after exceptions, etc) So, what seems like a nice little royalty of 75 cents per album for the artist is never seen by the artist. Why? Because all the “up-front” costs of album production and often-times even marketing (like print ads, retail promotions, and special tools, like videos) are all considered “advances” to the artist and they must be paid back prior to the artist seeing a positive balance on his/her royalty checks. If the album cost $30,000 to make and the label spends $1 per unit of projected sales (at 30,000 projected units sold, that’s another $30,000 to add to the “advance” balance), the artist has $60,000.00 to “pay back” (called “re-couping”) to the label. If the album sells 25,000 units, that royalty of 75 cents per unit only figured to $18,750 towards that balance. Thus, the band never sees a dime.

Many bands of the extreme musical spectrum (hardcore, metalcore, even emo-core) make albums for under $15,000.00 and they sell at or under 10,000 units. By applying the royalty times units sold formula, it’s easy to see why bands in this Christian rock scene never see album royalties. If you want to look at bands at a few levels higher, like the mainstream band that is famous and sells fairly well (but doesn’t go “Gold” status, which is 500,000 units)... Many of those albums are made with budgets that sit right around $100,000.00 plus marketing expenses that are much higher due to more markets to promote in... And these artists never see a royalty dime either. It’s not until the breakout scenario occurs will a band ever recoup their album budget. This breakout in national sales will usually only happen after severe marketing dollars are thrown in to capitalize on any momentum that the album gets on radio and/or on tour.

Just for grins, let’s take the $15 CD and break down where the dollars go. First off, take $7.50 and give it to the retailer. Out of the $7.50 remaining, around $3 will go to the distributor, leaving the label about $4.50. 80 cents goes to the publishing company (which, in some cases, which you’ll see in the paragraph below, stays in the record company’s pockets). Now 3.70 remains, and then the cost of manufacturing the cd with printing on the disc, four-color printing on the “tray card” and the “cd booklet” plus the “jewel box” plastic case it comes in plus shrink-wrapping and you’re talking about subtracting another $1 (2.70 remains). The record companies often follow a formula of “spending $1 of marketing for every unit expected to sell.

A side story that was told me again via phone as I type this story: Steve Rowe of Mortification was about to tour the US in 1996, “I was told, ‘You are due $13,000 US Dollars for the sales of Envision Evangeline.’ A couple of shows before the end of the tour, I rang them up and asked if we could get paid at Cornerstone, and they said, ‘No, we’ve worked it out to where we owe you nothing.’ I met them in their RV at Cornerstone and asked them, ‘How do you go from 13 thousand to zero?’ And they said, ‘We can give you 10.’ I said, ‘Okay, I’ll take that, but how do you go from 13 to zero to 10?’ They paid me 10,000 US dollars. We used that money to buy the house that has our studio in it.”

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Other Stories:

• Ugly File Sharing Debate #1
• Ugly File Sharing Debate #2
• Ugly Atticus Fault Interview
• The Ugly Bruce Fitzhugh Interview
• SXSW 2002 Recap
• You Say You Want A Record Deal?

so, how hard is it to start your own record label/publishing compay, such as what disciple did for so many years?
Posted by: phall3n on November 10, 2003 08:33 AM

Wow! This story is a real eye opener! I've heard these tales before about the music industry and how it works but to actually see the numbers, even if their "rough" it has opened up my eyes to this harsh reality. I play in a band too. We average $40 per night and we usually play only once a week! Our biggest “love offering” so far has been $105. We don’t have a CD out yet nor do we sell merchandise at our gigs. The only other income we get other than our fulltime jobs is playing at parties where we charge up to $400. These past two months have been good with our party gigs and we’ve been able to purchase equipment and studio time to begin our CD. As you can see by our income we are not “rolling in it” by any means. We are five members in the group and we all have full time jobs. The blessing, other than a steady pay check, which we also use to finance our gigs and studio time, is that we don’t have to work weekends and our supervisors are fairly lenient about us taking some time off to leave early for a gig. Even take a whole day off. Of course we can’t do this often or they’ll start to think twice about letting us go. But that has helped us to some extent. Only one member of our band is married the rest of us are single and still living at home. Other than helping out with bills we don’t have much to tie us down, so that’s another plus. We’ve been together for a year now and our starting to create a following. The two songs we’ve recorded our getting some airplay at least once a week during a youth program at the local Christian radio station. Honestly I don’t know how far we’ll go or if we’re going to “make it” but despite all the time and effort (and money) we put into this band and although the results aren’t enormous or if any at all, I still enjoy every moment! This is something I love to do and I’m happy to be able to do this. Plus my band is a bit more ministry minded so we get gratification from helping people out with their faith or leading them to Christ. But it would be nice to at least get to the point where you are living comfortably financially and still doing the music you love and believe in. That would be cool! Call me a dreamer but I’m enjoying the moment despite what happens to us or doesn’t happen. I wouldn’t change this for anything.
Posted by: geoyanez on November 11, 2003 11:37 AM

If I had known a long time ago what I know now about music. I would have taken up sewing.
Posted by: Noise on November 12, 2003 11:35 AM

I am a Youth Minister in small town America and for the past year we have been putting on shows at our church. These articles on bands and money and record labels has really got me thinking: "Is there some other way to do 'it?'" And by "it" I mean: the touring, producing and marketing. You would think and HOPE that in the Christian industry that there would be a different way a doing things. I think it is time for a change! Is anyone with me? Lets start a Christian record lable who doesn't screw the artisit! Maybe they are out there already, but lets have more. I know that at the end of our shows, as I am paying the bands, they thank me profusley! Reading these articles makes me see why, but I always tell them "These kids didn't show up tonight and shell out $5 to see me. They came because of you!" That is the way it should be! If anyone is interested in starting a Christain lable that will be fair and change the status quoe, drop me a line!
Posted by: Justin Daron on November 17, 2003 03:45 PM

Just curious why in the heck are the retail stores reaping a massive 100% markup? Most other industries you'd be lucky to get 10% markup, time to get tough with so-called Christian Stores. Bands pray for a true Christian investor or save, and make your own small print run album, or even sell your Mp3's online, do good websites, give people samples of your music, go around the "industry", people are buying music online now, use it, and blessing the living socks off people! You have to live in this world not be of it! And that my friends is scripture!
Posted by: Blade on November 21, 2003 10:27 AM

I don't know where you get your retail figures from, but the 50% discount (representing a 100% markup on cd sales) you listed above is a pipedream. For every $15 CD a store sells they are not making $7.50. Most distributors will give you a percentage off the full retail price of a cd which will usually vary between 30% and 45% with the occasional 50% discount to encourage larger orders ("order over 100 units and get a 50% discount" that kind of stuff). But what you need to take into account is that this discount is based off the full retail price. So iff the cd retails for $18.98 and you only get a 30% discount from the distributor (which is the deal that Central South gives stores for the new Stryper "7" cd) then you are paying $13.29 for a cd that retails for $18.98. Tjhis does not include postage which adds about another $0.50 to the cost of the cd. So the "Mom and Pop" store is stuck paying $13.79 for a cd that Walmart sells for $14.88. Virtually every store sells below retail to stay competitive price wise, so if you sell that $18.98 cd for $15 you are making a whopping $1.21. This figures would obviously get better if you get a better discount, but the point is most stores do not operate on a 100% markup on new cds. We are lucky if we can make $3 on a $13 cd. With a monthly health insurance bill of nearly $800 to cover me and my family thats 266 cds a month (or about 9 cds a day, every day of the year)I need to sell just to cover my bases in case my little boy gets sick. Stores have other expenses too. They have to pay employees, rent, insurance, taxes, advertising, utility bills, etc. Remember the next time you illegaly burn a cd that you are stealing from more than just the "big corporate record label" and the "millionaire rockstar". I remember it everytime my health insurance bill comes in...
Posted by: Alan Tregoning on November 21, 2003 10:51 PM

hmm... If the store ain't getting it, and neither is the star... phall3n might have quite a point. And the author of the article also indicates the publisher accounting can be somewhat, uhm, confusing. What worries me more is the sort of a sense of "entitlement" under which some people tend to expect to earn their livelihoods by doing the Christian "thing". Yeah, the best of both worlds -> be God's and be paid Caesar's coin for it. It might be my Puritan ancestors that I don't have, but something makes me feel wrong about that... (I come from a country where maybe 5% of pastors have some sort of a regular pay - and maybe only 10% of those make more than maybe $50 a month - everybody else is in it for the kicks. Medical insurance, anyone?) Yes, it is a sad thing that an otherwise skilled musician has to get a day job instead of enjoying his craft. Hey, I love to sail. Why shouldn't I be paid for it? (actually, for all of 6 months, I was :-) Now, if that music were really meant for the Glory of God, then all the power of Mammon would not stop it. Too bad MP3.com is gone, but, hey, there's kazaa and the boys. Spread the word! and your music! Ad majorem Dei gloriam! How is it that people _expect_ to make a living out of God's Word and His faithful? (I must confess that though has more than once tempted me, too - but I count that as temptation, sort of bread in the desert kind of thing). I find it downright silly that when my church records the service, they have to be careful not to record the worship songs - because of copyright issues - and don't dream of webcasting either. Same thing for summer camp songbooks. Hey, who's our Master? Why do people write worship songs for? their pockets or to inspire fellow humans to come closer to God? when the day of judgement, etc... I went already too far. Got a few logs to pull off mine eyes myself. Bless you all
Posted by: Yama Ploskonka on November 26, 2003 12:26 PM

In the same way, the Lord has commanded that those who preach the gospel should receive their living from the gospel. (1 Cor 9:14) I don't think that evangelizing through music should be excluded from this. Bands definitely can be huge tools for bringing people to Christ and I think that they are very effective with our youth. I don't think that bands should all get rich off playing music, but $1000 a month per band member is not enough for a band member who is working hard 6 days a week without being able to come home every night and while other people are making more reasonable incomes off of their very talents and creations. A full time job at $1000 is less than minimum wage. Obviously, we need most of the different roles represented in the music industry, but I think its silly that the musician, the creator of the product and the very reason the industry exists is probably the poorest paid of all those roles. If you like the songs you hear on the radio or the worship songs you sing in church that were written by someone else than you should have no problem with people getting payed to help you be able to enjoy them. If no one got paid, people would not be able to reach you with their music or lyrics. There wouldn't be people who could dedicate their lives to writing the worship songs you like or play the songs you like to listen to. Of course there would be those who did it for a hobby, but you would only hear about the guys who practiced next door to you who you will get tired of hearing soon anyways. I think the problem is not just a problem with the Christian music industry, but with the music industry in general. Its the same problems. And I wouldn't be surprised if a lot of the people involved in the Christian music industry were not actually Christians or doing it for a Christian purpose. I have heard of non-Christians owning Christian stores, etc. Commenting on getting paid to do what you enjoy, like sailing. Maybe some people won't be able to get paid to do what they do for a hobby. But if millions of dollars are being made off of what you do, then it seems reasonable to be able to get paid for doing it, especially if that meant the difference between you be able to continue doing it or not. Personally, I think music is a huge tool for evangelism to youth and I would like these bands to stay together and continue to do what God has given them talent to do. I don't know if I can make a difference in how they are treated by the industry that they deal with, but I know that I can support them in my own ways. And if enough people get behind them, then maybe they can continue despite the injustices of the industry they are in.
Posted by: sam vonderheide on November 26, 2003 07:46 PM

and then the record execs whine about how they're losing money from filesharing.
Posted by: lucas on December 5, 2003 09:46 PM

ok, so we know that the industry overcharges bands for their share because they have the majority of the "muscle" between the two. And we know that buyers aren't interested in record companies, aside from their role in getting the artist, and their music, "out there." so why hasn't any christian group with a little starting capitol come out as a solely "networking" oriented organization, to team up with artist and buyers alike, in order to create a responsive idea of what kind of demand there will be for individual artists, and link the only two essential parts of the music world together; the player, and the listener. you'll have to excuse my ignorance of any of the necessary details, of which, i'm sure could arise some problems with my "plan," or whatever.
Posted by: a_star's_bright_glow on December 22, 2003 04:34 AM

I am totally onboard with these challenges, in so much that I have used my own $ to develop and market a web site that allows fans to donate directly to bands to "invest in their future". There are two things that I personally feel strong about on this issue. First, that the great quality of harder edged faith-based member bands have created a fantastic fertile ground for development that can launch bands to a state of "financial sustainability" and second, that these bands deserve the extra edge that a fan (financially) supported model can give them while they are developing.
Posted by: larry on February 11, 2004 01:26 AM

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