Terry McBride's Blog

Have you ever run along the beach barefoot for an hour? It's the most amazing yet painful event. You find yourself running on an angle thus forcing the stabilizer muscles in your calves and knees to work in a strenuous manner. Running on the balls of your feet as your toes give no lift means no long strides, just short awkward ones. If you intend to do this, then be ready to hobble for at least 48 hours afterwards, even intense Yoga is of no help!! LOL

This week was interesting; intense yoga and heat, intense cold and wind, then back to Spring in Vancouver. The Canadian Music Week was fun, and the award night was enjoyable. Thank you Mark for an exquisite speech, you're a dear friend, to Ric who traveled in for just the day, and Dan who stayed behind to mind the start of the Avril tour. In my life, friends are the one part I did not imagine, which is amazing as I am forever surprised by their gifts of the heart.

I have talked a lot about artist imprints publicly so let me lay out my thought process in a more logical way. As a manager, you commission from a number of different revenue verticals: personal appearance fees, merchandise, publishing, endorsements and intellectual property (publishing & masters). The artist imprint really focuses on the income from the intellectual property part of the equation. Traditionally, one would commission on record sale income and publishing royalties that an artist receives from the record label and publisher. Revenues to the artist from the record label are approximately $1.50 for a CD sale, $1.10 for a digital sale and $.80 per album sale in publishing revenue. These numbers are based on the artist being the main songwriter and receiving about an 18-20% royalty rate on wholesale less any producer/mixer royalties. Thus, a manager would commission approximately 15% of a combined royalty rate between $1.90 and $2.30, or $.30-35 per album sale. From what we have seen so far on profitable artist imprints, the total that the manager commissions, in the initial window of release (2 years), is on about $5 of net income per album sale, or $ .65 commission per record sold. When you look at long-term sales (2 years +), this number climbs to $7.00 in income to the artist, or $1.05 per album in management commissions.

This increased commission (or reward) must be weighed against the increased costs (or risk) to the management company. The cost, in salaries and overhead, for Nettwerk to run an artist imprint is between $100K and $200K per album cycle - sometimes more, other time less. So initially, the risk is much higher than the reward unless you sell in excess of 300K albums worth of income, which can include track sales and syncs. So in the short term we loose, but what we have seen in this model is that with every new release we sell about 30% more catalog sales at the higher net income rate of $7 or more. Thus as the catalog develops into a library of Intellectual property, you hit a tipping point where the reward surpasses the risk and this model is far healthier for both the Artist and the Manager. What is key is that you stick it out as we are!!

Any questions Nettwerkers may have on this - just drop me a note : & now for my thought of the day - "Knowledge is a thought with a label and gives the illusion that you know"

Peace

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