Music Industry in the Philippines - Part 2: Music Recording

Music Recording is where the initial investment comes in. This is when someone --- either you or a record company --- gambles on your song and puts money into music recording, with the expectation of getting that money back when sales start to come in.

The most thrilling part in a music composer's life is music recording. Incidentally, music recording is also the most risky part for the record company's money.

And real success is still a long shot for a new artist today. Of the 32,000 new releases each year, only 250 sell more than 10,000 copies. And less than 30 go platinum. (Courtney Love, extracted from Salon.com)

That's 0.8% success rate, and that's in the USA, folks. I don't have as of this writing the figures for the Philippines. But do you think figures are better? I have gathered that albums of even the most popular artists seldom sell beyond 10,000 these days.

They blame piracy in the Philippines for that. I think it's more like, hey, the rules have changed and we haven't caught up with the new rules of the game yet. Or, perhaps they know that the rules have changed and industry stakeholders want to ward the change off and preserve the status quo.

If you're a music composer and have read this far, I think you have courage in you that withstands suggestions of doom. As I said, the rules have changed, and reading the full text of Courtney Love's speech nine years ago would englighten you on those changes happening in the Philippines today.

Daring music composers and performers today have the option to produce and market their own songs through the internet. Be your own music producer. Be your own music distributor. Then learn internet marketing. These are readily available and affordable tools today that Beatles and Bee Gees never enjoyed.

Internet marketing is huge and requires a series of posts. But nothing compares with getting it from real experts, for a price. I don't make a commission for this, but to prove my point, check out this link:

How to Promote Your Music Successfully on the Internet
http://www.musicbizacademy.com/bookstore/htpromotemusic.htm/top10.htm

I'll try to inject what little I know about internet marketing on the future post about Promotion.

But remember, there are no free lunches. You have to pay for the information somehow, but check out the author thoroughly. Does he really make money as he claims he does? I don't know how to verify that. But the amount of P1,250 to buy that book and trying out the concepts there is nothing compared to the risks in the most common option in music recording that people take.

What's the usual route that people take?


They sign a contract with a record company. Landing a recording contract is traditionally the dream of every music composer and music performer. This is when the record company agrees to finance the recording of the song using high tech equipment.

As I said, a recording contract is a very risky undertaking on the part of the record company. They work on numbers. For every x albums they record, they know most will fail. But success in one or two will compensate for the loss in the rest.

So, record companies manage their risks by letting you sign contracts that stocks up more favor on their part. It's your job to look into that contract before signing them. Many music composers do not do this. Results? Catastrophic.

Just two essential reminders:

1. Make sure the contracts DO NOT, in any way, transfer the ownership of your music copyright to the record company. You can lose millions here by being too excited and . . . careless.
   
2. Make sure the contracts DO NOT tie you up with producer "in perpetuity" or something to that effect. Signing that kind of contract is like selling the song to them already. Don't!
   
3. Insist on an Exit Clause. Know what their responsibilities are and what are yours. Know when they can kick you out, and insist on conditions when you can kick them out. Fair deal. A contract without an Exit Clause can entomb your musical creations ... for life. You do not want that.
4. Do not be afraid to say No. A "No" now will save you from the "hu hu hu" later.
   

The record company then produces the song or album. This is when the executive producer of the record company signs checks payable to finance the various stages involved in music recording:

1. Professional Fee for the performer - recoupable from the Artist's Royalty of 3% from wholesale price (then I gather that, really, performers are simply given a straight non-recoupable "for hire" compensation)
   
2. Professional Fee for the back-up singers, if any - non-recoupable, straight "for hire" payment
3. Synchronization License Fee for the composer - usually P15,000 to P20,000 per song, non-recoupable
   
4. Advance mechanical reproduction license fee - usually P5,000/song, an industry practice which I contest
   
5. Professional Fee for the musicians - non-recoupable amount that depends on the prestige of the musicians, and the producer either pays each musician separately or collectively
   
6. Professional Fee for the producer -  yes, producers get paid too, and here I'm referring to producers who do the actual work of producing the album
   
7. Professional Fee for the music arranger - non-recoupable amount to be paid to the guy who works after the performers and musicians have done their job
   
8. Rent for the musical studio
9. Promotion of the song - the amount for this depends on the commitment of the executive producer to the album
   

Just a note on the "performer." I mentioned that performers are actually paid one-time "for hire" fees, instead of recurring royalties. You have any idea how much performers cost? The more popular the performer is, the more expensive he/she is.

Why is that? In the Philippines, the choice of the performer is a "branding" choice of some sort, as if the quality of the musical composition relies solely on the performer, never mind if such popular performer is never a singer. What a joke! We have lots of jokes around. Just look around.

You can see that when you produce your own album, many of the cost items can be scratched off, especially when you also perform your own song.

The record company then has the Original Master Sound Recording (OMSR). The result of the music production process is a CD called the "original master sound recording" or OMSR which is the raw material used to reproduce the CDs that will line up the shelves in music stores later.

The record company, not you, owns the copyright over the OMSR. Make no mistake about this. You still own the music copyright for the song, which means that you are still entitled to your royalties everytime the record company makes money from the original master sound copy.

That therefore leads us to the question of what really are the uses of OMSR. The OMSR is used to:

1. reproduce the music albums for sale in the music stores -- this is the use I already mentioned earlier, the sale of which is also usually the gauge for the popularity of the song
   
2. produce the MTV for the song
3. supply music to caller ring back tunes, or CRBT, for mobile phones (remember calling someone and you heard a song instead of a ringing tone? that's CRBT)
4. produce MP3s that will be sold via online music stores
5. provide soundtrack for movies and TV programs
   
6. provide music background for song translations
   

There may be more uses than that listed. The point is, you as a composer and/or artist need to be aware of these uses and demand your fair share of the earnings (for Item #6, the performer is out and only the music composer can demand royalties).

The questions you must ask is, will the record company be fair to you and report to you all the deals they have done using the OMSR? Sales reports are the bases for royalty payments. What's the reputation of the record company you're dealing with?

Will dealing with them worth the risks? or would you rather learn the tricks of producing your own songs?

These are things to think about.

Next: Replication