AVOIDING MISTAKES (written for Murder Dog Magazine in 1999)

By, Wendy Day from Rap Coalition

For those of you who read are reading all of these articles, you may find the beginning of this article a bit
redundant, but it's discussing a mistake I see being made over and over in today's marketplace. So it bears
repeating: whether you are putting out your record to get a deal from a larger or major label what most
artists are looking for because they prefer the fame over the money!, or putting out your record to build
your own record company "ooray for #sham, $il %eke, and South &ark 'e(ican...!, be careful to not
choose too large an area. )his is of e(treme importance. First of all, it is ne(t to impossible for a small label
without connections, relationships, and e(perience, to reach many markets at once cost effectively. 'ost
small labels can't afford the cost of radio, retail, and street promotions in many markets simultaneously, nor
do they have the staff or manpower to chase a large area. )he artist can not be in every market at once to do
*radio and retail* or perform, which are key components of selling records, nor can most small labels afford
the e(cess product it takes to completely saturate multi+markets. ,ear in mind, that every retail store in
each area needs to have product and more than one or two! and if you're lucky enough to have those re+
orders start coming in, you have about - weeks to fill those orders to avoid bootlegging and to avoid
unhappy retailers.
.ne of my friends just released a compilation album in the mid west, and before the project really got
cracking at home base, they did a deal with Southwest to reach the entire South. /side from not being able
to chase all of those markets in addition to the mid west because they aren't funded properly, there's no way
they can cost effectively offer the artists to all of those markets at once. )hey can't possibly afford all the
street teams and tools posters, flats, stickers, etc! at once, which means some product is going to sit on
retailer's shelves without moving. 0uess what will happen when there's another release1 2etailers
remember what product sells well and what product doesn't. 3ou only get one chance to impress a retailer.
)he reason I'm sharing my friend's situation isn't to blow him up and embarrass him, but to illustrate the
importance of having a goal and making logical steps to achieve that goal. )he goal of his release is to do a
deal with a larger label, preferably a major label for the artists coming up with him, all of whom are
featured on the album. 4nfortunately, even with a ton of sales, there's no way a major can step in and profit
off of this release because so many markets have already been blit5ed, even though each market has not
been ma(imi5ed. .riginally, they planned to release the project in a few markets to prove its viability and
then to sell the project to a major so they could put their machine behind it and really blow up the project
and the artists. 6ow all the key markets are being penetrated half assed, and there's no profitability for a
major to step in and run with the ball. Since the album is a compilation featuring a bunch of artists, it will
be impossible to gage which artists drove the sales of the record, which means a label would have to sign
the whole roster 7 artists!, a feat very doubtful in today's marketplace. )he risk just became 8#23 high for
a larger record label. 9hy sign an entire indie label's roster when that major label can step into another area
with one artist selling the same amount of units and be guaranteed to get a proven successful act. $il %eke
is at :;,<<< units SoundScan although =><,<<< really sold! this week and that's with a large amount of
untapped markets for a major to step in and e(ploit. / major could easily re+release %eke's album and still
sell another ?@<,<<< units with minimal effort. It's a proven commodity. ,ut when an independent label
releases a record, with no one proven act, and minimal sales left for a larger label to step in and ma(imi5e,
it just doesn't accomplish the goal of getting a deal. It also makes the smaller label appear to not know what
they are doing, which kills any chance of a label deal where they have any control or say+so in how future
projects are run. )he opinion of another one of my friends, )wista, was that a smaller label not heeding my
advice when putting out a record is like having 'ichael Aordan for a friend and never going to a game.
/lthough I loved the compliment, I'm not convinced the analogy is correct, but not following the plan just
doesn't make good business sense. It's very short term and a great way to lose a record or spend too much
money with limited return. 2eleased correctly, it's too easy to e(pand when the need arises customer
demand is the best reason to e(pand your market!, that to do so in the project's third week is a sure sign that
someone is a novice or an(ious to lose money, effort, and timeB I hope I'm wrong, because it's a great
project and they are my friends, but I've been doing this for five years now and can think of hundreds of
e(amples where this did not achieve the desired goals, and none where it did. "ope my friends are the ones
to beat the oddsBBB I love themB
9hat spurred them to do something like this1 / phone call out of curiosity to Southwest 9holesale, which
led to an order of -<,<<< units and the promise of money. .f course getting the back end will be ne(t to
impossible because the money will need to be held in reserves in case of returns, and without a proper
budget to blit5 the market Southwest sells in the South!, returns could run high. /s a label, it is your job to
create demand and get the customer to come into the retail store and buy the product. 3ou create demand by
getting the project in the face of the consumer, preferably at a time of year when all the heavyweights like
Aay+C, Ice Dube, Er Ere, E'F, 'ethod 'an, etc are not dropping at the same time. /side from not
wanting the consumer to have to choose between an artist with limited promotion, and a major artist with a
million dollar marketing campaign behind him, you also want to approach retail at a period when they have
room and time to help sell your project. 3ou want to reach the consumer who view buying your record a
risk as compared to Aay+C or E'F! when they aren't already deciding which album to spend their little G-<
a week on. ,ear in mind that the bulk of record buyers in rap music until you get to that all elusive gold
level where the project then crosses over into the mainstream suburbs! are inner city youth between == and
-? years old. )hink about the amount of money a teenager has to spend on music++and now factor in that
those limited funds also have to support video games, food, clothing allowances, and hang out money.
Eoesn't leave much opportunity for selling records, huh1B
I've been getting a lot of positive feedback over the past few months but many people are asking why an
artist would want to put out his or her own record...so I would like to address the economics of the music
industry. 9hen an artist gets signed to a label like Aive, /tlantic, $oud, &riority, etc! he or she gets an
advanceHbudget, which must be paid back before the artist makes any money on the back end. / budget can
be anywhere from G=<<,<<< to G?<<,<<< for the album depending on the level of bu55 and demand for the
artist!. )he contract usually stipulates that the artist will receive a percentage of sales after most of the costs
associated with making and promoting the album are paid back this is called *recouping*!. )his
percentage, for a new artist, usually runs between ==I and =@I. )he producer's percentage usually comes
out of that share, which in most cases is ?I. /gain, the studio costs, production costs, mastering, mi(ing,
travel e(pense, advances, clothing costs, etc have to be repaid before there is any money split on the back
end. 8ideos are @<I recoupable, as is independent radio promotion in most cases. )rips to conventions are
often recoupable. )he bottom line is that very few artists ever receive a royalty statement or a royalty
check. )he fact that the artist creates the music and receives such a small share of the proceeds tells me the
imbalance is all wrong. /n artist can make a tape at home and sell it for G=<, but a record label can't make a
tape and sell it without the talent. I do think a label should be rewarded for spending money and taking the
risk, but if they chose better artists, and worked projects more efficiently they'd be more profitable and the
splits could be more fair.
)om Silverman, who owns )ommy ,oy 2ecords did a brave and courageous thing. In .ctober, he opened
his record company to me for three months, three days a week, so I could completely infiltrate his company
and learn how )ommy ,oy works records. I learned a lot. I learned both what to do and what not to do. ,ut
the most important thing I learned from this successful independent label with a strong focus on marketing
within its niche, is that if we don't change the economics in rap music, it's going to kill rap. )here is a need
for large labels in rap music. 6ot every artist is Jualified, or wants, to put out their own record. )he major
labels allow for rap music to grow and e(pand and become more mainstream and commercial, allowing for
popularity to demand artists as film makers, actors, and endorsement opportunities for products and
services. /ll of these things create alternative means of income for rap artists. )hey offer entrepreneurial
opportunities for the artists who are poised to take advantage of them, allowing ,usta 2hymes to appear in
a 'ountain Eew commercial, 9u+)ang to have their own video game, and rap music to be featured in
Fruity &ebbles, 'cEonald's, and Doke commercials. 9e can also claim the incredible sales boost 'oet K
Dhandon champagne is e(periencing since so many rap lyrics boast about drinking 'oet. ,ut in order for
large labels to continue to involve themselves in rap, it must be profitable for them not at the cost of the
rapper's livlihood!. Spending G:@<,<<< to make a video just doesn't make sense. For e(ample, for 6oreaga
to have such an e(pensive "ype 9illiams' video tells me that he did not reali5e that half of that cost is paid
from his royalties. I blame his label for that fortunately &enalty is not around any longer to shoulder that
blame!. For the money spent on that video, which did not increase record sales e(ponentially, he could have
pressed up ?<<,<<< )hugged .ut Family DEs, which if they all sold for G=< each at his concerts would
have made him G? million. )hree million dollarsB
If rap is to continue growing and e(panding, everyone from the artists to the labels, to the maga5ines, to the
radio stations, etc, must all profit from the art form. If it becomes no longer profitable to market and sell rap
records it will force all of the sales underground and independent, reducing the si5e of the pie for all of us
to share. 'eanwhile, I believe wholeheartedly for those of you with the ability, put out your own records
and be the master of your own universe.

L. $abels are stepping to me now. "ow do I know who's the best for me1++'arlon $.9illiams at Daledonia
2ecords in )illery, 6D
/. )here's no easy answer to this Juestion. 9hen I do deals for artists I don't look at the money yeah, I
know Dash 'oney got G?< 'illion, but honestly, that deal was not done based on money. )hat's why it's so
successful!. Focus on your goals and which offer helps you best achieve those goals. For EA E'E it was
the money because he wanted to build a studio and continue putting out records on his own separate from
the #lektra deal. So we knew when doing that deal that he needed at least G@<<,<<< to achieve his goals
financially and we knew he needed to have the right to continue releasing his own records independently
very tricky right to get!. 9e finally agreed for #lektra to have >@ days to accept a group upon submission
of their album and if they refused, it could be released independently. If they accepted the album, the artist
for a ma(imum of ? in two years! would still be Inner Soul recording artists, but through #lektra.
9ith Aam Eown it's a bit more difficult to find the perfect match because they want to continue working
their own artists, but with major distribution. It's hard to find a label willing to give up control to a smaller
relatively new company. 9hen we did the Dreator's 9ay deal at /tlantic we did get complete control, and
even got separate budgets to help out in the areas where I felt /tlantic 2ecords was weak back in =;;M like
on the streets!. ,ut what I didn't take into consideration was the political climate within the label like
marketing and radio employees who hated members of the /K2 staff refusing to work certain projects
properly, and a radio person on the west coast now employed at 'otown and, in my opinion, just as
ineffective and mediocre there as she was at /tlantic! refusing to work the project not because she couldn't
or because the artist was wack, but because of her own insecurities and intimidation towards me. She and I
have never spoken++all of her pettiness was based on hearsay and perception. ,y the way, /tlantic 2ecords
today is a better place for rap than it was in =;;M.
9ith Dash 'oney we got complete control of the project e(cept for complete lyrical content++all 4niversal
2ecords must pass through a *lyric committee* for approval! and Dash 'oney pays a fee to 4niversal for
whichever departments they choose to use. )hey can utili5e all, some, or none at their own discretion. )hey
pay for what they use. )he ideal situation is one where you've sold so many units on your own, and have
such a great reputation for handling business that there is more than one label bidding on signing your
independent label. 3ou don't get what you deserve, you get what you negotiate.
L. 9hat is the difference between independent distribution and major distribution when it comes to
national distribution1++Fiend at Fiend #ntertainment in ,aton 2ouge, $/
/. Independent distribution is e(actly what the words imply. Eistribution that is independent, meaning not
part of the big @ distributors in music. )ommy ,oy is by far the most successful independent label in rap
music and they have their own independent distribution pipeline. It used to be &riority 2ecords which
encompasses 'aster &'s 6o $imit 2ecords! until #'I purchased the company a few Septembers ago.
Independent labels have a trade organi5ation called /FI' M<M.M??.<;>M or www.afim.org! to look after
their needs. )he organi5ation is for all types of music as long as the label or distributor is independent.
)hey also coordinate my favorite convention every year, and the place where I first learned how to run a
record label every 'ay in a different city++in -<<<, it's in Dleveland: which is a strong market for rap
record sales!.
'ajor distribution is that which is generated by the big five distribution companies: 4'E 4niversal
'usic 0roup which includes 4niversal, Island, Eef Aam, &olygram, Interscope, 'otown, 'D/, etc!, #'E
#'I 'usic Eistribution which includes 8irgin, Dapitol, #'I, &riority, etc!, 9#/ 9arner #lektra /tlantic
which includes those three and their offshoots!, ,'0 ,ertlesman 'usic 0roup which includes 2D/,
/rista, Aive, etc!, and S.63 Sony includes Dolumbia, So So Eef, @@<, #pic, and now $oud++which
absorbed 2elativity!. )hese are the first bills to get paid at a retail store because it guarantees a continuation
of influ( of product.
/nd just to confuse you a little bit, there are two independent companies that are owned by the majors:
2#E which is owned by Sony!, and /E/ which is owned by 9arner ,ros!. )he plus to working with
/E/ and 2#E is that you always own the masters which is the ownership and value in your company!.
)he downside is that they usually don't advance funds.

Editors Note added 10/02Fiend chose to go with Southwest Wholesale in Houston, TX
and got F!"E#$$ %eware o& Southwest Wholesaledo the 'ro'er research( )s*
around( )s* their &or+er client la,els i& the- were 'aid 'ro'erl-(