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The Money Trail - The REAL Secret to Making and KEEPING Money In the Music Industry |
by:
Ty Cohen |
Any of us who have ever watched VH1, Behind The Music know the story of the band or artist who lost his shirt because he didn�t have his head in the game when the financial and legal arrangements were made early in their career. Or sometimes the problem is the artist just wants to play and live the life of a performer and just doesn�t pay attention to the money trail, where it comes from and where it goes.
From Ted Nugent to TLC to John Fogerty and Prince, problems with contracts and record companies, accountants and lawyers seem to plague musicians in every era of the evolution of popular music. Do you ever wonder why it happens like that?
Well there are several plausible explanations.
* The eagerness to get going. A young performer or band finally gets that break and has a chance to make a record or get on that break-through tour. In their eagerness to land that all important contract, they agree to some deals that cripple them for decades to come.
* The Wrong Self concept. When an artist is starting out, he or she will tend to see themselves as an amateur with a hobby. Few young performers see themselves as professionals and as successful performers down the road. So when the chance to get a recording contract comes, they have little to loose. That �what the heck� attitude can lead to foolish spur-of-the-moment decisions that you can regret months or years later.
* Bad advice. Like it or not, there are crooked people in the world. If your management or accountant is not looking after your best interest, they could easily guide you in a way that is not good for you career. The result could be lost money to you or even the inability to play and perform when your career is in full bloom.
DOING YOUR HOMEWORK
The time to research how the money flows in the music business is not after your first big hit and in the middle of your first big tour. No, even though you may not yet be a huge star, now is the time to get an understanding of the nuts and bolts of the business side of the music business. Here are some topic areas that are worth some research on your part:
* How does an artist get paid for his work in the music industry? Research recoupments, royalties and what you can expect as you begin to get creative material on the market.
* What is the role of the music publishers, Performance Rights Organizations and your management? How much is their �cut� and how can you know if they are treating you fairly?
* How can you set up your financial systems so that the money due to you will be safely paid to you even if you are not around to manage it and so that it will be safely cared for and invested.
* Who can you trust and how to verify that you are dealing with solid business people who are looking out for your best interest?
* What about investments? If you begin to see a significant amount of money coming in, should you leave it sitting in a checking account or buy The Dallas Cowboys? Seriously, what kinds of investments are best to protect and grow your financial holdings?
* How do you work with an accountant? Are certain accountants better at dealing with musicians than others are and how to find a good one that you can depend on?
* How do you track and keep tabs on your money even if you are on a busy touring or recording schedule? What kind of reports should you have delivered to you and how should you get them? Is this a place where the internet can help?
Some of these questions you can research by reading articles or online But don�t overlook the knowledge of those who have already set this up or been trough certain ordeals. Discuss these topics with successful bands and musicians and get some references and tips on how to handle the flow of money that will come once your art is discovered.
LEGAL JUNK
Try as we might, there are a lot of legal documents and lawyer stuff involved with a successful musical career. Part of building a business relationship with your agent, your record company, touring agencies and many other business that will be part of your team as your career expands, you will have to deal with that dreaded word ------------ Contracts!!! Like those found at http://www.MusicContractsOnline.com
As we talked about earlier, the time to think about what to do with these documents is not after they are signed and you are well into your tour or recording session. Get some help and some information about how to handle them well in advance. Some preliminary work you can do that will make this tricky part of building your career easier are:
* Make contact with people who can help you well in advance. You will need a lawyer who can read these contracts and who is getting paid to protect you. You can find a good lawyer, one that specializes in the music business by using a resource like The Industry Yellow Pages, which can be found at http://www.MusicBizPhoneBook.com . Now if you are still starting out and cannot afford the hundreds to thousands of dollars a lawyer may charge, use a software program like the one available at http://www.MusicContractsOnline.com.
* When the record company hands you a contract, let them know you want time to have your counsel review it. Insist on some time with the document. This is a normal and expected part of this kind of negotiation and do not let them pressure you into signing it without that option. If they give you trouble about taking to read and review with your lawyer, there is probably something in there you should not agree to.
* Read it. It won�t be easy or fun to read a recording contract or other kinds of contracts but force yourself to sit down when you are fresh and read every word of it. You will be amazed how many things you will find that you want to discuss or negotiate.
* Don�t be afraid to negotiate. You have that right. If the agent or representative says they will just not deal with you if you negotiate, then drop them. You don�t want to be in business with someone who won�t deal with you, find another using a music industry directory like the one available at http://www.MusicBizPhoneBook.com
* But remember, negotiate means back and forth. You might have to give in a little to get a little. Make sure your demands are reasonable and responsible.
BEAN COUNTERS
Just as important as a good lawyer and a good manager is to you as your career grows, don�t over look the need for an accountant. Your accountant will specialize in managing your money. He can take care of a wide variety of financial details for you that could become a big problem if they are not taken care of including:
* Collections. An accountant who is knowledgeable of the music industry can assure you get paid promptly for all of your royalties, concert performances etc. He can also assure the money is secured and available to you when and where you need it.
* Credit. You will need reliable credit cards and other credit resources as you set out on your quest to conquer the music world. Your accountant can assure you have those and that the payments are made on time.
* Bills. Many of us have trouble balancing a checkbook and paying our bills on time, especially if you are never home. By having all of those matters delivered to your accountant, he can see to it those details are taken care of.
* Investments. If your financial holdings begin to build up, you do not want the big paychecks you are making from your recordings and concerts to sit in a checking account somewhere. Your accountant can find out what your financial goals are and choose the right kind of investments for you to make sure your money �work for you� while you are out working hard to build your music career.
* Taxes. This one may be the most important of all. Taxes from income from royalties or payments from concerts have to be handled with skill and training. Your accountant must be on top of your tax situation to make sure your taxes are kept up to date and paid on time. Many musicians have fallen into a trap of not paying their taxes or paying them incorrectly. The results are always severe and come at a time when dealing with the government is �the last thing you need.�
You can see just from this short list, your accountant can take care of a wide variety of financial issues that will make your financial empire secure and growing. Yes, he will charge a fee but the work he does and the expertise he brings to your �business� is crucial to your success.
YOUR TROOPS
An important concept that we don�t always get our arms around early is the people who work for you. Your accountant, your agent and management and anyone else engaged to help with your financial management are employed by you and you should view them in that way. You do want reliable help but at the same time, it is always YOUR money and YOUR finances involved here. So the three commandments of being the master of your empire are.
"YOU" ARE THE BOSS
Make sure the people you use know this. Even if your accountant is your dads age and works for a big impressive accounting company, he is still working for you and you pay him so he is responsible to you for the outcome.
This doesn�t mean you are some big mean slave driver but is does mean that you have the right to know what is going on and that your representation is not permitted to conduct business without your consultation and approval. Do not sign over approval for investments and business ventures involving your money.
Be the boss and run your financial business so you will have that sense of confidence that what is going on with your money is what you want to happen with it. More importantly, once your advisors and experts know you are the boss and are going to act that way, they will respect you and your relationship with them will be healthy and prosperous.
HOLD THEM ACCOUNTABLE.
Accountability means that the people who work for you must answer to you for what happens. Meet with them often and make sure nothing goes on that is not disclosed to you and explained to you. Don�t be shy about letting your representation know they are accountable to you and that you are able to change representation if they do not perform. This is not out of line and it is expected in the business world.
It might be difficult when performing, recording and touring to make time to �meet� with your representatives. There are lots of ways to do this. You can use phone teleconferences, email, internet instant messaging or even video conferences. Set up your relationships with those who are assisting you with your money, so that they are expected to check in with you routinely and any time there is a significant change to your financial picture. Do this a few times routinely and soon it will be the norm for you and them and your financial future will be much more reliable.
KEEP YOURSELF INFORMED.
The meetings and checkpoints we have already discussed will go along way toward keeping you involved in your financial planning and management. You can have reports delivered to you by email or courier as you travel that are summarized in a way you can understand. You don�t have to look at a bunch of impossible to understand graphs and tables of numbers. Work with your representatives to create a reporting system and format you can easily and quickly understand. It�s their job to keep you involved and informed so if they are good solid business people, they will do all they can to make sure �the boss� is informed, happy and prosperous.
TRUST BUT VERIFY
You will have such a strong sense of accomplishment and confidence when you know your money is in good hands and that the �money trail� is correct from the sale of your art through to the payment of your bills. Once you have good people working for you, the worry will be off of your shoulders and you can concentrate 100% on your music and the growth of your career and of your band.
Lastly, always be aware of the individuals who are handling your money and review their progress often, keeping an eye open for anything irregular. Yes, you want to trust them but at the same time, always check up on them to make sure they are handling things correctly. As you become more successful and the finances become substantial, even the best and most responsible of money handlers can do things that are not right.
You don�t want to assume they will steal from you but you want to make sure they aren�t and let them know that if they do, you will find out. Big companies even have an outside firm come in and do what is called an �audit� of the books to make sure the people working for them are being honest and not making mistakes. You probably won�t impose audits when you are first starting out but keep your options open as your financial empire grows.
Much of this is outside of the artistic side of music and the art you so enjoy making for people. But it is important none the less and once you have gone through the rigors of making sure everything is in order, your feeling of security and the long term health of your private accounts will be strong and that will remove one big worry from your mind. Then you can focus on being creative and giving dynamite performances on stage.
This article was written by Ty Cohen, the music industry�s most recognizable voice!
Ty is the C.E.O of Platinum Millennium Publishing, Platinum Millennium Records as well as owner of http://www.MusicContractsOnline.com and http://www.MusicBusinesSuccess.com
Some of his work includes: books, directories, mini-courses and software programs including the titles: "How to Make a Fortune in the Music Industry by Doing it Yourself" and "How to Make $500,000.00 "or More" A Year in the Music Industry by Doing it Yourself".
For nearly a decade, Ty Cohen�s Get Amplified! Newsletter and series of Free Music Industry Success �Mini Courses� has helped over 40,000 independent musicians, singers, rappers, composers, record label owners, producers, managers, agents and others reach their music business goals. Using a unique combination of tested and proven music business success resources, which includes a series of books, directories, software programs, videos, seminars and newsletters, our goal is to educate and empower musical individuals just like you with the tools needed to succeed!
To find out more about Ty Cohen, his services, products and how he may be able to help you succeed in the music industry go to http://www.MusicBusinesSuccess.com and sign up for his free limited edition music industry success 10-part �Mini-Course�, it will work wonders for you and best of all, it�s FREE, but EXTREMELY VALUABLE!
Thank you for taking the time to read this article and I wish you Much Success!
About the author:
Ty Cohen.
C-E-O
Platinum Millennium
PO Box 1733
Bridgeport, Connecticut 06601-1733
email - mailto:Ty@PlatinumMillennium.com
For more great music industry resources please be sure to visit our family of websites:
http://www.MusicBizPhoneBook.com
http://www.MusicBusinesSuccess.com
http://www.MusicContractsOnline.com
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