Finances and the Music Industry Q&A with Janice Staub of Yaletown Financial Management
MB: How long does it generally take to recoup on a publishing /label deal and can you quickly explain how the advances happen?
YFM: All publishing and label deals are different. There is no set rule on how long it takes to “recoup.” Although many recording deals and publishing deals have advances, the amount can vary by quite a bit. But the important thing to know is that all advances are recoupable against your future earnings. So, an artist needs to generate enough in sales to “pay back” the advance to the publisher and or record company before they will see any personal earnings.
MB: What is the biggest mistake artists make with their money?
YFM: I think the biggest mistake artists make with their money is over spending if they are lucky enough to have a “hit” or a successful album. Although many people are naturally good at budgeting and planning, many are not. If an artist has struggled for years trying to break into the music industry they usually don’t have the experience or knowledge to know how to plan or budget effectively. This is where a business manager can be very helpful and will guide them through the ups and downs of the industry. Even if an artist is successful, cash flows will be unstable so planning is essential.
MB: How long does it take for an artist to receive any money from TV or radio?
YFM: Money that is generated from performances on TV/radio etc is made out by an artist’s performing rights society (such as SOCAN). This income takes about 9 – 12 months to start showing up on the artist’s royalty statement. For any foreign royalties it is at least a year and can sometimes be longer if you are being played in ex-North America territories.
MB: What is the largest source of income for artists that they should be making sure they do to get?
YFM: Every artists career is different and how they generate their income can vary. Some artists make most of their money touring and some make more through record sales and radio play. But publishing income is probably the most consistent and longest running income source for most artists. It really helps if you compose some of your own material. This does not mean you should not use outside writers as they can also help many budding writers strengthen their craft, but it is good to have some writing credit on your recordings.
MB: What is an important tip that can save a band a lot of money in the long run?
YFM: I think for many bands the most important tip is not to over spend on your tours in the early stages. Many bands try to move from a van or bandwagon to a bus too soon and then end up losing money on their tours or making a lot less for themselves. It is important to run a tight ship on the touring side!
I also believe it is very important not to give away too much when you sign your recording and publishing deals. Be sure you understand what you are signing. Read the contract. Most artists don’t even understand what they are signing or they actually never even read it! Always ask questions and try to fully understand the pros and cons of your particular deal. I have unfortunately seen many poorly written recording and or publishing contracts that have ended up costing the artist a lot of money. Many artists don’t even know what they have given away until they start making money. Then it becomes apparent that they may have given away “too much” and there is not a lot left for them.
MB: What point in a bands career do you think they need to hire a financial management company?
YFM: If you have a successful career or have signed with a major record label, you should probably get some help from a good business manager. Just hiring and accountant is not good enough. They will never understand the complexities of all the royalty based income streams or how to successfully plan and budget for a tour. So if you are making money and especially if you are touring in the USA it is essential to hire an entertainment business manager.
MB: What is the reality of an “annual income” for most musicians starting out?
YFM: There is no annual income for most musicians when they start out. In fact, many still hold other jobs to fill in the gaps. Even if you are lucky and get an advance for your label or publishing, you will need to make the money last for several years. This is where a business manager can really help you budget and plan. But many bands are living on small amounts for the first few years as they try and build their careers. You have to be prepared for some lean early years.
MB: Anything else that you would like to add that can be important financial information for any musicians and bands?
YFM: I think the most important financial advise I can give to anyone who is currently making money in the industry is to save and invest while times are good! The income streams can be very unstable and its always good to have money put away for the future.
A big thanks to Janice Staub, Owner and President of Yaletown Financial Management. To find out more about her company check out: http://www.yaletownfm.com/