Recently I received a letter from a reader that I’d like to feature today because she asked some good questions that I’d like to address. With the music business in such a state of flux I’m hearing from more and more of you, concerned questions like the following wondering how to respond to the new music business.

Here’s the letter:

From: Mary Buergin

Hi Peter, your article on piracy was right on. I wonder sometimes when I am purchasing music through CDNow or Amazon about the stores that sell CD’s… many say they are new, but they are at reduced prices. Does any of this money go to the artists?? What is the best way to purchase music so that I know the money is going where it should? Also I wonder how you feel about burning CD’s to share with friends. I feel that if I am introducing them to music they may have not heard, they will either buy the CD, or buy more of that artist’s music.

Thanks for your insights and I will pass that article on to as many people as I can…

All the best, Mary Buergin

When it comes to the record business, artists have often gotten the short end of the stick. Here seems a person who is concerned that they don’t and asks questions most relevant to today’s issues.

Does any of this money go to the artists?? Well, it depends. If the artist is also his/her own record company, meaning that basically they own their own masters and essentially paid for all their own expenses of their CD, the answer is yes – after iTunes takes their share off the top. The record company then takes their cut of the percentage and has to first pay the mechanical royalties, usually an institution called the Harry Fox Agency (HFA). Harry Fox then takes their share off of that piece and then sends a royalty off to the writers and publishers of the songs on the CDs.

If the artist is not the record company, then the artist has an artist deal with the record company and makes his/her royalty percentage. That’s usually between 8-25% of the record company monies depending on how the original deal was set up. Generally more famous or more successful artists get a larger percentage.

So the monies get split up pretty fast. In the old dead and dying record business it might cost the record company between $150,000 and $200,000 to produce, master, design and manufacture a single CD. On top of that they would spend 2-3 times that in promotional expenses. In the old days, the artist would not see a cent of their royalties until the record companies were fully paid back. This is why many artists never saw a cent from the sale of their albums.

If the retail prices of the CDs are reduced, everybody’s percentage of royalty stays the same, but earnings go down accordingly. This is contractual.

Today at Watchfire Music we do it differently. When we start making money, the artist gets paid his royalty on first dollar earned.

It is, of course, far more complicated than just explained. I have really skimmed the surface regarding the machinations of the business, but this at least gives you a start at understanding the answer to your question with the basics.

Is it all fair to the artist? In the past, no. Basically the artist always got the shaft. In the new world we have a chance to start again and make it better and more fair. I sit at an interesting position being a principle owner of Watchfire Music and also an artist and composer on the label. I see it as one of my jobs to find the balance of fairness between the two entities – the artist and the company and its affiliate partners.

What is the best way to purchase music so that I know the money is going where it should? If you buy directly from stores or from iTunes or say CDBaby, there’s probably no way of telling. The paper trail is just too long and complicated. If you buy directly from an artist’s site, that’s probably the best way of knowing that the artist is going to get her/his fair share.

The problem here is that the artists usually can have a site built at their expense and sell their CDs off of their site, but by the time they produce and manufacture their own CDs and then build their sites, they’re classically out of money and energies and consequently they don’t have the wherewithal to promote. I can’t tell you how many fine artists I know who are trying to do just this and are selling their CDs by the 10s or at best, the hundreds. They never make their money back. They never have a chance to break a record nationally or even locally. Their works are doomed from the start.

That’s another reason why we created Watchfire Music. We saw a great need to help these unknown artists. We offer them the next steps. A home site with their own pages and promotion. This way, once they have finished their CDs, they can get back into the studios and get to work on their next projects instead of flailing about trying to figure out the promotion business.

Also I wonder how you feel about burning CD’s to share with friends. I feel that if I am introducing them to music they may have not heard… Here, I’m afraid, we disagree. First of all it’s illegal. It’s illegal, because it’s stealing. The biggest problem in the music business today is not stealing off the internet, but file sharing.

Let’s say someone invented a machine that would totally replicate a desk lamp out of the air. It would virtually cost you nothing to take a desk lamp that some company had invented, designed and manufactured, put it in your machine and burn it and share it with your friends.

You might say, “Hey, you have more than one desk at home. If you like this one, you might go out and buy two more for your other desks.” But if they were smart, they’d go out and buy the machine that replicated the desk lamp out of thin air. In the music business that’s called a computer.

The company, workers, designers, suppliers, manufacturers, inventors of that desk lamp would go out of business because they did all the work and are now seeing none of the fruits of their efforts.

No, what you would really do is probably send them a catalog with a picture of the desk lamp and a description of how it works and how good it is. That’s what Watchfire Music is. An internet catalog. That’s why we have gone to such expense to have a 1:00 to 1:30 sample of each and every song in our catalog posted on the site so that all may hear and judge.

I say don’t burn a CD and give my music away for free. I’m the only person who can do that because it belongs to me. That’s my choice, not yours. I deeply appreciate your desire to share my music. But do it in the right way.  Those tools are available to you. Rather than sending them a burned CD or file share, send them a link to my artist page on Watchfire Music.

Here you go: http://www.watchfiremusic.com/artist.php?arid=7

How easy was that. No muss, no fuss. It took me all of 10 seconds. And now I have a chance to sell some product and put that money either into my rent, my breakfast or my next CD. Also you haven’t stolen from me; instead you have more effectively promoted me.

Thanks. I appreciate it. I really do.  :o)

And thanks, Mary, for writing in.