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Successful music investor situations?

Discussion in 'Studio Lounge' started by RyanC, May 31, 2014.

  1. RyanC

    RyanC Active Member

    Hello all-

    New here but have been on duc/gs for years. Happy to find a specific place for studio/music business discussions...

    To make a long story short, does anyone have a scenario where clients have funding from another client? What I'm running into is the lack of structure (contracts or even firm handshake type of agreements) is effecting the productivity in the studio. In a way I guess it's fine for me (bill hourly), but it's starting to turn into a bit of high school drama fest...

    I was curious if anyone has any insight into music investor roles and agreements, and what has worked for people so I can go to the investor and try to get a lot of the mess here put to bed. I've spoken a bit to my publisher about this, but essentially things need to be ironed out before he gets involved with anything.

    I know this is a lot of specific variables, but any ideas people have would be helpful. Thanks-
     
    bigtree likes this.
  2. audiokid

    audiokid Staff

    Welcome to RO Ryan.

    Yes, I've had investors and know other producers whom have received funding for projects more than a few times. Not one has ever ended up with 100% smiles. Its par for the course.

    Get it all in writing one way or another. Take pictures of things that will help and discuss everything with groups.

    Take the money, use it and hope it's a win win for everyone. That's how i see it every time. I've had excellent experiences because I am a great communicator
     
  3. RyanC

    RyanC Active Member

    Thanks-

    Well a good deal has been struck when everyone leaves the table a little bit disappointed...(certainly true with labels/pubs as well).

    Practical question- this investor is wanting to look at this like a venture capitol situation (IE he has ownership stake in the artists forever). I tend to think a better fit for this is for his compensation to be part of the royalty stream (if there is one) of the songs that he funds specifically...The problem with VC type investing here (I think) is it's prohibitive for labels/pubs to get involved (my pub likes one particular artist for to pitch for travel type shows). Of course the *other* problem with the VC approach is that profit margins in music are fairly low compared to other *start ups*, so collecting say 20% of gross could be astronomically high, especially considering that the investor is neither a label or publisher (no potential revenue streams).

    Any thoughts/experiences at all there? On average the investor might be 10k/artist, not 200k...
     
  4. RyanC

    RyanC Active Member

    db post
     
  5. audiokid

    audiokid Staff

    Yes, I did one of those in 2001. The investor became a crazy maker. It became a real problem for the artist as he was being lead by money and guilt (and dilutions of grandeur) and you know where that all leads. I dropped out of the race after my part was done but it was really fun. The artist went on to TV and radio but in the end, they both fell apart and it all dissolved. The best experiences I've had were simple investments that never had artistic control over it all.

    Its never easy. This sounds like hard cold business.
    You are at the point where you need an entertainment Lawyer and a number cruncher.
     
  6. RyanC

    RyanC Active Member

    But right-

    Don't look a gift horse in the mouth...ultimately I'm just a sub-contractor and don't *need* to get involved. But these problems are spilling over into being my problems. Nice rack BTW, always wanted to check out the 120v SPL stuff, you're audiokid on GS right?
     
  7. audiokid

    audiokid Staff

    Thank you, Yes i am.
     
  8. audiokid

    audiokid Staff

    So, you are concerned about it all going sideways, I don't blame you. I know exactly what you are up against. If I had another one of these, I would take the money, keep it simple and have a way out if and when anything went sideways, with no loss on your end. That's the best you can do.
    Some people are crazy makers. Creative people always have at least one crazy maker near by. Spot them, and be careful.
     
  9. RyanC

    RyanC Active Member

    Aye man we are on the same page...

    So your advice here is essentially just stay a subcontractor and let it be what it is?
     
  10. audiokid

    audiokid Staff

    I think so. Look what happens when you try and help a friend in a bad relationship. In the end, you might very well be the messenger who gets shot. If you don't get too involved, this can also help control the banter that will surely get out of control if you feed it.

    If you remain a sub contractor, its a pretty sweet deal, the perfect place to be! You will learn from it, and be respected and most likely discover more opportunities along the way. Do your very best to see the outcome is completed for your end of the bargain and enjoy the ride. If you do a good job, more will come. The cream does rise. :)
     
  11. RyanC

    RyanC Active Member

    Yeah I'm definitely following you. I've been guilty of feeding it which is something I need to curtail from a professional standpoint.

    I have maybe one possible quirk to it which is that in the last year I've made ~100 instrumentals for this guy. I don't surrender my writing (with any clients) as a work-for-hire so they pay hourly for the prod fee and if the song generates a royalty stream then I'm a part of it. So the issue there is my publisher likes a lot of the instrumentals, and wants me to get them together with other artists (that either he knows, or I know) which means I do need to work out something with him.

    It definitely sounds like the best bet is to just cut that deal (which won't be easy because he may not fund *all* of it, just the first stage of the instrumental part...). Thanks a lot for the thoughts here audiokid.
     
  12. audiokid

    audiokid Staff

    You are welcome. I'd love to hear your work btw ! There are a few members with this type of experience, maybe they will chime in with more thoughts to share, and help you further. It sounds like you have a good thing going. Cheers!
     
  13. DonnyThompson

    DonnyThompson Distinguished Member

    Based on past experience, my advice would be to stay the hell outta the way. LOL. Don't get involved. Do your job, record the tracks, mix the songs, present the invoice at the end of the day and get paid.

    And... get clarification right up front as to who's directions you are following in the control room.... because many of these investors will think that because they put up cash, it gives them the right to produce.

    If there has been a producer assigned to the project, then according to studio hierarchy, rank and file dictates that they are the boss in the control room. If not, then you should be taking direction from the check writer, unless that person has delegated authority to someone else and has told you so.

    Make sure you know up front to whom it is that you are listening to when it comes to direction on mixing, deadlines, media release, etc. Most of the time, it's the cat with the check, but, make sure.

    For example, you don't want to hand over dailies of current mixes - rough or finished - to someone who isn't authorized to have them (and never release anything until the bill is up to date and no money is owed to you).

    Nor do you want to go over the specified or pre-paid for session time just because the artist tells you it's okay. If He/She isn't footing the bill, you just might not get paid for that overtime. Check with the money first. They may be fine with extending the session, but... maybe not.

    In a nutshell, there's a boss on every project. Make sure you find out exactly who that is, who controls the money, who is in charge.

    IMHO of course.

    d/
     
  14. Paul999

    Paul999 Active Member

    There is a ton of good advise given already. Cash for services is the best way to generally operate. I tend to be sceptical as to why musicians need investors. Here is my rational. The musician is a business partner as is the investor. If the musician has $0.00 I will likely never work on a project that has an investor putting in 100%. Because the musician is one of the business men they have to come to the project with some "skin in the game". If the musician is a business person with no money then, IMO, they simply are incompetent business people and no person in their right mind should give them money unless they want it to evaporate.

    I use investors for projects semi frequently. Here are the ingredients that I find make agreements successful.

    1. Everyone puts some money in.
    2. People know the risks.
    3. The non monetary benefits are stated
    4. Everyone has been encouraged to not go ahead with the deal. (This often solidifies peoples commitments)
    5. Expected R.O.I's (monetary and non monetary) are established.
    6. The expected result is a better project then anyone could have done on their own.
     
    bigtree likes this.
  15. audiokid

    audiokid Staff

    Excellent advice from us all and you summed it up perfect, Paul. Can't agree more and couldn't have said it better. (y)
     
    Paul999 likes this.
  16. RemyRAD

    RemyRAD Well-Known Member

    I grew up in the days where most studios would only be studios because they had investors. But in the end, many times over, investors don't see the return they wanted? So they bankrupt the company and you're gone. And so it is all your stuff. Your equipment. Your music rights that you gave away. Whoops!

    Let's see, who has had studio investors have lost their studios? George Massenburg. George Massenburg and George Massenburg at least three times over. The Beatles sold their music to EMI which Michael Jackson ended up owning. Not Paul McCartney. Not John Lennon. What studio that had scads of hits have gone out of business? Well... most. What legendary studios still exist? The ones that were bought from the owners who bought them from the owners who bought them from the owners who bought them from the owners, still exist. Allen Sides is wealthy enough to have held on to a few. But he sold the lousy Nashville one off to Belmont University. And because there was no place to park LOL. There still isn't. I mean like no place. It's wacky. I guess everyone that used to go and live near that church never drove there. It looked like a likely walked? Tough when you got the loader drum set and stuff in and then have to go park a couple blocks away LOL.

    Were I worked at FLITE THREE Recordings Inc., their benefactor was the advertising agency. But when they felt they will did not have enough incoming work at the studio? The studio owner along with another partner went into competition with the advertising agency investor. Who then promptly got the sheriff and tore out their most important moneymaking control room. Effectively putting them out of business until they could install a brand-new control room with all the trimmings. Not an inexpensive venture. More like a train crash.

    Most folks that have studios have them because they can afford them. Sometimes it takes years. Sometimes ya never get there. And even when you do? How do you compete with the big guys in your market? Telling them you're a better engineer doesn't do it. Telling them you've got the latest plug-in will make them think you're talking about suppositories. And assuring them that you're the best because you are all digital will thus have them laughing at ya.

    Chris has got a most unique facility. Unlike that that most home studios and even top shelf professional studios, don't necessarily possess. Chris is on the leading edge of what I think will become eventually the way that folks, who really actually care about the quality level will be going after.

    I come from a different planet, side of the tracks, human species. Like someone who would own a 200+ year old violin, I essentially have a 200-year-old control room. Nothing in my possession is from any equipment older than the 1960s and nothing newer than the 1980s except for my computer and my digital multitrack hard disk recorder not including my old analog machines that I actually rarely use anymore. Though I am planning on building up a new 16/24 track analog recorder but that's another story. That will be a stretch for me financially without saving up a chunk of change from doing something else. And as we all know, the road to hell is paved with good intentions. So no matter what I want to try and accomplish? It might in fact be impractical and out of my reach. And sometimes... that's how things go. No matter how much passion nor time effort, energy and money you throw at something. This entire industry is one huge lottery. And really today, the only winners, as most of the winners in the past, is all based on dumb luck. Not what ya got. Not how good you are. Just dumb luck.

    I really don't want any investors, no. I would consider coming together with someone who is like-minded? And would. But having somebody else own me, not so much so. I don't want to be indebted to anyone or anything. And I'm not wealthy. I'm dirt poor. I'm broke. I am desperate. But I'm smart. I'm talented. I'm creative. I have a track record. I've got over 40 years of experience.

    There was a time ya could go to the small business administration in the United States and maybe get a loan to open a studio and a place for a town, far from anything like that? But today that has largely just disappeared. Everyone knows... it's not a moneymaking venture. It's a passion. And passion generally requires your time and your money.

    You mentioned that you had a publisher? And that's significant. You already have established yourself as a viable monetary generator. Otherwise you wouldn't have a publisher. And with that publisher... you might be able to get commercial funding? Unfortunately I can pretty much guarantee you... disillusionment will set in quickly. The business plan always sounds great until you put it into action. And that's where things rarely go as planned, right out of the gate.( not noise gate).

    My home studio was quite nice. 46 input Auditronics 501's double wide. 16 track MCI/24 track Ampex, 24 track TA-SCAM DA-88's, 1176's, EMT 140 ST, all that stuff. Only to get divorced and lose the house. It's okay... I had also built up an even better facility in a 25,000 pound Mercedes-Benz 1117, turbo diesel, box truck. 23 years ago that is today equipped with my 36 input Neve and 20 API microphone preamps. So the client has a choice of either best or, best. Nothing less than the best. Including the original Neuman U-67's, 87's, KM 56's, KM 86's, RCA 77 DX's and on and on and on. And I'm still broke and virtually business less today in the mid-Atlantic void of the Washington DC/Baltimore Maryland metropolitan area. But people don't come here to make their mark on the music world. And as a result, very few viable studios still exist. While there's plenty and scads of home and basement studio wannabes. Somewhat decent equipment. Somewhat decent chops. Most... pretty much worthless. Nothing to write home about. Nothing special. I have special. You need special if you're going to compete on that level. And then still no guarantee. With the likeliest guarantee that of bankruptcy. In short order time. Square footage today that is not constantly booked is about the most impractical thing you could possibly want to do.

    And if you're in a residential area as compared to an actual industrial business area? You might be looking at real trouble? This is and has been an ongoing problem here in the United States for quite some years now. Where certain local jurisdictions that had good, top shelf studios, risking annihilation, have effectively put a stop to home studios being used as commercial facilities. If you're zoned residential? I'd think twice about considering myself to be a commercial studio operation facility. Now things might be different for guys like Chris in Vancouver, British Columbia, Canada than they are for the folks in the United States? And it sounds to me from the use of your English, you might be from the UK? But I really don't know that? You certainly have that very necessary enthusiastic youthful passion that is so important. I'm almost 59 and I'm running out of gas LOL. Which is probably why I've been eating more Mexican food? Just to get ready to ingratiate everyone in Austin, Texas. Where, they're likely more used to that? So not only will our record the blues. I can make the air just like that.

    Wait! Here comes another one.
    Mx. Remy Ann David
    (that's a goodie...whoa... sorry)
     
  17. RyanC

    RyanC Active Member

    Very good info here fellas, I'm reading/digesting...
     
  18. DonnyThompson

    DonnyThompson Distinguished Member

    The topic isn't studio investment.

    The topic is a studio client who has a benefactor.
     
  19. pcrecord

    pcrecord Don't you want the best recording like I do ? Well-Known Member

    I recorded a band which had an investor once (mother of one of the musicians) I was ask to invest as well but declined and was kept in the loop as a subcontractor. I requested a check every sessions and got a good experience. The band was average sounding but with the magic of the studio(and some drum tracks I did myself), the album was good. After a few weeks of promotion gigs, the signer went God knows where and the band collapsed. In the end, I was the only one who got paid. I'm glad I asked to be paid right away ! :D
     
  20. RyanC

    RyanC Active Member

    Band-wise here is a recent project http://www.eminenceensemble.com/mouse-hunt/,

    something older but pretty cool (esp the first song), https://myspace.com/music2machines/music/songs

    Pop
    View: https://www.youtube.com/watch?v=tt1Wq2Uz5p8


    Rap
    View: https://www.youtube.com/watch?v=c7nzHbFamOc
     

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