Wanna take a guess what a record label CEO gets paid?

Wanna take a guess what a record label CEO gets paid?
0

Take a guess?

Talking CEO of one of the big 3…

Salary + bonuses + vested shares? (Aggregate salary not counting differed compensation)?

A lot. That’s my guess.

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8 million annually ?

Some CEOs have a very low basic salary - sometimes even $1 - because they get their income from shares etc. But if we’re talking about the whole lot combined I’ll go for $100m.

I don’t want to guess. I know.

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I haven’t seen a shareholder report that showed a base salary less than $2m. But what’s interesting was how Warner doubled then trippled their executive packages as the leadership teams moved the label from -$308m in net losses (as of 2013) to $25m profit (as of last year).

Thats possible. All major record label CEO reports to a higher CEO…the bigger guy can hit $100m annually.

Haha. lol. That’s interesting. That was a pretty silly way of drawing up the range for the CEO.

Though chart was published in June of 2015 and they certainly didn’t use 2015 Q2 mid-term projections. Not for the CEO salaries - the numbers don’t match anything in that happened in the music business at that time. They had to have been based on year-end fiscal statements from 2014 (which they actually match quite well).

No label exec made $2m ballpark in 2014. They all made quite a bit more. What this chart did was take the minimum guaranteed base salary (which actually was $2m for one of the labels), then drew a range based the actual aggregate payout at the end of the year of the highest paid CEO. The chart misleads you to believe that some unfortunate chump only got paid $2m. The lowest was actual payout was $6m for that year.

I wonder how much longer the gravy train will last. It seems like there really isn’t a reason to have record labels anymore. Before the lended money to make albums, but now making music is fast and cheaper than before. Also the type of music that is popular doesn’t really require high end studios like before. Promotion through TV and radio isn’t what it used to be and I don’t know if a record label can promote someone better through the internet than the artist could themselves. On top of that physical sales are decreasing(with the exception on vinyl ironically).

Of course I’m sure they’ll be around in some form or another, but I think the days of huge companies is over.

[quote=“Chandler, post:8, topic:1250, full:true”]
I wonder how much longer the gravy train will last. [/quote] I’m sure it will last as long as there is huge money to be made in entertainment.

[quote]
It seems like there really isn’t a reason to have record labels anymore. Before the lended money to make albums, but now making music is fast and cheaper than before. [/quote] There certainly is a reason to have record labels. The independent artist who are full time professionals may survive without one, but they are still incapable of building the corporate infrastructure necessary to scale to national status without the venture debt from the big labels. Any entrepreneur can go bake cake pops or made dog food in their home kitchen. And you can sell that the same way you sell a home made record. But is it really the same? That depends. Is it any better or worse? Depends on the metrics of the deal.

[quote]
Also the type of music that is popular doesn’t really require high end studios like before. [/quote] The music that is selling at the highest price point, namely that in feature films and AAA gaming audio, does require a high end studio and can’t be produced from inside a common house. If you’re talking about recorded songs then its possible, but it still requires a very very well built home studio (and a ridiculously good producer/engineer) if the product is targeted to compete for sales on regional levels. There’s nothing wrong with self-producing a record in your house, and there’s nothing wrong with having to outsource the mix to a commercial studio. My point is that there are still tremendous costs in the production if you want a product to go big. Most middle-class or working-class Americans are in no position to even consider attempting to put a track on the billboard charts. They’ll risk 3 years salary and may never see a return.

[quote]
Promotion through TV and radio isn’t what it used to be and I don’t know if a record label can promote someone better through the internet than the artist could themselves. [/quote]

They most certainly can, and they’re no strangers to social media. When I say ‘can’, this would of course assume the investment firm (record label) has sufficient motive to do so…but when the VP of marketing focuses his resources, flexes some muscle, and orders an army of peeps to go promote (insert artist name here), there’s going to be a lot more happening that what say XYZ artist and their buddies will be able to do on their own.

[quote] On top of that physical sales are decreasing(with the exception on vinyl ironically). [/quote] The digital sales are compensating for the drop in physical sales worldwide. You can also see the stats I provided directly from 2016 shareholder statements on AJ’s Future of the Record Industry thread. Since 2014, we have seen a 3 year climb approximately 8% pr year from all of the majors on physical and digital gross revenue combined, with roughly 12% profit margins. Total revenue between the 3 majors combined was roughly $7.5b.

That’s not what I’m seeing with the past several years of mergers, acquisitions, and restructuring at the top of the entertainment industry. They’re coming back…as you said, the roll of the major label is changing, but they are very much still in the game.

All music is national now, or should I say international. People can buy your music from anywhere and fans aren’t limited to your region. Of course a record company has more money, but a lot of that money isn’t really needed like it used to be.

Music for video games and movies aren’t made through record companies, they’re made through the respective companies. Of course an orchestra costs a lot, but the movie studio pays for that not a record company. Also some of it is made in people’s homes, especially if it is electronic based. Also you’re assuming everyone wants to go big. If you don’t have a record company eating into your profits you don’t need to sell nearly as many units.

If this is true why don’t we see it. People on major record labels are asking their friends to tweet their albums, if major labels could do this effectively they would.

Digital sales are going to hurt record labels. The biggest benefit of a record label is they will lend you the money to print a large number of physical goods. With digital there is nothing to make. Why pay Atlantic records to put your songs on Apple music when you can do it yourself?

I’m sure they’ll still be around, but I’m sure they’ll be getting much smaller and their importance will be greatly diminished.

OK. Just thought that was a reliable industry source. I’ve been told. (Slinks off to newbies corner)

[quote=“Chandler, post:10, topic:1250”]
Digital sales are going to hurt record labels. [/quote]

That’s an interesting conclusion. May I asked how you arrived there? Seems to me the sales journals from labels are showing a different trend. The labels still own the digital product. Each of the three major labels showed gross sales over a billion dollars as of the year end financial reports for 2016. Just from digital sales, independently of physical sales. I listed them on the other thread.

Awww. No need to slink off to a noob corner. I shared it because I was surprised when I just recently found out myself. There’s no way in hell I would have known if I hadn’t spent months studying the finance statements from record labels (which included that info). The data on the chart was actually somewhat accurate, its just that the context wasn’t clear.

The biggest advantage of having a record label is the fact that they have large amounts of money to print physical media and distribute it. Without physical media the need for that type of physical backing greatly diminishes. Of course record companies make money of digital sales, but why would new groups want to sign with a record label? Of course they can hook you up with a good producer, mixing engineer or mastering engineer, however its not like you can’t get these people yourself. Maybe you can’t get the same level of people as a big company, but being signed to a big label doesn’t guarantee access to these people.

Before the big labels had a monopoly on certain things and it was impossible to become a major force in the music industry without them. Now you can bypass them if you want and I’m sure a lot of people will because they have a horrible reputation.

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This is basically what I was saying in the ‘other’ thread. If I could just add a couple of ‘tweaks’ borne out of personal experience:

Even the money that labels can inject is not so important now, since virtually everything that the label used to cover with their investment can be covered at low cost by the artists themselves. (Recording, mastering distribution). The main point of a record deal now is promotion - that is where the label is supposed to spend the money. It is the last vestige of power that they have over artists, the one thing that artists can’t do very well for themselves. Whether the labels actually do promote is debatable. The wording on a contract is invariably vague, so it’s difficult to challenge a record company on whether they have actually promoted or not as per contractual obligation.

The physical products can be a help for the artist if there is an element of the contract that allows the artist to get free - or cheap - products for the merch table.

Finally, there is some advantage, in my opinion, of being signed to a label in terms of credibility. When you have credibility, large gigs and festivals become easier to secure, especially if you are signed to a large label, which not only bestows credibility, but also means that the label can pull a few strings with their contacts within the industry. Then of course, with large gigs comes large exposure and large merch sales, and, hopefully, another large label deal for the next album.

It’s a trade-off. You are sacrificing profit from sales (since you almost certainly won’t see a penny from sales when you are signed) in return for ‘success’.

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Again, who has told you this? Why do you think a label is more interested in printing physical medium than pushing digital tracks when the sales show that digital medium is bringing in equal or more revenue?

The gist of this is also incorrect:

You can not tap the multi-million dollar infrastructure or resource network without venture debt or equity sharing in one or more parts of your LLC. Your access to an A-list producer or engineer doesn’t mean shit. Your music production network doesn’t even matter unless you have the cashflow to contract marketing, procurement, PR, finance, and legal. You’re not going anywhere meaningful in this business without paying a retainer to contract those divisions of agency and you’re kidding yourself if you think any independent artist is capable of raising the funding that LA Reid, Bruce Tyler, or Simon Cowell could with the wave of a pen. Do you have any idea how much money changes hands in the upper levels of this industry? When I was shopping catalogs the lowest entry level investable portfolio that was $10m. For an artists I’ve worked with (signed to RCA), her management team in 2015 had a $3.2m sales target in order to retain her line of credit for the following year, and they missed. That’s for one damn artist. You’re nuts if you think your own little social marketing campaign can hold a candle against the $280,000,000 that was paid by a single record label in one year to one of the top rated social media analytics and consulting firms in the world. And you think those firms don’t know what they’re doing? I’m sorry, that’s arrogant. I’ve also sat in seminars hosted by the tech entrepreneurs that built and custom tailored the tracking systems for those social media platforms specifically to the music industry. One does not sit in the living room and code those data management systems when they’re off of their 9-5 job on the weekends. That’s really just sad. Its like being a local pizza maker and mistakenly thinking you’re competing with Dominos.

Why would group want to sign with a label? That’s why. What does it guarantee? You’re right. Nothing. What could it accomplish? Depends on your contract.

It’s quite obvious that if you want to run 10k Cds off it’s going to cost you in the region of $20K plus distribution costs. Most artists would prefer to use other people’s money for that kind of investment.

Why do think a label is not interested in physical mediums if they bring in equal revenue?

In any case, if you read the post again, you’ll see that Chandler is talking about the advantages to the artist, not the label.

Depends on your definition of ‘meaningful’. I doubt if any more than a handful of artists in the globe even give a shit what the likes of Cowell etc. can raise or not raise, because it only concerns the handful, not the other 99.9% of artists in the world.

You might as well say a millionaire isn’t rich compared to W. Gates and the Queen of England - do you think that the millionaire even gives a shit about that?

They don’t understand the importance of raising the capital? If you want a business to grow and scale on that level, you need the funds and the personal to get you there. As for the rest of the “99.9%” of music industry wantrapreneurs, if they aren’t concerned, their ignorance of how the system works is their own loss.

Many multi-millionaires are well aware of where they stand in their own perspective markets. A guy who thinks he doesn’t need a big label because he can do anything they can is an idiot. And yes, millionaire tech industry players were (and still are) continuously sizing their companies up against W. Gates and S. Jobs and M. Zuckerberg. So yes, they very much gave a shit.

@Chandler, I’m not saying your an idiot (as possibly insinuated in the reply to AJ above)…You just may not have known.

But in light of the comment, I would ask how much time you’ve spent studying the financial and operational anatomy of a label before you concluded that ‘you can bypass them if you want?’

As I say, define ‘that level’. What level?[quote=“Jonathan, post:18, topic:1250”]
As for the rest of the “99.9%” of music industry wantrapreneurs, if they aren’t concerned, their ignorance of how the system works is their own loss.
[/quote]

It’s not a matter of ignorance, it’s a matter of not giving a shit. There is more than one way to skin a cat.

Yawn. “A guy who thinks that he needs a big label in order to do anything is an idiot”. See? Words are easy.[quote=“Jonathan, post:18, topic:1250”]
And yes, millionaire tech industry players were (and still are) continuously sizing their companies up against W. Gates and S. Jobs and M. Zuckerberg. So yes, they very much gave a shit.
[/quote]
What a bizarre world you live in Jonathan. I assume you’ve interviewed all of these millionaires in order to state categorically that they are all measuring themselves up against Gates and co? If I was in that position I’d be too busy having a good time to worry about what anyone else is doing.