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need input on another money matter

Discussion in 'Band Management [BG]' started by Joe Nerve, Feb 5, 2005.

  1. Joe Nerve

    Joe Nerve Supporting Member

    Oct 7, 2000
    New York City
    Endorsing artist: Musicman basses
    I am not a good business person, but I'm working hard at it and will be one day soon. Help! Here's my story this time:

    A friend of Randy (my guitarist) recently opened a coffee shop in our neighborhood. He also sells books and a few CDs. Randy asked if he'd carry ours and he suggested we come in to talk about it. We did. He had a simple agreement he wanted us to sign saying we split any sales 50/50. I thought that was a lot and didn't want to do it but he convinced me that he had very little shelf space in his store, and that it couldn't really hurt. Randy is also doing an acoustic gig there (promoting The Nerve!) next week. He'll be playing at a book signing of some really poplular author who just released a book about Joe Strummer. It's supposed to be well attended. I said, out loud, "Well, hopefully you can sell a bunch at the book signing - and that'll make up for the money we're not making on the cds in the store." Randy's friend then said, "No." He was letting Randy play at the book signing so that he could promote the sale of the CD at his coffee shop. In other words - Randy is going to play this place for no pay, and this guy is going to get half the money for any CDs we sell.

    I got really pissed and said no way. Mind you the owner of this place is musician, knows what it's like to be in our shoes, and puts on the air of being one of those all loving, liberal, I only create community and love kind of people. He's good at it all too. Between him and Randy they convinced I was being really uptight about it - and once again, I agreed.

    Now I'm losing sleep and want to make my feelings known.


    What percentage does a store usually get when selling a cd?

    Would you not let it bother you that this guy was taking half and consider it a good opportunity to promote your band?

    Would you firmly say, sorry we don't do business that way - it's unethical.

    I believe as long as we accept treatment like this it will continue to happen. Once we start saying it's unacceptable we create the room for bigger and better things. Your thoughts please. Thanks.
  2. DaftCat


    Jul 26, 2004
    Medicine Hat
    I'll take a shot.

    I get the implication that there aren't many CDs on his shelf.
    Let it go, and write it off as experience and publicity for your band.

    If they ask to replenish the stock then you "re-evaluate".

    My .02 worth.
  3. Joe Nerve

    Joe Nerve Supporting Member

    Oct 7, 2000
    New York City
    Endorsing artist: Musicman basses
    The main thing that I'm upset about is that when he performs, the guy wants half he profit of any cds we sell. We've never done that. I never heard of such a thing. We do a show, we sell CDs, we keep the money. Period. It seems like a twist on a pay to play thing.

    Also - we put a bunch of free 3 song sample cds in the place and wound up selling the first 3 cds we had on the shelf.
  4. Eric Moesle

    Eric Moesle

    Sep 21, 2001
    Columbus OH
    You do realize that in a real music store, the artist makes only about $1 per disc sold on average????

    50% of nothing is nothing. 50% of "some" sales is something . . .
  5. David Wilson

    David Wilson Administrator Staff Member Administrator Supporting Member

    Oct 14, 2002
    Lower Westchester, NY
    Like other people have said, 50% is much more than you'd get in a retail store.
    When you sell CD's at a show, you bring the CD's with you and take the ones you don't sell away with you. If they're in his store, they're taking up part of a limited space so there has to be incentive for him to use part of that space for you. As DaftCat said, if it sells a lot then re-negotiate.

    Reminds me of when we did a few dates in California to promote our first album.
    When we played the Whiskey A Go Go, the mgmt said they wanted 25% of any sales we made of our CD there. They weren't going to provide a table or any assistance whatsoever, but wanted 25% for the 'privilege' of playing at the Whiskey.
  6. brianrost

    brianrost Gold Supporting Member

    Apr 26, 2000
    Boston, Taxachusetts
    I'm confused...this book signing is happening at the coffee shp where your CDs are being sold? Then of course the guy gets his 50%.

    It's just like when bands do promo gigs at record stores or Borders, the idea is that the audience buys the CDs from the store not the performer.

    I'd agree with the other replies about seeing how the first batch of CDs sell first.
  7. MichaelScott


    Jul 27, 2004
    Moorpark CA
    There is a joke I love:

    "How do you turn the most leftist liberal into an uptight conservitive?"

    "Get them to open a small business."

    It is so funny because it is true. Small businesses are a huge risk and your happy idealistic lifestyle falls to the side quickly when you need to keep the lights on so your family can eat.

    I don't think he is asking for too much. It probably cost him a lot of money to start up his coffee shop and the smart business people find ways to make money off of every inch of their property they are paying rent on.

    You could offer him a flate fee to carry the CD's but if he is taking a piece of each CD he'll have motivation to try to move them. He might play your album on the store's sound system and he might tell the customers to check them out.

    If you make a sale yeah he will take half of it- but you wouldn't have gotten ANY money if it wasn't there AND the person that bought your album will probably be a new fan (cause your most of your regulars already own the album). So you get cash and exposure. Also, it sounds like your guitarist is doing most of the work to make this happen.
  8. Perfect-Tommy


    Mar 28, 2004
    Here's how you solve the problem Joe...

    You sell him the CDs. Give him a deal on them and make sure you get some money to make you comfortable. Then the guy can sell them for as much or as little as he wants. If he sells them, tell him to come back and you'll sell him more. That's how it works in music stores and that way you don't have to worry about percentages and such. Let him worry about the profit margin and moving the product :p

    Seeing that you produced the CDs yourself, you don't have to worry about only gettign the $1 that label artist makes. You're doing all the jobs that the other $9 a cd goes to paying. Sell your Cd for $5-7 to him and then let him mark it up all he wants... ;)


    Jan 25, 2005
    Des Moines, IA

    ...and THIS is how the labels make THEIR money from Tower, Borders, Best Buy, etc.!!

    What an astute comment.
  10. Perfect-Tommy


    Mar 28, 2004
    I thought it was a clever and reasonable answer to problem. Initially, you might not sell as many. On the other hand, if they sell, he can request more. Either way, you're moving stock. It's better to get a guaranteed 3 sells then a *possible* 5 sells. If they don't sell, you still get your money. If they do sell, he can request more ;)
  11. Phil Smith

    Phil Smith Mr Sumisu 2 U

    May 30, 2000
    Peoples Republic of Brooklyn
    Creator of: iGigBook for Android/iOS
    Here's a couple of things to think about...

    What does the CD actually cost you to make? Are you still making a profit if you sell the CD at 50% off of your retail price? The answer to that question should be a resounding yes. I'm sure the selling price you have picked is based upon that and it is common practice for retailers to buy items at 50% or less of the SRP(suggested retail price).

    Don't get too attached to the CD, the idea is to sell them and to sell them quickly because they're only worth money when people buy them.
  12. I'd agree that if your guitarist is playing in the store to promote the CD, the store should be getting their portion of the sales - he is afterall playing to promote the CDs on the shelf of that store.

    However, 50% does seem like a bit much for their share... around here the retail outlets get basically a 10%-15%, with the CDs on the shelf there on a consignment agreement. You don't get any money until the CDs are sold.

    I think the 'sell the CDs to the store' idea is a good one in this case, especially since the first batch sold well and he will probably want to re-stock. I'm not sure how well your band is doing, but I know personally selling discs to someone at anything above break-even is helping my band get out of debt we went into making the disk in the first place. I guess you need to decide if you can stand making less per disc in exchange for the opportunity to sell more.