I recently read...err listened to Robert Kiyosoki's best selling book "Rich Dad, Poor Dad." The book had such an impact on me that I'm reading it...I mean listening to it for a second time and will probably listen to it for a third time. While there are many takeaways from the book, the overall story line is a long explanation of how the rich get rich, and the poor stay poor according to Kiyosaki.
Kiyosoki explains that there are assets and liabilities. Simply put assets are things that you buy that make you money and liabilities are things you buy that make you lose money. Assets come in the following five categories, as well as anything not mentioned that appreciates or produces income.
It is the last bullet on the list that peaked my interest. See business is built on fear and greed. People fear that if they don't have something that irreparable harm will happen to them. We call these NEEDS. People also believe that buying something will make their lives immensely better. We call these WANTS. People will buy what they want, but they will buy what they NEED quicker because of fear, and this is where the music business model comes in.
When the current music industry was created in the early 1900s, the business executives didn't care about the progression of musical styles. They identified an opportunity to own an asset, that asset being your intellectual property. If you have ever heard me speak or attended one of our Recording Artist Fundamental courses, you'll know that I stress that the right to have a limited monopoly on intellectual property (Copyright, Trademark, Patent) was given to American citizens before freedom of speech. This is because our founding fathers were business owners.
Article I Section 8 Clause 8 of the United States Constitution
To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
A Savvy business owner knows that the only thing better than using your own sweat equity to create assets is to use someone else's sweat equity to build your assets (This leads to something else our founding fathers added to the Constitution but I won't go there right now) Early on in our industry immediately after the end of the "Gilded Age" when Robber Barons used unscrupulous practices to get rich, those practices were very well still alive in the minds of people, with Publishers and Record Labels taking a percentage of the artists earnings, many times taking their intellectual property rights altogether. Almost 100 years later artists are still dying broke because the industry is setup to take your intellectual property in exchange for the illusion of fortune and fame. The industry preys on our hopes and dreams, and an unsavvy business owner, in this sense the artist, will fall hook line and sinker every time, selling their soul for some type of music contract.
It doesn't have to be this way. Business in general is not built on giving a percentage of your earnings or your intellectual property for a product (a good or service). In the Free Market, you pay for a product, and that's the end of the transaction. If you want more you pay for more. In the modern music industry you have the choice to pay a set fee instead of a percentage for everything from production, to distribution to publishing, but you have to be willing to do two things. You have to be willing to pay for a product up front, and you have to be willing to walk away from a deal. These are two of the hardest things for artists because we are subliminally taught that we are poor struggling working artists and that we should remain that way. Sure there may be times where you split song royalties 50/50 or 95/5 but that should be for the individual song, not all the songs you create. You can also decide to do some percentage splits but very often an artist will split a contract so many ways that they come out in the negative.
As an Artist you are a Business. You create a product which is both a good and a service that people want. You create an asset that can be passed down your family line up to 70 years after you die and can generate income every single day that it is released. Understand that the way we conduct business in the music industry is not a normal business practice. Hold on to your percentages and intellectual property. Every situation will be different, but know that you have options and that you can walk away from the table. If you need help, we're here for you.