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Monday, October 17, 2011

Making your Own Music-Royalties Verses Joint Ventures

Making Your Own Music-Royalties Versus Joint Ventures

Keep in mind when making your own music, there is a difference between royalty and a joint venture. So, are you better off with a joint venture or have a royalty arrangement? To answer this requires a crystal ball. If you're extremely successful, you're better off with a joint venture. With modest success, you're better off under a royalty arrangement. As I discussed, you're charged for more costs in a joint venture than under a royalty deal, and thus with only modest success. you're behind. However, many of these costs are not "per unit" when making your own music. This mans that there only paid at the beginning, as opposed to "per unit" costs that are incurred for each record made. Examples for per-unit charges are costs of manufacturing, mechanical royalties, union per record charges, freight, etc., which must be paid to manufacture and ship each unit. Costs that are not per-unit are such things like, artwork, videos, promotion, marketing, advertising, which are unrelated to specific units. Thus, with a great deal of success, the non-per-unit costs are eaten up by the first dollars that  come in, and thereafter the profit per unit is far greater than any royalty arrangement is ever likely to be.

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