Spec Deals... is there a standard?

[icebrotherd]

I run a small studio in San Francisco and we're in the middle of a project that is being spec'd by us for the band and their management. The deal that is on the table seems a little light and I'm wondering if there are those of you out there that have spec'd a few recording sessions under contract and if you have what the general terms were.

Under the the terms as stated we're getting .5% rather than a full point due to the fact that only 5 songs out of the ten that will appear on the record are from our studio. In addition, while the percentage point is based on the full retail price of the album, we wouldn't see any $$$ until after the first 5000 units are sold. As we understand it, we wouldn't make our initial investment (meaning studio time, production, etc.) back until after 60,000 units are moved. Is this normal?

[Nathan Eldred]

In a lot of ways there is no standard, yet there are some expectations that each party usually have. For instance, as the studio or producer of a spec project, you expect recoupment for your losses plus "interest" for basically funding their project. Just to get back your pay after they sell 60,000 units seems a little lop-sided. Let them get a loan from a bank to pay you. The band basically gets a free ride based on your scenario, you guys are doing all the work, and they are quibbling over .5 of a %. Personally I think you should be getting a lot more. You are the only one losing out -- of billable time, money, etc.

You really need to get a good lawyer. Put them on a payment plan. They need to pay your FULL rate plus a percentage. What's their history of sales, what is the time frame of payment back to you. Plus a percentage. I'd tell them to take a walk unless they agree to your terms - we don't dictate our loans with banks do we, you are in control. Depending on who the band is, I guess .5% could be something (lawyer's advice is necessary), like Bad Religion, Rancid, Jimmy Eat World. Who are these guys? (Rhetorical)

I was going to spec a couple bands, and I was not going to do it for less than half my normal rate up front (i.e. $47.5/hour from $95 regular rate) plus points. But needless to say most people who want specs want something for nothing. I know some people out there have gotten real lucky, getting back $50k for their work, but on the other hand so many people never see dime one. Even if you don't get paid back in points or interest because they don't move albums, every member of the band should since a contract that will pay you back in (6 months, or a year) for your studio time, signing in and signing out for every session so you have proof in court if necessary. I think the key to getting somewhere with a spec is having a good lawyer and lots of luck. This is a business not a sausage party.

[nacho459]

Unless you are recording Metallica or someone who can sell 60,000 records no problem I think you are getting screwed. When I do spec work I try to get some money up front, and then take a cut off the profit. That way if the album goes nowhere, which it usually does I haven't burnt a hole in the studio, just given away my time. I am pretty cynical though.

I usually speck with little Indie bands that only can sell like 1000 CD's at local shows. So I'll have them give me what they can up front and then have them pay me back with the money they make off selling the CDs. So If they owe me a grand or so all they have to do is sell 100 CDs to pay me back. This isn't really spec though. It's more like a loan.

[@?,*???&?]

The only standard we found at Master Control was that there is never a backside. One band of a hundred or so got signed and actually paid what they said they'd owe the studio.

Try and get as much up front as possible these days. With the massive downsizing of the industry and more and more people making 'no-budget' records, get the most of what little money there is to pay for a project up front- you run a business. The studio has expenses, why should it all come gratis to a client that probably won't (I'm generalizing) do the work to grow what they've got going anyhow.

Unless you love Ramen and love music and don't need nutrients, or heat, or shelter...then I'd say, go ahead, spec them the world!

[dubold]

is there a standard for getting screwed?

seriously, I think spec deals are bad news. I can't think of another industry that works on spec... I would never do another record on spec unless I loved the music so much that I wouldn't mind doing it for free.

[Mr. Dipity]

I run a small studio in San Francisco and we're in the middle of a project that is being spec'd by us for the band and their management. The deal that is on the table seems a little light and I'm wondering if there are those of you out there that have spec'd a few recording sessions under contract and if you have what the general terms were.

A deal this one sided is such a great display of hubris and cluelessness that I would recomend you prepare to drop the project entirely. If they think that they can deal with you (and the rest of the world) this way, they aren't going anywhere. They are both grossly inexperienced and full of themselves, to expect that this deal was in the ball park of acceptabitlity.

Under the the terms as stated we're getting .5% rather than a full point due to the fact that only 5 songs out of the ten that will appear on the record are from our studio. In addition, while the percentage point is based on the full retail price of the album, we wouldn't see any $$$ until after the first 5000 units are sold. As we understand it, we wouldn't make our initial investment (meaning studio time, production, etc.) back until after 60,000 units are moved. Is this normal?

For future reference (the deal in front of you isn't - they might as well have suggested that you pay them to record with you).

- you need get paid before anyone else. You are a cost of doing business - you aren't the artist. You should be arguing for gross.
- you get to charge sky high, ass-rape prices, since you are risking never seeing the money. Scratch that - you are probably never going to see the money.

As everyone else here has pointed out, if someone was going to be the success that would make most spec deals make sense, they wouldn't need a spec deal. Spec deals are overwhelmingly the realm of dilletantes, wannabes and losers.

[joel hamilton]

I agree with everyone who has posted above, and I will add this:

If you want a point on a record, or a half a point on a record, get it along with 3/4 of your rate. That way you dont lose when the band doesnt get huge enough for you to see money on the back end. Money on the backside seems to be almost mythological these days....

If you REALLY believe in someone, take a minimal hit on your rate in exchange for a point or 3... I have done that, and I feel good about it.
Have someone good draw up the agreement.

Speculation is one thing, getting ripped off is another...

[Posterart]

I agree with everyone else, particularly sserendipity. You have hard costs. You can 'spec' your personal time and the space/equipment. But tape, AC, water, etc. are all beyond your fixed cost of operation.
As another perspective, a studio owner I worked for tells folks that call for free work (spec, PSAs, earnest artists) they should call who they usually call to do paying work for them.
good luck[/quote]

[rpowell]

seriously, I think spec deals are bad news. I can't think of another industry that works on spec...

Lots of small and large construction and real estate investment companies invest $100k to $1 million and upward on "spec" homes and buildings that don't have an apparent buyer. Of course, living and commercial space is a necessity of life, while somebody's demo is not.

RP

[misterock]

Make them pay...

Unless you are absolutely certain it will be ENORMOUS

Make them pay.

[Dot]

The normal standard for a spec deal is that the studio puts up free time and never recovers a dime. That's how it works in the "industry".

If you're - at least halfway - smart, the way you need to look at it is that you are selling time in the studio. Since it is speculative, you sell the time at a greater rate - often 50% higher. When I have seen it work, the band was spec'ed a certain amount of time at a $75/hr room for $100/hr. The final studio bill was for something like 200 hours. X $100 = $20K. The band was signed to Warner about 6 months later. The studio bill was paid FIRST! Everyone wins.

Forget about points and all that - unless you are producing. And then that's something different altogether from studio time.

Studios can have down time. Sell that downtime to a band or artist you think has a chance. Put a cap on the limit of time. The band gets a bill with the stipulation that the studio gets paid FIRST!

Anything less than that and you're just pulling your pud.

[gog]

... any band who can sell 60,000 records should have a label that can pay you for your time now. 60,000 is a lot of records.
good luck

[dubold]

seriously, I think spec deals are bad news. I can't think of another industry that works on spec...

Lots of small and large construction and real estate investment companies invest $100k to $1 million and upward on "spec" homes and buildings that don't have an apparent buyer. Of course, living and commercial space is a necessity of life, while somebody's demo is not.

RP

well well. I didn't know that. your point is exactly correct-- a living/commercial space is a necessity of sorts. also really tangible and hard to ignore.

[Mr. Dipity]

Make them pay...

Unless you are absolutely certain it will be ENORMOUS

Make them pay.

I disagree - make them pay unless you are absolutely sure that you will have the greatest time in the world recording them, and you can afford it.