This is the strange story of a band that can make a million dollars from Chevy, but never see a dime from EMI. Two years ago, OK Go wriggled out of its EMI relationship for a number of reasons, and frankly, they're doing just fine on their own. But in a rather frank comment to one of our stories last week, OK Go manager Jamie Kitman pointed to a permanently unrecouped position. Which essentially means that the band will always be underwater on its original, major label deal. And, a big reason for that is a very exorbitant level of upfront expenditure.
The lead-up to this was a conversation in San Francisco (at SF MusicTech) in which Kitman likened YouTube streams to 'finding coins on the street,' while noting that his band has never seen payments from VEVO (the reason - an utter and complete state of unrecoupability - is explained here).
"I am the manager of OK Go and as with all out of context quotes, mine lends itself to misreading. What Rio [Caraeff] from Vevo says is absolutely the case -- as far as I know, they pay our former label [EMI] for the content they own and because we are -- and probably always will be -- in an unrecouped position, we'll never see a dime, as we are forever destined to be paying them back for tour support we received in 2002, or the $505,000 video they commissioned for our first song after turning down our $65,000 budget, before they decided we weren't a commercial proposition, or the 13 times they secretly retracked the drums on our first single at a cost of $35,000 (only to wind up using our killer drummer's original track--priceless.)
The wrinkle in our contract which stings the most is the one that allows a label to recoup publishing income from videos -- as distinct from mechanical royalties and other publishing incomes from record sales and other licenses -- apparently a standard clause in old-school record deals. No one anticipated Youtube or Vevo and what do you know, this one breaks in the favor of the majors. And while I'm busy clarifying, let me also say that the band and I bear Youtube no ill will, either. I was merely making the point that you won't get rich just by having an internet hit.
Besides, netizens, money is for losers. Don't forget it.
The Hornblow Group USA"
kevin Monday, February 27, 2012
"The wrinkle in our contract which stings the most is the one that allows a label to recoup publishing income from videos" ouch
The problem for this band, in my opinion, is that they are a novelty, only famous for making cool/viral videos. the music is of no value to people that watch the vids, therefore their concerts are not as popular as their YouTube hits might suggest.
effin Monday, February 27, 2012
money is for losers
hisssss Tuesday, February 28, 2012
if you play with snakes.. you might just get bit.
mnew Tuesday, February 28, 2012
I think it needed to be cleared up regarding the unrecouped position. Too many people seem to be quick to slate Vevo, but once the royalties have been paid by them it's down to the record label and the kind of deal the band has as to whether they will see any royalties from any service not just Vevo.
I'd interested to see what he means by "The wrinkle in our contract which stings the most is the one that allows a label to recoup publishing income from videos". Part of the money paid for videos is going to for performance royalties which would always be recoupable against any publishing advance so this isn't unusual.
again w the contracts Tuesday, February 28, 2012
are there any other stories out there. yes, anyone who signed a major label record deal past present or future is asking for pain. this story has been beaten to death
@danclarkmusic Tuesday, February 28, 2012
Labels recoup publishing income from videos. The Big Bad Wolf is in fine print.
dangude Tuesday, February 28, 2012
Appreciate the explanation and reality check. It is not a strange story. You pay a lot of money to a marketing company (EMI) they market you, you get noticed then sign a deal with a car company to endorse more product. Everyone knows that signing a contract w a major label means you get leftovers. Let's face it, if OKGO hadn't signed w EMI they would not have been noticed by Chevy. How much of the endorsement deal with Chevy went to EMI?
Visitor Tuesday, February 28, 2012
"You pay a lot of money to a marketing company (EMI) they market you, you get noticed then sign a deal with a car company to endorse more product."
Oh... I didn't know marketing companies can own the rights to your product...
Visitor Wednesday, February 29, 2012
@mllemax Tuesday, February 28, 2012
@SoundBizMgmt Tuesday, February 28, 2012
Learn from this.
@themusicninja Tuesday, February 28, 2012
Wow, I'm like, feeling bad for OK Go right now.