Wednesday, September 21, 2005

Clap Your Hands Signs Distribution Deal with Warner

According to this article from Billboard, "unsigned internet success story" Clap Your Hands Say Yeah have signed a distribution deal with Warner Music Group. CYHSY is remaining independent of any record label but will use Warner to distribute their records to stores nationwide. This is only the second time Warner has ever contracted directly with a band (the other band was jam band O.A.R.).

This is pretty heady stuff for the quintet from Brooklyn. In mid-June, amid a burning internet buzz, they started selling their debut record on their website (and a handfull of stores and insound.com). Since then, the buzz has grown and grown to the point where they have now sold 25,000 copies of the album. All without the help of any record label marketing machine.

In the article, their manager claims they pay a little over $1 per CD to have the CD's made. So, after some postage and handling, their $12 price per CD is yielding them about $250,000 in profit (before fixed expenses and income from t-shirts and concerts) over their first three months. Not bad for some true do-it-yourselfers.

The reason I find all of this so interesting is that it stands in startling contrast to what I'm reading in Jake Slichter's book So You Wanna Be a Rock & Roll Star: How I Machine-Gunned a Roomful of Record Executives and Other True Tales from a Drummer's Life. Slichter was the drummer for Semisonic back in the 90's. I was never a fan of Semisonic and the only song I know from them is their hit "Closing Time". However, I was in the airport looking for something to read and Slichter's book looked interesting. It's a very frank report of his dealings with record labels during his time with Semisonic. I'm not done with the book yet but, so far, Slichter has been very open about the financial arrangements they had with their various labels.

In the book, Slichter explains that MCA advanced them all of the money they needed to record and promote the album. Then that recoupable debt is paid back out of the band's fee per album which was only about $1 per CD (in contrast to CYHSY's $10 per CD). The problem was that MCA got to choose which song would be the single and then, without consulting with the band, how much to spend on independent record promoters to get the album airtime. Well, MCA chose "Down in Flames" despite the band's wishes for a different single. Then MCA spent $500,000 on record promoters which did nothing for the band since the single flopped and received very little airtime. So, after the recording costs and record promotions, Semisonic had to sell about 600,000 copies of their debut album before they started receiving their $1 per CD fee.

If they hadn't had the hit "Closing Time" years later, the deal wouldn't have netted them anything. Slichter compared their record deal to the ones he would sign with Columbia House Record & Tape Club as a kid. Great stuff upfront with a miserable back-end of the deal. However, as he points out in the book, he couldn't get out of this deal by having his mom write Columbia House a nasty letter.

Contrast that scenario with CYHSY's situation without a record label. It makes you wonder why someone would sign with a record label if they believed they had a very strong record. Thanks to the internet, if a band has a great album and is confident in its quality, they may be better off following CYHSY's lead rather than Semisonic's.

6 comments:

Bob F. said...

Schlicter's book is fun, isn't it?

CYHSH's deal sounds great, but I doubt it will be a model for the future, since (in my opinion, anyway) they seem to have totally lucked into being the recipients of the blog world's first "Let's pimp this band to high heavens" award. I know of more than a couple people who have bought that record based on buzz rather than music, and hate it. But now they own the coolest disc du jour, so their hip card is punched for the month.

Also, your accounting might be a little higher in their favor than it should be. Apparently most of the CD's after the first small run that they've sold have been distributed/sold/shipped by Insound, who obviously aren't working gratis. It's not like they've shipped 25K units out of their apartments and schlepped them to the post office themselves. Also, a large part of that total sales number includes CD's wholesaled into indie record stores, which were sold by the band at a wholesale price.

Still, though, an amazing number of CD's sold through such distribution channels. It's gonna be fun to watch where they end up labelwise.

The Contrarian said...

Just got that book sent to the office. Found it on my desk. What a coincidence. I hate Semisonic. They helped neuter rock at the tail end of the '90s.

Now "Closing Time" is in my head! ARRRGH!

jds said...

"Closing time
Every new beginning comes from some other beginning's end"

Man-of-war are Semisonic deep!

Is it just me or is the CYH&SY pic not loading?

Flatlander said...

Bob,

Those are good points. I don't have any idea how much those cuts are so I can't figure them into my calculations. However, I'm guessing that it'll yield them a good paycheck for 25,000 discs sold vs. the $575,000 recoupable debt that Semisonic had after 25,000 discs had been sold.

It's probably overly simple to promote CYHSY's approach becasue it may prove to be amazingly unique. But as the internet grows as a forum to discuss and learn about music, it would seem that the opportunities to repeat their experience will grow too.

Perhaps the best path is Arcade Fire's where you get a label behind you that gives a better deal than a major label does plus you get the internet buzz. The best of both worlds.

Flatlander said...

jds,

the pic loads on my home computer but not on my work computer. It must not make it through some firewalls.

It's just the album cover from the Pitchfork review.

Flatlander said...

casey,

Since you are already pretty familiar with the business side of the industry, the book may not be as interesting to you. However, despite not really knowing much about Semisonic (good or bad), I've been enjoying the book. Good insights into how bands get signed, promoted, etc. for the naive.