Category: Angel Investors

ITUNES and Spotify Are Costing Music Artists Money

4/18/2024

"Render unto Caesar what belongs to Caesar."
---(Matthew 14:7)

ITunes charges a $5.00 USD monthly fee per album for every artist that posts to their sight. Spotify charges a $1000.07 USD annual fee to every artist. Both sites are costing artists that wrote and recorded their music thousands of dollars annually.

Apple Music pays artists one tenth of a penny ($0.001) for every song that is played in full. Songs that are paused or stopped are paid nothing. On average, the top 1000 artists receive $100.75 USD per month. The top 1000 artists generally have seven full albums available in their portfolio. This means that the top 1000 artists on ITunes are receiving $0.25 per month per album.

ITunes pays artists $1.00 USD per month for every complete album their customers pay. On average, customers if the top 1000 artists complete slightly more than 11 albums per month.

Unlike ITunes, Spotify highlights five to ten songs in an artists portfolio. Spotify PLC pays the artists nothing when the highlighted songs are played. On average, Spotify pays its top 1000 artists $0.0876 a month for every completed album.

Without factoring in design, a basic website with retail capabilities can be maintained for $70-$250 USD per year. The variance in cost depends on the features used on the site. The most popular website builders are simple to use, Anyone with an artistic flair willing to spend three to seven days can build a site to their liking. The most popular web builders have several built-in templates and the templates can be greatly modified with little effort.

If the top 1000 artists were to build sites on their own and sold 2 albums per month at $11.00 USD an album, they would earn more on their own than they do with ITunes or Spotify. This assumes a $160 USD cost to maintain the site. For busy artists, professionally designed seven page site that includes a home page, a bio sheet, album notes, a retail portfolio, an appearance schedule, a blog page, and a contact form can be build for a one-time fee of $1100-$3000 USD.

Only one of the top 1000 selling artists on ITunes and/or Spotify controls their master recordings. Master recordings are the songs that appear on the albums record companies produce and market. Digitally recorded songs played through ITunes, Spotify, and radio stations derive from master recordings.

910 of the top 1000 artists on ITunes are presently bound by 360 Deals through their album labels or their record companies. 971 of the top 1000 artists on Spotify are bound by the same. On average, the originators of these contracts and the record producers that negotiated the deals keep 71% of the revenues from these artists master recordings.

On average, the originators of these contracts and the record producers that negotiate the deals also keep 57% of the revenues generated through appearance fees. They rarely do more than place five to seven phone calls to book the appearances.

A music artist's portfolio is considered intellectual property. Intellectual property can be bought or sold. By right, intellectual property owners must relinquish intellectual properties they sell in full to complete the sale. Record labels, album producers, and outside investors that purchase master recordings and use the original artist or artists name to promote intellectual properties they have purchased violate the terms of the sale.

Record labels and album producers that redistribute intellectual properties to other artists and fail to mention the name of the original artist or artists when the intellectual properties appear are also in violation of the terms of the sale. The originators of the intellectual properties have the right to take the artists, album producers, and record companies that violated international property laws to court and have their intellectual properties returned.

The same holds true for artists that originate screenplays and for novelists that have had film or theatre adaptations made from intellectual properties. Original screenplays that make it to theatre are often redressed as many as seven times. Original screenplays that make it it television are often redressed as many as eleven times.

The New York Times list of the 100 greatest novels ever written have appeared in theatre adaptations an average of 111 times. They have also each appeared in film adaptations more that 1100 times and in television dramas more than 111 times.

Novelists and screenwriters are rarely credited when adaptations are made of their works. By right, artists that copy their works are required to mention the name of the originating artist before they begin their adaptations and surrender 10% of the revenues they generate to the original artist.

Author: Erik Gagnon - Chi Rho Consulting

0 Comments

What My Experiences as an Angel Investor Have Taught Me About the Venture Capital Industry

8/13/2023

0 Comments

“Lazy hands make for poverty, but diligent hands bring wealth.”
---Proverbs 10:3

In 2008, I completed the last of my active-duty missions for the GCHQ and my combat license was decommissioned. Afterward, I entered the world of investment capital as an angel investor and served as a pawn for the British Crown and the American governments in a game of chess. Though my business ventures have met with limited success, I lhave earned enough to know that partnering with venture capital firms is a sure road to hell for any capable entrepreneur.

Brokerage houses back venture capital firms. The firms they back are nothing more than gambling houses. Firms like Accel and Sequoia Capital produce nothing of value for serious entrepreneurs with dreams of autonomy. Instead, they bank on their ability to work you out of your ideas and assume your assets and intellectual capital as their own.

So, too, are the brokerage houses that back these firms. If you follow the money trail long enough, you’ll learn that about eighty-seven percent of the world’s investment banks are controlled by eight families of kingmakers. The rest are irrelevant entities begun by corrupt individuals looking to corporatize their asset holdings.

While a handful of independent brokerage houses are allowed to play in the financial markets, they are small fish compared to the eight family networks that control the world’s capital markets. They are grooming houses for the larger firms, and oftentimes serve as shell corporations for criminal organizations. Analysts and partners within these firms that skill themselves in graft and piracy move on to the eight family-run banking empires, and the rest are swallowed up whole.

Skilled entrepreneurs that enter contracts with venture capital firms are forced to give up their autonomy. Their equity share are often diluted over time by their venture capital backers, and the interests of the brokerage houses their venture capitalists serve typically drives the direction of their companies. The principals within these firms are margin-focused and stop at nothing to drive up profits once they’ve set revenue objectives for your business. In the end, this compromises the quality of the products and services of the businesses they back.

If your business plan falls short of your venture capital firm’s revenue targets, you become a disposable asset for the brokerage firm that backs your venture capital partner. They begin to sell your concepts to competing firms and competing businesses with the purpose of liquidating your holdings. Oftentimes they do so without your knowledge or consent.

It is important to know that except of patents and design materials that fit within their brokerage firm’s strategic objectives, your business, your ideas, and your objectives are meaningless to your venture capital partners. The same holds true for the members of your management team. It’s a numbers game for them and your business assets are disposable.

It is also important to note that venture capitalists and angel investors are not the same. While some seed funds tout themselves and angel investments, true angel investors take a secondary lead role in seeing your ideas through to fruition. The deals are structured differently, with angels generally seeking a quick exit when their investments are repaid.

Depending on the assets you bring to the table and the risks associated with your business, some angel investors will ask for long-term non-voting equity shares in your company. Anywhere from 0.5% to 3.0% is customary in these circumstances. Venture capital firms on the other hand generally require equity arrangements and voting rights that affect an entrepreneur’s autonomy from day one.

The sweat equity true angel investors bring to the table cannot be measured. Most have run or managed business enterprises themselves and will mentor you on your deficiencies. They may serve as your Head of Finance, Chief of Operations, Executive Recruiter, Marketing Expert, or any combination thereof. However, their objectives are the same: to take your company safely to market and recoup their investment with a healthy dividend.

Angel investors will also leverage their business connections to help cut your costs. They will direct you to suppliers within their portfolio or their network, and structure the deals to get you off the ground. While venture capital firms claim to offer the same, the strategic objectives of the brokerage houses they serve drive decision making. They typically structure long-term deals with suppliers and distributors within their brokerage firm’s portfolio, and they structure these deals to maximize the brokerage firm’s revenues.

Human capital management is perhaps the greatest area of discrepancy between venture capital firms and true angel investors. While venture capitalists view open positions as red lines on a balance sheet, true angels understand that a strong corporate culture is fundamental to your long-term success. Consequently, worthwhile angels gravitate toward entrepreneurs that embrace values and principles that match their own.

Once you wade past seed funds, it is important to remember that all angel investors are not the same. There are plenty of unscrupulous individual investors that that milk intellectual capital during negotiations with the express purpose of pirating your ideas. There are others that will attempt to rope you into deals with the intent of driving you into bankruptcy and claiming your assets and intellectual property as their own.

The term angel investor traces its roots to 16th Century Spain and the fishing industry. True angel investors were men of faith who relied upon prayer, meditation, and scriptural teachings to guide them in placing their investments. When dealing with angel investors a good rule of thumb is to ask them about their faith. In short, listen to their testimony and get to know them as you would your closest business partners.

TAKE AWAYS
Venture capital firms are an anathema for entrepreneurs with aspirations of remaining autonomous. If the entry barriers for your business plan are so great that you require billions of dollars to get your idea off the ground, chances are you are chasing an illusion.

For entrepreneurs with innovative ideas who aren’t just interested in making a buck, co-partnerships outside the venture capital industry can be structured with reasonable payback terms. A capable angel investor with a strong network can help you structure deals with suppliers and distributors that are advantageous to your goals and objectives. In the long run, this will help you retain your autonomy and avoid the pitfalls of dealing with venture capitalists and the brokerages they serve.

“To the person who pleases Him, Christ gives wisdom, knowledge, and happiness, but to the sinner he gives the task of gathering and storing up wealth to hand it over to the one who pleases false christs. This too is meaningless, a chasing after the wind.”
---Ecclesiastes 2:26

CHRIST TRANSLATES FROM BEAST TO YEAST.

Author: Erik Gagnon - Managing Partner, Chi Rho Consulting

0 Comments

JUMPSTART STRATEGIES

Strategic insights for investors and entrepreneurs on a variety of topics.

CATEGORIES

ARCHIVES

ITUNES and Spotify Are Costing Music Artists Money

What My Experiences as an Angel Investor Have Taught Me About the Venture Capital Industry

About Us

COMPANY

SERVICES

RESOURCES

SUPPORT