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Handling CD Money

June 19th, 2016
contra, music, money

Like many small bands we paid out of pocket to create our CD. This was a big investment for us, which we split evenly, and until September all the CDs we sold were going toward paying ourselves back. But what should we do with the money now that it's paid off? [1]

Bands have done a few different things in this situation. Some groups like to put the money into a "band" account to cover band expenses, like instruments, travel for practices, stuff to sell, or eventually another CD. We thought about doing this, but decided we didn't want to structure things this way. When the time comes to do another CD we're planning to fund it like this one [2] and just split the costs.

Another approach is just to split CD money evenly. Sell the CD for $15, each of us get $5. This is nice in its simplicity, but we're not all playing the same number of gigs. I mean, all three of us play every Free Raisins gig, and for me that's basically all my gigs, but Audrey and Amy play with Triple A and Audrey plays with the Gaslight Tinkers, etc. So if one of us goes off and plays a lot of dances and sells a lot of CDs while another stays home, and even split doesn't seem fair.

What we decided to do instead is say that of the $15 sale price each band member should get $2.50 whether they were present at the gig or not. This pays us back for the time investment in the CD and the risk that CD sales wouldn't fully cover the expenses. Then the people actually at the gig (who played on the CD) split the remaining money evenly to compensate them for doing the work that brought in another sale. Examples:

(We actually started doing this a little before we paid off the CD. Audrey and Amy were going on tour with Triple A last summer, we were close to having made back our money, and this was exactly the kind of situation where it was clear some people were putting in a lot more work to make the sales than others.)


[1] Well, kind of. We put a lot of time into creating our CD, and time isn't in the accounting anywhere. Being conservative and valuing our time at minimum wage the ~100hr/person of preparing for the CD and recording it comes to just under $3k, or another 180 CDs before we're really breaking even. And valuing our time at opportunity cost, what we could have been paid to do other things with that time, it's much higher. But this is something we do because we enjoy it, and money is mostly useful in that it lets us keep doing it.

[2] Actually, I'm leaning toward doing something like Kickstarter for at least part of the cost of our next one. Since CDs involve a large up-front investment to produce something a lot of people are interested in, they're just a really good fit for that kind of financing. They also help make sure that you don't make a CD if there's not enough interest, and it's kind of like a preorder platform.

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