The Price of Success

There was an article in a national newspaper recently regarding an artist who appeared on last year's "Nashville Star" TV show and the struggles that ensued. The article centered on the costs involved to make it in the industry and the earning factor. The major label laid out the monies for the production on the CD, the promotional costs, etc., but the artist does not receive any royalties until the label recoups the monies they laid out. Hence the artist must depend on personal appearances to stay in the game. The label does supply tour support money in the early stages as the artist must pay travel and hotel costs, plus the band, etc. That leaves one way for the artist to generate income and that's by writing their own material and owning the publishing rights to the songs. That's one reason why it is difficult for writers outside the loop to garner cuts by both established artists and those who are just starting out.
In some cases though, the label signs the artist/writer to their in-house publishing company and enters into what is called cross-collateralization meaning the label recoups from both the artist's perspective and the writing/publishing ed as well. It's also understood in some cases that the artist is asked to listen to songs written by the writers who are signed to the label's publishing company. That doesn't mean that an intelligent producer and artist won't pass up on a solid song written by a writer with a great track record who is signed by another publisher.
What we have here is a catch-22 situation because without the label's financial assistance, the artist really must, in most cases, conform to the label's contractual demands. But once the artist reaches the star situation and it's time to renegotiate the contract, the artist now has the power to instigate many options and there are many at hand. They can, as some do, start their own label and have the label act as a distributor. Or they can sign with another label who has offered a very lucrative deal. Or they can stay at home so to speak, by re-signing with their original label with, of course, different contractual revisions.
Without naming names, I recall when I was the General Manager of Central Songs in Los Angeles. I had a close relationship with a major producer at a major label whereby I could bring him songs at any time, mainly because of the quality of songs the Central writers where producing. On this certain occasion, I went by his office and noticed he was pale as a ghost. I asked him what the problem was and he said, "My artist just became a millionaire" (and that was a pretty big sum in the mid-60's) "and he knows it and I have to renegotiate his contract at 2PM today." Thankfully, everything turned out OK for both parties, but that executive was stressed out.
Unfortunately, some new artists who are not familiar with the industry come into Nashville to do a project and they actually believe that once the project is done, they can march over to any major label, have an immediate audience with an executive and expect the label to release the CD immediately. Dream on....that's not how it works.
The best route for a new act to take is: firstly, cut great songs with a great producer; secondly. hire a respected PR person like Sandy Serge (aw shucks, Scotty, I'm blushing - ed.) and establish some credibility; and once that is done and the label is aware of the artist's success, the label will come after the act as the groundwork has been laid and the artist has bargaining power. I've seen instances where two or three major labels are in a fight to sign a new act, and what a nice position that is for the artist. But always keep in mind that superstars are created, not born. :->