Let's say you've been lucky enough to find someone to invest in your record label or other music project, or even that you have some cash of your own that you're ready to put towards what you're doing. You've got the cash in hand, but the hard part isn't over yet. Now, you have to figure out how to spend the money you do have wisely. There are a few reasons why making the right calls with your music business loan or investment matters:
- The most obvious reason not to blow the money you have is, well, you won't have any money left. But aside from the usual practical applications of being broke, if you will, overspending on one part of the process of your project will leave you with no money to for the other parts. That means, for instance, that if you blow all the money on the pressing of your album, you won't have any money left for promotion
- The money you receive may come with strings attached. This is especially true if you get money from an arts council (yes, I know, a foreign idea to US readers, but they're out there), but if you're dealing with an investor in your business, this could matter as well. You no doubt had to explain to anyone who is funding you what your plans are and where you expect the money to go. They'll expect you to stick to the plan your presented to them, at least in general terms.
- Flubbing your funding once could impact your chances of getting funded in the future.
Scenario One - Album Pressing Costs:
Let's say you have an indie label. You're getting ready to release an album, and you're trying to decide if you want to press up the album on CD and package it in a jewel case with a two or four page booklet, which you think is kind of ho-hum, or if you want to press it on CD, package it in a digipack or a jewel case with a 16 page booklet AND press it on vinyl, which, wow, wouldn't it be so cool to put something out on vinyl?!?! What do you do?
Well, surely the answer is obvious here. You go for the simple first option. It may not have all the bells and whistles, but things like digipacks and long booklets really jack up the cost of production in a hurry, and you don't get much return on that investment. Yes, cool artwork and packaging is lots of fun, but you have to spend wisely now to get to the point where you can afford to do that someday. As for vinyl, well, it costs a fortune, and it's hard to sell. Don't get me wrong, for some styles of music, vinyl is pretty important, and yes, when people love vinyl, they LOVE vinyl. If you're one of them, you might be convinced that vinyl is the way forward. If your friends love vinyl, then you'll REALLY be convinced that vinyl will make you rich. It won't. It's a luxury. Be smart at the start, and you'll be able to indulge your vinyl fantasies some day.
Of course, if you really want to save money, you could opt for a digital release and test out the interest in the album you're releasing before you press hard copies (or may decide you don't need to press at all). And if you need some more convincing about vinyl, consider Factory Records, who lost money on every copy sold of their biggest selling 12" - Blue Monday by New Order. Do you really want to be praying no ones buys your album so you can pay your rent? Learn more about packaging and digital albums here:
Scenario Two - Demo Recording:
You've got some good songs, and you think you'd like to send them out to some label to see what happens. You can record your demo at home, but your recording skills are so-so, and you're worried that your demo will sound so unprofessional the labels won't take you seriously. Your other choice is to book some studio time to record your songs pro-style. What do you do?
Even if you have funding for the album you're creating (and yes, in some places, arts councils will fund people to write songs), if you're recording a demo, don't spend your money on a studio. If your purpose is truly to shop your songs around, labels really, honestly are prepared for demos to be rough. They expect it. Some people think that having their demo professionally recorded and presenting it complete with extensive artwork and liner notes shows that they're serious about their music. Frankly, in some cases, it can actually make a bit of a bad impression - it's just a waste of money that looks a little naive. Your money would be better invested in some kind of home recording system so you can plug away at your ideas as they come up. Yes, people do record demos in studios, but that's best left to people who are already selling some records and can afford it. For now, you have better ways to spend your cash.
The exception? If what you're after isn't really a demo at all but rather a promo. If you plan to try and sell your recordings and use to promote your self release, then a studio may be in order. Learn more about demos and promos in these articles: