How do you get $13 million out of a record company?

[Mutherfunker]

We know that Michael Jackson is estimated to have spent $20 million recording 'Invincible'. How much of this was his own money, I'm not sure.

Now look at Guns N' Roses. $13 million and counting is rumoured to be the amount that the record label have spent. Has Axl spent some of his own money as well? Possibly.

This occured to me when thinking about the much lamented 3 album issue.
 
My question is this - Who do you have to be to get $13 million out of a record company, and what kind of results are the company expecting from this investment? Is there any other artist who whould be given $13 million to record one album?

My thoughts are this:

1). $13 million is spent on one album because the artist is huge and will sell millions of albums, leading to profit from touring, and profit from merchandise. (here we go back to my earlier question - has this much ever been spent before on one album?). If this is the case, then the label must expect phenomenal record sales from this album.

2). $13 million is spent on recording one album, and a lot more raw material for future albums. Depending on how close to completion this other material is, more money will need to be spent completing future albums. Again - the record company must have faith in a long lasting artist which will continue to bring in profit for the next few years by releasing more than one album and touring.

3). $13 million is spent on recording more than one album. Second and third album songs are near completion. Whatever happens, those songs exist and act as a reassurance to the company that future albums will be produced. Little extra money will be needed to complete future albums.

Which of these GNR come under, I have no idea. I do find it hard to believe that a record company would spend $13 million on one album (unless there are precedents someone can tell me about). Which kinda leaves me with the final two options.

Of course, GNR and the label have various contracts, which probably stipulate all kinds of things covering both parties so - did they invest this much because they know it has been spent to complete three albums worth of material as I mentioned in the third option, or did they do it because they know that they are totally covered by the contract that they have with GNR (i.e. a recoverable advance as described here: http://www.bbc.co.uk/radio1/onemusic/legal/recordp07.shtml), which makes option 2 pheasable despite the unreliability of a certain W. Axl Rose?

How do you get $13 million out of a record company?

@#$%Funker

[nesquick]

one answer---> The Greatest Hits album.
Geffen has already earned much more than 13 milllion $$ with the Greatest Hits album. and I think money is not a problem for Geffen and W.Axl.Rose. Don't worry for them...

[Mutherfunker]

That doesn't actually solve everything. If they hadn't given Axl $13 million and released GH, that would be $13 more profit.

You could have a point about $13 not meaning much to a company that big - but why give it to GNR and not anyone else (that's if it's just for one album)

@#$%Funker

[Aero]

one answer---> The Greatest Hits album.
Geffen has already earned much more than 13 milllion $$ with the Greatest Hits album. and I think money is not a problem for Geffen and W.Axl.Rose. Don't worry for them...

yeap. If the company spends 13 millons in the new album... it's because they know they will earn 100 millions as soon as they release it

[jgfnsr]

The quality of the material on the new record might have something to do with it. 

Just a thought...

[Mutherfunker]

100 million? ?

If they're lucky. ?

Lets say for arguments sake that they sell each album wholesale for $10 (probably less than this).

5 million albums sold = $50 million

15% of these are actually given away free (see this article: http://www.bumblefoot.com/otherstuff/articles/wheredoesthemoneygo.htm)
So minus 15% = $42.5 million
Now give an artist like GNR around 20% of that = $34 million
Take off your $13 million = $21 million

How much does packaging, shipping, promotion cost = a lot

So by this point, your profit on this album isn't much above $15 million (I'm pretty sure they make even less actually)
That means by spending $13 million on recording instead of $2 million you've almost halved your profits.

If they sell ten million, you've lost about a quarter of your profit. My point being that one album isn't worth spending $13 million from a business point of view. Unless it's gonna sell huge. But like I said, costs per unit in terms of shipping and packaging and pressing, etc mean profits are not that high per unit.

@#$%Funker

[Dont Try Me]

The quality of the material on the new record might have something to do with it.?

Just a thought...

I highly doubt that.

Silkworms....an experiment....,altho I love the intro. You can listen to the intro in verh high quality on gunsnroses.us, the medly vid of boston...it's there in the beginning, take a listen.

The Blues: great song, genuine lyrics


Madagascar: genious with the quotes, can't wait to hear the full orchestra.

Rhiad: average but has great guitar riff / still could work out to a great song.

There.......let's see......one song which sucks......silkworms.....soooo??? who cares?? They've only played it once at rio..... they haven't played it anymore.....they got the message.

And they haven't thrown out their big ones yet. And frankly these are already miles better then the shit bands nowaydays come up with...

Do Not Worry

[jgfnsr]

The quality of the material on the new record might have something to do with it.?

Just a thought...

I highly doubt that.

Silkworms....an experiment....,altho I love the intro. You can listen to the intro in verh high quality on gunsnroses.us, the medly vid of boston...it's there in the beginning, take a listen.

The Blues: great song, genuine lyrics


Madagascar: genious with the quotes, can't wait to hear the full orchestra.

Rhiad: average but has great guitar riff / still could work out to a great song.

There.......let's see......one song which sucks......silkworms.....soooo??? who cares?? They've only played it once at rio..... they haven't played it anymore.....they got the message.

And they haven't thrown out their big ones yet. And frankly these are already miles better then the shit bands nowaydays come up with...

Do Not Worry

"What we have here is failure to communicate..."

I was alluding to the fact that I think the material on Chinese Democracy will be exceptionally strong.

[Dont Try Me]

The quality of the material on the new record might have something to do with it.?

Just a thought...

I highly doubt that.

Silkworms....an experiment....,altho I love the intro. You can listen to the intro in verh high quality on gunsnroses.us, the medly vid of boston...it's there in the beginning, take a listen.

The Blues: great song, genuine lyrics


Madagascar: genious with the quotes, can't wait to hear the full orchestra.

Rhiad: average but has great guitar riff / still could work out to a great song.

There.......let's see......one song which sucks......silkworms.....soooo??? who cares?? They've only played it once at rio..... they haven't played it anymore.....they got the message.

And they haven't thrown out their big ones yet. And frankly these are already miles better then the shit bands nowaydays come up with...

Do Not Worry

"What we have here is failure to communicate..."

I was alluding to the fact that I think the material on Chinese Democracy will be exceptionally strong.

yes, correct, my bad. 

[Lesty]

I don't think Geffen said, "Hey Axl, here's 13 million..go record a good record".
Years of having a studio booked around the clock with little or no work being
done, plus the hiring and firing producers and studio musicians is probably where
most of the money has gone. Not in their wildest dreams would they have guessed back in 1999 that they're still losing on their investment, with nothing to release.
Ideally, they'll get it back in some form, and lets assume (and hope) that they are given
material for a strong album and lots of additional tracks for soundtracks, or future
projects.

[grog mug]

All this time working on the album can add up.  I think some of that money might go towards a bonus DVD with the album.  Or possibly a bonus album of B-sides or unreleased re-worked tracks of different songs.

[Zerocool2]

Practice.

[damnthehaters]

100 million? ?

If they're lucky. ?

Lets say for arguments sake that they sell each album wholesale for $10 (probably less than this).

5 million albums sold = $50 million

15% of these are actually given away free (see this article: http://www.bumblefoot.com/otherstuff/articles/wheredoesthemoneygo.htm)
So minus 15% = $42.5 million
Now give an artist like GNR around 20% of that = $34 million
Take off your $13 million = $21 million

How much does packaging, shipping, promotion cost = a lot

So by this point, your profit on this album isn't much above $15 million (I'm pretty sure they make even less actually)
That means by spending $13 million on recording instead of $2 million you've almost halved your profits.

If they sell ten million, you've lost about a quarter of your profit. My point being that one album isn't worth spending $13 million from a business point of view. Unless it's gonna sell huge. But like I said, costs per unit in terms of shipping and packaging and pressing, etc mean profits are not that high per unit.

@#$%Funker

You forgot one big thing.  Touring!  The money they get from touring will be much more than album sales.

[echrisl]

Ideally, they'll get it back in some form

Probably a tax write-off when they dump the whole damn thing down the crapper.

[neko]

i think they didnt plan to spend this kind of money , they probably have a contract with Axl covering the costs of making the album but Axl has spend much more money that the planned by the company . 13 million dollars are important for any company it doesnt matter if you are Geffen or Microsoft , they dont waste 13 million dollars just because they have billions , its has been a bad deal for Geffen i think , i dont know if they have indeed spend that kind of money , maybe its just a rumor.

[Mutherfunker]

You forgot one big thing.? Touring!? The money they get from touring will be much more than album sales.

Not really, the highest grossing tour ever was $300 million (Stones). But that's not realistic for Guns. Aerosmith's 2002 tour grossed only $36 million, which i think could be a good comparison. Still not enough to make $13 million insignificant

@#$%Funker

[willow]

PROVE YOUR WORTH IT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Farmer]

Where did ya get this number?? I have a feeling that this is another over-inflated rumor....First, it was 10 mil., now it's 13.....give me a link where a credible person mentions this...Please..

Peace

[Mutherfunker]

I concede that this has not been confirmed, but then it never is going to be.

There are several sources that have mentioned figures around $10 million

$13 million was mentioned by Steve Morgan (Reuters) in an article on March 16th:

"But a source familiar with the situation said the label has been waiting seven years for Rose to deliver "Chinese Democracy" and has poured $13 million into production of that album after repeated promises that he was about to finish the project."

There have been enough rumoured figures, and enough time spent in the studio/producers employed/etc to suggest this figure is realistic.

I wonder if other artists could get away with spending this much time and money. Would Madonna, U2, etc be allowed to do this. Is is down to the name and projected success, or is it down to having used the money to record more than one albums worth of material?

@#$%Funker

@#$%Funker

[HoldenCaulfield]

The $13 millions dollar figure is really what reinforces the notion that they are recording multiple albums, IMO. No record company is going to give a guy that much money to record an album, especially after they haven't done anything in 4-5 years, assuming they didn't start recording until '99. No way in the world. Granted, Axl is one of the most famous, successful rock stars in history, but promises don't equal money. Geffen must have really, really, REALLY seen something special in this project, something they knew would be guaranteed money.