Turns out, one of the biggest search phrases that land folks on this site is “what is the difference between gross and net,” which I answered flippantly before. For the benefit of newbies, here’s a quick primer in record label accounting 101:
In business, “gross” refers to the amount of money that comes in the door. “Net” is your profit — what you keep after you cover all your expenses. In most companies, it’s pretty simple. If you run a lemonade stand and it costs you $20 to buy supplies on a day that you made $100, your gross is $100, and your net is:
$100 – $20 = $80.
Pretty simple, right?
However, the way that most labels — even most indie labels — account for expenses, the musician is on the hook for anything that gets spent on an album. To see how the numbers play out, read this legendary article by producer Steve Albini. [ warning: justifiably coarse language. ]
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