Planet Money - Planet Money Records Vol. 2: The Negotiation

Episode Date: October 29, 2022

We got our hands on the long-lost "Inflation" song, and now it's time to put it out into the world. So, we started a record label, and we're diving into the music business to try and make a hit.This is part two of the Planet Money Records series. Here's part one and part three.Update: We now have merch! We released a line of Inflation song gear — including a limited edition vinyl record; a colorful, neon hoodie; and 70s-inspired stickers. You can find it here: n.pr/shopplanetmoney.Listen to "Inflation" on Apple Music, Spotify, YouTube Music, Tidal, Amazon Music & Pandora.Subscribe to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoneyLearn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money from NPR. We got our hands on this old song a few months ago called Inflation by this band in Baton Rouge called Sugar Daddy and the Gumbo Roo. They recorded it in 1975, but it was never released. And we liked it, so we decided to resurrect it. Inflation is in the nation. And it's about to put us all away. This is part two of a series. If you haven't listened to part one, here's what you need to know.

Everyone from the old band went on to have good careers in the music industry. Except the singer, Ernest Jackson. I've never been signed by a label. That's my hope and dream. So we're getting into the music business for Ernest Jackson. We're going to be the record label he never had. All the old band members are in. The keyboardist.

He's one of the best singers I know. The guitarist. I said, Ernest, I'll do whatever I can for you, you know, to help you achieve this. So that's how episode one ended. Now, episode two. The first thing we need to do is some real record label stuff. So we fly down to Baton Rouge and show up at Ernest Jackson's front door. So we have something for you. What is it? What do you think it is? Oh my God, I don't have any idea. Just look like a briefcase here now. I know one thing, the show can't be no suitcase full of money.

I don't know if my heart will take it. I wish it was a suitcase full of money, Ernest. I wish we could give you a suitcase full of money. We don't have it like that. Okay. Okay. Oh, is that the contract? Is that the contract?

All right. So it might not be what you were expecting, but we have decided that we are going to try to be a record label for you. Have you ever produced anything? I have never produced anything, no. I don't think you're ready for that. We were not ready. Hello and welcome to Planet Money Records.

I'm Erika Barris. And I'm Sarah Gonzalez. You've heard the inflation song. You've heard the story behind the inflation song, behind the singer himself, Ernest Jackson. Now we want the whole world to hear the inflation song. But the music business is harder than we ever thought. Fractions of a penny get divvied up in more ways than you could possibly imagine. Lawyers, accountants, the talent, the label, that's us.

Everyone gets a piece of that penny. Today on the show, we want to make inflation go up, up the charts. We want to get this song onto every service, into every earbud, make a whole bunch of money, and make Ernest a star. All right. We want to be a record label. Release a song. We've obviously never done this, so we're going to need a guide.

So we call up a lawyer to the stars. Well, I talked to Stevie not too long ago. This is Don Passman. And for the record, that Stevie is Stevie Wonder. Don negotiates record deals for a lot of big-time musicians. I don't like to talk about clients' names. It's just, it's a sense of sensitivity to their privacy. But you can say it because those things are all public.

Taylor Swift, Adele, Quincy Jones, Stevie. Don's been at this for 50 years. But I do have a lot of gold and platinum records. Were they like, you know, clients were like, thank you, you helped make this gold record possible? Yes. Oh, wow. Okay.

Like signed? No, they don't sign them. Oh, you don't sign gold records? No, you don't sign them. They're framed behind glass. No one signs the glass even? I have not seen it. Oh, good to know. Nor have I asked for that matter.

Right, you don't want to be like fanboying with your clients. Although, of course, I got into this because I am a fanboy because I love music. Always have. Don wrote the book on the music business. Like, literally, it's called All You Need to Know About the Music Business. So we fill him in on our big plan. And our first question is, can we even do this? Wait, can we be a label? Sure. Why not? Like, what do we have to do to be a label? Say you're a label. All right, we're a label. Planet Money Records. We have to formally register

with a bunch of official music rights organizations. We even had a logo made. You know, standard label stuff. No, there's nothing standard about anything you're doing. Oh, okay. Why is it not standard? Like, what are we doing wrong here? You're not doing anything wrong. You're just doing something unusual, which is, you know, taking a very old recording and sprucing it up to release it.

Apparently, one of the main things a label does is record a song, like pay for the studio time and engineers and producers, the musicians. They make the recording happen. But we already have a recording. It was made in 1975. So what we want to do is apparently not in any way typical. Normally, all of the who gets what contract stuff between the talent gets negotiated before a song is made. We have to do it backwards.

So that's the next thing we need to do. We need to figure out who has a stake in this song. Songs are split up into shares, kind of like stocks. Usually the songwriter gets most of it. But there are other musicians on the song, right? There's a whole band. So it could go a million different ways. musicians on the song, right? There's a whole band. So it could go a million different ways. Who wrote the song? Ernest? Ernest wrote it. They all played together

pretty regularly. So they were kind of a band. Well, if they were a band, that may be different. If they consider it a band project, they may want an equal share. And that becomes a negotiation between them and Earnest. And I wouldn't get in the middle of that. So we call up all the old band members from Sugar Daddy and the Gumbo Roo, and we get all the right signals that this is going to be an easy deal. Technically, Inflation was Earnest's song and not mine. That's the keyboardist, Kenny Landrum. The guitarist, Freddie Wall.

Yeah, he told us the same thing. It was his song and none of us owned any of it. Yeah, then it should be pretty simple. That's Thonigan, the music lawyer. But if they're difficult and say, no, I want a piece of it, then you'd need to make a deal with them. I think they're all going to be like, let's just do it for Ernest. Right, Erica?

Yeah, we hope so. Yeah, I think so. Yeah. I think so. So. I think so. So Planet Money Records starts writing a deal for earnest. And Don says a typical record deal, even for an established musician, is this. The musician gets 20% of what a song makes. The label gets 80%.

So if we were acting like a real record label and we made $100? The artist would get 20% or $20. And we get 80? That seems unfair. Yeah, it seems like a bad deal for the artist, right? But Don says you have to keep in mind the label's the one doing all the behind-the-scenes stuff. Marketing and promotion, negotiating contracts. The label is the one taking the legal and financial risk.

These are all the things we have to do as Ernest Label. So I think we're like a nice record label and we don't actually want that much money. Right. We like want it for Ernest. So like he gets 80 percent we get 20%. Yeah. No, nobody would make that deal ever. Oh no. That's kind of a dumb deal. Is it a good financial move? No. Is it a nice thing to do for Ernest?

Absolutely. But to take a risk and to do all this work and effort, that's a pretty thin slice of the pie. You know, 80 is pretty hefty to give away to the artist. I would go so far as to say, congratulations. That may possibly be the worst record deal I've ever seen from a record company point of view. Well, thank you so much. I didn't think I'd be able to make the worst record deal that anyone's ever seen. But, you know. Yeah. But, you know, the only reason we're making this deal is because we want to explain how the music industry works. And one reason we can give Ernest more money than he would get from a typical record deal is because there are a couple ways a song can generate money.

One is through the record label and another is through the publishing company. We're acting as both so that if the song makes money, we would have more pots of money to pull from. Yeah, we'd have more money to give to Earnest. So we write up this deal where we probably won't make any money, put it into that briefcase you heard at the start of the show, and head to Baton Rouge to hand deliver it to our artist. I'm going to tell you right now, I'm going to sign this contract. All right. No matter what's in it.

Believe that. No matter what, I'm going to sign this contract. Okay. I'm going to tell you all something right now. I got some songs in my heart, y'all. Well, I will say we are only releasing one song, Inflation. Turn it loose. Turn it loose.

Ernest is so ready for this. And like, listen, it is not a normal deal because, right, the song was already made. So we're kind of like renting this song for a few years to try to see if we can make it a hit. So our big thing is going to be distributing the song. We're not going to press any vinyl records right now. We're not going to give earnest in advance for signing with us. That's how it would have worked in 1975. But today you don't really do that. You don't invest this kind of money in an unknown artist. You wait to see how the song does. In 2022, you start by just uploading the song to every music streaming site there is. And we tell

Ernest, it is not going to be easy to make any money. To make money, people need to stream the song. They need to listen to it. A lot of people over and over. Every time someone streams a song, the big music streaming sites like Spotify, Apple Music, Tidal, they pay out between a third of a penny and a full penny per play. And not all of that always goes to the artist. So it is not a lot of money. At one point, Ernest told us he would love it if a million people heard Inflation, the song. So we figure that's a good goal. There are actually calculators out there where you can figure out across all the streaming sites how much money you can make on your song, how much you can make in royalties. That's what it's called.

Erica, let's do the math. How much you can make in royalties. That's what it's called. Erica, let's do the math. How much money would we all make? Let me pull up my little calculator here. Okay, all right. Yeah. So I'm pulling up

my little royalty calculator. Okay. So if a million people listen, we make $4,000. Okay. If a million people listen, you get $3,200. 80%.

You get the 80%. I get the 80% and y'all get the 20%. Yeah. Not a ton of money. So I don't know. Maybe our goal should be 10 million. So you can get to 32,000 or 100 million. No, no, no, Erica. That's like a third of the country listening to the inflation song. We would literally have to be like despacitos, dad. So I don't know. I'm thinking we should have a smaller goal, like 10,000 listeners. Ernest could make $32. Yeah, no. No, we need at least a million listeners. It turns out, though, however much we make, it's going to have to be sliced and diced in more ways than we expected.

When you really get down to it, what makes money worth anything? The fact that we all agree a dollar is worth a dollar. We think a dollar is always a dollar. Right. But a dollar is kind of a meaningless construct. This guy who used to work here, Jacob Goldstein, on why money is a fiction. It is not just something that exists in the world. It's a thing that we all collectively are sort of creating all the time. That's in our next episode for Planet Money Plus subscribers. If that's not you, it could be. More info at the

link in our episode notes. We just gave Ernest Jackson his contract with Planet Money Records, but there are other musicians on this song, right? A keyboardist, a guitarist, a drummer, a bass player. And Don Passman, our music biz lawyer, says normally you do pay the musicians also. Now, they don't have to get the same thing Ernest does. In fact, they shouldn't. Don says the singer gets most of it, especially because in this case, the singer wrote the song and the melody. The band was kind of like backup. So in this situation, Don says you generally give the musicians, the band, a flat fee for playing on the song. They're what's called session musicians. And then those session musicians waive their rights to the song. So we need waivers for the whole band. And we'd been in touch with the guitarist

and the keyboardist, but one of the people in the band is now super famous, Randy Jackson from American Idol. He was the bass player on the song back when he was in high school. And the other person, Roy Hebert, the drummer, he died 30 years ago. But he still has a stake in the song, so we had to track the drummer, he died 30 years ago.

But he still has a stake in the song, so we had to track down his estate. And we found it. His widow, Ann Hebert Turner. If Ernest can reap the benefits of anything that he created, I'm all behind it. She said releasing the song would be kind of like a little something-something for Ernest. There's a term in South Louisiana called lagnia. And it's kind of like a baker's dozen. You get a little extra something that you weren't expecting. And that's kind of what this is. Ann, on behalf of Roy, signed her waiver the next day. The next Gumbo Rue member was Randy Jackson. And we did actually talk to him on the phone.

He was super cool, very chill. He said, yeah, he'd sign whatever. So we are feeling pretty good about all this. Like this is actually going to happen. I'm on the phone with the guitarist, Freddie, talking about these waivers. And he's kind of like, OK, this waiver thing, you guys are taking this way too seriously. He says the band didn't even have any kind of agreement amongst themselves back then. So he's like, waivers are not even necessary.

I don't know why there's a waiver because we didn't sign anything. There's no waiver needed there. We didn't sign any contracts. There's no contracts. You don't need any of that. But, you know, Kenny and I said, whatever y'all need, we'll sign. 30 minutes later, we are still on the phone. Erica emails over the waiver and something changes for Freddie. Whoa, whoa, whoa, whoa, whoa, whoa. Wait a minute. Boy, I'm getting blown up. It's this here. Barris, Erica, waivers for inflation. The guy who 30

minutes ago was saying we don't need waivers is now saying hold up let me see what's going on here uh heads up waivers the first one on behalf of the second is second one is permission to use your likeness freddie basically tells us this is getting way more complicated than i thought it was going to be. I thought you guys were just going to upload this song for earnest. Now there's like official paperwork. And he's sort of like, I obviously can't sign this without sending it to my lawyer. The next morning, I get a call from Kenny, the keyboardist. He's not happy. Well, the contract as written is completely unusable. Um, well, the contract as written is completely unusable.

At some point, Kimmy kind of becomes like the rep for the band. And we're a little confused how this waiver thing broke down. I mean, when we spoke with, when we spoke with Freddie, he said, I'll just sign whatever. I just want to do this for Ernest. I just want Ernest, you know, to finally get his due. Obviously, once he saw the piece of paper, he didn't feel that way. Okay. We kind of messed up a little.

Our waiver was supposed to come with a fee, like the way Don told us, a session musician fee. We thought we sent that, but apparently our waiver did not spell out that fee. So, like, pretty bad, right? We were a bad record label. But actually, in the end, Kinney said a fee wouldn't have made a difference anyway. He has actually made his career as a session musician, getting a few hundred dollars here and there in these fees. On a song that might make some money, because, say, a podcast is promoting it, Kinney says he would never sign over his rights for a fee. Owning a piece of the publishing on a song that might conceivably make some noise is worth more than $300.

Kinney doesn't want a session musician fee. He's saying, I don't think we were session musicians on this song. Yes, Ernest could have called up anyone to play behind him and they would be considered session musicians. But Kinney is saying, I don't think it would have sounded the same. So he wants a real share in this song. 50% of the publishing. I want 50% to be divided among the other four entities. We should explain.

There are two ways to own rights to a song. Think of it as like two pies. One of the pies is pretty straightforward. It's a copyright on the sound recording, meaning like on the recording the band made when they all played together in the studio that day. That's one royalty pie. The second royalty pie is a little more complex. It's a copyright on the song. But there are two ways to get paid out of this pie.

There's the songwriter share for the person who wrote the lyrics, wrote the melody. And then there's the publisher share. Kenny, the keyboardist, is saying he wants the band to have a piece of this slice of the royalty pie, the publisher share. So not the part that has to do with writing the song, not Ernest's part. Ernest did, in fact, write the song. He wrote the words, he wrote the melody, and he deserves all of that because he did it. So you're not taking from the singer, songwriter pot of money.

We're not taking from the songwriter part of money and only from the music. And you don't want that. Right, and we don't want that. We just want from the music publishing part. And this, this is the part artists in the know often want in on. This is the part that can conceivably make money. The amount of income generated by this thing, which may not be a hell, I don't even know if it's going to generate $200 on the publishing side.

I don't know, but I don't care. You saying like you think it may not even generate $200. I mean, when I said a million listens, that was like best case scenario. That was like if we did. Yeah, I know. I know. I know. I know. I know.

I'm not stupid. I routinely get checks for movies that I've scored. 40 minutes of music pays me, you know, $14. I know. I got it. But there is the other possibility that does exist that is not out of the realm of possibility. that does exist that is not out of the realm of possibility that if the song becomes some kind of hit, they could generate thousands. And I know that's true.

Listen, we are not trying to give anyone a bad deal. We believe artists should get credit for their work. Yes, we do. But Don, the music lawyer, says for the musicians to get this much of the song is actually not standard at all. But look, they're the talent, and the talent is not happy. So to make this deal happen, we have to make them happy. This is what we wanted.

We wanted to be a label. And as a record label, Don told us, we don't want to get in the middle of determining who gets what share of the song. The band should figure all that out and agree on it. So the band starts negotiating. Kenny and Freddie tell Ernest what they want, and Ernest thinks the band should get something. Of course they should get something.

Of course they should get something. But if their intentions were, in the first place, to revive me, let's use that word. They was telling me like, you know, Ernest, if anybody deserves something good to happen for them, it's you. That's what they were telling me. You know, I'm not saying they shouldn't get nothing. Yes, they should get something. But you know, it's all right with Ernest, okay? And let's get the ball game on, The band figures it out. They decide on the new splits, which determine how all kinds of royalties are paid. The royalties for merch, the royalties for downloads, there are a bunch.

And they all have incredibly technical names like the public performance royalty on the underlying music composition. And this one is a good one to focus on because it's pretty representative of our new deal. Here's what it is. For this royalty bucket, Ernest will get 67.5% of the profit. The rest of the band splits 17.5%, though Randy Jackson wants to give his split to Roy's widow. And we get the remaining 15%. Randy Jackson wants to give his split to Roy's widow. And we get the remaining 15%. So if this song makes $4,000 just in royalties from this little royalty bucket,

Ernest will keep $2,700. The rest of the band gets $700 split amongst them. And we get $600. There are many different royalty buckets, though, and they all get split up in different ways. So accountants will spend the next few years splitting up this little sliver part of a song and that little sliver part of a song and divvying up fractions of pennies to cut checks to everyone in the band for years. This is what we got ourselves into. Way more lawyers and way more accountants than we were expecting. Kinney's kind of like, yeah, that's the price of getting into business.

Well, I hope we have a hit. It'll all be worthwhile if there's a hit. That's the bottom line in this business always. I hope we have a hit. What if we don't? Well, then, if you don't, it hadn't cost anybody anything but a little bit of time at this point. Well, it cost us a fair amount. Yeah, we've spent some money.

We have already spent at least $10,000 on Lawyers Alone. But, oh, well, we went all in on this song. Yeah, we did. And Ernest is ready. It feels damn good. Let's see what happens. We are happy to announce we have dropped our

single. You can finally hear Inflation, the song, in its entirety on Spotify, Apple Music, YouTube Music, Tidal, and Amazon. It is out there. It's everywhere. It's everywhere. So far, it has been listened to 21 times on Spotify.

And probably most of that is me and Erica and James, our producer. James has been jamming out to the song. So we need all of you to listen to this song too for Ernest. So, yeah, stream it. You know, get it on. Get it online. Pull it down, y'all. Listen to this song.

The song is called Inflation by Ernest Jackson and Sugar Daddy and the Gumbo Roo, brought to you by Planet Money Records. If you go on Spotify under songs, search Inflation and Ernest Jackson and you'll see his song. We are trying, we're trying to make Inflation the song a hit, which is honestly going to be an uphill battle. Spotify is one of the biggest streaming platforms and less than 1% of songs on Spotify have gotten over a million streams. 1% of songs on Spotify have gotten over a million streams. But, but, we have learned that if we can get to just 5,000 streams on Spotify in the first week that the song drops, so right now, that'll put Ernest in a special category of artists where we can start paying to promote his song, which we want to do. But we need 5,000 listens in the first week on Spotify in order to do that. So, Planet Money

listeners, go listen to that song. Stream it. And stream it. And stream it and stream it and stream it. Tell everyone you know to listen to Inflation. And let's see what happens. We're going to sit back and track this song. And when there's something to say, we'll be back to tell you about it. Today's show and the entire series has been, like, super produced by James Sneed, who is basically a real record label producer here. He also had help from Emma Peasley and Willa Rubin. The project manager on this series is Emily Kinslow. Sam Yellow Horse Kessler helped fact check. This episode was mastered by James Willits and Josh

Rogeson remastered the original inflation song. Jess Chang edited the show. Many thanks also to Ashley Messenger, Anastasia Silkas, Matt Sullivan, Rob Sevier, and Mike Nishida. Also, Erica Clayton, Rachel Swanson, Sasha Fomanskaya, and Kaz Pantone. And thanks to Robert Smith for being a consultant on the series and for letting us use a very special Planet Money briefcase to deliver our record deal. Again, the song is called Inflation by Ernest Jackson and Sugar Daddy in the Gumbo Roo. Go listen to it. I'm Erika Barris. I'm Sarah Gonzalez. This is NPR.

Thanks for listening. And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.