If Dave was such a good business man why did they owe 2 million to Warner after VH2

**mookie5** · 01.29.03, 05:30 AM

Anyone find it odd that according to Alex Van halen, the band owed Warner Brothers nearly 2 million after both VH1 and VH2 went multiplatinum and after 2 world tours? Maybe the record company should carry the blame for the way things have turned out. The long silence from the band may be because they don`t want to get fucked again like they have for the last 5 years with Ray Danniels still in thier pockets.

Just a thought.

**79th and Sunset** · 01.29.03, 06:16 AM

They probably owed all the money because they partied and trashed every place they went.

I dont think that was Daves' fault though. It was a band of four guys, and management, etc.

That being said, I dont know how much truth comes out of Alexs' mouth anyway ?? BTW, anyone seen him lately ?

**dirtymovies** · 01.29.03, 06:30 AM

I was thinking the same thing. I think I read that elsewhere also, maybe in Crazy From The Heat?

**Rocket** · 01.29.03, 06:42 AM

No artist in their first album or two, successful or not will actually make money from their sales. Every step the label makes to manufacture distribute and market the album is charged directly to the artist. That includes A&R guys hotel rooms, meals, travel expenses, Record release parties, payola to radio in the form of vacations and rolexes, studio time, producer fees, and many, many more things that you could not even imagine. In the 70's I wouldn't doubt that the coke bill was charged to their account as well. A record deal is more like a bank loan with a distributor. Only money they probably saw was a small 50 - 100K non recoupable advance. If they even got that much!

For new artists, money is made on tours and merch!!!

Don't blame Dave on this one...

**hendmik** · 01.29.03, 06:44 AM

Rocket is right. I do not find it odd. That is simply the nature of the record industry.

If you hear artist X got a million dollar recording contract from record company Y, it is not a check they can run out and spend (although many artists do), it is a loan. A nasty loan. From that loan, the band has to pay for a Producer, and engineer, a graphic artist, studio time, pay their staff (manager, techs, accountants, lawyers), then try and live off the remainder for a year+ while waiting for the album to be released. Courtney Love once remarked that after all was spent to create a CD, she was left with less than $50k to split between the band for the year they spent waiting for the CD to be released. Ever envisioned your favorite artist living on $12.5k? But it doesn't stop there.

Once the album is released and begins to sell, an artist with a GREAT negotiating lawyer, will begin receiving 12% royalties to pay the band (the distributor gets the remaining 88%). Not too shabby if your CD goes multi platinum. But often, the Producer gets a cut of the profits (~2%) which leaves the band with 10%. 10% that is used exclusively to payback the record company the loan they gave you in the first place. You don't see a penny of profit until you pay them back (remember they are already receiving 88% of your album sales that does NOT apply to the loan). This can take years, and sometimes - often times - a band has to record and release a second CD to pay off the first one, never receiving a dime from the record company. Now we know why Ed lived with his parents through WACF.

Taking that into consideration, is it any wonder bands tour so heavily? Tour profits are theirs to keep. That is, after they pay back the touring company, tour managers, crew, security, t-shit manufacturing, choreographers, makeup and wardrobe, personal assistants, venue rental, etc. And in 2002, where only 5% of tours turned a profit, many bands eat these costs to try and drum up more CD sales to payback the record company sooner.

Still want to be a rock star?

**BrownSound1** · 01.29.03, 07:00 AM

Steve Vai says that he made more money on his Flexable album than he did on any other thing he's done since then. Reason why is because he did the album himself and owned every right to it. So...having said that, it is entirely possible that VH owed 2 million to WB with all things considered. I'm sure they made up for it in a short period of time.

**tease** · 01.30.03, 07:56 AM

That is a very interesting read. Thanks guys for sharing your thoughts. [img]graemlins/thumb.gif[/img]
And Hendmik, you mentioned Ed living with his parents in 1980? I never heard of that before. Any stories to that? That sure sounds funny.

**dirtymovies** · 01.30.03, 08:26 AM

Originally posted by BrownSound1:
Steve Vai says that he made more money on his Flexable album than he did on any other thing he's done since then. Reason why is because he did the album himself and owned every right to it. So...having said that, it is entirely possible that VH owed 2 million to WB with all things considered. I'm sure they made up for it in a short period of time.

Didn't Whitesnake pay VAI $1 million to join their band several years back??

**Fontcow** · 01.30.03, 08:55 AM

The Problem with Music
by Steve Albini

http://www.negativland.com/albini.html

**Brett** · 01.30.03, 09:08 AM

Actually the band got to keep total rights to ALL of their music and their band name when they signed with Warner Bros. in 1977. I'd say they were damn good businessmen, as there are a TON of bands who don't even own publishing rights to their own music.

**Sweet William** · 01.30.03, 10:26 AM

Most artists get the short end of the stick on their first deal because the record company has all the leverage. If the artist sells well, the tables get turned on their subsequent deals. If you can get over the hump of your first contract, you stand to make a lot of money. Problem is that most artists don't have the longevity to get over that first hump.

And Brett is right about VH; they struck a better initial deal than most.

While I have no idea how much input Dave and Alex had in the negotiations with Warner Brothers, both are extremely smart, extremely savvy, and have a head for business, so that may have helped.

**Glenn** · 01.30.03, 11:56 AM

When did Van Halen sign their second record contract? I'm wondering because is it a known fact that they retained the rights to their music from the start? It seems just as likely that they didn't, but then got them back in a later contract extension.

As far as the original topic goes, how would anyone expect Dave, in his early twenties, to be an expert in the dark halls of the music industry???

**Rick S** · 01.30.03, 12:10 PM

ok i know this may sound dumb but....how come all these rappers and r-b singers you see on mtv are showing off their 25 cars and huge mansions? when theyve only been around for a few years? i always found that confusing. and misleading to the kids who watch the show thinking that you get all the money when you make a cd. is that stuff on loan or what?

**Hoobastank6** · 01.30.03, 12:19 PM

There always seems to be this big argument over how being in the music business is the worst possible ripoff in the history of the world and how "artists get scammed out of millions of dollars after all of their hard work" etc. I'm sorry but if someone thinks punching a clock everyday from 9-5 at some boring job you can't stand is that much better then I honestly want to know where they're coming from. I'd LET the record company rip me off if it enabled me to quit my job, tour and play music.

**Ten-13** · 01.30.03, 12:29 PM

As to why you see all of the rap artists on Cribs with the huge mansions and all of the cars, damn near everything is owned by their record companies. The artists get huge advances from the labels that they have to pay back with record sales. Give most of them five years and they will have nothing. That's what happened to MC Hammer. Some of those guys are truly wealthy - Puff Daddy, Master P - but the majority are living on borrowed cash and borrowed time. Some of the others make more money producing than selling albums.