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Author Topic: The Studio as a Business  (Read 7966 times)

Bmbch

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The Studio as a Business
« on: December 27, 2005, 10:28:32 pm »

Steve,

In the "Introduction" thread you mention the purpose of this forum includes discussing the owning and operating of a studio. I appreciate all the threads about gear and techniques, but I wonder if we could discuss the actual business side of a studio?

I commend you on your work ethic, as well as your outspokenness about conducting business in an upright manner. It is refreshing not to be patronized by someone with your experience.

I'd be interested to know more about your general principles in making Electrical a studio that is built to last. Obviously, it's not "all about the money." But I imagine the cost is staggering, and there must be considerable risk. Is there a balance between the punk archetype and the business world? For instance, when do you need lawyers, if at all? When do you need contracts, if at all? Incorporated, LLC or just plain Steve? (This italicized bit was my way of interjecting humor into a seemingly humorless thread. File Under: CPA humor.)

The common "small business" (though, I doubt one could classify Electrical as such) perception seems to be that everything is well and good until hard earned money is involved, and then one must get serious; with "serious" referring to the involvement of contracts, lawyers, limited liability, etc. I find this train of thought dismissive of the idea of the "indie" mindset, but wonder if there is some crossover. And, if so, when?

You've spoken before (on this site I believe) about the idea that the "money issue" shouldn't be taboo, so I ask if you could talk more specifically. What percentage of profit goes back into the studio? What is a gauge of a healthy, or lean, year? What are the criteria for judging whether the business is operating successfully? In comparison with other engineers of your caliber, I imagine your (self-proclaimed) annual salary is modest. Where then, if not in your pocket, does the money go? Or should it be thought of more as lower costs for clients = lower wages for studio personnel?

I ask, in part, because I own a very small independent record label with a friend. We have conducted business with engineers, printers, and manufacturers that are similarly independent, and have not felt the need to "go legit" yet. Pay with cash, and pay on time. We both have a commitment to our interest and appreciate that we could use our label for fundraising, which we've done to our delight. We've been tinkering with the idea of turning the label into a non-profit. We are comfortable with day jobs now -- sinking the money earned through the label back into the label or using if for donation -- with the idea that we could eventually draw a modest income and spend our profits wisely. Is there something you do, personally or as Electrical, to keep a similar balance?

I find the whole process rewarding. And realize my partner and I talk a great deal about shit we never spoke about before. Money, scheduling, following up with people, etc. I haven't been deterred thus far, but I don't think I realized how much time the "administrative" tasks required. Which brings me to my next question: What percentage of your day is reserved for "Steve Time?"


Forgive me if this is too blunt. Most of the independent folks whose business ethic I admire rarely talk about money, but it's usually some money shit that breaks the back of the up-and-comer. It seems logical, then, to be frank about these issues so others may avoid common pitfalls. I am interested in those specifics more than the "how much did Nirvana pay you" type specifics.

Thank you for your time,
Eric
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Daniel Farris

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Re: The Studio as a Business
« Reply #1 on: December 27, 2005, 11:00:50 pm »

Bmbch wrote on Wed, 28 December 2005 03:28

The common "small business" (though, I doubt one could classify Electrical as such)


Great post and, like you, I am eager to read Steve's response.

In the meantime, I would like to point out that Electrical is a small business according to pretty much every definition there is. For most types of businesses, the government says you're a small business if you have less than 500 employees. However, for recording studios, you qualify if you make less than $6.5 million a year.

I think most studios (Electrical included, probably) qualify as micro businesses.

Clarifying the phrase "small business" became a bit of a thing for me after the 2004 presidential campaign where I heard Bush use the phrase hundreds of times, and I had to tell my micro-business owning friends, "He's not talking about you. He's talking about aviation firms and small oil companies (like the one he ruined) in Texas."

DF
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Jason Phair

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Re: The Studio as a Business
« Reply #2 on: December 28, 2005, 12:23:56 pm »

Definitely small business.  My company owns a few million dollars worth of inventory, and we're certainly considered small business.

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Jason Phair
Advanced Production Group
Dunkirk, NY
http://www.advancedproductiongroup.com

Formerly:
Sound Services
SUNY Fredonia


Get that fucking thing off my vocal will ya?

Thanks.

t(h)ik

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Re: The Studio as a Business
« Reply #3 on: December 28, 2005, 12:39:20 pm »

Eric in the mean time you could do a search on Steve's posts.  There was an extensive discussion on the finances of EA.  It was a great thread.  I think it was the role of assistant producer or some such nonsense but Steve's post were very informative for those of us needing mentorship on how to approach dealing with bands.  You may have been referring to this in your post, sorry if I am repeating something you already know.


good luck

tik
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electrical

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Re: The Studio as a Business
« Reply #4 on: December 28, 2005, 01:28:55 pm »

This is an interesting topic, and I promise to reply more fully when I can. In short, the way I conduct the business of Electrical Audio is pretty much the way I do everything else.

Nuts and bolts stuff:

Total cost of building and equipping the studio (not current value) a little more than $2 million. I never had that much money in my hand, but that's what it cost to do it all. Annual studio revenues $375,000 - $450,000, depending on a lot of things. Staff of six. Monthly nut $28,000 (salaries, taxes, mortgage, debt service, utilities, insurance, amortized maintenance costs).

This is obviously a precarious position, and doesn't leave much (if any) room for error. It also implies that sometimes there won't be enough money in a given month for me to get a paycheck. If I didn't have both simple tastes and low expenses, that might be a problem. It's a close shave every month, but we've made it for more than a decade now.

Running a professional-caliber studio is not a profitable business. It is a business one hopes to survive in long enough to pay-off the real estate, at which point it can become marginally profitable. If you run a studio and you don't have any equity in the real estate, you're probably going to go broke eventually.

Running a studio in such desperate conditions is only worth doing if you enjoy it for its own sake, and have a stable client base, low expenses and low expectations.
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best,

steve albini
Electrical Audio
sa at electrical dot com
www.electrical.com

John Ivan

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Re: The Studio as a Business
« Reply #5 on: December 28, 2005, 02:10:16 pm »

Steve,,

This is a great topic and it's really big of you to talk about this. You could really help someone here. I wish more people talked about the biz end of all this. Very cool...


I hope this isn't to personal and if so, ignore or slap me up side the head...

Do you have some $$$$ coming in from past productions? And, dose this allow you to operate? I know a guy who has some $$$$ coming in from past work and he invests ALL of that and works his current biz to live on..

Also, do you only take certain things through the door? I mean, if a rockin' soul band came in from Cinci or something, would you record it even if it wasn't your bag   { I don't know ,,you might really dig something like this. It's just an example.}  or are you trying to stay true to stuff that YOU like only. { I know guys who do this.}

Thanks again for being real. It's very very refreshing indeed.

Love music always..

Ivan................................
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electrical

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Re: The Studio as a Business
« Reply #6 on: December 28, 2005, 07:34:18 pm »

ivan40 wrote on Wed, 28 December 2005 14:10


Do you have some $$$$ coming in from past productions? And, dose this allow you to operate?

Not from engineering, no. I make some modest royalties from the bands I've been in (my share of it), and gig money (roughly $30k a year all-tolled), and most of that goes into the business to allow for what improvements we get to make, building upkeep and the like. I live on my salary, which is about $24k a year, less if it's a bad year.
Quote:

Also, do you only take certain things through the door? I mean, if a rockin' soul band came in from Cinci or something, would you record it even if it wasn't your bag

I will record any swinging dick whose checks don't bounce. I think it would be both rude and counter-productive to vet clients along aesthetic lines.
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steve albini
Electrical Audio
sa at electrical dot com
www.electrical.com

John Ivan

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Re: The Studio as a Business
« Reply #7 on: December 28, 2005, 08:45:11 pm »

Man, am I glad to hear {well,,see}  that last part. I to will record anyone and go play on anyones stuff. When I get calls to play on stuff for young up and coming kids, they will sometimes ask a lot of questions and it's cool to be able to share the mistakes I've made with them.. Then I get calls where I feel I can barely hang and then I get to learn from great great people. Lucky folks for the most part, we who get to jam in one way or another..

I'm taking between 30 and 35 per year playing live and only between 10 and 15 in the studio completing various tasks. This all takes all the energy I have, pretty much...... I get to do what I love though.. Fuck it. It's worth it..

Best.

Ivan................
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Jules

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Re: The Studio as a Business
« Reply #8 on: December 28, 2005, 09:16:06 pm »

electrical wrote on Thu, 29 December 2005 00:34

I will record any swinging dick whose checks don't bounce. I think it would be both rude and counter-productive to vet clients along aesthetic lines.


Hello Steve,

Do you have a stock answer for a band working with you that might hope that you like their music, but you don't?

(or is there some other ethos you hold that deals well with an engineers musical taste & being in the hot seat for a bands recording)

Is musical content to you as engineer:
moot?
An unexpected bonus if good?
Unimportant?

How do you "approve takes"? Do the band have to decide or do you help them with that..

Thanks

billdooley

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Re: The Studio as a Business
« Reply #9 on: December 28, 2005, 09:30:03 pm »

Obviously, it's not "all about the money."

It's never about the money, but it's usually about the amount of money.

Bill Dooley
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electrical

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Re: The Studio as a Business
« Reply #10 on: December 29, 2005, 03:51:59 am »

Jules wrote on Wed, 28 December 2005 21:16


Do you have a stock answer for a band working with you that might hope that you like their music, but you don't

When I'm working on a record, I seldom form an opinion about whether or not I like the music. I don't even think about it, and I believe it is unproductive to think in these terms. There's plenty of time for that once it's finished.

My job is to do a good job on whatever walks in the door, not just those bands of which I happen to be a fan. My taste in music is pretty fucked-up, and it would be a mistake to even allow my tastes to enter into the process, or I would have bands bring their normal music in here only for me to fuck it up to suit my tastes. I think it is a matter of professional obligation for me to suspend my tastes while I'm working for someone else, so that I can come to learn what it is they like and want out of their music. My tastes don't (or shouldn't) mean a damn thing.

There's an analogy I've used before, and I like it, so I'm going to use it again:

I don't think it necessary (or appropriate) for a gynecologist to get turned-on by every vagina he is faced with. I think he needs to have a different relationship with the vagina. I think engineers need to have a similarly-distinct relationship with the music their clients bring to the studio.

Quote:

How do you "approve takes"? Do the band have to decide or do you help them with that..

I usually ask them what they think, and they decide. It is extremely rare for a band to be unable to form an opinion of their own music, once they understand that they're allowed and encouraged to do so.
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steve albini
Electrical Audio
sa at electrical dot com
www.electrical.com

electrical

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Re: The Studio as a Business
« Reply #11 on: December 29, 2005, 03:53:19 am »

billdooley wrote on Wed, 28 December 2005 21:30

Obviously, it's not "all about the money."

It's never about the money, but it's usually about the amount of money.

Bill Dooley


Bill Dooley! I refute your flippant remark! It is funny, yet I refute it! Take that!
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steve albini
Electrical Audio
sa at electrical dot com
www.electrical.com

jason goz

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Re: The Studio as a Business
« Reply #12 on: December 29, 2005, 06:35:33 am »

What about the work life balance?,I worked six days a week for five years(about 70 hours) trying to get things off of the ground,After wihich time i trimmed things back to five days a week but i still struggle with the work/life balance.I should be at home now but i popped in to cut a couple of dubs for a client.How does everyone else mananage this in the long term.
Jason

electrical

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Re: The Studio as a Business
« Reply #13 on: December 29, 2005, 11:34:01 am »

Jason Goz wrote on Thu, 29 December 2005 06:35

What about the work life balance?,I worked six days a week for five years(about 70 hours) trying to get things off of the ground,After wihich time i trimmed things back to five days a week but i still struggle with the work/life balance.


In general, I work 7 days a week, and have for the last 15 years or so. Days off are only due to unavoidable gaps in scheduling. The more days I work, the more money the studio brings in, and the better chance the business has to survive. This business essentially is my life, and I don't make a distinction between the two.

As an experiment, I have tried to give myself one day off a week for the first six months of 2006, and this has proven really difficult. Since any band that's travelling here (especially internationally) is being asked to grant quite an indulgence if they are here for a non-working day. Also, weekend days are the most in demand, so I had to settle for taking Tuesdays off. This is okay with me, since Tuesday is poker night.

Knocking one day's income off every week is what really worries me. It's conceivable that this alone might drive the studio into the red, in which case I will have to go back to working every day.

I have not been able to manage the bookings to give me every Tuesday off, but I am trying to lighten my schedule slightly. We'll see how it goes.
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steve albini
Electrical Audio
sa at electrical dot com
www.electrical.com

Bmbch

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Re: The Studio as a Business
« Reply #14 on: December 29, 2005, 11:59:50 am »

electrical wrote on Thu, 29 December 2005 11:34

 This business essentially is my life, and I don't make a distinction between the two.


Though not the same, but similar, my work is my life. When my lovely girlfriend asks what I want to do on a weekend and I excitedly blurt out something label-related, I am occasionally met with the stink eye. Slow to realize the question was more about what we wanted. You know?

My girlfriend is a very ambitious woman who has personal pursuits that keep her quite busy. There's not a lot of "what about us time" difficulty, but my single-mindedness is too strong at times. Those are the days when I come off as a selfish ass.

So let's forget about In Utero for a minute and talk about our lovely partners. After 3 weeks of non-stop engineering, and you're on the receiving end of the stink eye, what do you do?
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