Martyn Ware talks about money and the musician. Make £50,000 without playing a note.
With luck and effort, making music can also mean making money. "Money?" said Martyn Ware of Heaven 17. "My favourite subject." So tell us, just how much can you make from pop music? Get out your calculators and read on.
Once upon a time Martyn Ware was in a group called the Human League with Phil Oakey, Ian Craig Marsh and Adrian Wright.
They had a manager, Bob Last. But they had no money.
Do you know what happened then, boys and girls?
"We signed to Virgin," explains Martyn. "Only then could we justify giving up what were pretty well paid jobs in computers to become 'a rock 'n' roll group'. This was about 1978, and we paid ourselves £30 a week out of the advance."
Record company advances: they're not presents, you know.
"It's basically a hard slog until you have any commercial success. All these Sigue Sigue Sputniks that you hear about getting huge advances, they're only spending money that they will earn anyway. Hopefully.
"The problem comes in spending money before you've earned it. It's not actually your risk at that stage, because the record company is not recoupable against anything except what you earn. But assuming that you want to be successful and you want to earn money, it's worth bearing in mind that you're never going to be given money twice."
Back with the fledgling Human League, however, we discover that their advance on signing the recording contract with Virgin Records was close on £20,000. There was a further £10,000 advance on publishing, too - from Virgin Music.
Now you might deduce that the Human League were lucky to have had their recording and publishing contracts 'linked' in this way: one inter-related bunch of people pushing on their behalf, surely? Martyn suggests otherwise.
"I would never recommend anybody to sign to the same publishing company as the record company, because they have the same interests at heart."
Exactly, one inter-related... "Yes, that should be good," Martyn laughs. "But if you have a publishing company that has nothing whatsoever to do with the record company, then they'll put pressure on the record company to do certain things, and vice versa. They'll keep each other on their toes.
"Whereas if they're the same they'll cover for each other's mistakes. If everything goes well it can work to your advantage: you gain the confidence of the record company because they know their money is safe. But in terms of gambling, which is what it's all about, it's a pretty poor bet. You should keep publishing and recording totally separate, I would advise that to any young band."
Also, Martyn mentions, there's the danger of cross-colateralisation. Cross what? "It means you sign a contract saying that money you owe on the recording contract is recoupable from both the recording contract and the publishing royalties, and vice versa. Which means that you may end up never earning any money because you're in debt to one or the other."
To be frank, Martyn's no big fan at all of music publishers.
"Basically, they rip you off," he reckons. "I think they're disgraceful, anachronistic entities. What do they do? You tell me. They're supposed to get you work, cover versions, film work - in seven years that we've been signed to Virgin Music, and I'm sure that they're not an exception, we've had nothing from them at all. A couple of lunches, perhaps. And for that they take 30%. That's a good deal - a lot of young groups are on 50/50, or 60/40.
"So I'd recommend any new groups not to sign any publishing contract unless you're desperately short of money. I mean desperately."
But what are the alternatives? "Yeah, I know, if somebody waves a cheque for five or ten grand in front of your face, you take it, don't you? You think, oh, it's money for old rope, this. What you don't realise is that if you start earning good money, you're going to be resentful in a couple of years when you discover that these people are taking a third of your publishing income for doing nothing. Literally nothing.
"So I'd say hold on till you've had a hit single, an album in the Top 50, or even a successful independent single, because you'll get a much better deal from the publishing companies once you've got a track record."
Heaven 17 have finally got out of their Virgin Music publishing contract and have just set up their own publishing company.
"I'm seriously thinking that on principle we shouldn't sign anybody else to it apart from ourselves," Martyn says. "It's a disgraceful way of making money out of people. For publishers there's virtually no risk at all: record companies have to take the financial risk, they put up money for recording."
Back once more with the Human League, we learn from Martyn that they had a separate budget for recording costs - quite usual in the late 1970s. Now, record companies have wised up, he says.
"The current 'fashion' is to have a contract where you're given a specific amount of money on bona fide commencement of recording of each album. But you're not 'given' it - this is the relevant point - because recording costs are incorporated into your advance. So in essence they don't give you anything. Usually the recording costs exceed the amount of the advance anyway, or exceeded on the last album so you're in debt to start with.
"So the only money you ever get in real terms is from publishing. I can't remember us ever having cash in our bank accounts directly paid from Virgin Records as an advance, because it's offsetable against recording costs. And to record a state-of-the-art album these days is not a cheap matter."
On the other hand, the first Human League album cost only £15,000 to record ("Reproduction", released October 1979). By the time the second LP appeared ("Travellogue", May 1980) the group had set up their own small 8-track studio. Virgin gave them the money to buy it as an advance against recording costs.
The group still owed money when they split after that second LP, the debts mainly due to touring costs; Martyn estimates the losses at £75,000 over two years. "It suddenly struck us that if it wasn't for that we'd actually have been in credit."
As it turned out, Martyn subsequently made a lot of money from the record that the new Human League made - after he'd gone on to form Heaven 17 with Ian Craig Marsh and new ally Glenn Gregory. How so?
"After the split, the others still wanted to use the name Human League," Martyn remembers. "So we said - and we thought we were giving them an exceptionally good deal at the time - we said, 'For two royalty points on your next album we'll let you have the name.' That album, as it turned out, was 'Dare'. Which was very fortunate."
To say the least. How fortunate?
"I can't remember, to be honest. It was a significant amount of money. I'd just be guessing. How many did it sell, five, seven million worldwide? I'd need a calculator. I probably made about 50, 60 grand out of it. It enabled me to buy a house, which was the nicest thing, and to actually see some reward for those three years of slogging around. It seemed like a just reward, considering that they were earning a lot more. And our reputation did have something to do with the credibility that they achieved, it wasn't just the fact that they were writing really good pop songs."
But now that Heaven 17 had been formed, Martyn and his two colleagues wanted to restructure the business side: "No arguments, everyone can see the accounts, and a three-way split," as Martyn describes it now. Idyllic.
Even so, there were still some compromises to be made. "For the first three years of Heaven 17 we didn't have a manager, we looked after all our own affairs. Good professional advice is certainly a lot cheaper than having a manager, but managers don't demand money, cash sums, they just take a percentage of whatever you get. Six of one, half a dozen of the other."
By and large Heaven 17 have been successful financially, though a temporary hiccup occurred with last year's "How Men Are" album, which cost the group a phenomenal £200,000 to produce. Consequently the group have had a financial shakedown and are planning to bring their new album in for under £80,000 - and included in that budget is their new Twickenham studio (24-track Soundcraft/Soundtracs package) which cost £33,000 to build and set up. "At the end of the album," explains Martyn, "it will have cost less than half the last one, it will sound better, and we'll have our own studio."
How much money can you make from successful records? I asked Martyn to give an example of income from their most successful single, 'Temptation', but he pointed out that even very big singles don't make an awful lot of money, and are still considered as loss leaders for the albums.
Singles and albums make the same percentages for Heaven 17: with their particular deals they get 12% of 90% of the retail price from their recording contract, and about 8% split three ways from their publishing arrangement.
An album would make a better example, says Martyn. "Let's take 'Luxury Gap'," he suggests. "It sold about half a million worldwide. As a rough guide, let's call the recording royalty 10% of the average retail price, which we'll call a fiver. So that's 50p. On half a million copies that's £250,000.
"Against that you've got to offset the recording costs - always the group's expense, the record company don't contribute anything toward recording. That album cost us about £120,000 to record. So, together with ancillary singles, on the recording side we've probably made a bit more than £150,000 on 'Luxury Gap'."
"We were on a 70/30 publishing deal, so we got 70% of the publishing that was due. We'll round it up to 10% of the average retail again, two thirds of £250,000 is about £160,000, split between three. Again, all these things are offset against any advances or previous debts."
So Martyn personally made just under £100,000 from the "Luxury Gap" LP. "But that's a very successful album, and not every album you release is very successful," he adds, thinking, no doubt, of "How Men Are". You've got to pay tax too, of course. And the money isn't left in a big sack on the doorstep one morning. It comes in over maybe three years (because it takes a lot longer to get royalties from abroad).
Martyn's current big earner doesn't come from Heaven 17 at all. No, the source of his really large cheques is the spectacularly successful Tina Turner: Martyn has two royalty points for the two tracks he produced on her "Private Dancer" LP. They earn him a "significant amount of money". He can't put a figure on it. "It's sold 16 million copies worldwide to date," he sighs. "She got awarded a crystal disc for it, whatever that is, I've never heard of one of them before. It must be one of the top 10 albums ever made."
And it is for Miss Turner that we must draw the interview to a close: Martyn is off to have dinner with her in the £2,500-a-week house she's renting in London's Holland Park. They'll discuss the two further tracks he will produce on her next album, which she's currently recording. Any ideas? "Lots. I've got a list of about 20 songs to suggest to her. One I'd really like to do is Lorraine Ellison's 'Stay With Me Baby', a synthesised version of that would be terrific."
'Money' would be good fun, too.
Interview by Tony Bacon