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RAC doesn’t get a dime when you stream his major-label debut, Strangers — here’s why

The Green Truth is an ongoing blog series that exists to demystify the financial issues that affect creators today.

With the rise of streaming services in the 2010s and the cascading popularity of singles and playlists, many music critics predicted that the 21st century would be the end of the album as we know it.

On the contrary, whether you’re an indie artist, like the Portland-based producer RAC, or a nü-folk superstar like Taylor Swift, the prophecy didn’t come to fruition. For better or for worse, the album is a financial cornerstone of an artist’s career, and now that Covid-19 has made touring and live in-person events impossible, the stakes are even higher.

While the financial ramifications of a record deal are huge for an artist, for those on the outside, and even for musicians themselves, the money trail can be difficult to follow: that may be by design. Due to stigmas in the music industry against disclosing numbers or contract terms, musicians must decide between speaking out or suffering unfair deals in silence.

For listeners, there has never been a better time to discover music. But the convenience of streaming platforms, and the rapid release cycles that follow, shouldn’t stop music-lovers from asking this vital question: just how much are artists being paid for these records anyway?

To lift the veil on the finances behind a record deal, and to better understand the issues that artists are facing today, we had André Anjos, the producer behind the electronic-pop pseudonym, RAC, walk us through the money mechanics behind his 2014 major-label debut, Strangers.

Writing the record

While most records can be listened to in under an hour, making them is a different story that often takes years of an artist’s life.

Not to mention the decades spent honing his craft as a songwriter and musician, André spent three years getting his album Strangers over the finish line.

“To write an album, you really have to write three or four hours of music to then condense it down to an album,” says André. “I mean, that's how I do it….To be honest, I don't know anybody that writes a good song every time.”

While a Grammy Award-winning artist like André could certainly speed up that process, listeners would notice the difference on the final cut:

“If I sat down right now, I could probably write an album-length piece of music in a month. Easily. Like no problem — polished and everything, but it wouldn't be good,” says André. “You have to spend the time not only learning, but progressing as an artist and just developing. You kind of need time...to grow and just become a better musician.”

The Advance

Before we can understand how much André earns from the sales and royalties of Strangers, let’s take a deep-dive into his deal with Cherry Tree, a now-defunct imprint of Interscope Records.

In his deal, André was given an advance of $350,000 upfront.

Making an album is an expensive endeavor that comes with plenty of associated costs. That’s where the advance comes in. The advance is the money that the label gives the artist to pay for all of the expenses, as well as for the artist to live off of in the meantime.

André put around $250,000 of that advance towards Strangers to pay for things like production, marketing, union, and legal costs, etc. However, that advance is far from free: In fact, before he can start collecting his cut of the royalties, he has to pay it all back. To understand why this is no easy task, we need to talk about a music industry term called “recoupment”.

Recoupment

Recoupment is the standard method within the music industry for artists to pay their advances back to their labels. If an advance is like a loan, then “recoupment” is akin to an interest-free loan payment, and it’s taken out of the artist’s cut of the album sales and royalties.

After the release of Strangers, recoupment kicked in immediately, funneling all of André’s royalties to the label to pay back the advance.

Fast forward six years later to 2020. The album is a success both with listeners and critics. Spin magazine named it one of 2014’s best pop albums, and on Spotify alone, its two lead singles — “Let Go” and “Cheap Sunglasses” — have 44 million streams combined.

In spite of all that, André still hasn't made one cent in royalties from his album.

Why? Because the album hasn’t earned enough streams or purchases to pay back the advance to the record label. And, with estimates that certain streaming platforms are paying as little as .0032 a stream, the following may come as no surprise: Not only has he not paid back his advance, André doesn’t think he ever will.

“My first album is completely un-recouped, (and it’s) never going to recoup,” says André.

Here’s the kicker: until Strangers is fully recouped, André won’t receive his cut of the sales or streaming revenue. Therefore, since it’s so difficult to make a dent in the advance, it’s entirely possible that — despite garnering millions of plays on streaming platforms — he may never receive a dime from the royalties of Strangers.

So how much has RAC received in royalties for his 2014 album, Strangers? $0

In retrospect, André considers this deal with Cherry Tree a buyout — and as he said on Twitter, “That is OK, but know what you're getting into.”

Looking back on the deal, André recalls knowing that Strangers would never recoup. In fact, because of this, André’s managers advised him to take some of that advance as payment for the record:

“I knew at the time and I understood,” says André. “My managers told me...they basically laid it out that way, like — ‘Look, it's pretty unlikely you're ever going to recoup, so just consider this a payment for it.’ But, then again, that wasn't just cash in my bank account. That was cash that I needed to pay for lawyers, pay for studio time, pay for union fees.”

In the end, after expenses, he was able to keep around $100,000 of the advance. While André acknowledges that $100,000 was “a meaningful amount of money at the time,” given the three-year album cycle, it’s hardly sustainable.

“You feel rich for a second,” says André. “I mean, yeah, you get a $100,000 check in your bank account and you're like, ‘sick!’ But really, that's (for) three years of your life.”

Looking Forward

Following his deal with Cherry Tree Records, André applied his newfound industry knowledge to signing a more-friendly deal with the indie-label, Counter Records. That multi-album deal led to the releases of EGO in 2017 and BOY in **2020.

And his learnings paid off. Because of the deal he signed — which he calls one of the “best deals in the industry” — and a shift in strategy on his part, the album EGO is already completely recouped. While BOY isn’t recouped just yet, André believes he’s on track to recoup expenses in a couple of years.

What did he do differently this time around? For one, he negotiated smaller album advances from his label ($60,000 for EGO and $85,000 for BOY) On top of that, he changed his budgeting tactics by putting 100% of both advances towards the costs of the record, especially marketing. That additional promotional budget caused the albums to perform better and recoup faster, bringing André one step closer to finally earning royalties for his music.

“I could take the (advance) money,” explains André. “But I would actually rather just put it into the album, and be like, ‘hey — let's just allocate this to marketing or something else to help the album.’ And, (Counter Records) was stoked about that because it's more firepower for them. And, you know, it kind of helps the whole situation. I recoup faster.”

While he’s switching up his strategy from inside the industry, it’s not enough to manifest the true worth of his award-winning music. The Portland-based artist is on a mission to debunk the notion that recorded music isn’t valuable. That conversation starts with Patreon, where he’s receiving support from his fans directly, and it continues with live streaming and forward-thinking tactics, like releasing music on the blockchain,

That all adds up to a coalition of listeners to help hold the industry accountable until someday, a world exists where an artist doesn’t have to fight for a fair paycheck.

“I try to picture (things from) the consumer side,” says André. “The consumer experience is amazing — it's fantastic. I can't fault people for wanting that, you know?...But I do think that there's an inherent issue with how the industry is valuing itself and valuing recorded music...the model that we have just doesn't add up."

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