Are Reissues Cash Cows?

Recently, Punk News posted an item that Bad Religion was reissuing all of their albums, 15 in all as a vinyl box set. On said website, a member of the .org community posted, with eloquence that only the internet allows for, “Bad Religion loves money”. You can read the exchange that followed by clicking the link. I wrote to the argument:

That equals $600K in generated income. If you assume that each of these costs about $80 dollars to make you are looking at $360,000 profit for label and band. Split that six ways (assuming it’s an even split) that’s $60K for all parties involved. This isn’t a dis, but just putting some (assumed) perspective on it. Most people don’t even make $60K a year.

This is based on a list price of $200 dollars per set for a pressing run of 3,000 sets. Not an astronomical amount of money. Later on down the line another user said this about my comment:

That’s a pretty naive way of looking at a cost breakdown. Manufacturing costs (the $80 in your example) represent a tiny portion of the cost of doing business. Take the iPhone which has, for example, $200 worth of materials in a $600 phone. That doesn’t mean Apple clears $400 in profit each time. There are many, many sunk costs which have to be amortized over time. In the case of something like this, there is any licensing costs to the specific labels, producers, songwriters, performers who aren’t in Bad Religion any more. There were at least 14 members of Bad Religion over the span of 30 years, not including producers, etc. Last of all, even if they individually cleared $60K, that’s about $2000 per year. This is a 30-year history, it’s not something that can just be released every year.

Now, before we go further, this is not me trying to one up some dude on the internet. There are some good points here that my initial post doesn’t address. Basically, this whole argument got me thinking about music and money, which I do quite a bit these days. So I first responded as such:

Actually, I’d say that overall costs are pretty low. Depending on their various deals with majors and producers, it may not be totally accurate but I’d say it’s a pretty sound hypothetical example. One person said this was a cash grab, and in a sense it is. Bad Religion is re-releasing, mostly available music (everything but Into the Unknown) at price that is not equivalent to the lowest amount available, which would be $9.99 on iTunes most likely. All of this music has been available and has been bought hundreds of thousands of times over.

Most of the producers have probably been paid already. Most probably don’t collect points on records like this. Most independent producers don’t ask for points, but get paid in cash, in full at the time the session is completed. Most of the licensing on Major Labels (if Bad Religion is dumb enough to not own their masters, something I doubt Graffin and Gueterwitz would do) is already paid for. All other albums have been paid for in full I am sure. Advertising costs are minimal at best, probably a posting on their own web site, which is probably already covered in Epitaph’s budget and word of mouth press releases which is covered by web sites like this, at their cost.

Further, it’s an AVERAGE of $60k between five bands members who were in the band at any given time, but lets face it, most everyone post-Recipie for Hate that joined this band was a hired hand to which, realistically you have four core members, Graffin and Guerwitz  (who will both probably reap all profits because they share or own all song writing and publishing of the music most likely) Heston and the bass player whose name escapes me (Jay Bentley). Anyone else who was in the band or is in the band has either been bought out, pushed out or signed a contract.

The only part of my argument I would call naive is to assume that they have a even split between label and band. Most likely label clears cost plus 25%. But I don’t know that for sure.

Some posters first doubted that six dollars per record for cost is a bit low. So let’s first go to No Idea Records FAQ and find United Pressing, a fairly well known vinyl pressing plant. This is my math based on their charts for 45,000 records pressed (15×3,000):

Cost of Records – $40,5000
Masters – $4,800
Plating – $2,925
Test Presses – $1,725
Labels – $1,485
Standard Vinyl – $18,000
Jackets – $22, 455
Total: $91,890 dollars or $30.63 per box set or $2.042 per record.

Mastering is covered in these figures and remember there are no pre-production costs. All of these albums have been paid for the recording, mixing, original mastering. They have all generated revenue (we’ll get to this). As for production, there are no other costs. Again, advertising for this will be pretty limited as stated. The cost of that for the label should be rather minimal. Also, someone mentioned shipping, however, the webstore indicates shipping will be added to the purchase which is thus covered by the consumer.

So, I like my $80 per set argument better, because I am not trying to shit talk here (just prove I am not naive) and assume that shipping, production of boxes and the assumption that Epitaph went for a more higher quality vinyl. $80 dollars does not seem so bad and makes up for any bad math that could probably be added here. But I want to further extrapolate on this. First of all, I mention that many of these albums have sold in the hundreds of thousands of copies. So lets assume that all albums prior to 2000 were financially successful as this was before the internet (we’ll get to that). According to Wikipedia, Bad Religion has sold 5 million records world wide. Lets assume that these retailed for a total of $10 a piece. I think we can agree universally that this is fair and accounts for fluctuation in the market place in the thirty years they have been a band. This is a Gross Income of $49,950,000 over 30 years. So we can assume, that should they not have entered into any crappy deals, they’ve generated an income that could cover the $40,000 dollars in estimated totals to buy the masters back from Atlantic on four major label releases, assuming they did not already own them, and that they only licensed Recipe For Hate since it was originally issued on Epitaph. Further we can assume the earlier part about the production of early albums, payment to engineers and producers etc has, at this point been covered and this box set release is not going to pay out to any of these people, including management.

There are a few more points however I think worth mentioning. First, Napster was introduced in 1999 and effectively changed the game. One might assume that the releases from 2000 on (The New America, The Process of Belief, The Empire Strikes First, New Maps of Hell and The Dissent of Man) under performed the other albums. However, a look at chart rankings actually have some of the later albums doing better. This could be do to the fact that music sales over all are down and Bad Religion is a trusted brand. But it’s possible that one or more of these albums did not break even.  So the band, mostly self sufficient at this point, made bigger profits and suffered more personal losses on these albums.

Secondly, a Post Mr. Brett (Gurewitz) Bad Religion has had only two further members, Brian Baker and Brooks Wakerman. Neither of these members are generally counted as song writing contributors. Prior to this, surely the financial interests of the other members have been settled by contracts or buy outs. Gurewitz and Graffin are the main song writers, who most likely own the publishing rights to all the songs by Bad Religion ever released. So The $60,000 profit per member continues to be generous because, at this level, most non-writing members are essentially touring members and are generally only compensated on the road and for studio time, most likely at the union rate. Again, it depends on the contracts that have been signed (probably during the Atlantic days) between the members. My original argument gives Graffin and Gurewitz the benefit of the doubt that they pay at least Bentley and Hetson equally. We can probably split that last $60k between Wakerman, Baker and former drummers Bobby Schayer and Pete Finestone. That’s about $15k each. Which, admittedly sucks if they aren’t getting money from touring, merch or don’t have other jobs. Also, I doubt Baker is getting much Minor Threat or Dag Nasty money.

I think, though not explained initially, I have fully assumed the prior costs to these albums and profits based on some agreeable, public information. The math of the cost of each record may be totally shit, but by my calculations, $80 cost per box seems reasonable, even if you assume other, unseen costs Epitaph put up. My initial figure of $360,000 was the net profit expected from this. Also, I generally operate under the assumption that people don’t even pay for music anymore. I can imagine a ten year output that has slowly declined in revenue potential for Bad Religion because their own fans are probably thieving crooks. Do the members of Bad Religion and Epitaph deserve to make up this revenue by offering what is, after all, a pretty nice package to die hard fans? Absolutely. Vinyl seems cost effective and this will sell out. Also, the appeal of having an out of print album is pretty enticing, especially for collectors and completists who did not have an opportunity to purchase this album initially.

Bad Religion, I am sure, was fairly compensated from the sale of five million records over the last 30 years. All told, they probably live very comfortable lives and hopefully they will generate enough income off back catalog sales and touring that when they finally retire they won’t be worrying about if their 401k sunk in 2008 or if someone cleaned out the pension plan. Does reissuing albums on vinyl and charging $6 dollars over the average retail price seem a little much for an active, touring band? Perhaps. I mean, I won’t be buying this. I haven’t bought a Bad Religion album since Recipe for Hate and last time I saw them live, I got in for free. So it’s hard to call this a sell out, but they could probably shave $20-$50 bucks off this set and still feed their kids or pay for the bandwith for all the internet porn Graffin’s downloading, probably for free. Dick.


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