We often get asked by musicians, potential contributors or the press: “How does your process work?”
Here are the essential steps of the process in which THR provides funding for the production of CD’s. It is noted that THR might deviate a bit on a case-by-case basis, depending on the individual circumstances and/or needs of a particular project:
1. A potential project is brought to our attention by a New Orleans-based musician/band, a current THR musician/band, a fan, or any number of other ways. After an initial discussion with the artist to determine whether our business model fits the project needs, the artist and THR reach an agreement and THR puts out a call for funding for the project.
2. Once THR publicly announces a project, it generally takes 1-6 months to raise $$ from Threadheads, the band’s or musician’s fans, and/or other investors. If a project’s fundraising goals are not met, the musician/band will need to find alternatives sources of $$ to supplement the loan from THR. If such supplementary funds cannot be secured within three months after THR ceases fundraising, the project will be terminated and any unspent $$ will immediately be returned to investors.
3. Of the money raised by THR, 10 percent is deducted up front and is distributed as follows: 5 percent will go to either Sweet Home New Orleans, the New Orleans Musician’s Clinic, the Threadhead Records Foundation, or another local charity as chosen by THR; the other 5 percent goes to Threadhead Records, Inc. for overhead and administrative expenses, etc. If, for example, we raise $10,000 for a project, the musician is still required to pay back the full $10,000 even though the he/she only receives $9000 towards his/her project.
4. THR loans the money that has been raised to the musician/band for its project, subject to the terms above and below. Such loans can be considered similar to a “micro-loan.”
5. Because of the availability of sound recording tax credits in Louisiana, THR signs the checks for costs incurred up to and until completing the masters for the CD. The musician/band will write the checks for costs incurred after that (including CD design, artwork, photography, printing of CD’s etc.). To get tax credits from the state, THR needs to write the checks for the sound recording costs. (Note: such tax credits are available only for money spent in the State of Louisiana.)
6. Musicians are required to pay THR back within six months of a CD’s release to the public, or within 12 months from receiving funds from THR (whichever is first). Musicians are encouraged to begin paying back as soon as sales begin on the CD.
7. All monies paid back by the musicians get returned to the investors (from step 2 above). A note to contributors and potential contributors—the goal is for all contributors to get paid back what they put in within one year of the date the CD they have loaned money for is released to the public. However, because the return of monies to contributors is tied to a recipient musician’s (or group’s) ability to complete the project and/or to repay the loan, there is no guarantee that any or all monies will be paid back.
8. The artist/musician will need to supply THR with a copy of the Master Recording as soon as it is completed, and before the CD is released to the public. The Master Recording (all masters) will be owned by THR until the loan is paid back by the artist.
9. If the THR-supported CD is licensed, distributed, or released by a third-party record label, or any masters (tracks) are released on any compilations, soundtracks, or placed in any film, television, show, commercial, ringtone or video game, THR will receive 50 percent of the revenues until recoupment of the production loan (with no upper limit to THR); and, prospectively after recoupment of the production loan 20 percent of the proceeds until THR receives two (2) times the principal of the loan that the artist obtained from THR.
10. Starting in 2011, Mystery Street Records (a sister company of Threadhead Records) will set up world-wide distribution and release compilations and themed albums from the THR catalogue, which will focus on Louisiana’s rich heritage of music. Mystery Street Records shall be granted the right to license tracks on a non-exclusive royalty basis only.
11. Other requirements:
– Our THR logo placed on the outside back cover of the CD and on the CD itself.
– A box of 45 CDs from the artist for promotional (press) purposes. The musician is responsible for getting the CD distributed to local record stores, onto iTunes, etc. If asked, THR will assist with digital distribution onto iTunes via CD Baby and online physical sales via Amazon.com. We will also sell your CD digitally on our online digital download site at threadheadrecords.bandcamp.com. THR will keep a small percentage of such sales.
– In order to qualify for a THR loan, the musician(s) (at least one if a band) must join and show evidence of joining The Recording Academy.
12. Artists/musicians receiving a loan from Threadhead Records are solely responsible for paying any publishing/writer/mechanical royalties for non-original work used on their project.
Updated September 19, 2011