I became a music industry godfather by writing confidantes.

Chapter 063 Budget

After discussing art, the next topic naturally becomes money.

"250 million?"

Fang Lei held the album budget sheet titled "Swallowtail Butterfly" submitted by Yang Du in his hand, and his brows immediately furrowed.

"In an internal company meeting, I originally planned to budget 200 million for Orange's second album, which is the top budget for a near-top-tier singer on the market."

He shook his head and said, "To put it bluntly, the extra 50 yuan is enough for Jinshi to poach two more new talents from various universities and release two debut singles for them."

Fang Lei wasn't lying. In this era of internet traffic, many mass-produced pop songs are priced at less than 5 yuan per package.

"Director Fang, 50 yuan can indeed promote two newcomers, but the problem is, not all newcomers are like Tao Cheng. Right, Sister Hong?"

"That's right. Yang Du's words make a lot of sense; not everyone has Chengzi's abilities and potential."

Sister Hong sat up straight and began to bring up old grievances: "Director Fang, everyone here today is one of us, so I'll be frank. When Orange released her first album, the company played it safe to avoid risks, keeping the budget very tight for both song acquisition and production."

"It's all thanks to our own hard work that we've managed to get to where we are today. Now that we're doing a second major, the company has to make up for the budget losses we incurred before. 50 isn't much; Tencent spends 200 million just to buy a splash screen ad."

Fang Lei found it somewhat amusing to watch the two people in front of him singing in unison.

He knew that producers and singers were usually in cahoots when it came to budgets.

That being the case...

"Okay, let's assume the album budget is 250 million, but—" Fang Lei looked at Yang Du, "Yang Du, as the album producer, how many producer points are you planning to get? Don't tell me you don't have that idea."

In the record industry, producers receive a fixed production fee and a percentage of album sales revenue.

"Haha, you can talk to my agent about that."

Yuan Xiuqing, who had been sitting in the background, said, "The production fee is 100 million, and the producer's share is 3%."

"Very well, now let's do the math."

Fang Lei neither said yes nor no, picked up the phone on the table, unlocked it, and entered the calculator.

"Let's assume that Orange's album sells 200 million copies. Based on a retail price of 20 yuan per digital album, the total sales revenue would be 4000 million yuan."

He tapped his finger on the table and continued, "But the platform will take 30% as a channel fee first, and the remaining 70%, which is 2800 million, is the base for our revenue sharing."

"According to industry practice, Yang Du's 3% producer points are taken from Orange's artist royalties. Orange's artist royalties are 12%, Yang Du takes 3%, leaving 9%."

"What is 9% of 2800 million?" Fang Lei pressed a button on his calculator. "252 million."

"But don't forget, the album budget is 250 million, and the production costs advanced by the company will be recovered from the singer's royalties."

This is the most notorious prepayment credit system in the music industry.

To fans who are unaware of the facts, it seems like the company is incredibly wealthy and spent millions to produce albums for their idols.

But actually?

This exorbitant production cost was not funded by the company at all, but rather lent to the singer by the company, with the record company making the initial payment.

Once the album is released, every penny of it should be recouped from the singer's artist royalties.

"252 million minus 250 million leaves 2. In other words, Orange worked hard for more than half a year, recording songs, doing promotional appearances, and promoting on charts, but in the end, she could only get 2."

"Oh, right, this doesn't include Yang Du's 100 million yuan production fee. To be precise, Orange owes the company 98 yuan."

Being owed money by the company is arguably the most terrifying aspect of the prepayment deduction system.

Under this system, no matter how many copies of an album are sold, the platform takes a guaranteed 30% cut, Yang Du, as the producer, takes a fixed production fee of 100 million plus 3% producer points, and Jinshi, as the company, takes the lion's share.

Tao Cheng, a singer who had to work hard recording songs and promote them everywhere, ended up owing the company nearly a million dollars.

This is the cruelest form of exploitation at the bottom of the record industry.

The seemingly glamorous, exorbitant production costs and the grand production hype from fans are actually just financial shackles imposed on the singers.

"Sister Hong, you don't want to see Chengzi owe the company money, do you?"

The meeting room fell silent.

Fang Lei smiled and said, "A budget of 250 million for the album and a producer fee of 100 million plus 3% producer points are like two ends of a scale. If one end is too high, the other end has to be too low."

He held up two fingers: "I'll give you two options."

"Option 1, guarantee the budget, I can approve 2.5 million directly, but Yang Du's production costs must be reduced to 800,000 + 0.5%."

"Option Two: Maintain the points. 100 million + 3%, but cut the album budget to 150 million."

Which one do you choose?

Yuan Xiuqing responded first: "Director Fang, any one of the five songs our boss has submitted is a top-tier hit on the charts. The quality of these five songs alone has already saved Jinshi a lot of money from having to create songs outside. 100 million + 3% is a very fair price."

"Xiuqing, 100 million plus 3% is really too high," Sister Hong suddenly said.

This is exactly the effect Fang Lei wanted to see. When the conflict of interest came to light, the two parties who had just joined forces to ask for the album budget began to go their separate ways.

"Sister Hong, we're all insiders. Actually, everyone knows that in this era, singers don't make money from albums. Albums are just promotional films to build fame and increase status. The real money comes from commercial performances, business endorsements, and national tours."

Yuan Xiuqing continued, "As long as this 250 million is invested, by the time the album is released at the end of the year, Orange will have firmly established herself as a top-tier singer. Then she can easily land a couple of endorsements and hold a tour. What's a few million in production costs? Will she still be worried about not making money?"

"Xiuqing, what you said makes a lot of sense, but these are all future commercial premiums, that's a matter for later. Right now, the risk is something that Chengzi has to bear all by herself."

Hong Jie's tone suddenly hardened: "Of Director Fang's two proposals, proposal two can be scrapped outright. What kind of good album can you make with a budget of 150 million? The album budget of 250 million is non-negotiable."

She looked at Yang Du and Yuan Xiuqing and said, "Since the budget can't be reduced, we can't let Chengzi bear the extra risks alone. We can only ask Yang Du to lower the production fee as a way of sharing the risk."

Yuan Xiuqing was silent for a moment before saying, "Okay, we're all trying to make a good album, so we can compromise. 80 + 2% is our bottom line. But, Sister Hong, we must guarantee a budget of 250 million for the album."

"it is good."

After saying that, the two women, who had been at loggerheads just moments before, seemed to have reached some kind of tacit understanding. They turned their heads in unison, their eyes fixed on Fang Lei, who was about to drink his tea.

He glanced at the two managers, Hong Jie and Yuan Xiuqing, who were suddenly eyeing him menacingly, and then at Yang Du and Tao Cheng, who had already started discussing the album. He suddenly realized, "Did you guys coordinate beforehand?"