Team Pebbles VS. Team TLC: The Business of Music by Kyle Phoenix

I remember when TLC came out, the splash of color and energy and the hip-hop and rap and music from the first cd (Shock Dat Monkey!) then when they went CrazySexyCool it was the absolute of the total.  Then it got Fanmail and finally 3-D.  I was down, I was there I was in it.  It was good.  I actually have all four cd's in my Ipod and in my physical collection.

Recently there was TLC bio movie on VH1 about their whole rise to fame, the drama, the extra drama and the total drama.  Upfront I will say that I've only seen clips of the film so I'm writing mainly about the interviews around the movie and pointedly the business of music and the music business and the business of doing business as a creative person.

Next to gangland fights, the music business is one of the most difficult---the movie business and probably arms dealing running a close second.  The reason why is because talent is ephemeral, glitter is blinding and there are so many levels of business to the business itself.  For years there has been the TLC swirl of the three young ladies (T Box, Left Eye and Chili) not getting due pay, being used by Peri "Pebbles" Reid, LA Reid, LaFace Records, Arista Records, Clive Davis and BMG Music.  As one of the examples in a class I'm teaching, I always like to use a real life example full of known/famous folk to keep my students interested and captivated as we discern real world issues.  Also a lot of my students are African American and Latino and both fortunately and unfortunately, there's a heavy interest in singing, dancing, rapping, modeling, acting---wanting to be in entertainment.  I, as a teacher, can now point to TLC, as the main reason to get a sound education.

The gist of this multi-player drama is that TLC didn't get all they were due and everyone else got more than they were due.  After listening to and watching several interviews from all sides on this---yes, it is a mess but if you listen, can think and understand business, it's clear.  Though she can be...much in her heavy delivery---I think I understand what Pebbles is trying to explain without "breaching confidentiality"---which I surmise is a level of confidentiality or a non-disclosure profit sharing agreement that she has with LaFace records and not the term/agreement in her divorce, which is why she'll talk about infidelity but not actual royalties or payments or monetary structures.  Essentially the first cd was under a music production company's contract of New Artist---which seems to translate to mean, you ain't ballin', you just getting started---the real money is in the comeback.  I got that in just a couple of hours of watching all of these pieces to put together fairly cogent curriculum.  I also got a clear picture of the production and therefore profit train that was the inception of the group---Pebbles has a vision for a girl group, pulls together a T an L and a C and because her husband is in charge of LaFace Records as is she, they're able to fast track the group (about a year) through development to an album.  LaFace Records then packages the product and sells/leases it to Arista/Clive Davis who puts the big company push behind it and it's distributed by BMG.

The way the money is made is:

  • You or I buy a cd and essentially BMG get's the $15
  • then they send Arista/Clive Davis their cut---say $10
  • then he sends LaFace their cut---say $5
  • and LaFace first pays its bills
  • then cuts to Pebbles her managerial/development cut
  • and then she turns around and gives TLC their cut, which I would think would be maybe the equivalent of $1 in our fictional money stream.
  • From that $1, which makes the music business like a grandma with razors in her dentures---tour, band, costumes, equipment,living expenses, etc. come out of that $1.  According to Pebbles she put up hundreds of thousands---probably a shared business expense with LaFace so all of that had to be paid back first before other money was cleared to re-invest in the group.
  • In my studying and interest in business and the music business I would say maybe Pebbles got $2.50 in our example and as their manager/developer paid for everything out of that, inclusion of their salaries.

It makes sense so far.  TLC were highly visible but not paid employees.

Mind you it's not "fair" but it makes sense.

Then Pebbles explains that when it came time for everyone at the table to talk about CD #2--CrazySexyCool---she got cut out of the formula.

Which sort of makes sense too because the wheel is spinning from everything above Pebble's company, what do you really need Pebbles for?  She's kept as the wrangler but the girls, very young at the time, start to go a little whackadoo, start screwing around (with Dallas Austin a producer), setting fires, trying drugs, screwing the boss (LA Reid) just a mess of messiness.

The young women to some degree not sticking with Pebbles, who seems sharp enough and tough enough to negotiate nuclear arms treaties, got taken advantage of because suddenly you don't have an intermediary between you and the direct boss (LA Reid).   It's kind of like if you went to court and the Judge was also your lawyer---there's a conflict of interest and capability because LaFace Records in our above scenario has more of vested interest in you're NOT understanding and they also are the only accounting system between TLC and the check handed down by Arista.

 I would think that this would mean:

  • Arista has it's $10 left over as BMG pays out from purchases of CrazySexyCool.
  • LaFace Records only has to answer to itself and it's own accounting for expenses, costs, salaries, loans, etc. 
  • from that $5 they can then turn and hand TLC members 0.25 cents each.  

And what could TLC do?  You don't have Pebbles at the table, in the ring, with razors between her teeth to act as not just a person but a company (Pebbles Inc.?) to say "Nah, you hand me $2.50 and I pay out."

Now an additional word is that Pebbles still had ownership stake in the group and TLC eventually had to purchase the name TLC from her.  So I'm thinking Pebbles/Pebbles Inc. got 25% off the top of whatever came out of LaFace from the get go of her deal with them---which in our exercise would be $1.25 BEFORE anything is handed through to expenses, costumes, travel, salaries etc..
When Pebbles gets shut out, she's fine to stay out because her cut essentially comes off the largest chunk---$1.25 off of the $5.00 from the record company itself.

So Pebbles is like---"BMG, Arista, LaFace AND TLC want to shut me out?  Do you, boo?  I'm still in for 25% though I no longer have control."

Pebbles explained there was a legal maneuver that snatched them away from her---I would think it was essentially TLC was signed with Pebbles, Inc. and then after the first cd they re-signed for a longer deal (multiple cds) with LaFace directly, skipping over Pebbles, Inc..

It probably seemed both cute, smart and bitchy to do it that way to young women who were---I think---at least high school graduates but who's heads got swollen and their heads were already full of lack of education about the music business.

The reason why the music business is such a rough industry is because essentially it takes soooooooooooo many people to make it a success.  All of the involved people---the group, managers, agents, press folk, the production company, the record company, the larger label, the distributor---that's at least 100 people with all kinds of morals and agendas and levels of talent and lack of talent.  And honestly, it looks like a drip down profit system with the closest level to the artist being only a third of the profit revenue stream to divvy up.

What this is indicative of is lack of education from TLC's perspective.

One, if you don't have some college, a hundred books about doing business, a week to read a contract with someone explaining it to you---IN REALITY terms, not souping up young folk terms, that's a full scale lack of education

Two, the artist who can't do business, needs to buy some lube for the screwing.

Sadly, I've had several students who think cute and being able to carry a note mean that you'll be rich.  Probably not.  In fact in the age of lack of development (that Pebbles was providing---and you need a piranha like Pebbles in your corner as an artists---I mean piranha in a wholly appreciative way) you won't have the mentorship and protection to excel.  If you can't read a balance sheet, don't know what EBITDA is, where to put money, compound interest, etc....I guess you end up having financial woes like TLC and Toni Braxton who was also with LaFace.

A question came up---do I fault LaFace?  I think people of color apply an expectation of solidarity to people of color just because we share similar melanin.  No one ever coincides their singing and dancing with stopping into Barnes and Noble every week to buy and read a book on the business they're in.  That lack of knowledge and financial education disparity is only going to grow wider and wider as time goes on.

I want to thank my students for suggesting things in the news to look at through a business lens and be sure to drop me a line or additional questions!  And yes with another business post I'll explain how royalty structures and licensing works!

Thank you for reading and if you liked this check out the other blogs or one my books on,

Kyle Phoenix
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