Article Database

The Rockers Are Rolling in It

America's young are showering more than adulation on their favorites. There are at least 50 rock superstars whose incomes make Harold Geneen's look like small change.

WE HAVE NO IDEA what Margaret Mead may make of this. It may rep­resent the greening of America. It may represent the creaming of Ameri­ca. But the fact is this: The fastest way to become a millionaire these days in these United States is to be­come a big rock 'n' roll star.

One statistic sums it up: FORBES estimates that at least 50 music super­stars are currently earning between $2 million and $6 million a year. These stars, 35 individuals and 15 additional groups, make from three to seven times more than Harold Geneen, the highest-paid executive in the country, makes. That's 50 super-Ge­neens as far as relative earning pow­er is concerned.

A few veteran pop and country singers are music millionaires: Andy Williams, Johnny Cash and Buck Owens. However, for the most part the big earners are youthful perform­ers like Alice Cooper, Elton John, the Rolling Stones, Sly And The Family Stone, Chicago and on and on. They're not just new-rich. They're kid-rich, some as young as nine-year-old "Lit­tle" Jimmy Osmond, none older than 38-year-old Elvis Presley.

Who Deserves It?

"It's ridiculous," says Johnny Ma­this, who made $1 million a year when he was on top in the Fifties, and still nets $500,000. "Performers aren't worth this kind of money. In fact, nobody is."

Jerry Wexler, Atlantic Recording Corp.'s executive vice president, con­cedes that the numbers sound absurd. But he shrugs: "It's pure capitalism. In any field, the guy who sells the most to his followers, makes the most money."

Not so many years ago Frank Sinatra and Mathis had to strain to hit $1 million. Since then, however, record sales — -and performers' incomes — have more than doubled. Last year music lovers, who are largely the affluent between 12 and 32, shelled out around $2 billion for records and tapes, plus another $150 million to see their favorites in concert.

Why has the record business sur­passed Broadway (gross revenues: $36 million), professional sports ($540 million), movies ($1.3 billion) and network television ($1 billion)? Industry executives talk vaguely about teenage affluence, Beatlemania and the music consciousness it fostered. But that's only part of it. It's ob­vious that today's rock stars are sell­ing more than just music that the kids can hear for free on the radio.

A major record executive, who asked not to be named, has a theory: "Rock 'n' roll is music by the inept for the untutored. There is no gulf between the audience and the per­former. Every kid in Scarsdale says to himself, 'I could sing like that.' So for the kids, worshiping a rock star­ — and making occasional $6 offerings for his albums and concert tickets — ­is a way of worshiping themselves."

There's truth to this description. On balance, the superstars are the kids next door who struggled for fame and fortune long enough to get lucky. Not talent but luck is the key word. All the superstars FORBES interviewed said the same thing: It's a short step from the audience to the stage, but it's a long climb to the top. Below are three typical success stories.

Alice & Richard & Karen & Harry

Lounging in a $160-a-day Beverly Hills Hotel suite, Alice Cooper, who's a he, told of rifling girls' purses for food money and sleeping eight to a room only four years ago in another part of Los Angeles called Evil Hill. "That was before the bisexual revolu­tion," says Alice, the son of a Phoenix minister, who livens his act by singing to a live boa constrictor and chop­ping up a fake baby. "Nobody would touch us."

People wouldn't even stay in the same room. One night half the audi­ence walked out. "That's when I knew we had something,'' says Shep Gor­don, who began managing the act five years ago despite his age (22) and his experience (none). "I figured anybody who got to people like that could be a big star."

Gordon took Alice on the road. Audiences kept deserting Alice, and Alice in turn kept deserting hotels via the back door. By 1970 the act owed more than $100,000. But just about then Warner Brothers Records de­cided the time was right for "freak rock."

Alice's first Warners LP, "Love It to Death,'' sold over 500,000 units (or about $3 million in retail sales). A star was born.

Resplendent in high-heeled Buster Brown shoes, polka dot pants and a billowy shirt open to his bony chest, Alice told FORBES, "The idea all along was to make $1 million. Otherwise the struggle wouldn't have been worth it. I was on the road for 2 ½ years straight. Look at me. I'm 24, but I look 30."

Alice has his million. In fact, he spent $3,270 to take the cash out of New York's Manufacturers Trust Co. and pose with it to promote his cur­rent $4.6-million concert tour and his new LP, "Billion Dollar Babies."

Thumbing through photos of his money, Alice said: 'I’m the most American rock act. I have American ideals. I love money."

The Carpenters' story is all-Ameri­can, too. From the beginning, when Richard was organizing high school combos and sister Karen was thump­ing away on her drums in the bed­room, their most worshipful fans were their mom and dad.

Dad, a printer, took a second job to buy them amplifiers. Then he got them a station wagon to carry around the amps.

Nothing helped. Riots and Vietnam dominated the news. The kids wanted long-haired protesters and jarring "acid rock." The Carpenters offered squeaky-clean wholesomeness and soft melodies. RCA's record division dumped them in 1967, after which they were rejected by a succession of companies, "even the funky ones," says Richard.

Then late in 1969 Herb Alpert, who made his millions by creating the Tijuana Brass sound, signed them to his A&M Recording Co. They re­leased "Close to You," the first of four straight gold ($1 million) albums.

Their parents' faith has been re­warded — literally. The kids, now in their mid-20s, retired dad a couple of years ago and replaced the family's old $27,000 home in middle-class Downey, Calif. with a suburban dream house in a much ritzier section of the town.

Karen and Richard, who still live at home, insist that success hasn't changed them. Says Karen: "We had a typical American childhood. You might say we were spoiled rotten. Whenever we wanted something, our parents got it for us. Now whenever I want something, I just write a check. One way or another we've always got­ten what we wanted."

Harry ilsson had a tougher life. His father left home when Harry was a baby. At 15, he quit school and ran away to California.

Sipping double dry martinis through his red beard, Nilsson says he was a teenage dreamer: "I would pull the pillow over my head in some $2.50 hotel room and imagine myself taking bows before an audience. My goal was riches and fame."

His brains and a few lies landed him a bank job instead. Within seven years, he headed the bank's computer section at night and wrote hit pop songs by day.

"I remember sitting around the Beverly Hills Hotel pool discussing $250,000 deals, and then speeding to the bank, fixing my tie as I drove along. I loved the bank job. It was security. But I couldn't afford to stay. I was making twice as much in music."

RCA signed him in 1968. Finally last year, at 30, he exploded with two smash albums, four hit singles and music's equivalent of the Oscar for his recording of "Without You." He netted a little under $1 million. This year he will sign new recording and writing contracts that will guaran­tee him at least $6 million over the next few years. "Talk fast," he quipped. "Remember, my time is worth $10 a minute."

With a touch of a British accent he has picked up since buying a Lon­don flat, Nilsson says: "There is more to life than money. But money is the first plateau."

A Jackpot Pie

As those stories indicate, all a rock­er needs to make a pile is one "mon­ster" hit. Every year one or two com­plete unknowns become overnight mil­lionaires. Last year's jackpot winner was 27-year-old Don McLean, who wrote and sang "American Pie." Let's count his winnings.

Singers get a percentage of the price of every record sold. Beginners generally get around 4% of list, 25 cents on a typical LP, about 4 cents on a single. This is not as good as it sounds, because the record compa­nies usually deduct various expenses from the performer's share, including recording costs. The expenses are rarely under $25,000. So if an LP sells only 5,000 units (which is not unusual for a dud), the artist ends up technically in hock to the record company for $23,750. At 100,000 records he barely breaks even. The leverage, however, is terrific. At 200,000 platters, assuming moderate expenses, the artist can get around $25,000. At one million copies, he can come out with around $225,000 — on a single album.

What it boils down to is that most rockers starve, while a handful of superstars roll in money. For the more records a star sells, the higher the royalty he can demand. Some super­stars get up to 80 cents per LP (a so-called 16% deal).

McLean, a middleranker at around 10%, reportedly sold 4.5 million "American Pie" singles and 1.8 mil­lion LPs to net around $1.1 million. That's just for his singing.

There's a lot more. Like most cur­rent artists, McLean writes his own songs (something the Sinatra genera­tion almost never did). That entitles McLean to the standard writer's royalty of a penny per cut, or 2 cents per single and 12 cents per LP. More­over, he owns a half share of his pub­lishing copyrights, which provides another penny per single and 6 more cents per LP. In all, writing and pub­lishing royalties have yielded him about an additional $460,000.

Now add around $200,000 for for­eign record sales and broadcast royal­ties, and you get a grand total of $1.6 million. His manager gets at least 10% of that; so does his booking agent. But that still leaves McLean at least $1.2 million!

"Two years ago," says a Los Angeles record executive, "he used to sit in my office barefoot."

(McLean's record company, the United Artist Records subsidiary of Transamerica Corp., did even better. After artist royalties and overhead, promotion and distribution expenses, UA ought to be clearing 20 cents per single and up to $1 per album.)

There are several "American Pie" hits every year. Sinatra probably never sold 1 million copies of any of his LPs. But that was yesterday. To­day six Warner Brothers artists alone sell 1 million copies of just about everything they release.

So far Carole King has sold 6 mil­lion "Tapestry" albums in the U.S., plus another 3 million worldwide. Despite a low royalty — of, say, 35 cents per LP — she has netted well over $3 million. The Beatles probably made much more on "Abbey Road." So did Simon & Garfunkel with "Bridge Over Troubled Water." Paul Simon's writer royalties on that title song alone are said to approach $750,000, and may net him another $1 million during his lifetime. When FORBES called Simon to check these estimates, he said only: "I don't want to discuss business. It doesn't interest me." Not any longer it doesn't. Simon is a multimillionaire.

More To Come

Having a hit record, furthermore, is only the beginning. It creates fans all over the world — no exaggeration­ — who clamor to see the star in concert, in movies and on TV. The artist gets all this outside income; none of it is shared with his record company.

Concerts can be extremely profitable. Most of the superstars FORBES studied earn more performing than recording. Take Neil Young, who per­forms in tattered denims. He sells out 10,000-seat sports arenas at $5 to $6 a head with ease and walks away with around $18,000 a night. Young will clear nearly $2 million for him­self from his current three-month tour, even after paying his back-up musi­cians $100,000 each.

No other type of performance — be it starring in movies, a TV series or nightclubs — can touch the concert game. Indeed, in comparison to con­certs, playing Las Vegas is like en­tertaining at a bar mitzvah. Elvis Presley commands one of the fattest fees in Vegas, some $150,000 for seven nights' work. Last summer at New York's Madison Square Garden, Elvis netted close to $400,000 in just three nights.

Moreover, smart rock acts film their concerts and turn out feature-length motion pictures and one-shot TV spe­cials. Elvis apparently netted well over $1 million for a one-hour con­cert that was beamed live last winter via satellite to most of the world.

As if all this wasn't enough, mer­chandising can be a bonanza, too. Take a teenybopper idol like the Par­tridge Family's David Cassidy, who at 22 is getting a little long in the tooth. (Query: Is it age, or the way he smiles?) He has earned untold thou­sands for years on T-shirts, "love kits" that contain a few photos and a secret love message and, of course, bubble gum. Now acts with older fans are jumping in. Alice Cooper is selling cosmetics for men. His "whiplash mas­cara" is a natural for the guys who attend his concerts in capes, eye­shadow and glitter. And the Rolling Stones want to tie up with a man­ufacturer to sell Rolling Stone beer and wine. You can imagine the ads: GET STONED.

Doubling Up

Add up all the outside sources, and you can see why the biggest acts can easily double their record income and earn between $2 million and $6 million a year. FORBES couldn't verify any current annual incomes above $6 million. But Alan Livingston, Cap­itol Records' former president, esti­mates that at their peak in 1967 and 1968 the Beatles earned well over $10 million a year. Some say it was more like $20 million.

Okay, the kid next door, after years of sacrifice, becomes a superstar. What does he do next? He runs to the phone and calls his record com­pany president. To thank him? Guess again. The star whispers that he's losing his voice. Unless his royalties are doubled, he says ominously, he may never sing again.

Ethics? The sanctity of contracts? Millions of dollars are up for grabs. There's no time for niceties.

The president could hang up. Most artists sign for five years or ten al­bums, whichever comes last. That way, a company could lock up an un­cooperative act for life. However, the company is in business to sell records, and if the act is really that big ... well, okay.

Alice Cooper got a 35% boost to about 55 cents per LP after his first Warner's album. But Alice had to sign a new contract, obligating the act to five more years and ten more LPs.

"It's volunteered slavery," says a rock manager, "except the slaves get to ride around in a Mercedes."

How much can a hot act demand? There are no limits. Columbia Rec­ords claimed that Sly And The Fam­ily Stone still owed several albums under a 1965 contract. Nevertheless, last fall Columbia President Clive Da­vis handed the group $1 million for the first LP of a new deal. No act has ever gotten so much for so lit­tle product. Since then, police have arrested Sly (né Sylvester Stewart) twice for the possession and sale of dangerous drugs.

Now it's rumored that Bob Dylan, the lost voice of today's lost genera­tion, is seeking that kind of money to come back and record again. Is an aging legend, who never sold like Sly or the Beatles, worth $900,000 an LP? A top record executive stroked his chin and said: "He might be worth more."

Outer Limits?

As we said, there are no limits. Livingston notes that Benny Good­man, Nat King Cole and the other giants he negotiated with at Capitol were nowhere near "as unreasonably tough as today's anti-Establishment rock stars. They don't want anybody to make money on them. They want it all." At the same time, the record companies are now run by gamblers who seem willing to pay anything — ­indeed, to do anything — to land the next Beatles (who sold a half-billion records).

Steve Paley of CBS' Columbia Records, William Paley's son, says: "This business is amoral. If Hitler put to­gether a combo, all the top execu­tives would catch the next plane to Argentina to sign him up."

A few months after the superstar gets his first "monster" (and has re-negotiated his old contract), the mon­ey starts pouring in like water through a faucet. The dollars overflow the tub. More than likely, the dazed entertainer grabs a bucket and starts throwing the stuff out the window.

"It's so much money that it can become funny money," says Jerry Ru­benstein of Segel, Rubenstein & Gor­don, a respected financial counselor based in Los Angeles. "We've seen performers run through as much as $3 million a year."

His clients are kept on budget. Rubenstein claims that four of his 40 performers, including Neil Young, are set for life, thanks to a tax-sheltered pension plan and a series of apart­ment house and shopping center pur­chases. Young also owns a 1,000-acre ranch north of San Francisco. Others with expert advisers are in good shape, too.

Rebellion Money

None of them, however, has done anything exciting with his money. All they've tried to do so far is ac­cumulate what they call "[bleep-] you money," a sum so large that no­body can force them to do anything they don't want to do. Once they have that, the young millionaires may branch out like Buck Owens, the crafty country and western singer.

When Owens' money started roll­ing in ten years ago, he expanded his music publishing interests by signing other young country stars like Merle Haggard and Susan Raye; bought four profit-making radio stations and syndicated his own weekly TV series. He owns the TV tapes, and in 1980, under an unusual arrangement, he will get every master record he and his artists ever made at Capitol­ — some 500 cuts. He could then press his own LPs, or sell the masters to the highest bidder (and pay only cap­ital gains taxes). Says Owens: "When video cassettes come along, old Buck is going to make some deals." Cur­rently, the 42-year-old performer, who grew up dirt-poor in Texas, is pulling down around $3 million a year. Or as he puts it in his best down-home drawl: "I got enough money to set fire to a wet hound dog."

Financially astute superstars are the exceptions. Many are high school dropouts who don't pretend to be businessmen; they only pretend to be artists. Beyond that, they get their kicks by being disrespectful toward the money they never really "earned." For every Buck Owens, there are 20 Toy Farouks.

The Mamas and the Papas' John Phillips moved into Jeanette Mac­Donald's old mansion with his first $65,000 royalty check, and furnished it with his second. He should have installed revolving doors. The group disbanded. He moved out, and Sly, Columbia's $1-million baby, moved in. The police followed.

England's Elton John gave his agent a $38,000 Rolls-Royce last year. For his own amusement, the 25-year-old pianist has eyeglasses with windshield wipers and a $5,000 pair that light up and spell E-L-T-O-N, a string of TV sets so he can walk from his bar to the toilet without missing any action, and two cars for each foot. FORBES asked his 23-year­-old manager whether the spending ever got bothersome. "Oh, yes. 'Elton bought a Rolls-Royce three weeks ago and sold it yesterday for another one with a better color. The first was white. The new one is brown, which is less conspicuous." With a straight face, he added: "Elton doesn't waste money ... . He likes cars."

The reigning champs are Grace Slick and the Jefferson Airplane. They've managed to live hand-to-­mouth for seven years despite mak­ing millions. Their manager says: "They return from a tour, pay their bills and buy new toys. Then when they get behind again, they do anoth­er tour. It's a life style they're into. They have no investments. They've never had sufficient cash together at any one time."

Sandy Gibson, Atlantic Records shrewd press agent, pinpoints the in­dustry's fatal flaw: "There's too much money in this business. It makes peo­ple crazy. It turns Horatio Algers in­to greedy wolves."

The Payoff

In the final analysis, the super­star's rewards — riches and fame — aren't all they are cracked up to be. Time and again, both disappear after only two or three years, and the fading star is left with his tax problems and his memories, a lonely ex-performer trying desperately to impress strangers.

Fame is especially deceptive. Harry Nilsson, the singing banker, refuses to perform onstage, partly to avoid be­coming too well known. "Eventually the famous ask themselves: Why am I exceptional? And if they don't have an answer, they usually develop ec­centricities to justify their fame." Of course, that isn't fame at all; that's insecurity. All too often it leads only to hard living, hard drinking and hard drugs.

Yet, kids keep grabbing for the brass ring, even those who know it's tarnished. Take Billy Joel, a gifted young pianist who could be as big as Elton John by this time next year. He told FORBES he dreads the loss of privacy and the physical and psy­chological strain. He isn't excited about the money either — "I live pretty well now." But then he flashed his cat-like smile and said: "Still, I'm kinda look­ing forward to being a star."