KORN will officially complete its innovative two-album deal with EMI/Virgin Records with the July 31 release of the band's eighth studio effort, "Untitled". The band signed with the label in 2005 and was given a $25 million advance in exchange for EMI/Virgin obtaining a 30 percent stake in KORN's merchandise and touring revenue, areas previously off-limits to record companies.
In the latest issue of Billboard magazine, KORN frontman Jonathan Davis offers more details about the record deal.
"This is the only way I can explain it," Davis says. "Epic: 'Here's your money. Make a record and we'll put it out.' Virgin: 'Here's the money, make your record, put it out, and we're going to help you booking tours, and we're going to make sure this shit is in the record stores when you come through, and we're going to make sure that this is here and this is there and that and that.'"
The numbers seem to be working out in all partners' favor so far. Davis says roughly $10 million of the EMI money was structured in the form of a traditional album advance, leaving EMI's 30% buy-in valued at about $15 million. So for EMI to recoup their investment on the deal, Billboard estimates that KORN needs to generate in excess of $50 million in profits during the five-year life span of the pact.
To date, Billboard projects it has generated around $15 million on the sales of "See You on the Other Side" (based on worldwide sales of about 2 million units and estimating a net of about $7.75 per album after manufacturing and distribution costs, based on an $11.45 wholesale price).
The band has also pulled an estimated $4 million after fees from additional sales of digital downloads, ringtones and the "Unplugged" album. On top of that it has netted a projected $7 million-plus after expenses in touring-related revenue from the 2006 Family Values Tour and a 20-date U.S. theatre tour and selected European dates that grossed more than $11 million in box-office receipts.
Tour sponsorships and merch pulled in another estimated $2.2 million. That leaves the band still needing to earn another $20 million-$30 million in profits by 2010.
If its next album repeats the sales of the last (2 million units worldwide), and the band posts numbers on the road similar to 2006 (50 dates grossing around $11 million), it should come close to break-even by the end of this new album cycle. That's before any additional nontouring/non-CD revenue is factored in.
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