Celebrities give (mostly good) financial advice don’t ask for a piano

by on April 19, 2017 at 1:44 am in Economics, Education, Music, The Arts, Uncategorized | Permalink

Here is Rufus Wainwright:

What’s the biggest financial mistake you’ve made?
Signing a publishing deal years ago and asking them to throw in a piano. I thought they were gifting me a piano, when in fact I was just paying for the piano. I was confused by the big leagues—financially, it was a no-man’s land. That happens to most musicians. They get screwed by the industry. It’s a rite of passage. Don’t ask for a piano!

Here is Lee Daniels:

What do you wish you’d known about money before getting into showbiz?
That half of it goes directly to the government. And another 20 percent goes to your representatives, so that’s 70 percent of your income right there. You’d better make some money, honey! You’ve got to put $15 of that $30 away for your retirement.

Is that what you did?
No, of course not! That was the learning experience. It took me 34 years to find that out!

It is striking that none of them refer to “The d word,” namely diversification.  (Priyanka Chopra does mention she bought land in Goa and Mumbai, and that it worked out very well for her.)  Though you also have to wonder if that is not part of the reason why they rose to the top of their respective crafts.  Rather than setting for a sufficiently happy and complacent normal existence, perhaps many kept doubling down on what might have been fundamentally unsound bets.

Here is the full piece from Bloomberg.

1 Matt April 19, 2017 at 2:06 am

There’s a strong selection bias here. A (somewhat) successful director says ‘Anytime I’ve made a decision or I bet on myself, it ended up being the right decision.’ But nobody is interviewing people who bet their futures on film-making and ended up working at a cash register at 50.

2 Jim April 19, 2017 at 3:08 am

Musicians know music, music companies know business. The musicians get screwed (or, get paid less than they would like) because they don’t know enough to avoid it. Deck is stacked in the companies favor, also–they know how much product they’re moving, the musicians don’t.
Unless you can write songs that a lot of other performers want to perform (and you retain and jealously guard your rights as the composer), and a lot of consumers want to pay money to hear them, forget music as a career. Think of it as a way to meet girls, for a brief while, then get a real job.
Goes without saying the IRS will take whatever it wants. Young musicians, being young and musicians, tend not to grasp that. They think, what I get paid is what I get to keep. Doesn’t work that way in the real world. (Or, what I was promised is what I will get…..).

3 Troll Me April 19, 2017 at 11:43 am

If you keep at it, it’s not unreasoanble to think you might at least be able to pay the rent (etc.) with essentially lots of cover gigs, while working on a variety or original material.

Even if the original material doesn’t get far, it’s a paycheck. Point is, there are a lots and lots of ways to make money in music other than being a rockstar. Most of them are just not what people envision.

After a few years or a decade, if you’re decent, maybe play 5 or 10 or 20 festivals a year of your own music and a dozen cover shows a month in whatever taverns (etc.). There are thousands and thousands of bands doing something basically like that.

4 carlospln April 19, 2017 at 3:38 am

“Musicians know music, music companies know business”

Bobbie Gentry knew both.

http://thequietus.com/articles/17223-bobbie-gentry

5 Moo cow April 19, 2017 at 11:24 am

Good link. I liked this:

“…she decided to become a success early on, and then trained for it like an athlete.”

6 DevOps Dad April 19, 2017 at 12:06 pm

I am the entertainer
And I’ve had to pay my price
The things I did not know at first
I learned by doin’ twice
Ah, but still they come to haunt me
Still they want their say
So I’ve learned to dance with a hand in my pants
I let ’em rub my neck and I write ’em a check
And they go their merry way

The Entertainer
Billy Joel

7 Axa April 19, 2017 at 6:23 am

The interviewer focuses on failures and that skews the answer.

Only one person was asked about “How do you manage your money?”, the rest is gossip not financial advice as the title implies.

8 rayward April 19, 2017 at 6:30 am

Like athletes, musicians and other celebrities earn much of their income in a few years rather than a level income over a lifetime. That means the income in the very good years is taxed at the highest rate even though, unlike the typical executive, the income will decline and be subject to significant fluctuations. The tax laws at one time included what was called “income averaging” to address a temporary spike in income, but it was deemed no longer necessary when the top marginal rates were deceased. It is a function of the “ineluctable taxable year” (each tax year stands on its own), which for musicians, athletes, and others whose income spikes for only a few years imposes a tax burden in the good years far out of line with the average earnings over a lifetime. Of course, deferral would avoid the concentration of income in a few years and taxation at the highest rates, but few get the advice to plan; or more likely, they get the advice (from agents) to accelerate their income for reasons that benefit the adviser. A few athletes do structure their contracts to defer much of their income, but they are the exception (and to be clear, deferral has its own risks). But so much for taxation, human nature plays a big part, in particular the belief that tomorrow will be just like today: if stock prices went up today, they will go up tomorrow, if my income is XX this year, it will be XX (or more!) next year. And money attracts the worst of humanity: one reads a story almost daily about some huckster exploiting a musician, athlete, or other celebrity. Willie Sutton may have robbed banks (“because that’s where the money is”), but Wall Street and every other place where there’s money is full of hucksters always willing to separate someone from his money. Greed is the mother’s milk of capitalism, and phishing for phools the sport.

9 Lord Action April 19, 2017 at 10:22 am

“Like athletes, musicians and other celebrities earn much of their income in a few years rather than a level income over a lifetime.”

Don’t most upper-income people earn that way? Certainly it’s been my experience (*), and my wife’s experience. And the churn on every top-earner list and in categories like the 1%, top decile, etc, suggest that it’s widespread.

Leaving aside one-time events like selling a business, people don’t last at the top. They rise to the level of their peak earnings, hang on as long as they can, and then subside. Generally what you have to do in your peak earning years is hard. How long can you be an eye surgeon until tort law catches up with you? How many people are left by the wayside on the way to their biglaw partnership? There are many, many former traders for every one currently employed. Which is not to say these people do badly, merely that they experience three or four earnings years that they aren’t likely to see again.

(*) I haven’t topped out, but I can look around me and I’m not an idiot. If I’m fired tomorrow or if I have another 20 years of success, those last few years will count for an out-sized fraction of my lifetime earnings.

10 JWatts April 19, 2017 at 8:45 am

Lars Ulrich Drummer, Metallica – “Touring like this is not financially efficacious…”

Nice verbiage.

11 JWatts April 19, 2017 at 11:31 am

–Shirley Manson
“Any crazy purchases in your heyday?
I have a pair of black boots, which look like ordinary boots, but you know how it is when you see a new pair of footwear: “I have to have.” A stylist had brought the boots to my hotel. I said to her, “I want these boots,” and she went, “They’re very expensive.” I said, “I don’t care.” So I get the boots. I wear them a couple of times. They do nothing for my life. Then I discover they cost $5,000. Every time I look at them, I feel hatred, but I shall keep them for life as a reminder of my own idiocy.”

She paid the Stupid Tax, but is wise enough to have learned a lesson from it. It’s only a complete waste, when you do it the second time.

12 Boonton April 19, 2017 at 11:57 am

“It is striking that none of them refer to “The d word,” namely diversification.”

I recall an interview with Woody Allen where he mentioned that he actually made more from appreciation of his NYC apartment(s) than he did for his acclaimed movies in the 70’s.

13 whatsthat April 19, 2017 at 1:55 pm

Piggy Chops buys up land in Mumbai – Wonder what Prof Tabbarok has to say about this.

Also, happy for her that she’s doing shows, but she isn’t even in the top 10 of current Indian actresses.

14 Ricky Tylor April 20, 2017 at 9:33 am

One should always work around his own thinking not others advice. As a Forex trader, I always run around my own advice, it’s incredibly easy for me to do with business like Forex. I really enjoy it to pieces with a broker like OctaFX in the corner. They have brilliant deposit bonus of 50% and is use able without any major restrictions at all, so that is really what keeps me comfortable and relaxed when it comes to working with things.

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