IT TAKES AROUND $1 MILLION AND A WHOLE LOT OF TIME AND EFFORT TO LAUNCH A RECORDING ARTIST

Leona Naess pulled down the sleeves of her blue sweater as she paced inside a recording booth, waiting to start her six-song performance on L.A.'s KCRW-FM 89.9.

At the same time, MCA Records Marketing Director Jeremy Hammond paced inside an adjoining booth, where a sound engineer checked audio levels and MCA employees gathered to watch their newest investment perform on the other side of two thick sheets of soundproof glass.

"Come on, Leona," Hammond said, under his breath.

The stakes are high in the music business these days, with the industry trying to rebound from a several-year slump, stockholders demanding high returns, and mergers resulting in gigantic companies that seek to prioritize and reorganize most often at the expense of new, non-established talent.

As a result, launching a new artist's career in this market is about more than a catchy tune. It's about building a brand and marketing an artist so that by the time a record is released, there's already a fan base ready to buy.

"Once you've discovered someone you feel has the goods, it gets you into a passionate mood and you get the wherewithal and the mentality to take on the marketplace," said Hammond. "You want your artist's music, image, name popping up everywhere. Then you say, 'And by the way, this is the record.' That's the game."

Intense competition means companies must develop a comprehensive plan for launching each artist.

"The tendency at record companies is to spend more time, much earlier, on marketing," said Andy Schuon, president of Universal Studios Inc.'s new record label, Farmclub.com, and a former executive at Warner Bros. Records and MTV. "Today, with so many entertainment choices, TV channels, the Internet, street marketing, and other means, all that stuff gets ramped up and started much sooner, while the record is in production."

Launching a new musician can easily cost $1 million. The cost to launch Naess' career is expected to hit that mark.

Production costs for an artist's first album can range from $150,000 to $500,000. For each music video, add another $100,000 to $500,000. Marketing can cost from $150,000 to $350,000 or more. And these costs do not include special expenses, such as those incurred for joint promotions like a sample CD included with a magazine.

For a record company to break even on a $1 million investment in a new artist, that artist needs to sell 100,000 albums at $10 gross income per record. Record executives tend to shoot for record sales of a few hundred thousand, ideally hitting half a million. When attention turns to the bottom line, artists who are perceived as unable to generate that volume of sales are the first to go.

In fact, Naess could have been one of those casualties.

The now 24-year-old singer and songwriter's manager made contact in 1998 with Mark Williams, an executive at Outpost Recordings, which was part of Universal's Geffen label group. Under Outpost, Naess recorded her first album, "Comatised," which was scheduled to go on sale last June.

Due to 1998's merger of the Universal Music Group and PolyGram, several hundred local executives and artists were let go last year, the release of "Comatised" was put on hold and Outpost ultimately folded. But the head of Universal's MCA label, Jay Boberg, had heard Naess' album and placed her at MCA, which remained virtually unaffected during the restructuring. MCA took over the marketing of Naess' album, and "Comatised" is now scheduled to hit sales racks this week.

"A year ago, I was cursing (the merger). I completed the album and was waiting for it to come out last summer, and it demolished hope of that happening," Naess said. "Now, I'm thankful, because it allowed me to get better as a performer."

She also was lucky; thousands of musicians playing in clubs will never be discovered and never get where she is now.

Sealing the deal

"(Musicians) have to start with a record deal. The rest of their career depends on it," said Jay Cooper, an entertainment attorney at Manatt, Phelps and Phillips. "Their touring depends on it, their merchandising depends on it, their publishing income and recording income depends on it. But that's not easy to do."

Signing with an independent label is an option for artists who fit a certain niche, but because the big labels have the deepest pockets, they're seen as the most coveted venues for artists seeking large-scale success.

But attracting attention from the big labels is not easy. Bands can't send demo tapes to record executives; if they do, the tapes are usually returned unopened, because executives are wary of potential lawsuits over copyrights and allegations that the companies "stole" lyrics or musical ideas. That means musicians must find other ways to be discovered.

Artists can give tapes to managers, producers and attorneys in the hopes that they will hand over the tapes to well-placed contacts at record labels. FarmClub.com even allows fledgling musicians to upload tracks for artist and repertoire executives to hear. Another source of discoveries is nightclubs, which are frequented by radio deejays and A & R; executives.

"I had a tape and I thought it was sensational, but I didn't ever ask to see (the band) live," Cooper recalled. "The A & R; guys I gave the tape to asked to see them live, so about four or five companies came down to see them and they were awful! So they better be prepared to play live, and well."

Once a musician is discovered, a deal is negotiated, usually a long-term contract for five to seven albums with artists' pay given as an advance on royalties. Advances can range from $50,000 to $1 million.

"As a hypothetical, let's say we sign you and give you a $500,000 advance," said Fred Croshal, general manager at Maverick Records, the label founded by Madonna and distributed through an arm of Warner Music.

That advance is used as a starting point to determine when an artist will begin receiving royalties from record sales. Royalties earned will go toward the advance until the total amount is reached. "When you're up to $500,000, then you would actually start to make money on every record after that," Croshal explained.

Plus, certain production and marketing costs deemed "recoupable" can be added to that $500,000 and must also be earned back before the artist sees income from album sales.

While production on the first album begins, other record label departments kick into high gear.

Radio play

Beginning during an album's production, a label's promotion department will work to get a selected single on radio stations reaching targeted demographic groups. Doing so is not an easy task, as competition is fierce and station playlists are limited.

"The most competitive part is getting a record on the radio," Hammond said.

MCA executives determined that Naess' first single, "Charm Attack," was most appropriate for stations with adult alternative, modern rock and adult top 40 radio formats. Her performance at KCRW, which broadcasts out of a basement studio at Santa Monica College, was key because the station's "Morning Becomes Eclectic" show is considered a venue for breaking talent and reaches a key college-age audience.

Radio stations don't get paid to play songs, but record companies may spend $100,000 or more to get a song on the radio.

"Your radio costs are spent on tip sheet advances, advertising in Hits, Billboard, R & R; (Radio and Records)," Croshal said. "Then there's hiring independent promoters to get radio airplay, which is another major marketing cost."

Most stations only play songs from big artists on big labels, though stations looking to break talent may bend those rules and play music from independents. Stations agree to air songs based on the particular single, the label's interest in making the artist available, and relationships with record executives.

"I think playlists, particularly in recent months, have become so much tighter, because so many styles of music are popular right now," said Chris Patyk, music director for adult Top 40 station KYSR-FM 98.7.

Relationships with record companies help get a new song into that tight lineup, Patyk said.

"They'll set us up with a new artist, bring them by, perform for the office," he said. "I think that's a good way for people to get to know the artist, and you get to hear more than just the single."

Hitting the public radar

While promoters focus on radio, the marketing and publicity departments stage a public relations blitz to get their new artist as much attention as possible.

"We focused heavily on press," Hammond said, rattling off a list of mentions of Naess in publications from Jane magazine, to Seventeen, to Spin to Time.

Labels will also seek alternate ways of catching the public's eye. The Internet is a growing platform for such campaigns.

"If it's on new media, and it falls on its face, there's no harm, no foul," Cooper said. "On the other hand, if it catches on, and all the young people are listening and pass that information on, and say 'Did you hear the latest thing?,' they may get some activity. As many times as you can get the name heard and the product listened to, the better off you're going to be."

Music executives are still trying to determine how to best use online sources to market new talent.

"Until people find a regular avenue for breaking an artist on the Internet, there's going to be a lot of trying things," said Schuon of Farmclub.com. "It's difficult. It's not a focused medium, like TV or print or radio. It's easy to get lost."

As labels try their luck on the Internet, executives are also increasingly relying on grassroots "street marketing." Maverick Records used street marketing to generate interest in its recent release, William Orbit's "Pieces in a Modern Style," a collection of modern renditions of classical music pieces.

"We went out with a two- to three-month campaign to get advance music played in museums, coffee shops, bookstores, what we call lifestyle accounts," Croshal said. "We found it created a very nice groundswell. People were talking about it. We anticipated shipping about 20,000 units. We've shipped 60,000 and it's only been out two weeks, and we've scanned (sold) 15,000."

Sometimes, opportunities just fall into a performer's lap.

With long dark hair and enviable cheekbones, Naess was selected by Calvin Klein executives to participate in an ad campaign featuring hot young musicians such as Liz Phair, Shirley Manson of Garbage and Moby. The pictures of Naess appeared in Rolling Stone, YM, and Jane magazine and were paid for by Klein's camp, but MCA shelled out $90,000 to put 90,000 accompanying CD samplers in the October issue of Rolling Stone.

"It was a considerable financial outlay so early on," Hammond said. "But it was an effective way of getting the music in consumers' hands."

Executives at Jane invited Naess to participate in a college concert tour the magazine sponsored in November, an opportunity Hammond called "perfect" for a musician whose target audience is women between 18 and 25.

Taking a short break before her performance on KCRW, Naess said she's not slowing down yet.

"These are the early days," Hammond agreed.

There's still a song to place on additional radio stations, an album to sell, a video recently shot in Paris in production, and shareholders and higher-ups demanding a return on their investments.

"It's an uphill climb," said Naess. "I still feel like I'm only a third of the way there."

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