so you wanna be a rock 'n' roll star?

when the head of Fontana Records goes to bed, he probably dreams something like this: INTERIOR. AWARDS CEREMONY. NIGHT. Close-up on one table: a ring of smiles. An alabaster-toothed ex- Radio 1 DJ (clearly bored) takes the podium. DJ: "And the shortlist for Best British Newcomer is: Soda, Lamb and the Mystics. The winner is ..." At this point the dream dissolves in the light of reality. Soda, Lamb, and the Mystics are Fontana's newest signings, and the chances of all three becoming stars are minute. But some element of this dream may come true. Fontana is, after all, part of Polygram, one of Britain's four major record companies. A lot of money rides on these young acts.

Soda are five young lads from Hull. Three still live with their parents. Their bassist, Liam, looks like a vampire and writes the songs. Stuart, the lead singer, wears shades indoors and puts teenage girls' hormones in a stir. They're an indie guitar band with a dash of bubbly (soda) pop.

Lamb are from Manchester. But, hearing Louise's ethereal vocals, you'd be forgiven for thinking they came from Bristol, like Massive Attack or Portishead. Louise used to take pictures for Select magazine. Andy was a studio technician and DJ. They have few illusions about the music business.

The Mystics - Sam, Kate, Woodie and Matt - are a volatile garage band, once considered almost unmanageable. Based in Oxford, they've an ear for US pop. NME calls their new single "fair-to-twiddling guitar chugarama ... neurotic and quite fine with it".

What will that elusive album deal mean to all these people's lives? Why them out of a million other hopefuls playing pubs and clubs around the country?

One thing certainly unites all three: they were signed very early. A decade or two ago, a band might spend years honing its playing before 17 drunks and a dog. Then, finally, a deal: proof that persistence mixed with talent pays. In the Nineties, however, that scenario's as rare as an Our Price that doesn't sell Oasis. Richard O'Donovan is one of Fontana's A&R (Artist and Repertoire) managers, responsible for signing and developing new talent. He unearthed Lamb - after a tip-off from a journalist and mutual friend - just a couple of months after they formed. They had never set foot outside the rehearsal room. The Mystics he saw at their second gig.

"England," O'Donovan says, "is A&R frenzied. Anything good, and most good A&R departments will know about it within two or three gigs, sometimes earlier. With Menswear, for example, A&R people were at their first gig. Because the British music press is so early on bands, many now have a certain profile before they sign." In addition to the labels' talent scouts out "trainspotting" every night, almost everyone fancies themselves as an amateur A&R exec - promoters, studio technicians, DJs, even other bands. Together they form a huge whispering machine dedicated to finding the goose that will lay the golden egg.

"For the first time since the Sixties, the Next Big Thing syndrome has resurfaced in Britain," says Steve Lamacq, who presents Radio 1's influential new-music show, Evening Session. "It began in the Eighties with the Madchester scene, and has continued into the Nineties. A&R is based on paranoia. There's a lot of pressure on A&R people. Labels are aware that if they don't get in early and snap bands up, they'll have to pay a lot more later."

But making the wrong signing is even more expensive. It can cost up to pounds 500,000 to propel an act through its first album and tour, a sum that explains why A&R men are notorious for hunting in packs, looking to their peers to validate their taste. (Hence the joke: How many A&R men does it take to change a light-bulb? I don't know, how many do you think?)

Like many, the fight to sign Soda became a bunfight. Word of mouth grew over a year. They acquired the same manager as Shed 7 (enough to create interest on its own), supported Blur at their "secret" Camden gig, played with Supergrass and The Bluetones. By the time Soda played in Bath last spring, 60 record executives were on the guest list. Then came the showcases, unpaid gigs for interested labels.

"A different company would come to York each day," Liam Maloy says. "People would fly in from Los Angeles. We set up the gear at Stuart's parents' pub, playing almost every day for a month. It was the weirdest thing."

The Mystics had caught the zeitgeist perfectly. First, they were part of the lively Oxford scene (like Radiohead and Supergrass, whose album the Mystics' Sam Williams produced). And, second, they originally had American management and a certain transatlantic appeal - very attractive to companies slowly realising that, although Britain likes Britpop, America hasn't the foggiest what Damon and co are on about. Like Soda, their signing was also a classic "chequebook chase".

You might think new bands, over-awed by this level of attention, would be lambs for the slaughter. It is, Steve Lamacq says, a real danger: "Acts are being signed so early, they haven't the experience. The major labels can make any deal sound attractive." Perhaps. And yet none of Fontana's three new acts seem to be dupes. Take Soda again. One minute they're on the dole in Hull (or, in Liam's case, working as a school secretary), the next they're taking a break from filming a video to say things like: "In five years we'd like to see the band at a secure financial level". As a journalist, one relies on a band to make fools of themselves and slag off their label. Instead, they've apparently all been tutored by Max Clifford and Cyrus Vance. If pop rejects them, there's always the Foreign Office.

"Most musically talented people you deal with are canny, too," Richard O'Donovan says. "They understand I want something from them. I don't believe a complete naive exists any more. If someone's wide-eyed, that would be a warning to me. Some people do find it hard to become business-orientated. Having their time taken from them can also be difficult. But most bands who get signed knew they'd get signed. They knew what to expect."

So does that mean innate talent and a lack of naivety guarantees a young band financial success? Not quite. The thing about the record industry is that you don't need to be an ingenue to get screwed.

Leaving aside the specifics of the Fontana bands' contracts - which none will discuss in detail but all seem genuinely happy with - the economics of recording deals make compelling, if depressing, reading. The average advance for a young guitar band is around pounds 70,000 (Soda say they got about pounds 80,000). But the band doesn't get to keep this. Setting aside the 20 per cent that goes to their manager, that advance will have to pay for lawyers, accountants, studio time and their own - minimal - wages. They'll get a royalty of around 12 per cent on the wholesale price of each record.

Before that royalty is calculated, though, record companies often lop off 10 per cent for breakages - a relic from the days of shellac 78s which is, to put it kindly, anachronistic - and 25 per cent of what's left is usually deducted for packaging (that's a lot of packaging). Use a producer and, as well as his fee, he'll typically want three of your 12 percentage points royalty. All of which means your real cut is nearer six per cent than 12. From this you're required to repay your advance plus every other penny spent by the company when recording the album.

The record companies say this set-up is fair reward given the money they invest. After all, they say, if a band is dropped, no one asks them to return their advance. Others, like Bob Brimson, whose firm manages the Mystics as well as Echobelly and XTC, are less sanguine about some companies: "My father was a folk singer. He made nine albums, and I grew up watching him being ripped off by one bastard after another. That's why I went into management. You couldn't get away with it in any other sphere of business.

"When the guy from Jamiroquai did Top of the Pops, he had to borrow the bus fare home. There's simply no wedge in it. Even your road crew earn three or four times more than you. The only consolation is you're more likely to get laid, but even that's not guaranteed. I always say to young bands: 'If you want to make money, open a shoe shop'. The record company loan you your own money and expect you to be grateful, just so you can function long enough to earn them a pile. As soon as you can no longer do that, you'll be dropped.

"One in 50 groups make so much they keep some for themselves. But most never do, because every time you tour, every time the company sends a taxi, every time you buy new guitar strings, you have to sell an album to bloody well pay for it. There is money in writing songs. The Mystics all write - that's different. But most people in bands don't, so they'll never earn a penny. They're on a paid holiday until it finishes."

Inevitably, the considerably more than $64,000 question is: will Fontana's young pups thrive or be put down? Look at it this way: getting a record deal is less like winning the Lottery, more like being invited to enter the Reader's Digest prize draw. Pop is fashion, and this year's chart- fodder is next year's browser-bin bargain. Someone, Steve Lamacq believes, will take a tumble: "It's 100 per cent unlikely all three bands will be at the label in three years. Any one could make it. But you'd expect one to be successful, one to be 50-50, and one to die a very swift death."

Ominous words but, faced with a unique chance to get their music to a large number of people, the young musicians remain undeterred. "You have to think of it all as a game," Liam Maloy says.

"None of us are interested in playing pubs for the rest of our lives," says the Mystics' Mark Wood. "Money notwithstanding, the sweepstake element is appealing. Some bands do sell lots of records. And, while it lasts, bands do a lot of interesting things - meeting people, touring."

"After all," Bob Brimson asks, breaking off from his anti-record company tirade for a second, "what's the alternative, really? At the end of the day being in a band does beat working in a shoeshop. Everyone should do it at least once before they die."

cess? Not quite. The thing about the record industry is that you don't need to be an ingenue to get screwed.

Leaving aside the specifics of the Fontana bands' contracts - which none will discuss in detail but all seem genuinely happy with - the economics of recording deals make compelling, if depressing, reading. The average advance for a young guitar band is around pounds 70,000 (Soda say they got about pounds 80,000). But the band doesn't get to keep this. Setting aside the 20 per cent that goes to their manager, that advance will have to pay for lawyers, accountants, studio time and their own - minimal - wages. They'll get a royalty of around 12 per cent on the wholesale price of each record.

Before that royalty is calculated, though, record companies often lop off 10 per cent for breakages - a relic from the days of shellac 78s which is, to put it kindly, anachronistic - and 25 per cent of what's left is usually deducted for packaging (that's a lot of packaging). Use a producer and, as well as his fee, he'll typically want three of your 12 percentage points royalty. All of which means your real cut is nearer six per cent than 12. From this you're required to repay your advance plus every other penny spent by the company when recording the album.

The record companies say this set-up is fair reward given the money they invest. After all, they say, if a band is dropped, no one asks them to return their advance. Others, like Bob Brimson, whose firm manages the Mystics as well as Echobelly and XTC, are less sanguine about some companies: "My father was a folk singer. He made nine albums, and I grew up watching him being ripped off by one bastard after another. That's why I went into management. You couldn't get away with it in any other sphere of business.

"When the guy from Jamiroquai did Top of the Pops, he had to borrow the bus fare home. There's simply no wedge in it. Even your road crew earn three or four times more than you. The only consolation is you're more likely to get laid, but even that's not guaranteed. I always say to young bands: 'If you want to make money, open a shoe shop'. The record company loan you your own money and expect you to be grateful, just so you can function long enough to earn them a pile. As soon as you can no longer do that, you'll be dropped.

"One in 50 groups make so much they keep some for themselves. But most never do, because every time you tour, every time the company sends a taxi, every time you buy new guitar strings, you have to sell an album to bloody well pay for it. There is money in writing songs. The Mystics all write - that's different. But most people in bands don't, so they'll never earn a penny. They're on a paid holiday until it finishes."

Inevitably, the considerably more than $64,000 question is: will Fontana's young pups thrive or be put down? Look at it this way: getting a record deal is less like winning the Lottery, more like being invited to enter the Reader's Digest prize draw. Pop is fashion, and this year's chart- fodder is next year's browser-bin bargain. Someone, Steve Lamacq believes, will take a tumble: "It's 100 per cent unlikely all three bands will be at the label in three years. Any one could make it. But you'd expect one to be successful, one to be 50-50, and one to die a very swift death."

Ominous words but, faced with a unique chance to get their music to a large number of people, the young musicians remain undeterred. "You have to think of it all as a game," Liam Maloy says.

"None of us are interested in playing pubs for the rest of our lives," says the Mystics' Mark Wood. "Money notwithstanding, the sweepstake element is appealing. Some bands do sell lots of records. And, while it lasts, bands do a lot of interesting things - meeting people, touring."

"After all," Bob Brimson asks, breaking off from his anti-record company tirade for a second, "what's the alternative, really? At the end of the day being in a band does beat working in a shoeshop. Everyone should do it at least once before they die."

WHY A LABEL CHOOSES A BAND...

Anyone who saw last month's BBC2 documentary about the "boy-band" Upside Down will have come away with the idea that the record industry is the last refuge of the Svengali. What other conclusion can be drawn from a group whose members were recruited through magazine adverts not so much for musical ability as malleability, and because they looked good posing in their thermals? Happily for British music, however, the band of Frankenstein is still relatively rare. "The idea that I can just create something is ludicrous," one experienced A&R man says. "You either do it naturally or not. There's enough talent around that we don't need to fake it." Sadly for aspirant stars seeking tips, though, he also feels that giving advice is pointless. "You're either good enough to get a deal or not." Fontana's Richard O'Donovan agrees, although he adds: "It's usually a good sign when a band does things off its own back that a record company would set up for them, like touring." So, typically, Soda and the Mystics both pressed limited-edition singles before signing and, rather less typically, The Mystics took themselves to Los Angeles to play Johnny Depp's Viper Room club. A good manager is worth his weight in gold (and will probably expect it). Finally, unsolicited demo tapes are unlikely to pave their way to a deal. "I listen to them," O'Donovan says. "But many are frankly atrocious. Sensible bands don't mail people randomly. They get an appointment."

Don't be fooled into believing record companies call all the shots. A band in demand will choose who to sign to, and the size of advance on offer is only part of the equation. "The label we signed to wasn't the one offering us the most cash," says Liam Maloy of Soda. Like Lamb and the Mystics, Soda say they were attracted by Fontana's reputation for treating its artists like artists, rather than just as "product". Every band wants different things from a contract. Soda wanted a guarantee they would make at least two LPs (contracts usually give the record the option to drop a band after each album). Lamb wanted money for a studio in Manchester, so they wouldn't have to move to London. On these kind of points are decisions made. The biggest decision, however, is whether to sign to a major label or a smaller - and poorer - indie. The dangers of jumping into bed with a major are two-fold. Firstly, the larger a label the more bureaucratic it's likely to be, and the more likely a band will be held on ice while it goes out of fashion. Secondly - and more importantly - a major label deal can be a swift way to lose credibility among pop's all-important opinion-formers. As NME cattily observed about Soda last week: "Maybe they've realised they'd be better off refusing to sign for some horrible major label the first possible chance they had, now they're watching their dreams go pear-shaped. Never learn, some people, do they?"