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Money in the Music Business
paulbd writes: "Electronic Musician has a good article on the economics of selling music on CDs. Its a sobering read that gives some of the hard numbers that do a little to counter
the sense of record companies being vultures. Recommended for anyone who seriously imagines making a living from selling music."
this article basically restates everything that is known about how artists are ripped off, except in a lighter note, to make it seem an un-evil act. they neglect the artist's expences, be they legitimate or not. also, the writer is a lawyer, not an economist, so some of the points might be subjective to those cryptic legal interpretations. overall, nothing new, more of the same.
. . . many people think record companies are just plain bad. Why is that? . . . Perhaps it's because of the way record companies make their money: they make it from our heroes, the musical artists.
All notions of musical parasitism aside, record companies perform the critical functions that allow artists to reach the masses.
No, musical parasitism not aside, technology has made the Big Five as relevant as buggy whip manufacturers.. Perhaps its their illicit oligopoly that offends the customers. Or just the use of that monopoly-like position to crush as much opposition as possible.
1Alpha7
Live to be Moderated
I can't wait til VA goes out of business.
This looks very much like the deal with Vulture Capitalists. You go to them, you beg for money, hoping to get rich. They get richer in the long run. Maybe you get lucky. Everyone complains.
Any thoughts on who gets the shortest end of the stick? Nerds or musicians?
http://www.mp3.com/news/222.htmli .html / a-1098-1.htm
http://www.musicalevolution.8k.com/albini.htm
http://www.negativland.com/albini.html
http://www.ram.org/ramblings/philosophy/fmp/albin
http://www.musicianassist.com/archive/article/ART
A load of total BS. Another attempt to jimmie the numbers and make it seem like the record companies aren't so evil after all. All of the numbers used for expenses are deliberately on the high side. In the end, another attempt to cover up the fact that the record companies earn enormous profits, with only a tiny fraction going to the artists.
"...an artist royalty rate of 15 percent, the record company owes the artist approximately $2.25 per unit sold."
In your dreams. Only the biggest mega-superstars bet anywhere near that much. Many artists get less than $1 per unit sold.
"However, the best opportunity for artists to make serious money is to write their own songs."
It is such a shame that music has become another talentless investment. Back in the day, people like Beethoven didn't write music because they wanted to make some cash, they loved it, and they got the crap beaten out of them by their parents if they didn't play.
Gee I would love to see N*Sync get slapped around for not being corporate hoars, and lip syncing a song because they want to be as rich as The Backstreet Boys (Pop music in all its evil).
Microsoft take the whole cut as theres no middle-man. Not only that, but they sell for $100 per unit and more. Their production costs can't be that high, and their idea of not printing manuals must save them a bit of cash. Not only that, but they can sell site licences aswell. And most people pay them for windows with out even realising it. If they were a record company, they would have about 10 artists, all of them super-stars (crappy boy-bands mostly). There would only be about 2 other record companies in the world. There would be stores dominated by rows of Microsoft label CDs selling for $100 a go.
This comment does not represent the views or opinions of the user.
For years and years, we have been forced to ingest the strongholds of said companies who search out, mold, mass produce and stamp the aproval for mass consumption. Amid the true talent that thrives, there are countless wastes of time and money that get far too much attention in a business that cares about making money and not making a statement. Which is what music was orginally intended. We all can recognise when things are done and done well. People's acknowledgement covers a varied ground of acceptability and popularity. Unfortunately, when appealing to the masses, the record companies have shot way below the bar for way too long. Thinking that a person wants/needs simplicity throughout their entire lives. It's a ball that has started rolling a long time ago. It reached it's terminal maximum speed and now it just hums along with out a care in the world. In order to maintain that momentum, record companies instill in our minds that what they do is a valid resource for the spreading of music to the masses. When in fact it takes a form of expression and turns it in to the next big thing. It's disgusting that we are programmed from the very beginnning to think that these practices are the norm and we should contribute to them blindly and faithfully. Independent music resources have, and always will be my preferred option for music that I feel can propell a mind further than most of what's available through corporate distribution.
I understand the process rather well. I also believe that the process has destroyed many good bands due to these such practices of mainstreaming what they feel should be available for mass cunsumption. By putting some thing great in front of every ones faces to digest and understand is not the best thing to do. Not all people understand the same things. Hence the diversity of music. Yet, when the lack of understanding wide spread acceptibality of all forms of music translate in to poor record sales, it means certain death for many good bands. What it translates to from there is that record companies really do not care about the Quality of entertainment made available, but more the Quantity that can be consumed.
Krama: Bigdickinyoura
It seems to me that Radio stations often determine what songs will be hits. How often have I heard songs that are plainly second rate just because they're by an already famous group?
Due to the limited number of radio stations, and the (probably very large) 'entertainment' budgets (read this as: bribe money set-asides) the record companies pay to have their leading albums played, the number of new independent and local bands played is very, very limited.
If the local bands and groups have a following from a bunch of gigs they play where people know them and like them, they will be playable locally. Trouble is, the station is typically owned by a large corporation. Strategic investment by radio media means less choice for us consumers.
Likewise, if local bands have airtime, they can make their own label and print CDs as they're needed, stocking record stores and via website sales.
-- Kevin
Unitarian Church: Freethinkers Congregate!
Although this article has nothing to do with nerds, let's look at what we've just read. - Artists don't make money until the record company breaks even. Yep, that would sound OK to me, especially if I was the record exec stumping up the cash to invest in some new talent. I run a business, not a charity. - Artists gotta pay their own legal fees? Damn right. When I set up my limited company to work as an IT contractor, I deducted the legal fees from the tax at the end of the financial year as expenses. So why can't they? - "Perhaps it's because of the way record companies make their money: they make it from our heroes, the musical artists." : Erm, uh huh. And Paramount/Warner Brothers doesn't make money from the actors? And DynoRod plumbing does make its money from the engineers they send out in dayglo red vans? - Anyone with any sense doesn't go into the music business to ensure they become a millionaire. You have to work for it - and hard. Like being a nurse, police officer or child carer - It's about job satisfaction and the fact that you want to express yourself by doing something you like doing. If you want a stable income, and a sense of job security and can do without fame, get a 9 to 5. And as a little aside, what crows me is the fact that (nearly) every rap video shows guys counting money, toting guns, wearing sunglasses and touching up bikini clad girls while driving in expensive cars through the bad neighourhoods they claim to have grown up in. If I was a record exec and saw my artists making crap like that, even I'd want to skin them for every penny too.
I run a tiny bedroom indie record label, partially to release stuff by my own band (moonkat) but also to release stuff by other bands I like. The figures in the article, while more at the high-level end of the spectrum, are entirely plausible. So, for example, no-one makes any money out of selling singles - they cost about £1 to make, I sell them to the distributor at £1.23 and all of that 23p plus more besides gets spent on publicity.
As far as albums go, yes, I could make money because I sell them to the distributor at £5, but the promotion costs are also higher, and the album has to pay for all the money I lost on the singles. Besides which, they may turn out not to be popular at all, in which case I lose all the money I spent. The band themselves have already made more money than I will - through radioplay royalties.
So far, since starting a record label 6 months ago with £10000, I have made a loss of £6000, and a further £2000 is in the form of advances to bands (so they could buy equipment) which I will may well never recoup unless they suddenly become successful.
I don't advise anyone to start a record label unless they enjoy feeling like a glorified secretary to (often ungrateful) bands.
For all you Lynxers out there
If a square is really a rhombus, why aren't all triangles purple?
The record companies certainly get a bad rap on this site (and in many other circles as well). However, we need to separate the facts from the emotion here. Record companies run a risky, speculative business, and it is a well-known fact that most of the artists they sponsor do not succeed. It is a testament to their ingenuity that they are able to make such huge profits by developing a successful formula to minimize losses on crappy bands (the 95%) and maximize profits on good bands (the 5%). How many speculators in other industries (such as real estate) can you name who are able to achieve such a high return on such risky investments?
My personal argument is not with the record companies on the basis of profit. They should be allowed to sell their wares and make money; after all, this is a capitalist world. My beef with the RIAA members is that in their zeal to increase profits, they advocate the loss of basic freedoms for U.S. citizens, in the name of "stopping piracy." The DMCA and SSSCA, as well as their continued attempts to squash fair use, spy on computer users, and shut down BearShare users are an affront to freedom and do nothing but mobilize public opinion against the entire industry. It's unnecessary, relatively unprofitable, and the public won't stand for it for long. The Ford Motor Company used to have a lot of popular support in this country before "Unsafe at any Speed" came along. And it took them years to recover from it.
If the RIAA companies would just focus a bit more on producing quality music instead of trying to control every aspect of their products' use, they will get a lot farther and probably make a lot more money. Which is fine with me.
~wally
I don't know if I can agree with that. He pointed out very clearly that a very small percentage of artists signed will even let the publisher break even, which is symphonies with the idea that the music business is very much like the venture capital companies.
So what you have is business model of taking large number of high risk investments. For the company to make money they need some of there investments to actually make a profit, which in turn means they can afford to risk money on new talent that might again prove to be profitable.
Think about it this way, a artist/talent/band/singer whatever is a company, they might make money if they we're given some venture capital, direction and marketing, but they don't know how to do any of that, so you help them out, and give the a decent chunk of change to try it out. You say
"Hey, if it doesn't work out don't worry about it, we'll take the loss; but if it does work out, before we pay you your cut we want to get our investment back"
Sounds like a darn good deal if you ask me. They give you money on faith, you try your hardest to make a decent product (album) and if it sells well you see a cut of the profits.
This is also much the same way the game industry works, however you don't hear nearly as much public outcry on how the developers get screwed even though they never get a share of the profits, typically get laid off after a game ships and for the most part get paid sub pare in comparison to there skills.
this is my sig.
This reminds me of this wonderful article that's popped up on JWZ's site several times about the economics of the music industry.
It really sucks.
http://www.arancidamoeba.com/mrr/
What does it have in common with creators of software?
"Unsafe at any Speed" was written by Ralph Nader to highlight the safety problems with the Chevrolet Corvair. I suspect you are thinking of the Ford Pinto. I understand your point, though. I was just being nitpicky.
-AC
by the retailers. Most retailers expect a 100% markup on what they sell - that is, the retailer expects to pay $7.50 to $11.50 for a CD that will sell for $15 to $22. When it comes down to it, the record companies may be greedy, but not so much as the retailers, who skim larger profit margins from the sale of CD's than do the record companies.
The society for a thought-free internet welcomes you.
do you really have to spend so much for recording? for some plastic music like britney spears and so on (and who's listening to this anyway?) - ok. but there is a lot of good music out there that doesn't need it. if it would, there couldn't be any good life concerts.
so, according to the figures, 95% of the artists would do fine if they puplished everything on mp3, and made money by touring.
plus they could still make money by airplay.
--
making up good sigs is a hard thing to do.
Records stores operate on much slimmer margins- your local Tower records works on about 25% markup. Get a clue.
God damn! A million dollars in recording costs? Half a million in marketing? Quarter of a million advance, most of which goes to management, lawyers and recording studios?
Bah. We've ended up at these insane levels of cost through a conscious choice to make products instead of music. And it's the big labels (that we're asked to pity) that have chosen to do this. That's why they're the Big Labels, you see? Smaller labels and artists (and authors and print publishers) can make a good living by selling actual art without million dollar videos and marketing campaigns.
Here's a synopsis of this article: big studios have big costs. Well, duh.
If you were blocking sigs, you wouldn't have to read this.
That distributing music is expensive is exactly why we need to sit down and think about other ways to do it. And when somebody comes up with an idea, the last thing we need is for labels to rush forward to destroy it.
Employee of Inrupt, Project Release Manager and Community Manager for Solid
Oh, cry me a river for the poor record industry. I don't suppose their problems with making a profit have anything to do with the huge number of totally hopeless acts they sign (anyone who's ever been in the promotional mailing list for a label has to wonder about what they didn't sign after seeing all the obvious stillbirths that did make it), the huge amount of money they spend at ever step of the process (refer to the famous Albini article for an account). And what about all those mob ties detailed in the book "Hit Men"? And to add insult to injury, if a band does manage to recoup on the myriad costs foisted upon them by the industry, the label still owns the master. This is like the bank owning your house AFTER you've paid off the mortgage.
Whta the RIAA tries to confuse is the fact that there are two kinds of "piracy". One of them is companies that print bootleg copies of records, which are hard to distinguish from legitimate records. This is, usually, done in industries in Asia, using mass production methods.
The second kind of "piracy" is done at home, by consumers who make copies of cassettes and CDs for their personal use, or, sometimes, for friends.
I think there is little doubt that industrial-size piracy does hurt the legitimate recording business and the artists. Those illegal records may be sold to totally unsuspecting stores and consumers.
However, the home-copying thing is much more fuzzy. I may make a copy of a CD to listen in my car, while my wife listens to the same CD at home. But this does not mean I have cheated the industry of selling another CD. I may feel that forking out $15 for a second copy of that CD is too much. In that case, my "illegal" copy brings a benefit to me, while hurting no one, since not making that copy wouldn't make me buy a second copy of the CD.
And all of the "copy prevention" methods being used and proposed are meant only against making copies at home. Industrial-grade pirates have more resources and can circumvent copy protection quite easily. If the RIAA would divert all that effort against industrial espionage and piracy, they would get considerably more return for their investment, while preserving their public image.
You have to remember (or realize) the dirty fact that the music business has almost nothing to do with music. It has to do with promotion. It makes about as much sense to complain about the music business ripping off the "musical artist" as it does to complain about the shock-absorber business ripping off the "drill-press artist" or the "rubber bushing #214A artist".
The music biz can pick, choose, or manufacture "artists" upon its whim, promote them with the guile that can only come from decades of dilligent mass manipulation - and truckloads of obedient kids will duly line up with money in hand, go shrieking to the concerts, and obliviously suck up every cross-promotional product without so much as a moment's reflection.
Please, once more for clarity: THE CONSUMER - AND ESPECIALLY THE TEENAGE / YOUNG ADULT CONSUMER - IS A FUCKING COW TO BE MILKED.
So don't be so upset that the music companies are taking all the money. They did the heavy lifting. They put out the ads. They put together the deals with Pepsi and Budweiser and AOL and Spin and Rolling Stone and MTV and the radio conglomerates to mind-fuck that band into your consciousness, and into the collective youth consciousness that virtually every teenager lives in terror of being excluded from.
So give credit where credit is due.
If you want real music, from un-exploited "artists", simply stop buying from the evil corporations. Leave the talentless, classless, unimaginative, over-produced, formulaic dreck on the shelves. Scour the net for independent work. Discover music your friends have never heard before. Find intriguing, mysterious music made by small outfits without massive distribution channels and focus-group-driven images. It takes some time to find them out there, but when you do, they are precious.
Then whip our your credit card and support them by purchasing their work. You'll get a a CD with a home-made liner inside a plain brown wrapper with your address hand-written on it. And you know what? The artist will probably get every cent you send.
The band may not even exist in a couple years, but you will always have that CD, and the music on it - a memento of your discovery.
Oh well, never mind - I think I hear them ringing the bell up at the barn. They're putting out the hay. Time for you to eat what you're given, and have the suction milkers attached to your teats.
pr0n - keeping monitor glass spotless since 1981.
Well, while a recording budget $500K - $1000K may be the "typical recording budget for an artist's first album" it seems rather high. While that may be true for the types of Britney Spears and your favorite boy band of the week (which really are just products rather than artists), you can record quality music for far less.
To give you an example: I listen to a lot of Heavy Metal. One of the more interesting bands I've come across over the past year or so has been "Children of Bodom" (for those who don't know them, they are a speed metal band from Finland and quite musically skilled; their live album puts most other bands to shame). Their first album, which admittedly was pretty rough, was recorded in 2 days. Their second album (Hatebreeder) is a wonderful symphony of high-speed power rock and melody which sounds good and was recorded in a week. While I don't know the recodring budget they had, I can assure that it wasn't anything in the $500K region.
Another example I can give is a local band here (2 of my friends play in it) which just recorded their first album. They had 4 days to do it and the studio cost them
My whole point is this: decent musicians can produce quality music on a much lower budget. You don't need 1/2 year of studio time to record your songs (provided you have written them prior to waking into the studio).
The story about music videos is similar. Artists are often required to do videos which basically puts them into more debt. So they are effectively owned by the record companies who are in effect pimping them; it's like indentured servitude.
Part of the problem is that the music industry requires expensive productions and videos as marketing tools. Where they should be more like reporters (ie: finding and covering the news rather than creating it) they have become the creators of bands which then require huge budgets to be pushed to popularity. It doesn't have to be like this.
I think I'll be putting on my asbestos suit
Apparently, Konqueror renders this page funny. At least on my machine. Here is a link to the printer-friendly version.
making people aware of your music, hopefully to the point of wanting to pay for it, is expensive.
A typical recording budget for an artist's first album is between $250,000 and $1 million.
You could build the artist their own recording studio for that, and minimise the production costs of their next album. Geez even 250 grand would be enough. Wanna guess why they don't do it that way?
But worse still, this presents the story as being awful hard on the record company. Bullshit. Lets rephrase the process...
"Yeah, you write this piece of software. We'll give you money to cover the costs of it now, and advertise and sell it for you. We call that an 'advance'.
But when we start to sell it, you'll pay us all that 'advance' back, out of your share of the profits (we call them 'royalties), and in addition to you repaying our outlay, we'll get at least three and a half times the profits you do.
If you don't cover the money you owe us, then we'll ask you to do another project, and the amount outstanding will have to come from the profits you make on -that- one. We'll also reduce your new advance, and the amount of advertising we do because you're obviously unprofitable."
free experimental electronic music netlabel at www.viablehybrid.com
This article seems like a good argument for bands pressing and marketing their own CDs, given that this is now pretty cheap & easy
" Unfortunately for them, the Napster unpleasantness has merely exacerbated that characterization."
Unfortunate for them? Yes
Guns don't kill people; Physics kills people! - John Lithgow as Dick Solomon on Third Rock From The Sun
These are the numbers that need to be reduced to make music more profitable, and technology can help.
It's time to get rid of CDs. Vorbis (or, *sigh*, MP3) or even wav/aiff, combined with HTTP or FTP can do that. And by getting rid of the middlemen, You can either reduce the price (thereby increasing units sold) or make a greater profit per unit.
As for marketing, some music (e.g. heavy metal) is already getting by with virtually no marketing at all, so spending $0 here has become a proven strategy (though some of the musicians are unhappy about it ;-). Granted, that won't get you Big Bucks in sales, but it does work. One nice thing about the Internet is that messageboards, usenet, etc. allows word-of-mouth to travel a lot further and faster, so marketing gets replaced by just having better-informed and connected customers.
That leaves the production itself, and of course the musicians' time/labor. Personal computers can replace some of the once-expensive capital (my brother just mixed a friend's recording on his Mac). There's still some equipment and expense left here that can't be eliminated, I think. But it's a start...
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
Your typical slashdot sugestion is that this makes warezing ok, so that the artists makes nothing instead of little.
That is how the current business model works. The problem is that new technology is changing existing business standards, but the recording companies choose to litigate rather than adapt.
This threatens the basic structure of American capitalism. Build a better mousetrap, and get sued into bankruptcy.
The simple facts are that record companies are becoming pointless. Modern computers can reduce the cost of recording, and distributing music to a tiny fraction of the costs listed in the article. It is then up to the artists to lever their popularity into profit through performances.
Before record companies were huge and powerful, bands made money performing. Once record companies are no longer powerful, bands will have to make money performing.
Concerts are NOT supposed to be advertisements to by records.
-Zaphod
Um, looks like the math is wrong. If the record company gets $8 of $10 for every album sold (the other $2 were the cost per of productions and distribution which it doesn't see or has to pay). then it only takes 62,500 albums for them to break even not the 86,957 stated in the article since it sais later that the artist gets nothing until the record company breaks even. Which means you don't subtract the $2.25 artists royalty per album until after the break even point which is 62,500. So the %16 percent figure is probably also wrong and could be quite wrong since if we assume the sales of albums vs. # of musicians having that sales level has a gaussian distribution this would be a nonliner increase in percentage. (Actually it's not really Gaussian since you can't have a perfectly symetrical distribution around the mean since you can't sell less than 0 records.)
It sounds reasonable, no one makes any money until every one gets their money back, and then the artists takes %28.125 of every dollar of *profit* (remember there are still marginal costs after the payoff of the up front investment.) This doesn't sound too different from the stance the venture capital people are taking in my startup. No body gets any money till all the money everybody put up is recovered.
Here's my beef. I bet that part of the problem is that the artists has no control over anyhting but the creative end (and I am not even sure about that.) I mean lets say you are a musician and you want to make an album and make money off it, there are 2 things you can essentially do to make the thing a success, 1) sell more which means spend more on promotion, and 2) cut costs, which means don't put yourself up in 4 star hotels, buy cheap time at the studio, don't spend tons of money having a party at the end top celebrate finishing the recording. But do the artists really have any ability to control any of this spending? I don't know, but I would like to know How about a slashdot interview with a record artist just on the cusp of profitability?
Eric Leach is an intellectual property and business law attorney at the firm of Goodman and Leach.
Talk about an unfortunate name for a IP lawyer.
recording costs: minimal, all done on a pc
shipping costs: about $1
manufacturing costs: about $1, all done on a pc
website fees: $14.95/mo
selling price: $10/each
profit: about $8,000 ($8/cd)
it's a hobby now, but if i can get to the point
where i sell 10,000 copies per cd (not an outrageous goal)
then i can actually support myself on cd sales alone
who needs a record company!
Comment removed based on user account deletion
Eric Leach is an intellectual property and business law attorney at the firm of Goodman and Leach.
Good Man or Leech? I think I'd like to talk to Mr. Good Man please!!
Suggested reading is Moses Avalon's "What the Reocrd Companies Don't Want You to Know" You can do a royalty calculation on his website. The Future of Music Coalition has an excellent document that analyzes the "standard contract" explaining how that 16% royalty turns into 6%. Both websites cut through the RIAA spin, and get to the underlying truths.
The truth is that the 90-95% of artists that don't recoup, don't recoup because of inflated expenses, the fact they don't get paid for "special" sales, such as overseas, and record club sales, and music taken out of the label catalog and not available for the public to purchase at any price. If the labels don't sell it, you can't make money off of it. In addition to this, you give up your copyrights to boot.
It took John Denver's Estate 5 years after his death to get a accurate total of his sales in which 19 MILLION more sales were "found". This Article on the RIAA website documents it. Talk about your "smoking gun".
I recently had a conversation with a member of a 60's group who had several top ten hits, his words explain it better than anything else I've ever heard. "If I were going to tell any group that is considering signing a major label contract any one thing it is, get as much money up front as you can, because you will never see another cent from royalties."
When her parents split, they fought over $12 million, of which she got almost nothing. If she's lucky, her mom will buy her a used car to get through college.
And the best of it is, her parents signed her - when she was 12 - to a contract that requires her to make TEN million selling CDs before she is released from Curb.
The music labels are fair, right.
or make that old, old news....
First of all, there is more than one way to skin a cat... the production costs (as has already been pointed out) cited in the article are outrageous. No "new artist" receives this level of money unless it is a totally pre-fab act (the type that "fronts" for a producer).
As a musician, I've entered into several "licensing agreements"- which are either exclusive or non-exclusive rights to use my material on CDs or in soundtracks... granted I perform electronic music, where artist development is rather non-existent, but I write what I want to write, and if the label wants it, they pay me- simple as that. I owe them nothing, there is no advance, and I am responsible for all production costs (which I do myself anyway). A licensing agreement allows me to be on multiple labels at once. Granted I'm dealing with a niche market, and full-length electronic CDs are not exactly best-sellers, and there are a handful of touring acts in this genre- but -imagine if everyone operated in this manner, that the artist assumed the "risk" and directly reaped the rewards. Would we be listening to the Backstreet Boys, Brittany Spears, etc..?
It is old news that labels pay for placement on playlists and for video exposure... sure, the videos may be wrapped around the myth of a groundswell such as "Total Request Live"- but songs are "top 40" for good reason (and this is legal- NOT payola).
I seriously DOUBT that labels assume much risk at all with new artists. They have lower budgets, and labels often recoup money through overseas sales or tours. The risk comes with taking an AGING star such as Mr. Jagger, who sells less than a thousand copies of his solo venture on "opening day." Or the risk comes with a huge deal to lure a "star" with dubious appeal away from another label. Labels carefully hedge their bets by stripping away any artistic license from artists who are unknown quantities.
There were some jabs taken at retailers in this thread. I take issue: retailers are in an excellent position when selling music. There is practically NO RETURN POLICY and very little in the way of demoing a CD. If the CD sucks, "too bad!" Combine that with the fact that many folks want a song or two off an otherwise sucky CD and we see why Napster was what it was. This has less to do with the nature of digital media and more to do with marketing. If a record label actually added something of value to a CD (other than the music itself) maybe people would be less inclined to burn a copy of a friend's CD.
Finally, there are really only FOUR big labels in existence (if my memory serves me). This is as close to a monopoly as it gets. Try establishing a decent distribution and product placement network with your startup label, and you will quickly see what an uphill battle you face. There simply isn't room in retail outlets for all the tiny indie labels- yet you can find the entire Nazareth or Black Sabbath library at most retail stores?! It makes no sense.
There will always be top-40 radio. But changes in technology have drastically reduced production expenses for the do-it-yourselfers and small labels. I have hope that distribution will eventually be decentralized from the big four (who will likely dig their own hole as they try to show hi-res surround sound DVD audio down our throats by re-selling us the music we already own on CD). At the rate they are going, I wouldn't be surprised if they tried to charge the consumer on a "per-play" basis in their own home! I can't help but feel that the high markups on CDs are there to punish us all for all those Napster tracks on our hard drives. You can buy a movie for about the save cost as a CD. Explain that one to me!
Those that suggest you "dance like no one is watching" really want to see you make a complete fool of yourself.
First I read this:
If the artist receives a $250,000 advance and the record company spends $250,000 on marketing, the record company has spent $500,000 dollars before one album has been sold. [...] The record company must then pay for its overhead and all of the albums that don't sell well enough to pay for themselves, $5.75 at a time. For that hypothetical album, the record company must sell 86,957 units[.]
Then this appears in the following section:
So what about the artists? They're really raking it in, aren't they? Well, yes and no. Huge stars make lots of money, but most artists, even if moderately successful, generally struggle to make a buck. First of all, the artist won't see any royalty money until the record company recoups its advance production budget. To further complicate the math, the artist usually must pay 3 percent of the royalty to the record producer. Deduct the 3 percent from the royalty rate, and the record company recoups its $500,000 advance at $1.80 per unit sold. Therefore, the artist won't begin seeing money from sales until 277,778 units are sold, and only about 3 percent of records ever reach that sales figure.
So.. Is the record company recouping it's costs through it's own profits, or through artists profits? I guess neither of them are very good in math and failed to notice that the sum is reportedly paid for twice.
From what I've heard and read, it appears that the "500k" is paid for by the artist. How much has the record company made by the time 277 778 sales rolls around? 1.6 million. Subtract 500k and we get 1.1 million. So, the ballance is 1.1 million made by the record company, and 50k made by the recording artists. (50k because that's in pocket money, rather than money immediately going to pay for record company related costs like marketting and recording.)
AC023
Maybe I've got this wrong but it seems to me that on a $14.99 CD sold that the article states $5.75 goes to the record company and $2.25 to the artist.
Doesn't the article forget that until the artist repays the advance that $2.25 goes back to the record company.
I reckon this moves the break-even point to 62500 CD's and the record company will effectively make $8 profit - not $5.75 up until the band repays it's advance.
Only two things are infinite, the universe and human stupidity, and I'm not sure about the former. (Einstein)
This may be slightly offtopic...
But without empty threes and the internet, I'd never have discovered one of my favorite bands - [minus]
I originally found out about them because my friend (who owns a cd burner) made me a cd with them on it. It was amazing, and I personally think they are one of the best bands out there. As soon as I found out who they were, I went to their site and found the link to where to buy the real CD. Sure - it doesn't have some of the tracks that I have, mostly 'cause I have underground ones, but at least it gives the band money.
Just goes to show that maybe all that rambling about Napster and Morpheous actually helping the bands isn't just rambling afterall.
We wave the flag of freedom as we conquer and invade.
However in the six or seven years that its been feasible to do that, has there been anyone thats done it successfully? It seems like it would be a much better idea than for a band to go into major long-term debt to a record company, which unfortunately is what happens to the 90%+ that don't "make it".
I know there are exceptions, but as a rule, music made in years past was much better, simply because it wasn't so much prepackaged crap for the masses(e.g. anything that gets played on MTV). Why hasn't the net spawned a revolution in music like as was promised?
Perhaps what is needed is an open source-style revolution where people with day jobs post great music with the intention of making great music moreso than making money. It wouldn't surprise me to see such a thing. Musicians are a lot like geeks(in fact many of them are geeks) - they do what they love, their mindset is based on sharing, and they're fairly technical. So far it hasn't happened, but who knows.
No, Thursday's out. How about never - is never good for you?
Well, I was going to post, but I kept hitting the lameness filter for too many junk characters (don't know what character's throwing it, though, so of course I can't fix it. What characters trip the filter aren't in the FAQ, either. Guys: make it a ratio, not a count. Long posts get screwed. And make it tell you what character is getting tripped.)
A link to my rebuttal, and a hope that people will still respond.
Warning: that rebuttal is *long*.
StoneCypher is Full of BS
Wow. Fix it, take the time. Post it here. Pretty damned good.
God damn! A million dollars in recording costs? Half a million in marketing? Quarter of a million advance, most of which goes to management, lawyers and recording studios?
I really don't think this is so shocking. I'm amazed that they can make Brity Spear sound good, it's a marvel of modern technology. It's also pointed out that the Union Man, the songwriter, sits in first class while the scabs sit in Coach.
What they don't mention is that that same expensive technology and marketing engine fails on non-pop bands. Girls vs. Boys was a great punk band, but their major record label CDs sounded like pop, and bombed. Ani DiFranco had to create her own label because the record labels couldn't figure out which shelf her music went on. Pee Shy was a eclectic Florida/NY band that died after their second CD because they were forgotten during one of the music industry mergers. I read about a music store that couldn't figure out whether Patty Smith should go in Folk or Punk, and decided it wasn't worth it to stock.
The industry is broken, and it isn't just because technology has reduced their natural use to promoters and financiers. They've merged to the point where they don't have enough heads to deal with all the music out there and so are forced to deal with the mass appeal stuff like nSync, Madonna, Spear, etc. Technology is just a catalist, eventually someone would have figured out that better bands don't need as much handholding but still need risk capital and figured out a better business process with lower costs.
The economy of scale needed for records, cd's, and glossy 4 color prints to make money made the publishers too big to make money for smaller bands (That is where most of money is to be made). Book publishers will have the same problem in a few years when someone figures out how to print a single nicely bound books on the cheap. They were more recently merged so they may be able to undo the problem. I have little hope that most of the record companies will survive however, their only hope is another copyright extension by congress, but at some point the Supreme Court will have to strike that down. (Monopolies can only be granted for limited times under the US constitution. I don't know if Europe has the same restrictions on their governments, but they have fewer lobbyists asking them to hobble their intellect.)
Twice in this article, it is stated that the artist sees no royalties until the record company recoups its recording costs. Why then do the authors subtract artists' royalties from the record companies profits when discussing how many disc sales it takes for them to break even? The results in the article go something like:
$500000/($8.00-$2.25) = 86957
whereas the result of not paying the artist before recouping your investment goes something like:
$500000/$8.00 = 62500
I would guess that a significantly larger percentage of albums sell this many copies, probaby more like 20%, as opposed to the 16% number quoted for the article's figures.
In any case, this is a much better return rate than, say, veture capitalists get. They can only expect 10% of their investments to make money. VCs are an entirely different group of money grubbing bastards though...
vi is my shepard, I shall not font.
Comment removed based on user account deletion
Parts of Sgt. Peppers were done with two 4-tracks linked together.
Can anyone tell me that the production quality achieved by spending $1M on Britney-in-a-box compares? If you want sound quality, get someone who understands sound, not a bunch of expensive equipment which you don't know how to use.
You really can make professional quality music on very simple equipment. In addition, your mix doesn't end up sounding exactly like every other song on the radio.
Why is Grand Theft Auto a much more serious crime than Reckless Driving?
This is competition on the mass market with small reproduction cost, in an area very (yet very unpredictably) responsive to promotion money. It is only natural that promotion costs will rise to allow only the minimum acceptable profit that will hold the invested money in each company.
Those promotion costs become value in the promoted musician's name, so it is vital for them to lock down their musicians with debt and contract. Otherwise, another company could easily draw them away, offering more money but taking more profit, because they haven't spent anything to gain the wide recognition and carefully manufactured demand for the product.
Of course, most musicians wouldn't think twice about screwing over the recording companies whose money made them famous. When they succeed, it's purely "because of their talent." Fans tend to agree, because they value the music, but see no value in having their tastes manipulated. Contrariwise, to the promotion industry, talent is just a common raw material (preferably available in naive and desperate packaging) which is not valuable in the raw, but can be smelted and formed into a profitable product. Paying the minimum price for raw materials is just good business.
Looking at the business of it, it seems pretty clear that the promotion dollars are more important (both more scarce and more necessary) than talent when it comes to making money.
The copyright profit model, combined with the few-to-many broadcast media, makes a naturally rotten situation. There's plenty of talent to be had cheap, and scarce little public attention to buy at high price. Add in the glamor and natural attraction of the work, and competition becomes so cut-throat that deceptive, underhanded tactics are necessary to survive, skimming along the edge of legality, as far as lawyers can push it out.
You can't blame them, really, any more than you can blame men trapped without food for turning cannibal; there's money to be made, in an attractive and well-loved industry, but not by honest and generous people. You can only work to remove the situation that causes it. It's not an easy problem.
I like the donation profit model, for sheer simplicity, but it's not 100% clear that it would actually work, as a matter of human psychology. The concert profit model (recorded music as promotion for live performance) is good for bands that sound best live, but what about music that makes lousy concerts? Pay-per-download (or pay-per-play) sounds nice, but either it requires essentially an end to personal ownership of general-purpose computers and recording devices (replaced by media terminals which can't be reprogrammed to circumvent copyright measures) or it collapses to a less efficient variant of the donation model. Are there any other ideas out there?
Accounting stands in place of analysis when the culture critic is incompetant or there is no meaning in the work. Now It's common to see opinions like this, an inversion of the culture critics abandonment of meaning: That the stuff that sells best is best.
AC023
The problem is in getting heard, getting your name in front of paying public.
This is something that can perhaps be better dealt with thru a public digital accessible classification and sampling system.
Even CD production cost can be removed or turned over to consumers PC. And I'm sure there are many other things that can be done to reduce cost while insuring monies get to the creative parites.
But without the consumer ever hearing your work, you cannot make sales.
So here I am, a consumer looking for a certain type of music over the internet and listening to samples. Where upon finding a song I like I pay for it, download it, etc..
Seems to me there is plenty to do in making such a midpoint service available to artists and consumers. Even something that makes CD creation extreamly easy for the consumer of such service.
And because the consumer is paying for individual songs, they are going to get better value for their money while the artist get better feedback as to what music of theirs the public likes.
Once an artist reaches a certain level of sales, the traditional marketing methods can come into play. Traditional methods that now have a way to better prequalify or improve/reduce risk. Overall greatly reducing losses which in turn improve payouts back to the successful artists..
In other words, technology can be used to greatly reduce the cost of overall losses obtained in traditional systems of the majority that the miniority successful end up paying for.
And it can even be used to help those who aren't top popular enough to earn a living thru traditional methods, to do so thru digital means.
.
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I agree. $500K recording budget seems ridiculous. For example the classis jazz record "Kind of Blue" by Miles Davis, was recorded in two three hour sessions. The musicians were playing live, and what's on the record is the first complete take of each number.
This album has consistently sold well since it was made back in '59.
So, the bottom line is, if the musicians are good, it takes no time to record great music.
...richie - It is a good day to code.
I disagree. While the marketing machines of most record labels are formable in size & scope, they're not so formable in effectiveness. We live in a world that is cradle to grave advertising. As a purely defensive mechanism,most of it gets ignored. Hence a viscious cycle is started. More marketing. More ignored. Also you complained about your music not being popular with a particular demographic. Marketing (getting the word out) is only going to be so effective in changing peoples mind as to weither they want to listen to you or not. However in todays global age, even one with niche music can have a supportable audiance. One simply has to make certain they don't get attached to boat anchors (record companies) that could turn something sustainable (economically) to something that isn't worth the trouble except as a hobby.
"Why hasn't the net spawned a revolution in music like as was promised?"
Proabley because no one has yet come up with a way that has the ease of going to a store and paying cash. Two there's still quality of product vs time issues.
". There is practically NO RETURN POLICY and very little in the way of demoing a CD. If the CD sucks, "too bad!""
Well that's why most record stores will let you listen to a CD you're interested in. If you like it, great!. A happy 'come back' customer. You don't, they don't end up with a customer who feels that they were burned, and can try something else. Short term. If the store ends up with a lot of cd's that people don't like... Long term hopefully that will weed out the bad artists, and everyone benifits.
a successful formula to minimize losses on crappy bands (the 95%) and maximize profits on good bands (the 5%)
I must beg to differ. It is quite clear that quality of music has very little correlation to its success in the marketplace. When a good band actually gets popular, I assure you it is merely a random coincidence. A friend of mine who has worked at WB records for 20 years said it best: "If 16 million people buy it, its GOT to suck!" The only exceptions I can think of @16M would be Nirvana and Lauren Hill. Cake is good, but not megaplatnum. If you listen to Blink132 or Creed, your mind and soul are in danger. Please go to a small record store and ask whoever has the most tattos for guidance. And buy some pre-Dio Black Sabbath. Viva Rikki Martin y la vida loco!
LOL, according to the blurb at the bottom of the page you are breaking the law reading the article - you can't display this article without their prior written permission. Also, all the computers between me an them broke the law when they "transmitted" the page to me...tell me that all the hops along the way are not "indirectly transmitting" it.
Interesting perspective, nonetheless.
© 2001, PRIMEDIA Business Magazines & Media Inc. All rights reserved. This article is protected by United States copyright and other intellectual property laws and may not be reproduced, rewritten, distributed, redisseminated, transmitted, displayed, published or broadcast, directly or indirectly, in any medium without the prior written permission of PRIMEDIA Business Magazines & Media Inc.
~XeonTux
Lots of people have already said as much on Slashdot before, especially the Beyond Napster story earlier this year- But to reiterate what is needed to completely subvert the model of massive risk/massive exploitation:
Micropayments Whether or not they're required to download the music in the first place or a culture of fairtunes-esque donation can be raised to a level that would reimburse costs. If a donation system revealed how much money had been given to any one group or person, people would probably cease donation to artists after some perceived level of sufficiency had been met. So if you have to live in a mansion and drive a Bentley just so you have something to make music about you'll have to rent instead of own.
Recommendation System Advertising is the big money sink, and most of it gets wasted on people who don't even care. But with a well designed a popular (and preferably free and open) system that would make suggestions with a high success rate (the music suggested is well liked by a high percentage of the people given the suggestion). It would need a diverse set of different criteria for suggestion creation- top download lists, overlapping categories of for every conceivable classification, trusted 'friends', lyrics database, Amazon style 'people who got this also got this', etc. The passive recommendation part would coexist along side user initiated searches facilities, where you could traverse say a tree that would map the decent of samples from one work to the next or have some advance 'sounds like' dsp stuff going on.
The latter one is a pretty huge project, if anything like that has already been initiated share the links.
The record companies LOSE MONEY ON 85% of ALL ACTS!!!. Those acts get not only $200,000 in advances but they get to pocket $50K as well!!! AT ZERO RISK TO THEM!!!Their CD may seal a sum total of 3 units and they got pocketed $50k and had another $200k spent directly on them not to mention the other money for duplication, ads, promotion etc.
How exactly does this article make the record companies look like vultures? Would you personally loan somebody 1/4 of a million and not hold them accountable for it? If anything the publishers come across as angels.
And, do the math. Switching from CD to MP3 or some other format would do little to lower the costs. Though it would help it would not fundamentally change anything. The major costs are production and advertising, not duplication and distribution
Look, look, a guy who's actually informed !!!!
Pinch me, I must be dreaming !!!
How, exactly, would you propose measuring the success of a musician to find out whose CDs are worth pressing by the million, and whose to throw in the dumpster?
Obviously the consumers are voting with their pocketbooks, and buying 16M of the CDs that you consider to "suck." Perhaps the problem is that a large percentage of people are not good judges of music quality. But how do you solve that?
As another example - Sanyo probably sells millions of their relatively inexpensive CD players. To an audiophile, they probably sound like crap next to a high-end Harmon Kardon box. But Harmon Kardon only sells a handful, and Sanyo sells millions. How do you get all of the peons who buy from Sanyo to switch? You can't, because the Sanyo equipment is good enough to do the job. Maybe music is the same way - not perfect, but sufficient for most people.
~wally
Dischord Records (Fugazi) is the best example of a virtuous label, and one of the FEW truly "independant" labels which are world renouned. You could always buy their stuff cheaper than retail by mailorder, and this fact is printed on the back of all the records. I bought the newest Fugazi record for $10 post paid. No record store will EVER beat that price, so I bought the EP too. I highly recommend you go buy the entire Fugazi catalog, is the best bang-for-your buck you will find for visionary recordings.
This article was very informative, but it glossed over some stuff. One of the things ignored in the article is that online music distribution squeezes a lot of the overhead. By divorcing music (and presumably motion pictures and software) from a physical medium, flexibility increases. Instead of Tower Records having to return several hundred unsold copies of Quasimodo Sings Opera, people would download QSO on-demand. JIT (Just In Time) is the future of retail music distribution. My cousin works in a Tower Records, and they now have kiosks connected via DS3 that will print a four-colour booklet and stamp a CD in a couple of minutes. Very impressive. It's probably slightly slower per-unit than mass manufacture, but the convenience is king.
First of all, if you believe a music industry accounting statement, I have some swamp land in florida and a bridge you might be interested in buying. Secondly, the cliche is OLD wine in NEW bottles. OLD.
Parent needs modded up
Excellent work!!
Bad boys rape our young girls but Violet gives willingly.
An excellent debunking effort. I wonder; if, in fact, the authors were to produce their source materials, would their logic hold? Or is it more likely that there aren't any source materials? The rebuttal is better written than the article.
The cost of doing business in the music industry is summed up in the article as the production and pressing costs.Remove the production costs by allowing music to be published "as is" from new artists. A few new artists are quite capable of rendering professional sounds from their home PCs. Remove the pressing "risk" by not pressing any albums! The popular MP3 services sell music this way. There is very little risk making CDs one-at-a-time. It does, in fact, bypass most of the costs, and you're not sitting on a trashheap that won't sell, either.
The article doesn't mention all of the contracts in place between record companies, recording studios, and CD manufacturers. The companies can't change the way they do business if there are long-term contracts in place. They are afraid to change their distribution practices because music-buyers are resistant to change as well. It's an awful Catch-22.
It'll actually take the bankruptcy of several major labels to change the way music is sold. I don't see that happening anytime soon.
The article would have been more credible if it were honest.
E.g. It talks about the record company initially being out of pocket $500k ($250k production & propaganda, $250k advance royalties to artists). The company wholesales the record for $10 out of which come $2 for pressing, shipping, and mechanical rights, leaving $8. It then states that $2.25 goes to the artist as royalties so the record company gets only $5.75 to amortize its initial $500k, requiring the sales of 87k units before it breaks even.
Did you notice that? Pretty slippery. The artists don't get the $2.25, it goes directly to the record companies until the advance earns out. So the record company makes $8 in marginal profit on the first 111k of sales, and is in the black after 62.5k unit sales.
By the time the artists start earning royalties beyond the advance (111k units) the record company has made $390k in net profits. After that, the royalty-reduced $5.75 profit is acceptable if they can't find another way to gouge the artists.
This ignores the fact that the pressing and distribution costs go to companies that are probably related to the record company, and make profits of their own. It reminds me of Hollywood accounting, where if any movie, especially a blockbuster, makes a net profit (leading to money actually being paid to someone who has monkey points) it means that somebody didn't do their job right and will never work in this town again.
Of course, there always has to be a villain in the piece. OOOHHH THOSE SCUMMY SONGWRITERS!!! They're the reason music costs so much. Burn them!!!
I downloaded four 1m30s clips from their(?) site. Not my cup of tea exactly, but I'd really have to listen to a whole album (or at least complete songs) to be able to tell.
Tried In Flames (They've changed over time from death to more plain metal -- somewhat like Paradise Lost. I like the middle albums the most, like _Whoracle_ (try 'Gyroscope') and _Colony_ ('Ordinary story' is great IMHO). Their latest release is a live album from Japan, which really isn't all that good unfortunately. I've recorded a gig they did for our public radio, P3, which is way better) and/or Dark Tranquillity, whose album _Haven_ is very nice.
For some reason I'm fond of Darkseed which is a german hard rock/metal band, too. Try 'Self pity sick'
Ah, metal. The energy. Have a good one.
Belief is the currency of delusion.
A lot of the numbers in that article are suspect as others have pointed out.
For a start, anyone can get 1000 retail ready CD's duplicated for $1.25 each. In quantities of 20,000 the record companies pay around 75 cents at the absolute maximum. Because most record companies have integrated manufacturing, the CD never incurs a shipping cost. The distributor or retailer usually bears all of these.
Also, the 15% royalty rate is pretty rich. OK for Michael Jackson maybe, but not a newly signed artist. The advance is also too high, and the retail price is too low for new artist releases which currently retail for $19 in the US. This analysis doesn't even get to the fact that overseas sales are more profitable.
I redid the analysis and the break even point comes down to 26,000 units from 86,000. I'd post it here except Slashdot's lameness filter keeps jumping in because of the tabs in the spreadsheet.
First guess is all the right braces.
Strip them out and try posting again.
Your rebuttal deserves a wide audience.
Thanks for a good article in Electronic Musician - I found
the songwriter's section most illuminating (and actually
somewhat encouraging).
There were a couple of figures that didn't make sense to
me - in your hypothetical record deal, you mentioned a
$250,000 advance to the band - and you also mention that
the record company intercepts the bands royalties (if they
are there) to recoup the advance. So it isn't really true that
the record company only makes $5.75 per album, is it?
They're also being paid back, on top of that, from the royalty
rates of the artists until they recoup. Minus the record
producer, that's an extra $1.80 per album up through the
first $250,000. Secondly, most articles I have read say that
many record companies try and make the marketing expenses
recoupable against royalties as well - whether or not it was
structured as an "advance" to the band - which if true would
make the entire $500,000 recoupable at $1.80 extra per album.
On top of that, royalty rates for first-time artists have certainly
be consistently reported as lower than 15%, which dramatically
increases the gap of time (and units) between when the
record company breaks even and when the artist starts
seeing income.
Let's restructure it so that $500,000 is recoupable and the
royalty rate is 10% (still high compared to many first-time
artists). $1.50 royalty per cd, minus 3% producer
fees, is $1.05 per cd royalty. Until the label recoups,
they are making $7.55/cd, or $6.50 straight profit.
The label recoups their out-of-pocket costs after
66,225 units. However, they haven't finished recouping
from the band yet, and continue to make $7.55 until they
do. The band gets $1.50 per cd, which means they don't
start making bucks until 333,333 units are sold. By that
point, the record company has sold 267,108 more copies
at a pure profit of $7.55 apiece, or over two million dollars.
The producer has made $150,000. The band only has their
advance.
I think your article highlights the adversarial positions
record companies and artists have towards each other - when
I look at the numbers this way (hopefully accurate), it doesn't
seem quite as fair as it did when I read your article.
Thanks for the exercise though,
Curt Siffert
skkkoooonnnggggkkk ptui
We only have ourselves to blame...
It seems to me that the biggest problem with music recorded by independent artists is the (typically) poor production values of their recordings. Sure, it's easy to create slickly produced electronic music, but even just making an acoustic drum track sound decent requires a talented engineer with a decade of experience, which many small studios are lacking. Also needed are good microphones, a quality drum kit, and fresh drum heads for each session. Even if the use of the Internet sets distribution costs to zero, quality recordings are expensive to make.
Alright. Here's one thing I don't understand. If this is a risky business, then take out the risk! Instead of trying to shut down the mp3 file sharing programs, they should be trying to foster them. In fact, they should be pouring money into them.
.wav) would already be distributed for free. Yes. Except you've lost considerably less in initial investment. You are using your money more efficiently So you could sell for less. And, as a result, the cost to the end consumer goes down. The biggest gripe I hear about CD's is that they are too expensive. I also hear that people would have mp3 and CD versions if they cost less, too (see also: college students). So you win.
Imagine the information that could be gleaned from knowing what mp3's are hot and which, well, aren't (no personal information need be given; just like when you request a packet over the internet). As with the auto insurance industry, you could even do a statistical analysis of a share threshold for some confidence level for success; the auto industry has already done this with the higher premiums for teenage drivers (more likely to get into accidents). Why not apply this to another industry?
Now before you flame, you are right. In this scenario, the mp3's (and therefore
And then there are the advantages of the internet. It's much cheaper to have one website, etc. as a promoting medium. Nice thing about the digital world is that if you have one copy, you have an infinite number of copies (aka: infinite supply). Hence why the classical laws of economics falter when applied to the internet. But I digress. The point is, it's a possible way to cut costs on promotion, etc. To know the real answer for use in a business plan, you'd have to do a cost analysis. But, then again, these should be done regularly in any self respecting company anyhow.
I'm not trying to say I've the answer for this problem. In fact, I doubt it. I just wonder why we haven't seen an analysis on this as to why it wouldn't work.
Just my input.
How, exactly, would you propose measuring the success of a musician to find out whose CDs are worth pressing by the million, and whose to throw in the dumpster?
There is only one way to measure, being the feeling in my chest, and the look on my face, when I hear the music.
Perhaps the problem is that a large percentage of people are not good judges of music quality.
Although I think that has something to do with it, I think the real problem is that people don't know where to find a reasonable array of choices, so they follow the path of least resistance and buy popular garbage. I've known lots of people with good taste who suffered deeply because they could not locate any CD's which satisfied their urges. I propose that the status quo music industry denies them access to the quality they seek.
But how do you solve that?
My theory (and that of many others) is that the labels are marketing machines, thus when their marketing and sales channels are finally and truly made obsolete by the internet, then consumers will be aware and choose from a drastically different array of cultural media products. Once those crazy kids grow up, and a larger percent of the country/world can effectively use information technology to locate and define what truly interests them, we will no longer be subject to the tyranny of commercial radio.
People buy what they are told, thats why marketing professionals exist. Once pop radio and MTV are not the sole method of music promotion, things will change rapidly.
When the consumer is exposed to more complete information about the world around them, then the market will decide in favor of artists which are of higher quality, because there will finally be new competitors. The whole 'lowering barriers of entry' bit can be inserted here.
For example, notice that once college radio got hot (R.E.M.), record companies started looking there for talent, then commercial radio imitated with "alternative." Once another real compteitor arrives, the vile music promotion industry will have to either evolve again (hopefully more drastically) or perish.
This article is just plain wrong. Most of the time the artist is responsible for the money spent to produce the album. Even if the record company makes money the money spent to produce the album (one of their $250,000 numbers) comes out of the royalties. The Goo Goo Dolls sold a ton of albums (over a million) and still ended up in debt to the record companies because they got a bad deal and low royalties.
Darthtuttle
Thought Architect
whatever happened to records? you know, those things on vinyl that actually sound like the things they're supposed to sound like? no digital compression format is going to sound good because they're all based on cds, so it's irrelevant which is used. with no compression it'll still sound worse than an analog recording. (and why we don't have silicon-pressed, laser-read analog discs yet is a mystery to me.)
all i know is, anyone can record a full-length album and print a thousand cds for $3000, and it'll sound no worse than $500K will provide. and the people who actually care about and have taste in music will use the internet to find new bands, and support them. and the other 95% of the world will continue to shovel in whatever's put on their plates.
i don't think it's a stretch at all to compare independent music to independent software, the difference is only that there's five major labels and only one microsoft. but at some point, in either case, the question must be asked: why do i care how much money a bunch of anonymous dumbasses are handing over to another bunch of dumbasses? if i don't watch mtv or listen to the radio or use any microsoft software, does really matter how many teeny-boppers (or corporate managers of comporable intellect) do?
First record companies no longer "develop" talent. They do not go around, put people together, teach them to play, tell them what to wear how to dance etc. (Well for these made up boy bands yes...) For most bands it starts out with guys who love music, start playing, find friends who love it and play with them. They then work as whatever so they could afford to go out and play on weekends for $100 a member. This often means singing at weddings, bar-mitzvahs etc.
Once they make enough money and start playing some gigs (in jersey to make it you used to play the arrow lounge, move up to fastlane ii and lastly the stone pony) The band then would make tapes/cd's themselves and sell it at each gig, including the weddings. Eventually they work with some small local mom and pop record company (or start their own) to make a bigger pressing. if the band gets lucky and gets some airplay on a local radio station (in the 80's it was WAPP, now its more like DHA) The band once rules the local area, they try to expand by playing gigs outside their local area. Playing and playing and playing..
Record companies find and take the only the bands that are "profitable" themselves and either press one of their current albums, or take one of their highly paid producers combine it with a pop songwriter (you really think ricky martin wrote his own tunes it was desmond child, oh he wrote bon jovi, cinderella's tunes etc..) and produce a new album (oh from that article its the songwriter and publisher make some of the bucks.. get it ) The album is usually recorded in the companies studios at a "reasonbale" rate per hour.
Lastly no one gets paid until the record company recoups its expenses which we all know are up on the good/good.
So basically that article accurate as it is, also has some "missing" pieces. Knowingly there are record companies trying to produce the next "nsync" etc, but most of the bands are still internally grown.
Hope that puts the rest of the pieces from that article..
Let's compare the music industry to the book industry to see why the music companies are so evil. Book publishers takes financial risks publishing books. They pay out up front costs like production, printing, marketing, and advances. The author gets royalties from the first book sold. They won't get a check until they pay down the advance. But they can spend the advance on a new car (or more usually a used car). They don't have to pay any part of the production cost, and the marketing doesn't come out of their royalties. All except the biggest authors don't make a ton of money. But they make money. They get to keep the copyright to their book. Why do they get to keep a pretty significant fraction of every record sold? Why do artists need to sell the copyright to their work to the company?
I guess that's OK for the masses who could give a hoot about the quality of sound that they listen to, but I care! After spending a small fortune on high end audio equipment, the last thing I want to do is take a backwards step in my source material.
Music from my computer doesn't even come close to matching the fidelity of music from my dedicated stereo system. Yes, I have a computer connected to it so that I can have hours of MP3's (ripped from CDs that I purchased) playing in the background, but when I sit down in front of the speakers to actually focus on the music to the exclusion of anything else, you can bet that the audible differences between Ogg Vorbis, high bitrate MP3 and anything else coming from that computer and the output of my CD, SACD and turntable are like night and day. The computer, even with a relatively good Sound Blaster Audigy card, just can't compete.
Another, even more insidious problem, is that the course that you advocate pretty much eliminates the availability of music to anyone who doesn't have a computer and a broadband connection to the Internet.
When I listen to music, I want to hear everything that the artist performed. Digitally compressed formats, while convenient, mask much of the detail that makes a high end audio listening session the incredibly enjoyable experience that it is.
-h-
I manage a record store. Gross margin on CDs is in the low 30 percent.
The only thing we make a decent amount of money on is used product. There the margin approaches 60 percent.
I will also add that I am running one of the more successful stores in my district, and in a good month we've got about 5 to 6 thousand dollars left on the store's bottom line. And that doesn't include the costs of running our home office.
If you think the retailers are gouging you then you are extremely uninformed.
Folk or punk? Doesn't that make it "funk"?
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>Eric Leach is an intellectual property and business law attorney at the firm of Goodman and Leach
Which means he's a paid by record companies and
seems to know exactly where his money is coming from.
It is a testament to their ingenuity that they are able to make such huge profits by developing a successful formula to minimize losses on crappy bands (the 95%) and maximize profits on good bands (the 5%).
Great, The good bands are the ones that sell more! I've always thought the best were the ones that touch me the most.
Record companies are evil, not because they pay little money to musicians, but because they control the media and marketplace to forbid music diversity. You'll just be able to hear in TV and radio three or four genres, where all the bands sound the same. No originality. No emotion. No creativity. No art.
Why is it that this whole $15 per album problem first introduced itself with the advent of CDs? Cassettes and records have never been that expensive (to the best of my knowlege). When CDs came out, they were about twice the cost of cassettes. The record companies seemed to be doing just fine before CDs existed, and you can't tell me that a cassette is cheaper to produce than a CD. I'm sorry but you can throw numbers at me all day long, you're not going to convince me that the overinflated price for CDs is justified.
..it's just because Britney is hot?
there's no vast conspiracy to mind-fuck you into liking boy bands / Britney. tastes change. if the majority of music buyers wanted to listen to bluegrass, we'd have lots of that.