How Much Does it Cost to Produce a Recording?

An anonymous reader writes "How much does the average new album cost to produce? I have seen this cost estimated between $500,000 and $1,000,000, but some quick figuring does not support a cost this high. According to various sources (Ok, Slashdot stories...), somewhere around 27,000 albums are produced each year and 906.6 million albums are shipped. I would guess that the album retail (about $15 per album) is based on a 100% markup, so that these 906.6 million albums are sold at wholesale for about $7.50 apiece, which means that the revenue from wholesale sales is about $6.8 billion. This means that the actual production cost has to be less than $250,000 per album, otherwise the record industry is losing money. I have left out the cost of actually printing and copying the albums as I think that the average cost is probably less than $0.25 per copy."

Comments

250,000 is too much

[inepom01]

It's not NEARLY that much. The $15 price is not a 50% markup from what it costs to produce. There are distribution costs that you are forgetting. Making a CD is really not that expensive. It all depends on what kind of music and how much of their own recording the band does: you can record the whole thing in your apartment and just go to the studio to mix, which will lower your cost considerably. You can have your CD for about $4,000 probably. Why do your CDs cost $15? you are paying for the PR and everything... There's a whole pyramid of people between you and the artist. Also, 90% of bands never really make money so the remaining 10%, whose CDs you actually buy, have their CDs' prices jacked up.

Also, everything is getting cheaper. Things like mixing are moving towards being done on a less and less expensive PC. A Mac with ProTools can do a LOT these days.

Faulty premise

[Golias]

You are operating from a faulty premise, which is that the record label must recover their production costs from sales.

The truth is that most of the production costs are paid by the artist. With a new artist, the label fronts the money to produce the album, to be paid back out of artist royalties.

One of the big complaints of artists, which several prominent performers have pointed out before, is that they can almost never repay all of these costs from their first album, unless they are one of those rare acts which goes platinum with their debut. Most acts are then pressured to rush a second album, as cheaply as possible, to increase their revenue to pay off the production costs of the first album and get them into the black. (Hence, all those infamous "sophomore slump" albums.)

In other businesses, this practice is called "loan sharking", but it's the way the record industry has worked for decades, and there's no sign of stopping as long as this business model continues to work.

Re:Just a guess

[n9hmg]

the recording of nevermind
We're not talking about pure geek technical excellence at slider positioning. The subject is quality of album.
You ever hear "Frampton Comes Alive"?... No studio at all. While I'll be the first to admit that a good enough producer can almost single-handedly create a killer album (if he can choose his own studio musicians... Think "Tales of Mystery and Imagination"), the main thing you need to make a good album is good music played well. If you don't have that, you have........ well, you have what we seem to have now. Rap, "boy bands", Brittany Spears (I'm sure I'm spelling that wrong. I sure hope so, anyway.), or whatever overproduced, corporate-manufactured non-music they're trying to sell now. If the RIAA wants to see big sales, get Nick Mason to wake up Pete and Dave, and let's have another Pink Floyd album. Better yet, let's have somebody else start making music that good, as they need their sleep. The problem is that there was a huge rise in the importance of recorded, recognizable, repeatable music, which created a business model which brought in enormous profits. As other forms of entertainment reduced the demand for pure audio, the record companies who sprung up in that rich compost began trying harder and harder at the part of that business process that they can influence. It's a lot like the situation where your car starts to overheat, and loses power. As it happens, you can maintain speed by pushing the throttle pedal farther down. This, however, aggravates the overheating condition. We've got the same thing going on now. There are damn few new artists that command respect. Only the mindless ones want to be like "in sink" or Tiffany. It's not attracting real, intelligent, talented people any more, so all the record companies can do is crank harder on the publicity machine, and seek new income through fees on data storage media.
I'm sure that prior to the wide availibility of the automobile, there were some really incredible buggy whip companies, producing superlative whips, which could touch the horse in just the right way, making it excited to run, without causing it a trace of pain. I'll also bet that they did everything they could to survive after they were no longer needed. They're still gone, and we don't need them to come back. Back when producing and distributing an accurate copy of a piece of audio took a big business, the record companies served a very important purpose. Now, they are as important to music as buggy whips are to transportation. I really don't see why this is difficult for them to understand. I'm really sorry for the people who are no longer needed in their jobs, but there are still a few really excellent telegraphers out there (really... I've met one), who had to find something else to do. Sadly enough, I'm beginning to think that that fate is already coming around for unix system administrators. Anybody need a really good one?