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A Music Industry Case Study
spmkk writes "The NY Daily News has an uplifting look at the fate of a (hypothetical) 4-piece band "making it big" in today's RIAA-driven music industry. The condensed version: A band that sells 500,000 records for $8,490,000 gross ends up (after a few iterations of the new math) with $161,909 in their pocket. Split four ways, that's a whopping $40,477.25 each for a record that probably took close to a year to produce. And this is for a record that goes gold (as per the article, only 128 of some 30,000 records released in 2002 were so privileged). And I bet you wanted to be a rock star when you were a kid..."
"Blame it on piracy! Piracy, robble robble robble..." - Hillary Rosen
Todays rock bands don't even get the supermodel girlfriends, they get goth chicks with piercing in 7 different places. And Heroine, Cocain and LSD aren't even socially acceptable among rock stars anymore! Bah!
To the problem with music, an insightful insider's look on this exact same subject with more analysis and perhaps less solid figures.
It is written by Steve Albini, who produced (besides a few bands you maybe might have heard of) a little no-name act called Nirvana. Everyone should read it. Of course, most people have, which is why i predict it will be linked at least three more times somewhere in this story discussion.
I wonder when they'll get it all fine tuned to the point where successful bands actually go bankrupt from attempting to make and sell an album :-P
Daniel
Carpe Diem
It costs quite a bit to make an album, and even more to market it. Most garage bands don't have that kind of cash laying around. So they need someone to finance it.
It's like going to a loan shark and getting a deal with 80% interest.
A band can either take the shitty deal, or go back to playing in their garage where no one will ever hear of them.
"People should be allowed to keep midgets as pets."
- Gov. Jesse Ventura
You can read her manifesto about this at http://www.holemusic.com/speech/
It's more in depth than this article and comes from someone who has been there, a good read..
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Oh bother.
I guess I'm puzzled by the attitude displayed here on /.
On the one hand I'm told as a software developer it's not about the money. I should code just for the love of it!
On the other hand I'm supposed to be outraged because a rock star only makes $40k off a record deal?
And the rock star get's groupies, whereas the programmer just has pr0n.
In a 2000 speech to the Digital Hollywood online entertainment conference. It shows how a million dollar advance and a million copies sold can equal zero dollars.
People who disagree with you are not automatically evil, greedy, or stupid.
1) Radio monopolies. As has previously been discussed on /., this means that few bands ever get play time on the radio. In fact, radio today pretty much sucks unless you really like "Top 40" music. Now, there's a reason that Top 40 music used to be Top 40 -- it was popular (and usually fairly good) music. But that's not really the case anymore.
2) Paying artists. The Music Industry can whine all it wants about "artists getting money" this and "artists getting money that" but the truth of the matter is, Item No. 1 makes the music industry so competitive that, after all the marketing is finished, they can't really afford to give any money back to the artists. Artists in today's music industry are somewhat like the sweatshop girls who make Abercrombie and Fitch cargo pants (or Nike shoes, or you name it): they produce a product sold for an extreme premium but are poorly paid. Incidentally, the premium goes not directly into the pockets of the responsible corporation, but instead into marketing and promotion -- but only of the artists which the record company likes.
I firmly believe that we're about to experience a paradigm shift in entertainment delivery. The era of free music -- as it was in the 16, 17, and 1800s -- will once more be upon us. Recorded music will be free, and niche internet radio/community music sites will be responsible for the creation of new hits and pop sensatia (remember Michelle Branch? MP3.com, not the radio, was instrumental in her stardom). Artists will instead earn their money as they did 100 years ago: in concert. Ticket prices will skyrocket (and fans will pay), and probably move to an auction-dominated system -- which will equilibrize ticket prices. Some artists might be forced to get day jobs. But art, music, etc., they will all move onward...
Statistically speaking, there's a 99.998% chance that my IQ is higher than yours. Get over it.
You guys are ignorant. The same thing happens in the live music industry. Only a tiny miniscule ammount of people make money touring. And there are probably only a handful of people in the world (mostly actors, not musicians btw) who get paid to appear on magazines.
I am a professional musician who recently put out a record on a major label. I did a west coast tour last month where every show was sold out. Wanna know how much money I made?
$80 a day. And that's with the shows selling out.
The live music industry is the same as the record industry. They've worked it out so that the musicians get nothing.
And I bet you wanted to be a rock star when you were a kid.
Rock Star? I always dreamed of working for the RIAA. I started young, charging my first royalty at the age of six. One day I hope to have a global surcharge named after me. That would be the ultimate bragging right.
The point isn't that they only make 40k, the point it that thy are make 8 million and only seeing 40k. That other money is being eaten up by an industry that exists so it can continue to exist. You know how you can get an e-commerce package for $25/mo? Yeah, thats what the music industry could be, a monthly service for any band to upload and be published. Then, local record stores with bulk burners could download and burn, or burn on demand for customers.
Customer: "Do you have the latest radiohead?"
Clerk at a PC: "That'll be ready in 10 minutes, $5.00 please."
This recording industry is spending millions and millions manually doing the job of a good database. To make a long story short (too late) the problem is the record company being overpaid for a service it doesn't provide.
Some one forgot along the way that it's really about the music. Musicians don't make music so that they can become famous.. they make music because they love to make music. Sure we strive to "make it" but even though most don't make it.. it's still rewarding. True music is an art.. prefab music is a business. I have been writing songs since I learned guitar when I was 12. 8 years later I have a band... I could care less if we "make it". I just love to get together with my band and play music and give that music out to people who want to hear it. Remember, there are a lot of rock stars and wanna be rock stars out there.. but a lot of them aren't musicians.
Problem is, the math will more likely look like:
1. 1 song @ $0.70 x 1 download = $0.70
2. 1 album @ $7.00 x 1 download = $7.00
3. 499,999 copies of each downloaded from Gnutella/Limewire/etc. = priceless.
"The moment those bands become popular (even though if their music didn't change and/or become more mainstream), the fans reject them because they have "sold out to the mainstream" or some other crap like that."
Totally untrue. Most of the time these bands produce one record that fits their old style then fall to the hype from the record companies. The record companies will say, "hey, change this and you'll sell a couple hundred thousand more albums", or "Let's sound more like band X so that we can reach a wider audience."
When a band changes just to sell more records, forgetting the fans that got them to the point they are at is, when the band sells out. Sometimes the bands just change as the members get older. But any fan can tell the difference when a band starts "selling out".
Environmentalists are their own worst enemy. ~tricklenews.com
I put out a record on a major label recently. Just finished a sold out tour of the west coast a week or two ago.
I have these thoughts:
1. The article is totally accurate.
2. Anybody who thinks successful musicians make it back in touring or merchandise is A COMPLETE IGNORANT IDIOT. Once you get close to going gold this might be true, but as the article pointed out, this happens to 138 of 30,0000 records.
3. My sold out tour of the west coast was the first profitable tour in almost a decade of touring. I made $80 a day once the profits were tabulated.
4. Merchandise sales are not major sources of revenue, but they help stem the bleeding. Less then half of that $80/day was from merchandise.
5. One word: EXPENSES. It's not just the money you get. It's also the money you pay out. And touring is expensive. Don't be one of those assholes who says "ah but the bands make it back from tours and merchandise"
6. A shitty sys-admin can do $30-40k a year.
7. A top notch musician who has practiced most of their life and given countless sacrifices for their job and has gone gold will do about the same.
8. A top notch musician who hasn't gone gold will be broke.
9. A shitty musician will be in debt.
10. Mama don't let your baby's grow up to be musicinas.
What's wrong with the music companies taking the cost of touring, recording, distribution and advertising from the revenue earned by an act? How else are they supposed to pay for it? It's a business, not a donation to the arts
The problem is that the companies take their profits first before costs are taken out. If the system were truly fair, record companies would take their profits with the artist at the end of the day when all costs have been calculated. Yes, it is a business and the record companies deserve the right to make a profit on investment, but would you want your investment company taking their profits before costs were calculated? The folks that manage my portfolio take 1.5% of the portfolio value at the end of each quarter, not at the beginning of the quarter, therefore their income is dependant upon the performance and my costs to them are based upon mutual growth. Not bleeding the portfolio dry.
Visit Jonesblog and say hello.
I don't know that I have ever seen a 'rock star' driving a really nice car. You know who I see with lots of money? Rap artists. Anyone care to venture a guess why there are rap artists that make a shit load of money?
They have their own labels! Death row, murder inc, I could go on and on. These guys were smarter then whitey from the get-go. They produced their own music, and sold it themselves. New artists get picked up by these labels and make ridiculous amounts of money because these labels know how easy it is to market these albums. All you need to do is have a video filled with hot chicks and some Bling, have music that doesnt suck(Doesn't have to be good, Ja Rule sucks heavy fucking ass and is really rich), and the white MTV watching yuppie kids will go out and buy that album in droves.
There is no shortage of smaller record labels that will sign interesting groups. If not, create your own label! Swollen Members did it with Battle Ax records, and the beastie boys eventually came out with Grand Royal as a record company. Hello Nasty sold a shitload of albums, and wasn't promoted by RIAA tools.
If more people followed this business scheme (Basically invented by Puff Daddy and Russel Simmons) when they went for a recording contract, they'd be rich. (See Bow Wow, but it helps that Snoop Dogg was in his corner.)
I don't feel sorry for Idiot Band A when they sign with Mega Asshole Company B, without taking into account whats going on. That's just stupid business practice.