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How Labels And Artists Divvy Up Your Dollar Online
Subliminal Fusion writes "Business 2.0 has an article that breaks down where that $1 goes when you buy a song from iTunes or other online music services. Key figures: the site takes .40, the labels take .30 and the artists get a measly 12 cents for each download."
Key figures: Read the article for the other figures. It shows how its divided up 5 ways.
if you go to the article and check out that little pie graph, you'll see there's 8 cents for the publisher. .40+.30+.12+.8 does equal $1.00.
According to this guy, artists only get 10%-12% of the cost of the CD.
And thats after paying for promotion. Depressing stuff.
It's not 0/0, stupid asshat. It's 0/100. Stupid trolls...the next evolution.
If you read up a little more on the music store, Apple does it's credit card charges in bulk. They don't do one for each song bought, but rather they bulk together the last 1000 or however many songs were bought and charge those. That was they can mitigate the fee. It's not that big of a deal if it's one charge per thousand or so songs.
In their chart, the cut for apple includes credit card usage -- because that's apple's responsibility to do. Seriously, your question is like asking "who pays for the recording? Recording studios get expensive!!" It's not like the credit card company is a partner in the music store. The chart divides up between the partners and those partners have certain responsibilities like paying the processing fees or the recording fees.
Generally, credit card fees come out of the retailer's piece of the pie. How do they afford it? We're only talking about 2-4%. Yes, 2-4%. What about the transaction fees? While many internet merchants do pay per transaction fees for credit cards, this is not a "requirement" of the deal. The CC companies have and do setup some accounts on a strictly percentage basis. I'm sure it's particularly easy to negotiate this when you're Apple and not joescomputershack.com... but it's not particularly a "special deal'.
Have doubt? Try googling for "merchant account 'no per transaction'".
-jbn
Anyway, 12 cents a song for a 12 track cd = $1.44.
I believe most artists make anywhere from $.75 to $1.50 per cd depending on the popularity of the artist. Yep you read that right.
Infact they get a bigger share because the RIAA does not have to go through a greedy retailer which charges $5-7 per cd, and no shipping or manufactoring costs are considered. Its the retailers and not the RIAA who make the majority of the outrageous prices. If the RIAA sells a cd for $11.99, the retailer will bump up the price to $18.99 and pocket the difference. Infact I believe they already do this. They only discount if the product does not sell well.
That is unless the artist is really big and has their own record label after their contract expires. That is difficult because most contracts require that the RIAA own the first 5-6 cd's. Mostly the big artists can afford to outsource to a small or indie label after many hits when the contract runs out. Metallica for example does have such a deal which explains why they sued Napster. They have alot more vested interest and their newer albums make a shitload more money for them. They do not have to have a huge record label to market for them.
http://saveie6.com/
the artists get a measly 12 cents for each download.
From all the articles there have been about the artists under the RIAA, 12% is a hell of a lot better than the cut they get normally. Sure, it's measly, but it's probably a step up. Here's to hoping it'll increase.
According to one of the best articles written on the subject, it's a big step up."Only two things are infinite, the universe and human stupidity, and I'm not sure about the former."
If it's anything like regular CD sales;
.40, .30 and
the site takes
the labels take
the labels take another 12 cents from the artist's share to recoup "production advances" and "independent promotion"
The artist gets shit until they've sold the first few million CD's. Only then, they get to keep their 12c.
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It's closer to a dollar a CD. Just keep in mind that out of that dollar the band has to pay for paying back it's advance from the label, pay back all recording costs, and pay for any and all touring they do. I don't know any other business where the employees get fucked over so much.
'Standards' in computing only impress those who are impressed by things like 'standards'.
Well, Apple works with indiependant labels, but labels can only join by invitation. That's why CD Baby's offer is so cool. They said that they were invited to sell their music on the iTMS and that they would sign independant bands and sell their music as a pipeline into the iTMS. Pretty cool of them.
That figure excludes deductions made by the record label for everything imaginable. Studios charge artists a fortune in promotional costs and touring, limos and so on. But even at 12c per track, that's a much better per track rate than artists have gotten traditionally from prepackaged albums.
Another thing to remember is that Itunes is an unprecidented success in the industry. Say what you will about it, but they're still only targeting 2% of the computing population...
This signature has Super Cow Powers
Interesting question. I was wondering that myself.
Not many people outside the music industry are aware that retail sales are the only revenue stream. For one thing, there's something called mechanical royalties, a fee of 7.5 cents per song per unit that's paid to the songwriter (not the performer, unless they are the same person or persons). BTW, the term mechanical originally referred to player piano rolls, and goes back over a century.
If a band releases an album of all "cover" songs, all the mechanical royalties go to the songwriters.
There's also performance royalties, money paid to the songwriter from radio and television airplay (as well as jukebox placements and clubs that employ cover bands). The recent controversy surrounding streaming webcasts involved these. Performance royalties are administered by ASCAP, BMI, and SECAM, organizations that collect fees from radio and television stations (and clubs and jukebox vendors) and disburse these monies to songwriters according to a formula based on the number of plays multiplied by the potential number of listeners.
Other revenue streams include synchronization rights (the use of musical works in a movie soundtrack) and transcription royalties (use of musical works in advertisements).
For all but the most popular bands and songwriters, these royalty payments don't amount to much, but even a "one hit wonder" might see a jackpot if their song hits the Top 40 or ends up in a movie or a television commercial.
The canonical/apocryphal royalty success story is that of Paul Anka, who wrote the theme for Johnny Carson's Tonight Show, and earned over $700 each week from performance royalties simply by having that tune played on every NBC affiliate in the country five nights each week.
k.
"In spite of everything, I still believe that people are really good at heart." - Anne Frank
I took a music publishing class which detailed all this stuff in gory detail. Average artists' cut on a new CD is ~$0.07. This cut gets even lower (read: as the limit approaches zero) if the album gets a lowered rating (decided by the label and is sold at a "discount" by the label (those 'bargain' bins you'll often see).
If you find yourself in such a situation, get 1-800-MC-ASSIST on the phone while you are arguing with the store (that's for mastercard, visa has a similar number, I just don't remember it off-hand). The store's merchant contract has a number of consumer-friendly requirements of the merchant. In this case, they are not allowed to set minimum purchase requirements to use a credit card. You should be able to buy a 1 cent gumball with your CC if you wanted to.
Another useful fact is that the merchant contract prevents the store from requiring seperate ID beyond the card itself. However, they are allowed to ask for ID, they just aren't allowed to require ID unless they have reason to believe that the transaction is fraudulent (note, blanket policy of requiring ID from all CC users is not sufficient, that is the equivalent of saying, "if you shop at our store, we think you are trying to commit fraud" and thus is not acceptable under their merchant contract).
Some people claim that these requirements aren't fair and that in the case of minimum purchase requirements, the vendor loses money on the transaction and that in the case of not being able to require ID the vendor has to make good on fraudulent charges either directly through chargebacks or indirectly through increased fees for being a more risky business. Well, tough noogies, the store signed the contract with these terms, they have the choice of either not accepting credit cards or accepting them with the terms offered. The reason these terms are in all the contracts is that the CC companies wish to be as easy to use as cash - cash does not require an ID, and there is no minimum purchase to use cash. either.
So, stand up for your rights. Most people pay very dearly for them with the exorbitant interest rates that the CC companies charge, at least you should be able to get the benefit of the few actual contractual terms that are in your favor.
When information is power, privacy is freedom.
This is as worse as CD distribution by the record labels. Apple should've striked deals directly with the artists. Hm, if the artists got say .60, then they'd have to sell 5 times as little as they sell now to get the same amount of money. This is bloody ripoff.
On the other hand it also costs as much as regular CDs. You get like ~10-15 songs on a regular CD, which is around $15. If you download 15 songs from Apple, you also end up spending $15, as much as you spent for the CD. Maybe a little cheaper because a CD doesn't always have 15 songs on it. But still.
Ripoff! First, the artists are ripped off, then you, the consumer. I mean it's somehow fair for Apple to get .40 out of it, but the record labels and the publisher? Give me a break!
The record labels are the media intrustry's dinosaurs. And Dinosaurs will die.
In the book "All You Need To Know About The Music Business" by Donald s. Passman, an attorney in the music industry, royalties are extensively discussed.
SLRP: suggested retail list price minus 20% for packaging. ex: CD retails at $14.99, minus 20% for the packaging ($3.00), SLRP is $11.99.
New artists signing with an independent label get between 9% to 13% of the SLRP.
New artists signing with a major label get 12% to 14% of the SLRP
Midlevel artists get 15% to 16% of the SLRP
Superstars get 18% to 20%+ of the SLRP.
Apple iTunes is paying the label 65 cents per download, (as reported many places). Of that we can pass almost all of it to the artist, since we're not a record label, and have no up-front expenses.
You can see my notes on Apple's meeting with independent record labels here (pt 1) and here (pt 2).
Beyond the fact that artists shoulder the costs you speak of because the record companies charge them back to the artist your assertion that production and distribution need be done by the label for an artist to be known is absurd. You'll note one of the richest men in the nation is an artist who needed no such label to become famous rather he recorded his own CDs, countering your point that CDs wouldn't exist, and then did his own promotion and sales of those CDs. Now he has his own clothing line and his son is excelling in the music industry. Who is this man you ask? Why it's none other than MasterP. MasterP couldn't get airplay for his songs because they're obscene so he sold his own tapes. Don't believe me? Trust Forbes then: http://www.fortune.com/fortune/40under40/snapshot/ 0,15793,11,00.html Note his progression up the list as well.
Like most things that seem bad, they have their upsides. In this particular case, the labels can afford to spend money on advertising and support for a group, making them known throughout a wider area. There are a few stations around that provide better coverage to unsigned or independent artists (Los Angeles's KLOS does this with their weekly Local Licks program), but by and large, major stations don't supply a lot of coverage to unknowns without a label or a trusted agent behind them.
It's possible to get noticed and get publicity without labels, yes, but it's not easy, and if it flops can easily bankrupt a group (and their families).
You can never go home again... but I guess you can shop there.
Just to provide a URL so people can have something to point to (since I wasn't aware it was against credit cards rules to set minimum purchase prices)--
http://www.corporate.visa.com/footer/faqs.shtml#7
Make sure to let it scroll down automatically, or click on the FAQ entry for minimum purchase to use a Visa card.
All I know about Bush is I had a good job when Clinton was president.
And here's one for Master Card--
http://global.mastercard.com/hk/faq.html#c_cust_se rv
Same as the Visa, be sure to let it load, or just do a text search for "minimum".
All I know about Bush is I had a good job when Clinton was president.