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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."
I would rather give the artist 50% and the site 50%. leave B&M sales to fund the other leaches.
that the artists should be attacking their own labels...not their fans.
They're getting just under half of what the labels are getting.
IMHO, "measly" would if they got three cents and the labels got fifty seven cents.
Of course, if they went independent, they'd get 60 [assuming the sites still charged 40 cents].
40+30+12 ?= $1
Why don't artists skip the labels? Go straight to the Apple Music Store or mp3.com or whatever? With that extra thirty cents a song, they don't need support from Universal or Sony or whoever.
Of course, the hard part is getting started...
Microtransactions have failed up to now because of the extreme costs involved in processing them. The credit card companies like to take a small flat rate fee and then a percentage on top. On amounts of a few dollars and up, the retailer can swallow this.. but on a buck? Regular deals with the credit card companies could end up with them getting about 40 cents out of the dollar.
:-)
Clearly Apple and chums have made some sort of special deal with the credit card companies, but there's no doubt there's a percentage coming out for the credit card companies.. and their chart just doesn't address it.
You could argue that it's the 'middlemen' section, but this is listed as going to subsidaries such as AOL and Amazon (in the case of certain retailers).. and I seriously doubt as if they'd fork over their whole share to VISA!
Someone with some real knowledge of merchant accounts in this capacity.. please fill us in
This is why the record companies churn out the music they do. All they need is an ``artist'' willing to sing some and dance a little to bring in money. They recording industry money machine encompasses the studios, engineers, musicians, distribution, etc, and the money flow chart has no money going out of that process. They take in new money and recycle what they already have.
That's why I don't understand the tone of some people here. They seem to be waiting for the record industry to propose an acceptable solution to the filesharing fiasco before welcoming them back. The record industry, as a whole, exists to take money from you and me. If they have to destroy the computer industry to do it, they will. Instead of trying to work with the record industry, the nerds should be preparing lines of retreat. Versus the money we're facing, I don't believe we can win. Instead, we need to be working now on software tools and hardware tools that can be used without inserted DRM, etc. The hardware is especially important.
When you make a deal with the devil, you will always get burned. Most artist are stupid about the deals they make and then bitch about gettin screwed. Look how these fools give away thier publishing rights.
Considering that if you went to a store and bought an overpriced CD, the artist would get somewhere around 1-3 cents per CD; I don't think that 12 cents per song is a bad deal. I was quite surprised by how often, from Apple's claims, people are downloading whole CDs from them. Then I thought it out. $1 per song, 15 songs: $15 from iTunes; $20 from a store... plus I don't have to get up and walk to the car to drive to the store. Anything that saves you money while making you lazier will be a success.
I know a lot of people here are going to be mad that the record company is getting anything, but I also dont see a problem with that as long as it is the record company that's doing the work of recording, advertising, listing with iTunes, etc. It's what record companies are for, after all.
Devil Ducky
MY peers would get out of jury duty.
When you buy a car, how much of that money do you figure goes to each engineer who was involved in designing it? Probably much less than the profit margin of the dealer or the car company. Now think about the modern popular music industry: It truly is built on huge economies of scale, and just like that car, every track of music you buy is the result of the work of many different people. The task of the "artist" themselves varies depending on the particular group, but as a general rule, they are more replaceable than a highly-trained engineer, and each has unique value mainly because of their public image, which is itself crafted by record company marketing departments. Nonetheless, probably no one person receives a larger share of this money than the "artist" involved, which is in many ways unfair considering the amount of effort put in by producers, recording engineers, and of course the marketing department, but obviously the market viability of the work depends to a certain extent on the presence of the artist, so the market rewards them with a greater share. These figures, in short, are simply proof that free markets are working well.
(of course, I leave it as an exercise for the reader to determine the share of the revenue from each song you pirate on Kazaa that goes to the artist)
The article states that 12% is average. Only high-successful acts can do better and they are completely free not to opt-in to Apple's music store like Radiohead and Linkin Park have decided to do.
Secondly, these are growing pains. 12% is excellent for a non-MTV/Clearchannel down your throat 24/7 mega-pop band. As diversity in the catalog continues and less money is funneled into four or five pop sensations, but instead funneled into exposing more artists then smaller advertising and word of mouth will produce more varied sales. Bands that start as nobodies and end as nobodies will be getting 12%. That's pretty good.
Personally, I think moving to singles and a diverse selection is a step in the proper direction to satisfy both fans and artists. We're going to look back to the days of big radio and MTV and not believe our rampant fandom and misplaced loyalties, not to mention taste.
Does the label really do nothing more than provide $$ in advance (ie: an EXTRAORDINARILY high interest loan) and provide some of the contacts (advertising means, etc.) for the artist to spend the advance on?
Or now that all the radio stations and TV stations are owned by the same companies that own record labels, is it hard/impossible for an artist to get a decent deal on advertising without the media conglomerate's support?
Oh really?
Well, let's say that you album only goes gold. That's 1 million albums sold, if you really made it big you'd most likely sell more. 1 million albums at $0.12 per song at let's say 10 songs an album equals $1.2 million in your pocket. Sure you have to pay tax, yadda yadda yadda but so does everyone. Do that once every 2 years or so and you'll make $600,000 a year. This is not counting other sales such as concerts, commercials, product endorsements, book deals, celebrity freebies, and all the other perks of being a star.
So is 12 cents sounding a little better now?
Sapere aude!
very few artists, except for metallicunt and a few others, bitch about file trading. artists make their money on the road. in fact, most don't even own the music. they are treated like 2 dollar vegas whores, get paid for shit, and are turned out like a sorority girl in the morning when their records stop selling. file trading helps the artists by giving them more exposure, and generates fans which go see them live. in fact, i'm actually surprised the in the IP sense, they don't get a dime.
the music "industry" has lost far more due to artisits being able to produce their own albums and generate their own music. technology has hurt the music industry. iut has freed the artist to bypass the studios and go stright to the people. all the music industry has to do is look at the crap they are pushing and see they are dealing with a more discerning clientele. how many teeny-bopper, perky breasted teenagers and tatooed, skinny, psuedo-punk wannabee bands do they think we're gonna buy?
My problem? I was perfectly gruntled, until some numbnuts came by and dissed me.
If as an engineer, I'm the lead designer, and design a product, I don't get 12% of the profit. I would move to jamaca if I got 12%. The engineers working under me, the sales people, the managers, the guy who stocks the soda machine, the people who foot the bill for funding, etc, etc, etc all get a share, including the store that sells it.
Lighten up people
Courtney Love does the math ...The record is a big hit and sells a million copies.
...the band may as well be working at a 7-Eleven.
... they can pay the mortgage forever but they'll never own the house. Like I said: Sharecropping. Our media says, "Boo hoo, poor pop stars, they had a nice ride. Fuck them for speaking up"; but I say this dialogue is imperative. And cynical media people, who are more fascinated with celebrity than most celebrities, need to reacquaint themselves with their value systems.
So, this band releases two singles and makes two videos. The two videos cost a million dollars to make and 50 percent of the video production costs are recouped out of the band's royalties.
The band gets $200,000 in tour support, which is 100 percent recoupable.
The record company spends $300,000 on independent radio promotion. You have to pay independent promotion to get your song on the radio; independent promotion is a system where the record companies use middlemen so they can pretend not to know that radio stations -- the unified broadcast system -- are getting paid to play their records.
All of those independent promotion costs are charged to the band.
Worst of all, after all this, the band owns none of its work
When you look at the legal line on a CD, it says copyright 1976 Atlantic Records or copyright 1996 RCA Records. When you look at a book, though, it'll say something like copyright 1999 Susan Faludi, or David Foster Wallace. Authors own their books and license them to publishers. When the contract runs out, writers gets their books back. But record companies own our copyrights forever.
Whenever the offence inspires less horror than the punishment, the rigour of penal law is obliged to give way...
Why don't you show us...
...how Linux distros divvy up their dollars, and what percentage the programmers get.
...how work-for-hire proprietary software houses divvy up the dollars, and what percentage their programmers get.
It's gotta be far less than a penny on the dollar for Linux, and I'd be surprised if it was more than a nickel on the dollar for all but the smallest proprietary software houses (where the coders are probably the owners anyway).
So, if artists can make 12% of the gross online, that's sweet compared to a lot of other situations.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
Let's put this in perspective here. I work for a large retailer that grosses $60,000 per day or more (per store, not company-wide). How much of this money do I make in this same day? typically between $28 and $40. That's about 0.25% (give or take) of the gross revenues, for those of you not mathematically inclined. To put this in perspective, they're grossing about 50 times as much as I am, per dollar earned.
Granted, the record labels do not have the recurring expense of having to continually refill stock, while my store does, but nevertheless; Record Labels are small fish in the big pond of economics. Sure, they may be making out like bandits as far as this is concerned, but in the grand scheme of things, not many people invest in record labels today, because they just don't make as much money as other industries do.
People should keep these rates in perspective with comparison to how much a writer makes off book publishing: A 12% royalty on paperback sales is much higher than normal, and 12% for a hardback is toward the high end of normal. 12% would be a more than respectible rate for a beginning-to-midlist author. (Stephen King and other bestsellers, of course, can get considerably more.) Also, a beginning writer usual gets between $3000-$5000 dollars as an advance on royalties (granted, the ways to screw writers after the advance have been given are far less numerous than in the recording industry...). Usually, there will be escalator clauses that bring higher rates after X number of books have been sold. Anyway, these are ballpark numbers for the science fiction field. Source: The SFWA Handbook, 1990, p. 62-69. (Note: Since 1990, if anything, rates have gotten worse, especially for midlist writers.) I am given to understand that advances in the Romance genre can be as low as $1000 for all rights (i.e., no royalties).
While it is true that recording (and other artists) get screwed by media companies in many ways, the 12% discussed is not at all out of line with current reality in other fields.
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
Yes, that's the point. Math is an algorithmic process, one that gives answers to various well defined questions. You can ask an unanswerable question, such as "What percentage of 0 is X?" or you can ask an answerable question, such as "What is X% of 0?". The first question will literally have no answer, the second will always be zero.
Why do millions of people use AOL for Internet access? Some people don't know any better. People with no computer experience buy the hype and believe that it's the greatest thing since sliced bread. The same thing applies to musicians in the record industry.
It's fairly accepted that if you ever want to make it "big", you need to be partnered up with a major label. Whether or not it's actually the case, the popular misconception is certainly pervasive enough to convince many people to screw themselves into shit contracts.
Part of it is also psychological. If a scout from Sony approached you and wanted to sign you, you would probably be more excited than if some mom-and-pop BaBango Records from the other side of town wanted to push your EP. To many people, being signed to a major label gives them a feeling that they, to a degree, have already "made it." Many years later they tend to regret their dealings.
And many artists DO start up their own labels. Some are rather successful at it, such as Steve Vai and his Favored Nations label, but most musicians don't have the business sense to manage a company like that.
0/0 is not undefined. It is undetermined. 0/0==. The reason it is different than with a non-zero number in the numerator is because division adheres to denominator * result = numerator. It is true for any number with 0/0 and true with no numbers for anything else divided by zero.
:))
Therefore, 0/0 == 100% is true!
(maybe you should take a math class
And the muscular cyborg German dudes dance with sexy French Canadians
If Joe Sixpack asks for $47k pay for his job, medical benefits, and the ability to leave with two weeks notice, he can't then turn right around and whine that he isn't making $55k and identical bennies. He got what he asked for.
If I'm Jimmy Drummaster, an aspiring upcoming musician, and I don't feel that the promotion and management services provided are worth what current sellers are asking, I'm more than free to set up my own website and sell MP3s. Hell, I'd be selling to a larger market segment than iTunes is (far more people can play MP3s than use Macs).
I'm not trying to be deliberately callous -- I'm simply saying that if musicians don't like iTunes, they can choose a different route. (Of course, there are those that have sold contracts to put out n albums -- stupid sort of deal IMHO, but such is life -- and they'll have to put out n more CDs before they go freelance. And again, they got what they asked for.)
Nobody is shedding tears for *other* classes of workers that don't get better deals than they asked for -- computer consultants or plumbers or proctologists aren't getting any love.
My personal guess is that the people writing the article don't care about the musician *either* and just has some vague ideas that enough undirected protest will somehow result in him getting free music of the caliber he's currently enjoying.
May we never see th
So, it would seem that the online price is in-line with cd sales. To be honest, though, I find myself torn as to whether this is fair or not.
In the extreme example, take a band like N' Sync. These bands are obviously manufactured by the record label. They came into existense as a result of casting calls. Their music was written for them. They were provided with singing coaches, dancing lessons, etc. The record company promoted them, booked their concert dates, paid for their recording time, food, lodging, and transportation. The record company also handled virtually every angle of CD manufacturing and distribution. And don't forget the marketing machine that ensured that there would be enough radio play and media exposure such that enough pre-teens would want the CD in the first place.
So, in this instance most people would agree that the record company did at least 82% of the work (probably more). So is it unfair that some of these artists make 12%? In my estimation, the majority of major label artists fall into this category -- they weren't "discovered" so much as they were developed, honed, and trained by a music executive who knew what people would buy.
Am I over-generalizing? Yes. Do I think the music industry has become a cartel that will squash independent music and technological innovation? Most definitely. But let's be real. I like REM, but my guess is that Michael Stipe has as much business acumen as a piece of toast, and that without a major lable he'd still be plugging away at some bar in Athens, GA.
My point? I'm not sure I even have a point other than to say that 12% does sound unfair, buy maybe not THAT unfair depending on a host of other factors. I'm really more concerned about the chilling effect that the industry has on technology and the consumers' access to truly unique and different music.
Let's put this in perspective. $350,000 divided by 4 is $87,500. Now, I don't know about you but that is a lot of money to make in a year. There are people out there who earn $20,000 a year and live just fine on it. Maybe to Courtney Love that's chump change because she won't be able to support her coke habit but for the rest of us we could live pretty good off of $87,500 pre-tax.
I'm sure that music videos can and do cost that much to make, but let's look at this a different way. Music videos are what, 5 minutes each? So we are talking about spending one million dollars on 10 minutes of video. There are independent film makers out there that make pretty damn good two-hour movies for well under a million. How about you hire someone young, hungry, and promising who doesn't cost you an arm and a leg to produce your movie rather than hiring Steven Spielberg to do it? Sure sure, you gotta spend money to make it and the video is an advertisement for the artist but either cut the cost or stop crying about how expensive it is.
Another thing I noticed in analyzing this piece written by Ms. Love. Her numbers don't add up. Take a look:I would say that the entire article is suspect, since it's clear that Ms. Love can't even do simple arithmetic. I'm sure that she feels slighted because she isn't getting 100% of the millions her albums make, but the fact is that she is living the rock star lifestyle and she has a lot more money and other advantages that most people don't enjoy. Sure, I agree that artists should get a decent cut of the profits from their music but I really hate to hear them cry about how they just aren't getting that extra million or two past the millions they have gotten. They should try working minimum wage scrubbing floors for a while and we'll see how much they cry about being a celebrity.
Sapere aude!
How about you hire someone young, hungry, and promising who doesn't cost you an arm and a leg to produce your movie rather than hiring Steven Spielberg to do it?
Saying this kind of thing just shows that you "don't get it". Ok, so the record company says, you need to hire MR Bigshot for $10 mil for 5 minutes of video... you have no choice it's in your contract...
Or, ok, mr smart guy, you were smart enough to have some artistic control added into your contract, well, WE always have to aprove your albums before they are officially sanctioned to go on sale, so we just don't approve. Sorry. All your money spent on no name directort is wasted now.
Oh, and since you signed a contract that says you MUST publish 5 albums and 8 videos before you get out of the contract, you are stuck with us until you put out an album that we "approve" of. You can't legally work another day of your life in this business with our say so... You can't really even sing in the shower, we own your voice forever, bitch. And if you piss us off enough with your fancy college student directors, maybe we'll just NEVER approve any more of your albums... Of course, w'll make sure, before we do, you'll be on our "solo" contract so even if you try to form anothe rband you cant.
So, in conclusion, ha-ha, fuck you. Sincerely, The recording company.
What makes the artist's time so much more valuable than everyone else's? A record company surely must have studio workers, a marketing department, accountants, systems people, administration, human resources, and all the other conveniences of a modern corporation.
A farmer doesn't get 50% of every can of corn sold. Maybe that doesn't seem fair, but he's not the only person involved. Someone has to package it, someone has to ship it, someone has to provide the shelf space for it, and someone has to ring it up at the checkout. And, of course, there are other costs. The supermarket and the distributor have to establish a relationship, coordinate shipments with demand, and so forth. All of this takes work.
Artists still screwed.
+ + + +
Rationale:
- the companies are not producing the music, the
artists do. Without the artists, companies are
nothing.
- companies have a role only of intermediators
+ + + +
If I was to release a song to the world, and the company was to tell me "for your promotion we get 85 cents over your dollar" I would tell them, "screw you and your promotion".
"I am slashbot, hear me roar!"
Exactly. Everyone forgets that the 'rock stars' account for maybe one tenth of one percent of the WORKING musicians out there. They don't seem to understand that being a musician and being a rock star are two different things. Musicians generally spend all day at work, the lucky ones only have to work part time, the even luckier ones don't HAVE to have a real job, but do so because it means more gear and extra shit. Writing music is not easy. Booking gigs can take hours of club owner harrassment a day. Loading up for a gig usually takes a couple of hours of hauling heavy-ass equipment around. Then you have to unload at the gig. Then reload afterwards. Then unload back home. If you are a working, gigging, musician it's HARD FUCKING WORK. There aren't any roadies to carry your shit. There aren't any green rooms full of free food and beer. There aren't any bigass paychecks waiting for you at home. All you have is maybe a couple of hundred bucks (if you're lucky) and hopefully the ability to go home knowing you put on a badass show, because at the REAL musician level that's all it's about.
'Standards' in computing only impress those who are impressed by things like 'standards'.
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Compare the two products.
Buying the album from iTunes gives you the ability to listen t the product immediately. Buying it from a music store requires a separate trip to the music store. Buying it from a mailorder or online retailer requires you to wait for delivery.
When you buy an album from iTunes, you get it in a lossy compression format. With a CD, you get the music with a sample rate of 44.1 kHz @ 16 bit.
When you buy an album with iTunes, you may get a small jpeg of the album cover as an ID3 tag. When you buy a CD, you get an actual physical copy of the image on glossy paper, and usually some interesting material in the liner notes.
When you buy an album from iTunes, it is protected with its DRM technology. You are also tying yourself to playing the songs from iTunes, and are trusting that Apple will continue to develop iTunes and maintain their DRM infrastructure. When you buy a CD from a record store, you get a product with no DRM protection, is able to be played a many output devices of many styles, and has a long enough history to assume that new devices will be produced for a long time to come.
An album bought from iTunes can be burned to CD. A CD bought from a store can be ripped to MP3. Mostly a wash, but burning the slightly lower fidelity iTunes AAC file to CD doesn't give it the quality of the CD. Ripping the CD to MP3 reduces the quality, but you still have the high quality original.
When you buy an album from iTunes, you get a very helpful shopping experience. Searching for songs is faster, there are hypertextual jumps between song, artist, and album. On a particular page, it will show you top selling songs by that artist, and the "people who bought this song also bought..." list. Also, if you use the shopping cart, rather than the 1-click purchase, you get a "Recomendations based on albums in your cart." When you buy an album from a record store, you tend to some teenager who sparked up during his last break asking you "Can I help you find anything?" (to which my response is usually. "You still have them arranged alphabetically by artist, right? I think I'm all set.")
Different people will put different weightings on each of these criteria. If you usually listen to music from only one or two Macintoshes, or an iPod, rarely use actual CDs, have audio equipment that doesn't give noticable differences between CD and MP3 quality, then iTunes is a good deal. If you frequently are on non-Macintosh machines, bounce around on more than three Macs when you listen to music (or for some other reason find the need to "authorize" a Mac with your DRM key prohibitive) and have a quality home entertainment system that can show the differences between a lossy rip and the original CD, then a close to 50% price reduction may not quite be enough for you.