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."

Comments

it should be 50/50

[ender_wiggins]

I would rather give the artist 50% and the site 50%. leave B&M sales to fund the other leaches.

I've always thought...

[bazabba]

that the artists should be attacking their own labels...not their fans.

"measly"?

[RLiegh]

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].

Re:"measly"?

[DavidinAla]

Considering the costs of promoting a new group, getting them recorded, producing the CDs and getting distribution, the group almost certainly wouldn't be selling ANY albums or getting ANY money if they weren't working with a record label -- because nobody would have heard of them and no CDs would exist. While labels might have too much power and take too large a cut of the revenue, the truth is that they DO fill several very important functions, which some people don't seem to understand.

Measly? For some, excellent for most

[gad_zuki!]

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.

Re:I'd be pissed

[Graff]

I'm a rapper and if I made it big, 12 cents wouldn't be enough

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?

Re:Artists should skip the label part!

[PerryMason]

Why don't artists skip the labels?

The answer is that without the publicity and promotion that the major labels provide, you simply can't get the exposure necessary to really 'make it big'.

Sure you could go direct to Apple and many people do go direct to MP3.com but you just won't get the downloads without the exposure. I am involved with a few bands in Australia, some signed to big labels and some going it alone and without fail, the servicing that the signed bands get is the difference between the success of the bands. The major factor being that if you aren't signed, you simply don't get airplay on the radio. Even on Australia's 'indie' radio station TripleJ, the DJs themselves get the option to play 3 tracks of their choice in a 3 hour shift. The rest is dictated to them by managament, which in turn is dictated by how much the labels are willing to pay the station. Payola is well and truly still alive.

So despite the fact that its eminently possible to record your own album at home in small recording studio and produce a product that the 'unwashed masses' couldn't tell from a studio recorded album, you just won't make it big without label backing.

Artists are getting exactly what they deserve.

[0x0d0a]

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.

Re:Measly 12%?

[nobodyman]

You raise a good point. Here's a quote from Mike Viscelglia (he played bass for Suzanne Vega, I believe). His website has some good insight into the industry from sort of an "everyday joe" perspective.

When an artist negotiates a contract (preferably through a music attorney) he or she must come to terms as to what share of the price of the CD goes to the artist and what share goes to the company. This is referred to as "points" or a percentage of sales. An industry standard point allocation to the artist is usually 10 to 12. This means that the artist will get 10 to 12 percent of the sale of the CD. But 10 to 12 percent of what number? Is it the retail price? The wholesale price? The manufacturer's price? For this there is no standard and different companies will try to enforce different numbers.

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.