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].

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.