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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 $1 goes when you buy a song from iTunes or other online music services. Key figures: the site takes .40, the labels take .30 and the artists get a measly 12 cents for each download."
I would rather give the artist 50% and the site 50%. leave B&M sales to fund the other leaches.
that the artists should be attacking their own labels...not their fans.
This is why I only use Kazaa to get my music. That way I know the artist is getting 100% of the 0.00$ I spend.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
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].
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...
Afterall, the labels need all of that money to keeping buying the bullets they constantly (and consistently) shoot themselves in the foot with.
It adds up!
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.
Is 12% really that measly? I agree it's low (unless the artist is a britney spears/in sync clone, in which case it's too high), but what percent does an artist get from CD's? What percent is standard for authors? My mom is an author, and gets about 25 cents from a 5.99 paperback... Seems like online music is giving artists a bigger cut compared to more traditional methods.
It's nothing but crumpled porno and Ayn Rand.
CowboyNeal gets the other 18 cents.
well, using crazy RIAA math, you must subtract the negative dollars they never earned due to piracy. so, the equation is 40+30+12--18=$1
YOU SUCK BALLS!
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.
According to this guy, artists only get 10%-12% of the cost of the CD.
And thats after paying for promotion. Depressing stuff.
I'm a rapper and if I made it big, 12 cents wouldn't be enough...that's for damn sure.
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)
Despite the major labels' success in clearing hundreds of thousands of tracks for purchase online through services like Apple's iTunes Music Store, some top artists continue to resist authorizing the dismantling of their albums for Internet consumption as a la carte singles. Some acts are requiring that their music be sold exclusively in album bundles. For example, Linkin Park recently pulled its music as a singles offering from digital services. Sources say the band has expressed concerns about undercutting album sales. Other acts with similar stipulations about their work include Radiohead, Madonna, Jewel and Green Day, sources say.
Now, from an artistic standpoint I can see where they are coming from, there are certainly albums that must be experienced as a whole, or at least in the order that they were laid down. Still, I have to wonder whether they're not just shooting themselves in the foot; if the concern is over money lost to piracy, wouldn't 12 cents in the hand be worth it to an artist rather than 0? Eventually, they'll make the money back on volume; it seems they're too obsessed with immediate returns.
is this Business 2.0 "Full Speed" or "High Speed"?
$cat
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.
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.
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"?
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
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.
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
Courtney Love Does the Math
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
...than current arrangements.
What does an artist get from an album? 50 cents, tops. That's for approximately one hour of content which wholesales for about $10.00 and retails for anything from $10 to $18.
Here, the artist gets paid $0.12 for approximately 4 minutes of content which wholesales for $0.60 and retails for $1.00.
If an artist sells an hour of content online, he gets $1.80, which is 3.6 times what he gets from the CD. Looking at it from wholesale to wholesale, if content with a total wholesale value of $10.00 is sold, the artist gets $2.00, which is 4 times what he was getting previously. If you go for $18.00 at retail, the artist is now getting $2.16. This is about 4 times better than what the artists were getting before.
but I've heard that apple charges 34 cent per song and their agreement leaves the rest of the division and responsibility up to the label.
/.'s editors:
another slice of info that was rejected by
I received an email from bloodshot records with the following- 'As the music business heads off into uncharted territory we are feeling the effects first hand as stores close, media consolidates and users have no qualms about stealing music from the web. After a fun business trip to Apple HQ in California, we have decided to cast our lot with Appleâ(TM)s new iTunes store. By the end of the summer (hopefully) youâ(TM)ll be able to download individual tracks or albums from nearly every Bloodshot artist (including comps). Weâ(TM)ll let you know when our catalog is ready to go.'
Creationists are a lot like zombies. Slow, but powerful and numerous. And they all want to eat our brains.
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.
And that's why it's almost impossible to buy a decent book these days, unless the author happens to be a J.K. Rowling or such.
The whole bit of authoring books, particularly technical ones, is such a gamble for everybody concerned that authors churn them out as quick as humanly possible these days and doesn't it show.
It's just not worth spending the time to do it properly.
....how long before we start seeing cd burning terminals at music stores where you can either buy full licensed albums, or pick and choose tracks ala cart?
Until last week. The first such terminal was enabled last week in the city of Lübeck, Germany, which is incidentally pretty close to where I live.
Kristian
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'.
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.
This is completely and totally true. $0.12 is actually PROGRESS when compared to the status quo. Here's a better breakdown of the whole situation, courtesy record producer Steve Albini:
http://www.negativland.com/albini.html
As far as the whiners about "the death of the album" go, two things wrong with their premises:
- Up until the 1970s that's the way radio and records went. Top 40 Radio created a singles-oriented business, with the album as gravy. Even with great albums like Sgt. Pepper the Beatles made sure there was at least one good single on there if not a few. It was only with the popularity of Album Oriented Radio in the 1970s that things changed. The last gasp of the single 45rpm record as a mass consumer good was in the early 1980s.
- The primacy of the album has been basically stood on its head in the first decade of the 21st century. The average CD has you back in the '60s again, with albums that have one or two good songs and an ocean of filler. Some of the people complaining on that list are guilty of this crime against the music consumer.
All that Steve Jobs is doing is levelling the playing field for the consumer. You have never been prevented from downloading a whole album on iTunes...in fact, you get an economic incentive to do so with the $9.99 bargain "album" rate. If a band makes a super-bitchen album, and people hear that the album is great as a whole, they will download the whole album rather than download the songs piecemeal without the advantage of the bulk rate.The fact of the matter is that the "album" died years ago. Deal with it.
Knowledge is power. Knowledge shared is power multiplied.