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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].
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.
According to this guy, artists only get 10%-12% of the cost of the CD.
And thats after paying for promotion. Depressing stuff.
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.
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!
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.
"I'm tired of all this 'Aren't humanity great' bullshit. We're a virus with shoes" - Bill Hicks
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 $700 each week from performance royalties simply by having that tune played on every NBC affiliate in the country five nights each week.
k.
"In spite of everything, I still believe that people are really good at heart." - Anne Frank
I'm a rapper and if I made it big, 12 cents wouldn't be enough...that's for damn sure.
If you're a rapper and you're reading slashdot at 11:30PM on a Saturday, chances are you don't have to worry about making it big.
IF the album goes gold, and they got to pay for the promotion and music videos... and those videos doesn't come cheap...
... zero!
Courtney Love wrote about it (ok... is a b&$@#! but that is not the issue here...)
Courtney Love does the math
The controversial singer takes on record label profits, Napster and "sucka VCs."
By Courtney Love
June 14, 2000 | Today I want to talk about piracy and music. What is piracy? Piracy is the act of stealing an artist's work without any intention of paying for it. I'm not talking about Napster-type software.
I'm talking about major label recording contracts.
I want to start with a story about rock bands and record companies, and do some recording-contract math:
This story is about a bidding-war band that gets a huge deal with a 20 percent royalty rate and a million-dollar advance. (No bidding-war band ever got a 20 percent royalty, but whatever.) This is my "funny" math based on some reality and I just want to qualify it by saying I'm positive it's better math than what Edgar Bronfman Jr. [the president and CEO of Seagram, which owns Polygram] would provide.
What happens to that million dollars?
They spend half a million to record their album. That leaves the band with $500,000. They pay $100,000 to their manager for 20 percent commission. They pay $25,000 each to their lawyer and business manager.
That leaves $350,000 for the four band members to split. After $170,000 in taxes, there's $180,000 left. That comes out to $45,000 per person.
That's $45,000 to live on for a year until the record gets released.
The record is a big hit and sells a million copies. (How a bidding-war band sells a million copies of its debut record is another rant entirely, but it's based on any basic civics-class knowledge that any of us have about cartels. Put simply, the antitrust laws in this country are basically a joke, protecting us just enough to not have to re-name our park service the Phillip Morris National Park Service.)
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.
Since the original million-dollar advance is also recoupable, the band owes $2 million to the record company.
If all of the million records are sold at full price with no discounts or record clubs, the band earns $2 million in royalties, since their 20 percent royalty works out to $2 a record.
Two million dollars in royalties minus $2 million in recoupable expenses equals
How much does the record company make?
They grossed $11 million.
It costs $500,000 to manufacture the CDs and they advanced the band $1 million. Plus there were $1 million in video costs, $300,000 in radio promotion and $200,000 in tour support.
The company also paid $750,000 in music publishing royalties.
They spent $2.2 million on marketing. That's mostly retail advertising, but marketing also pays for those huge posters of Marilyn Manson in Times Square and the street scouts who drive around in vans handing out black Korn T-shirts and backwards baseball caps. Not to mention trips to Scores and cash for tips for all and sundry.
Add it up and the record company has spent about $4.4 million.
So their profit is $6.6 million; the band may as well be working at a 7-Eleven.
Of course, they had fun. Hearing yourself on the ra
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.
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.
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).
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.