Money in the Music Business

paulbd writes: "Electronic Musician has a good article on the economics of selling music on CDs. Its a sobering read that gives some of the hard numbers that do a little to counter the sense of record companies being vultures. Recommended for anyone who seriously imagines making a living from selling music."

Sounds like VC

[Anonymous Coward]

This looks very much like the deal with Vulture Capitalists. You go to them, you beg for money, hoping to get rich. They get richer in the long run. Maybe you get lucky. Everyone complains.

Any thoughts on who gets the shortest end of the stick? Nerds or musicians?

And in summation mi lud...

[Anonymous Coward]

Although this article has nothing to do with nerds, let's look at what we've just read. - Artists don't make money until the record company breaks even. Yep, that would sound OK to me, especially if I was the record exec stumping up the cash to invest in some new talent. I run a business, not a charity. - Artists gotta pay their own legal fees? Damn right. When I set up my limited company to work as an IT contractor, I deducted the legal fees from the tax at the end of the financial year as expenses. So why can't they? - "Perhaps it's because of the way record companies make their money: they make it from our heroes, the musical artists." : Erm, uh huh. And Paramount/Warner Brothers doesn't make money from the actors? And DynoRod plumbing does make its money from the engineers they send out in dayglo red vans? - Anyone with any sense doesn't go into the music business to ensure they become a millionaire. You have to work for it - and hard. Like being a nurse, police officer or child carer - It's about job satisfaction and the fact that you want to express yourself by doing something you like doing. If you want a stable income, and a sense of job security and can do without fame, get a 9 to 5. And as a little aside, what crows me is the fact that (nearly) every rap video shows guys counting money, toting guns, wearing sunglasses and touching up bikini clad girls while driving in expensive cars through the bad neighourhoods they claim to have grown up in. If I was a record exec and saw my artists making crap like that, even I'd want to skin them for every penny too.

Some of your friends are already this fucked

[jkujawa]

This reminds me of this wonderful article that's popped up on JWZ's site several times about the economics of the music industry.

It really sucks.

http://www.arancidamoeba.com/mrr/ [arancidamoeba.com]

Re:Buggy Whip Thuggery

[paulbd]

as much as i dislike [equalarea.com] every aspect of the RIAA and its cohorts, i know from personal experience of starting a CD label that they are not "as [ir]relevant as buggy whip manufacturers". producing music has become vastly cheaper than it used to be, and the net offers some excellent possibilities for distributing compressed (lossy) audio. however, the net doesn't come within 10 miles of offering the marketing and publicity engines that the RIAA still know how to work (or maybe we should say control). its also a complete waste of time for people who want at least CD quality audio, though that will change as bandwidth increases over time. we spent about $5000 to do the production copy run on our first CD, and didn't have to pay for studio time since we own the studio. but this music [equalarea.com] isn't the kind of stuff that most people listen to, and the challenge of marketing it effectively is vastly more difficult and involved than running a website and having some MP3's available for preview. although their tactics and contracts suck, the truth is that its very, very hard to effectively market music without the involvement of major record labels. this is particularly true if the music you make isn't popular with the demographic that has made, say, ani defranco such a success.

Insane recoding budgets == pimping the Artists

[RNG]

Disclaimer: I'm not a professional musician and am not involved in the music industry. At the same time I don't think I'm 100% clueless about the music business.

Well, while a recording budget $500K - $1000K may be the "typical recording budget for an artist's first album" it seems rather high. While that may be true for the types of Britney Spears and your favorite boy band of the week (which really are just products rather than artists), you can record quality music for far less.

To give you an example: I listen to a lot of Heavy Metal. One of the more interesting bands I've come across over the past year or so has been "Children of Bodom" (for those who don't know them, they are a speed metal band from Finland and quite musically skilled; their live album puts most other bands to shame). Their first album, which admittedly was pretty rough, was recorded in 2 days. Their second album (Hatebreeder) is a wonderful symphony of high-speed power rock and melody which sounds good and was recorded in a week. While I don't know the recodring budget they had, I can assure that it wasn't anything in the $500K region.

Another example I can give is a local band here (2 of my friends play in it) which just recorded their first album. They had 4 days to do it and the studio cost them
My whole point is this: decent musicians can produce quality music on a much lower budget. You don't need 1/2 year of studio time to record your songs (provided you have written them prior to waking into the studio).

The story about music videos is similar. Artists are often required to do videos which basically puts them into more debt. So they are effectively owned by the record companies who are in effect pimping them; it's like indentured servitude.

Part of the problem is that the music industry requires expensive productions and videos as marketing tools. Where they should be more like reporters (ie: finding and covering the news rather than creating it) they have become the creators of bands which then require huge budgets to be pushed to popularity. It doesn't have to be like this.

I think I'll be putting on my asbestos suit ...

Re:Compare to Albini's "The Problem With Music"

[paulbd]

the problem with Albini's analysis is that it doesn't mention that the obscene $710,000 profit the record company made has to be used to amortize all the losses it made on the new mariah carey cd. see, there's this problem: you're a successful musician, and the record company appears to be ripping you off. they probably are. but a large part of the apparent rip off is because they are also making lossy investments in new artists which never work out. now, you could choose to excuse yourself from this charade, like ani defranco and others have done, by working on your own - you win, then you win big, but if you lose, you lose everything you put in. however, as long as you choose to allow somebody else to help you with the initial costs, you need to deal with the fact that their losses on other artists need to be covered by their profits on you. in such a system, the artists are simultaneously screwed and simultaneously supported. of course, the record companies are making obscene profits on the backs of underpaid musicians. but don't assume that when you get those numbers down somehow that the inherent inequality in the relationship will go away. if someone if going to make a risky investment in several artists, the ones that succeed will need to pay for the ones that fail. do you want your success subsidizing your fellow artists failures? do you want your failure subsidized by your fellow artists? or put another way, do you feel lucky, punk ? :))

problem with self publishing thru internet

[3seas]

The problem is in getting heard, getting your name in front of paying public.

This is something that can perhaps be better dealt with thru a public digital accessible classification and sampling system.

Even CD production cost can be removed or turned over to consumers PC. And I'm sure there are many other things that can be done to reduce cost while insuring monies get to the creative parites.

But without the consumer ever hearing your work, you cannot make sales.

So here I am, a consumer looking for a certain type of music over the internet and listening to samples. Where upon finding a song I like I pay for it, download it, etc..

Seems to me there is plenty to do in making such a midpoint service available to artists and consumers. Even something that makes CD creation extreamly easy for the consumer of such service.

And because the consumer is paying for individual songs, they are going to get better value for their money while the artist get better feedback as to what music of theirs the public likes.

Once an artist reaches a certain level of sales, the traditional marketing methods can come into play. Traditional methods that now have a way to better prequalify or improve/reduce risk. Overall greatly reducing losses which in turn improve payouts back to the successful artists..

In other words, technology can be used to greatly reduce the cost of overall losses obtained in traditional systems of the majority that the miniority successful end up paying for.

And it can even be used to help those who aren't top popular enough to earn a living thru traditional methods, to do so thru digital means.

.
.

The market speaks for itself

[Walter Bell]

How, exactly, would you propose measuring the success of a musician to find out whose CDs are worth pressing by the million, and whose to throw in the dumpster?

Obviously the consumers are voting with their pocketbooks, and buying 16M of the CDs that you consider to "suck." Perhaps the problem is that a large percentage of people are not good judges of music quality. But how do you solve that?

As another example - Sanyo probably sells millions of their relatively inexpensive CD players. To an audiophile, they probably sound like crap next to a high-end Harmon Kardon box. But Harmon Kardon only sells a handful, and Sanyo sells millions. How do you get all of the peons who buy from Sanyo to switch? You can't, because the Sanyo equipment is good enough to do the job. Maybe music is the same way - not perfect, but sufficient for most people.

~wally

Re:An artist needs slick recordings to succeed

[xkor]

It seems to me that the biggest problem with music recorded by independent artists is the (typically) poor production values of their recordings. Sure, it's easy to create slickly produced electronic music [xdas.com], but even just making an acoustic drum track sound decent requires a talented engineer with a decade of experience, which many small studios are lacking. Also needed are good microphones, a quality drum kit, and fresh drum heads for each session. Even if the use of the Internet sets distribution costs to zero, quality recordings are expensive to make.