With the numerous allocation of expenses and overhead costs, nearly 90% of records that are released by major labels fail to make a profit. (RIAA)
Artists, whether they are educated on the matter or not, bear recording costs, not record companies. Labels, generally, loan to artists (I.e., “Advances”) for these costs and recoup them from royalties.
Note: Advanced monies aren’t for the artist to just whimsically spend on houses, cars, expensive clothing, jewelry etc. It should be understood that it is to “maintain” the artist throughout the creative process.
The average new major label artist recording budget can be between $100K and $500K (minimum) (This does not include: manufacturing, distribution and promotional costs.) Approximately 20% of the annual gross income is budgeted for promotional cost. These costs include (but are not limited to): print and design, packaging, websites, EPK’s, radio promotion, music videos and PR.
Said costs are often recouped from the artists’ royalties.
Breakdown of Profits (source: Diane Rapaport’s “A Music Business Primer”) At common discounts, record companies receive approximately $10.00 per CD ($16.95 SLRP). Thus, projected record company gross income is ten million dollars.
Out of this the record company will spend approximately $625.000 in manufacturing costs; approximately $1,000,000 in promotion (another $1,000,000 will be charged against artist royalties); $1,780,00 in royalties to the artists (at 14% of the SLRP of $16.95, less packaging); and $600,000 in publishing royalties (at 75% of statutory). After subtracting $4,005,000 from its ten million gross income, the record company has a gross profit of $5,995,000.
It will recoup its million-dollar advance to the artist and its promotional costs.
Naturally artists are attached and emotional about their bodies of work, however it is unreasonable to expect that everyone you meet or need, for that matter, is obligated to “believe in” or feel a personal attachment to your work, especially if they are merely providing a service.
The entertainment industry is highly “political” & filled with aspiring “stars” attempting to become the “next big thing.”
One must understand it is not just “who you know” but also WHO KNOWS YOU, WHO WILL DO & FOLLOW THROUGH.
It is the responsibilty of the artist to offer a product that will stand out from the rest & hold interest. Understand that those who have been in the game for awhile have seen and heard it all before. What makes YOU different. *Make them care!*
- Increase national exposure
- Increase radio airplay
- Increase record sales
- Build a story for physical record distribution and negotiations
- Gain record label attention
- Position you better for record label negotiations
Measurements of Success:
*Total amount of airplay spins
- Guaranteed Radio Airplay
- Charting possibilities
- Recognition by thousands of radio stations
- Get paid 100% of your royalties from radio airplay
One of the most important things you can do is to invest in your future.
Investing in your future means making some sacrifices & investing time & money in the present to reap greater rewards later. *No one is going to believe in your product more than you!* Don’t “short-change” yourself by cutting corners on things that can elevate your brand.