There is a great article on the blog TechDirt that discusses why musicians (in this case, non-classical musicians) rarely make very much money from even astronomical album sales. Here’s a great graphic from the post:
The essential scenario is this: the band gets signed by a label, and is given an advance (against their future royalties, NOT their actual album sales – this is important to keep in mind), usually quite a large sum of money, let’s say a million dollars. The band makes the recording, which is paid for out of the advance, as well as the fees to their agent(s), lawyer(s) and others. Whatever is left over is what the band splits amongst themselves and lives on while making the album. The album drops. Basically, the band owes the label a million dollars. The label is taking 63 cents out of every dollar the album makes. That does not apply towards the advance, because that money is album sales money. The left over 13 percent that the band gets (after the distributor takes their cut) is what the band essentially uses to pay back the record company, who is making all of the money from the album in the first place. Kind of screwed up, isn’t it? Now we know why artists are building their own private labels, and the recording industry is rapidly digging a hole for itself.
Read the entire article here.
