Quote:
Originally Posted by Kommismar(sp?)
Here's a reality of the music industry. Let's say you're a member of a four-person band. Your debut record just went Gold (500,000 copies).
Let's say that you're not a songwriter, and that you're on a record label (i.e. you don't sell independently, a la Steve Vai). The list price of your CD was $16.00, therefore your record has earned a total of $8,000,000. We'll say it took you one year to make the record, and you did not tour to support it. Therefore, Mr. Professional Musician, here's your earnings for one year:
These are standard average figures for the industry.
$16.00 - Standard list price of record
- $4.00 - Deducted by record company for packaging costs
---------
=$12.00 - Cost of the record as determined by the record company
x 10% - Net Artist Royalty (minus the producer's take, about 3%)
= $1.00 - Base royalty for each record sold
x500,000- Number of records sold
---------
=$500,000-Base amount due to the artist.
Now follow me here...
500,000 - Number of records sold
-75,000 - 15% deducted for freebies, promos, review copies, etc
=425,000- New base number used to determine gross royalties
$425,000- New base amount due artist (425,000 x $1.00)
---------
$425,000- Royalty base
$148,500- 35% of royalty held by record companies for returns
$276,500- New royalty paid out to artist
---------
$276,500- Royalty base after freebies, returns are deducted
$27,650 - 10% deducted by record company for breakage
$248,850- New royalty base after breakage.
---------
$248,850- Paid to band by record company
$150,000- Expense to record the record: studio time, engineer's time, equipment rental, per diems (this cost may have been covered by record company as an advance; now it gets paid back to record company)
=$98,850- Band's take after expenses
---------
$98,850 - Band's earnings
$19,770 - Manager's 20% of the band's earnings (some take only 15%)
$79,080 - Band's final take
---------
$79,080 - Money earned from sales of 500,000 records รท 4 Number of people in the band
$19,770 - Individual members' final paychecks
This does not include lawyers' fees, the cost of making a video for MTV (which the band will foot at least part of), taxes, social security, and insurance.
Don't spend it all in one place, rich guy!
This is where phrases such as "paying your dues" come from in the music industry. This is also how a huge-selling group like TLC can go bankrupt. Very, very few come out of music rich. They do it because they love it.
Its really narrow minded to make comments like, "All the artist I see on MTV are F'in rich!", How do you know that? You think a label is going to let what they want to be 'The Next Big Thing' roll up onto a TRL stage wearing 6 year old chucks and the same shirt they had on 3 days ago? With powdered sugar all over their mouths cause the donuts in the studio are the only other food that they have had all week other then loser sandwhichs and Top Ramin?