Originally Posted by elginchris
the old system of selling music will never work again. anyone who thinks otherwise might as well stop reading this post right now.
all music should be free in cost.
as an artist/label, the only way to make money 'selling' music is through advertising and merchandising.
---end of story---
Fans are not the only ones who want what is "hot". Marketers make entire careers "breaking" underground artist to the main stream. Thats where the deals should be made.
Ha! You're just looking at it from the label side.
Artists have never made significant portions of their income from selling music. Because they're paying their advance back out of their small percentage of the profit, they generally have to generate 10x the revenue they were advanced before they can earn their first penny in sales.
An advance of $1 million means they will probably have to sell 2 million copies before they recoup - assuming that video costs and tour support are not recoupable.
If you've sold 2 million copies of an album, you should have no problem generating $10/per fan per year, or $20 million.
Now lets say you sell 4 million, that puts you at $40 million from non-record sales income. In the black x2 million records which you're probably getting 10% of 90% or 1.8 million at $5 each. That translates to the record company cutting you a check for $900k boosting you're income from $40million to $40.9 million.
If you have to recoup other costs besides the advance, then it's far less.
Artist's have never really earned real income off of their album sales.
That doesn't mean that they don't need albums to sell to be successful. That's what's funding their ability to earn through all of those other revenue streams and fund the venture capital that is the record label. If you take the VC away, the whole thing falls apart, which is what's happening. Labels don't have the capital to function properly because 90% of record sales revenue is no longer enough.
Had the model been more 50/50 the current problems probably wouldn't be happening and labels would have seen Napster as a tool rather than a threat.