Truths About The Industry: From An Insider On The Outside

Nov 7 2010

recent post from Tech to a disgruntled fan. I read the article and realized many fans don’t know the ins and outs of the music business like many of us do who live it every day. People are generally not aware of the massive amounts of money being lost and that due to these losses many labels are not signing new acts. As a person who struggles in music and who keeps a very close eye on the trends and the profits, I wanted to give you a little Music Industry 101 so that you can see what an artist makes and doesn’t make. The bell has rung and class is now in session.

The music industry is hard and the road is cold. Many sing about it for a good reason. Tech says “Fuck the Industry” because it always has its hand out waiting for a payment. The reality is that labels are losing millions of dollars due to free downloading and pirate sites. Artists used to make the majority of their money on touring and CD sales. Now CD sales are nearly a thing of the past. Rolling Stone recently put out an article that I read page to page about how the music industry is declining due to people downloading free music as well declining show attendance due to the poor economy. The article quotes:

Our prediction that the U.S. music market will shrink in five years from $10.2 billion to $9.8 billion also seems like a conservative estimate. We’re not taking into account some of the new models that are coming into play. We haven’t predicted what the licensing revenues are going to be for something like a Nokia Comes With Music. This is purely based on revenues from direct sales or services to the consumer.”

This is a trend that is being seen by all artists from the top-of-the-charts-people like Madonna to the selling-on-the-streets-people like my team. We have not seen such hard times in years and everyone is hurting to find ways to make revenue. A lot of people don’t know how much it costs to make an album, release it, tour, and just live. I’m gonna give you a small estimate of what many of us shell out for these expenses.

From an outsider looking in this is what I know and see from experience. Let’s say that you are just a little underground band. You want to print a CD and do a show. To record the twelve tracks you are looking at minimum of $10,000 (which includes tracking, mixing, and mastering) if you want something good and not poor quality. To print you are looking around $1,600 (for 1000 discs) if you want a nice book and a cd shell with plastic wrap. So you are in $12,000 and your CD is ready to go out. Then you need a show to showcase your CD and hopefully sell some. You are looking at $1,500 to $3,200 for a venue and security, $60 to print tickets, $200 for minimal flyers, and $200 for posters. Don’t forget the set up fees to start printing which would be $100. So now you are in it $15,700. Now you need to hire good acts to draw people into your venue. You are looking at anywhere from $200 to $5,000 a group depending on their level as well as hotel rooms, food, and any extras they require to play. So let’s say you get three acts to play for a total of $3,000 and you have a couple free openers. Now you are in $18,700 before you even get a show on. You would have to sell tickets for at least $15.70 to break even, assuming you have sold out the whole 1,000 capacity venue. At this point you have made no money at all. Artists generally make pennies on the dollar for the CDs they make. The cheaper the CD is, the less money they get in return.

Many artists are forced to tour more and more to make up costs. Imagine this on a much larger scale for artists like Tech N9ne who have much more cost: producers, managers, lawyers, roadies, other artists they work with, business fees, office costs, etc. This adds up to a lot of money going out. So when an artist releases an EP for $6 he/she is not making much of anything on it. Something like that is very much for the fans.

I hope you can get an idea of what is involved and I hope this gives you a new look into artists of all kinds that you love and why they make the choices they do. The bell is about to ring and class will be dismissed for today. Any questions? Make sure and do your homework and I hope you walked away with a little knowledge of Music Industry 101.