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How much can you make being no name indie, you ask? Here's a clue...
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| aNYthing |
source http://thecynicalmusician.com/2010/01/the-paradise-that-should-have-been/
A somber shot of reality, IMO.
| quote: | You may have gotten the impression that I don’t like the Internet. Some people certainly have. Some are convinced that the reason for it is my ignorance of how it works.
The truth is I am deeply disillusioned about how it turned out and I’ll take this opportunity to tell you why.
The Internet should have been a godsend to musicians and creators of replicable works in general, for two reasons:
The two biggest problems an independent creator faces are distribution and promotion, which in the past meant the need to deal with publishers (and all associated creative and financial trade-offs). The Internet has enabled even the smallest business to reach a potentially global consumer base.
Creative works such as books, movies and music are pretty much the only products (others include software and news) that can be delivered on-line and as such seem custom-fitted to e-commerce.
Looking at the two points above, we see that the Internet should have opened wide new vistas for the creative sector and enabled thousands of independent creators to flourish without the need to court big business. So why didn’t it pan out that way?
Or did it? Some would say it did. However, looking at matters realistically, the amounts earned from creative output delivered through the Net verge on the laughable.
It so happens that I write this from a position of someone who makes money from making music available through the Internet, so let’s take a look at some numbers. Just how much can we make from this new method of distributing our work that should have been our paradise?
Starting with MP3 downloads, the wholesale price per track is typically 70 cents. Depending on your distributor, you will receive a bit less. For myself, distributing through CD Baby, both Amazon and iTunes sales bring in 64 cents per track – more precisely 63.7 cents. A full EP download from Amazon works out at $3.82. Things begin to look up for full-album sales direct from CD Baby. Under the old scheme, $9.99 from the purchaser would bring in $9.09 for the artist. After CD Baby increased its commision towards the end of last year, the payout to artist decreased to $7.49.
These are not generous margins to be sure, but the fun starts when we consider streamed music. Rhapsody streams generate just under a cent per play – 0.91 cents to be precise. Recently we’ve began to be credited for Last.fm plays and frankly I do not know whether to laugh or cry about the handsome sum of 0.015 cents per play. I’ve yet to receive any numbers from Spotify, but if there’s anything in the Lady Gaga story, they’re likely to be in the Last.fm region.
For additional perspective, permit me to quote David Harrell’s findings with regards to the subscription/download model at eMusic, posted at Digital Audio Insider. His Q3 2009 payouts worked out at 34.2 cents per track (compared to 33.4 in Q2). David attributes the increase to eMusic rasing its prices following the introduction of the Sony catalog. He also provides additional insights with regards to per-track income on full album downloads – read his post for the details.
Now that we have our raw data, let’s see what it means for recorded output as an income source.
Let’s start with some assumptions (since we’re striking out into economic territory). The Federal minimum wage rate in the U.S. is $7.25 per hour (Source: U.S. Department of Labor). We’ll assume a 40-hour working week and a four-week month for ease of calculation. The result will be somewhat lower than you’d expect for full time employment, but since we’re looking at minimum earning levels, this does not impact our calculations negatively.
Rolling it all together ($7.25×160), we get our benchmark minimum monthly earnings for one person: $1,160. Over twelve months, this gives as an annual income of $13,920, which is above the Federal poverty line for a single person ($10,830 – source: U.S Department of Health and Human Services), but under it for two ($14,570 – source: ibid.). In other words: make sure your wife has a job.
Now that we have our benchmark minimum earnings level, we can check just how much we would have to sell of each of these products in order to earn these amounts. Note the additional assumptions that there is a single creator (a self-recording solo artist) and that her costs of recording the material are zero.
In the case of Amazon and iTunes single-track downloads, 1,813 units must be sold monthly; 21,750 units a year.
For CD Baby full album downloads (under the new commision rates), the numbers are: 155 units a month; 1,859 units a year
For eMusic single-track downloads, at the rates reported for Q3 2009: 3,392 downloads a month; 40,941 a year.
With Rhapsody streams, you’ll need 127,473 streams a month; 1,529,670 a year (yep, that’s over one-and-a-half million).
Finally, Last.fm rates mean you’ll need 7,733,333 plays monthly; 92,800,000 plays a year.
I don’t know what these figures tell you, but my opinion is that Last.fm is not a viable income stream. Maybe there’s something in that Lady Gaga story after all.
What about a band? Let’s just quickly go over the same calculations for a standard four-piece rock group (vocals, guitar, bass, drums):
Amazon and iTunes, single-track downloads: 7,250 a month; 87,000 a year.
CD Baby full-album downloads: 619 a month; 7,433 a year.
eMusic single-track downloads: 13,567 a month; 162,807 a year.
Rhapsody streams: 509,890 a month; 6,118,681 a year.
Last.fm plays: 30,933,333 a month; 371,200,000 a year.
Aside: Even if you got the entire Chinese web-connected population to listen to your song on Last.fm just once, you still probably wouldn’t meet your annual quota.
To put things in perspective, let’s consider a final scenario: the humble CD.
Taking a quick quote from Disc Makers, for jewel-case CDs with full-color 8-page booklets to a customer-supplied design with UPC bar code included, a 1,000 unit run, the duplication costs for a single CD work out at $1.88. If we sell these for a tenner at gigs, our margin works out at $8.12.
Looking just at the band example, we see that they have to sell 571 of these a month and 6,857 a year, which actually works out at less than full-album downloads that are cheaper by only a single penny. We’re talking about a physical product, that at least some people consider as having additional value (the artwork and liner notes, for instance).
For completeness, we should add that if we’re to distribute the same CD through CD Baby and wish to preserve our margin, it would have to be priced at $12.12, to account for CD Baby’s $4 cut on each CD sold.
Thus we see, paradoxically, that in terms of generating realistic income, the CD is still our best bet. The direct digital replacement – bundled download sales – is comparable. Unbundled track downloads increase the number of necessary transactions by a factor of magnitude and subscription-based downloads by yet another. The supposed future of recordings on the Internet – cloud-based streaming – barely deserves mention. I can’t imagine an independent artist receiving millions of streams a year, much less hundreds of millions.
Let me re-emphasise that all of the above assumes zero costs of origination and minimum earnings. If we were to account for the fact that music does cost something to record and that creators should earn more than the minimum wage, the numbers would have been a lot higher.
Finally, let me address some potential criticisms. I’ve focused on the “pure recording artist” for a reason. Yes, it is true that the artist can supplement her income from other sources: playing live, licensing, merch sales or whatever, but that’s exactly the point. The further we go towards the “new” methods of distributing recordings, the more it becomes necessary to do just that. The Internet should have been a paradise for the recording artist, but it became hell. The trends on the Internet are such, that it is becoming harder and harder to pursue recording music as a career. If recordings aren’t a money maker, they’ll be treated as one of three things: advertising, a hobby or not worth the bother. But we still want recorded music, don’t we?
One thing I did not do, was consider the joint impact of these various income sources, for the simple reason that the number of possible combinations is infinite. To give you some perspective on how this might work, I’ll now take the $8.12 margin on a CD sale as a benchmark. To earn the same amount as you did on that one CD sale you’d need:
1.08 full-album sales through CD Baby,
12.7 single-track downloads from Amazon or iTunes,
23.7 single-track downloads from eMusic,
892.3 streams from Rhapsody, or
a whopping 54,133.3 plays on Last.fm.
These numbers should serve to illustrate that whatever benefits “music 2.0″ may have, it’s certainly done nothing for the recording artist, save make her noticeably worse off than she was in the old CD-based market. If recording artists ever go the way of the blubber merchants, it won’t be because there’ll be no demand for their product. It will be because making recordings makes no economic sense.
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| Mad for Brad |
mp3 downloads (legit) are increasing exponentially. The easier they make it for people to buy tracks, that is lets say you are listening to radio station on your ipod, the track playing is always displayed, you click brings you right to the app store, you have the track in less than a minute.
Once teens have credit cards and are able to buy the music they want, the floodgates will open. I think there will be a point where songs will cost 10 cents and you will have a million people buying your track even if it is somewhat good because it is so cheap.
Once you make it more of a hassle to download warez mp3, music piracy won't exist. I mean who here steals chocolate bars ? I did as a kid because it was expensive but at a certain point, I mean a chocolate bar costs nothing and it isn't even a question.
Not to mention the money in licensing royalties. You know the rather obscure band The Naked And The Famous ? That track Young Blood which was featured on at least 3 prime time shows that I know of that I watched and I don't watch tv basically made that band enough money to live on for a year and every year that show is syndicated and repated. Thats all it takes. USA is divided into a certain amount of regions so not only will you get a piece of the sync fee but you will get the rate for each region for the time it is played. Now these shows also show in other countries so you can see how it quickly adds up.
So a band that did not even chart in the USA basically made a lot of money with just 1 track. The best is if you can make a the opening for a tv show. That is basically around 2$ every time the show plays in each of the regions. |
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| DJ RANN |
Interesting and thanks for the find. TBH, I think dance music was one of the first genres of music to realise that with digital distribution came the need to find other forms of revenue as an artist (and by that I do not mean to compare to struggling bands etc - I mean as a working and even fairly popular artist). The moment Vinyl began to struggle and it moved to digital format, the days of making livable money as a producer (only) were gone for most people.
Personally, unless you are going to make money off gigs/PA's and need the exposure, I have no idea why you'd allow your music on last.fm or spotify - you might as well just make a torrent yourself.
I think the internet has drastically increased artist awareness and decreased income for bought materials - gigging is a different thing.
Prince actually set up a really interesting model and has made a serious fortune from it. Basically, you sign up to his CD club, and he lets you know, as a fan when new msuci is available. The clever thing is, he puts out a lot more content (like 7 CD's in one release) and does it far more often than your average popular artists (one album a year for instance).
So he's reaching a far smaller fan base that commercially releasing to the mainstream but they pay more (up to $40 per release) and they get it more often. The math means more profit, more often.
This means he gets full creative control as he's the one releasing it and has no labels to answer to, his fans get more of him and it's personalized in box sets etc.
ing smart way of doing business. |
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| Mad for Brad |
Here is a breakdown of some tracks and the royalty per week
CELEBRITY APPRENTICE
“For the Love of Money” – O’Jays – ($6000/week)
CHOPPING BLOCK
“Ring of Fire” – Johnny Cash – ($11,000/week)
ER
“Shadows and Regrets” – Yellowcard – ($6000/week)
HEROES
“Together” – Krystal Meyers – ($5000/week)
THE JAY LENO SHOW
“Hold On, I’m Comin’” – Sam & Dave – ($8000/week)
“Life Is a Highway” – Tom Cochrane – ($2000/day – $8000/week)
“Mess Around” - Ray Charles - ($6000/week)
NOw imagine a show that is syndicated and starts having repeats. You can make more than movie composers. |
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| DJ RANN |
| quote: | Originally posted by Mad for Brad
Here is a breakdown of some tracks and the royalty per week
CELEBRITY APPRENTICE
“For the Love of Money” – O’Jays – ($6000/week)
CHOPPING BLOCK
“Ring of Fire” – Johnny Cash – ($11,000/week)
ER
“Shadows and Regrets” – Yellowcard – ($6000/week)
HEROES
“Together” – Krystal Meyers – ($5000/week)
THE JAY LENO SHOW
“Hold On, I’m Comin’” – Sam & Dave – ($8000/week)
“Life Is a Highway” – Tom Cochrane – ($2000/day – $8000/week)
“Mess Around” - Ray Charles - ($6000/week)
NOw imagine a show that is syndicated and starts having repeats. You can make more than movie composers. |
Very true - If I told you how much one composer (you know who) makes per week just from licensing his back catalogue to TV alone, it would make you vomit. And that does even include residuals or his film catalogue, nor the fees he gets paid in the first place to write them. |
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| aNYthing |
| quote: | Originally posted by kitphillips
tl; dr. |
Herp a derp, then. |
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| tehlord |
I'm wondering how much systems like paypal actually help music sales. I find i'll impulse buy a few tracks on beatport these days just because I don't have to get off my arse to find my credit card. Plus of course those that are too young to own a credit card can easily obtain a paypal account, or at least have one set up for them.
It's that impulse buy nature that helps a lot I think. |
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| Richard Butler |
| I thank the Lord I'm a 'producer'as opposed to some bloke that plays the sax. At least us guys have the potential to make a big impact without having to rely on recording studios and what not. |
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| Mad for Brad |
| quote: | Originally posted by tehlord
I'm wondering how much systems like paypal actually help music sales. I find i'll impulse buy a few tracks on beatport these days just because I don't have to get off my arse to find my credit card. Plus of course those that are too young to own a credit card can easily obtain a paypal account, or at least have one set up for them.
It's that impulse buy nature that helps a lot I think. |
With most places, they already have your info , you. Click buy, and 10 seconds later, you have the track. Pay pal would take way too long and pay pal sucks all-round. |
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| Richard Butler |
| quote: | Originally posted by Mad for Brad
With most places, they already have your info , you. Click buy, and 10 seconds later, you have the track. Pay pal would take way too long and pay pal sucks all-round. |
I agree with this, it's stopped me buying many a track. Stupid things like not being able to recall which phone number you once entered for security, or putting my village in the city box when it might have to be the town near me to be entered. |
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