Recently, the UK government passed The Digital Economy Act which included many, perhaps draconian, measures to combat online music piracy (including withdrawing broadband access for persistent pirates).
Much was proclaimed about how these new laws would protect musicians and artists revenue and livelihoods.
But how much money do musicians really get paid in this new digital marketplace?
This image is based on an excellent post at The Cynical Musician called The Paradise That Should Have Been about pitiful digital royalties. (Thanks to Neilon for pointing that out). I’ve taken his calculations and added a few more.
As ever, this was incredibly difficult to research. Industry figures are hard to get hold of. Some are even secret. Last.Fm’s royalty and payment system is beyond comprehension. (If you can explain it to me, please get in touch)
Note: these figures do not include publishing royalties (paid to composers of songs). The full spreadsheet of data does though. You can see all the numbers and sources here:http://bit.ly/DigitalRoyalty
If you have any experiences, data or royalty statements to share, please post below!
sources: TheCynicalMusician.com, Digital Audio Insider, Basca.org.uk, PRSformusic.com, MusicAlly.com
data: Digital Royalties
research: David McCandless, Caroline Flyn, Toby Slater, James Key
design: David McCandless
136 Comments
Wonderful! Do you have this as a PDF? Would be awesome to print it up and put it up at the office.
Cheers.
These metrics are interesting, but they only tell part of the story really in terms of how a performing artists economics play out – Between appearance/performance fees, merchandising rights, and the always difficult to quantify perks, and the the extensive cost of recording incurred by performing or recording artists and the label offered finance arrangements (that make loan sharks ashamed to be in the same industry) – It’s still difficult to get a realistic picture of what it takes to survive as a musician. While it’s slightly less ambiguous as to what it takes to survive as a writer, it’s still not exactly a clear picture.
Among the more interesting numbers in the metrics are things like the difference between price to the consumer, and total artist/label revenue via different distribution channels.
Great work, im already thinking how to CSS this!
This data doesn’t take into account cost of goods for physical CDs.
* An unsigned artist selling a self-published CD must pay about $1-$2 per copy for COGS, so their earnings are less. (Often, they also don’t get the best deal on manufacturing their CDs since majors do things in-house or have large contracts with CD manufacturers, which lowers the price.) This COGS price applies to CDs sold in-person at shows and on CD Baby.
* Signed artists’ deals usually are “press and distribute” so the artist royalty does not take into account COGS directly.
Also, this goes to show that the record industry must start to become artist friendly. Otherwise it’s better for artists to go it alone, and many already are.
Hence the reason why musicians go on tour…
So – what you’re saying is this:
If the artist is at a “low end royalty fee” deal with her/his record company buying a CD equals listening to that CD approx. 120 times on Spotify.
(assuming that the CD contains 10 tracks and that the artist stays with his/her record company)
those categories are fairly generic and frankly, antiquated. If I write, produce, record and distribute everything myself, I stand to make much more than any model you have outlined. Without going into detail, I will say that one can do at least 2.5x better than your figures. Ask an artist! It’s not a great, or fair situation, I will agree, but there is something worth building on in the current model. -un-evolved as it is.
I understand how tempting it may be to dis-credit any attempt at fair usage compensation for artists. great powers that be make a whole lot of money either way. many sites make money through ad revenue as well. yet the only group which is constantly attacked are the CREATORS of the content which everyone so hungrily consumes.
some content creators favor compensation. in turn it goes to fund the music you love. accurately. it a particular song gets streamed/downloaded a kagillion times, why shouldn’t that be reflected through a share of the AD REVENUE which the curators are PROIFITTING FROM being alotted to the writers, producers, and performers who are responsible for the success of the content. It will help to ensure the quality of future content. plain and simple
This seems deliberately misleading as costs are not taken into account. Yes, you might get 8 revenue after pressing costs from a self-pressed CD but then that 8 and plenty more is already swallowed up in myriad other costs. To suggest that there is anything left for a “wage” – no matter how minimum – is misleading.
That’s a great article, really interesting to see the information laid out in graphics like that.
The Music Void has an article online about making music work in the digital era, especially given that streaming services are paying such poor royalty rates.
http://www.themusicvoid.com/2010/04/the-economics-of-making-money-as-an-artist-in-the-digital-world%E2%80%A6/
As an artist I tired of this scenario some years ago and have established a company where 95% of revenues are returned directly to the artist. As always, the bulk of revenue comes from royalties. However I have to say that the streaming sites are good in theory but still have a long way to go and I’m not surprised that Universal recently put a stop on their releases going to these sites.
The problem with going DIY, is that while you get to keep all the money, you also have to learn to sell things – and that is what record companies are good at.
Even if we include other things, like performance income, then you’re actually a lot better off earning nothing from millions of record sales, but having massive stadium audiences, than selling 2000 copies yourself, and playing to 30 people a night.
(Imagine how much a company could charge to successfully promote your music to millions of people and guarantee you sell-out stadium gigs).
Financially, anyway. Creatively, it’s another matter. The problem is that financial success guarantees you creative independence, but is hard to achieve without losing that independence.
An error: Rhrapsody stream and Last.fm seem to have transposed data. Or perhaps a typo as $0.0022 is smaller than $0.005
I used to work in the CD pressing industry and if you want to press your own CD there is a significant minimum, 10,000 last I heard but it may be double that by now. This is due to the tremendous amount of work involved to produce the masters. The first CD in a batch may cost thousands, the next 9,999 and be stamped out with no effort for pennies.
Those are some big dots on the last columns. aww yeah
This is an execellent piece of work. I would say to anyone thinking of pressing their own CD’s / DVD’s – Shop Around! The quality output from most pressing plants is very good but does vary and some media that they use is questionable so ask for and try out samples and make sure you follow up reference customers.
The other things that you really do need to factor in to the mix are the cost and time for self promotion, marketing, advertising etc. This can be very expensive. Get some good cover art – there are plenty of art students more than willing to do something very creative for you – just ask at the local art college.
Remember that just because your track or album is on a site does not mean that someone is going to listen to it or buy it. You have to attract people to it so use the press, write blogs, use social networking just to attract people to you and your music.
Don’t forget AFAHMAEP “A Fool And His Money Are Easily Parted.” There are plenty of enterprising ‘sharks’ out there that will gladly take money from you with the ‘promise’ of making you a superstar but will deliver very little – and you are paying for it.
This is so frustrating. I am neither an artist or in the music business in anyway. I think this article is approaching this issue from the wrong angle. If the current digital music economy is broken, than of course that is a problem. On the other hand, if we are serious about fighting digital piracy we have stop thinking about fighting it with education and legislation. There is only one way that issues like this can be changed: offer a better product or service and figure out how to make money from it. This may sound impossible, ITunes doesn’t really provide any better service or product than downloading something for free. Ad-supported, free subscription, streaming does (e.g. Grooveshark). Although Grooveshark has its problems (like having the users upload the content), what it offers is a single place where users can store all of their music, listen to their entire catalog from any computer, from their phone, from their car, never have to worry about losing a CD or it getting damaged. Grooveshark, and similar services, offer a product much better than what users can get for free. This is our only hope for the future. If musicians don’t make enough from them, than the music industry need to get their act together and work out new deals. Pretending that we can guilt people into buying crappier products for more money will not work.
i will like to make a song and be with lil boosie
This trend exists across all media markets. Everything from music to news media to porn has moved along the same path where digital syndication is replacing the need for physical products.
In a physical product market, financial resources and access to distribution channels determine who can enter the marketplace. And this is from both the supply and demand sides of the map. Costs of production limit not only what can be produced, but what can be distributed and what can be accessed. If you can’t afford to make and market your product, you’re out of luck. If you can’t afford to purchase the product, you’re out of luck. But the more resources and access you have, the more you can influence the demand of your product. The barriers to entry make for a larger piece of the pie for those that make it in.
In our new digitally syndicated market, access and distribution are universal. Anyone anywhere on the planet at any time can listen to what you make available to the public via the internet. The only barrier to entry in the new model is the cost of transferring the information from your mind to a web server.
With this unlimited supply, there is less of a demand for everything because there are an unlimited number of options for our attention. We as viewers, listeners, accessors of content are able to get whatever information we want at any time with almost complete control of our experience. And that means that pieces of the pie become infinitesimally smaller whie a much larger group is grabbing for them.
So it’s a trade off. The old world gave you less access but more opportunity for exposure. The new world gives you much more access with much less opportunity for exposure.
But stepping back from the economics of the issue, what is really the point of this info-graphic?
Is it to say that artists are getting screwed?
Is it to say that companies are making more off music than the artists that make them?
Those things have always been true. To buy into any kind of mainstream distribution is to be a part of a supply chain that doesn’t give a shit about anything but selling a commodity. In the whole history of music, a vast majority of the income made off of distribution of music products has been by people who had nothing to do with making the music.
First off, no one forces any musician to put their stuff on iTunes or Napster. No one forces any musician to sign with a record label for a shitty royalty split. What is not said here is that in this day and age, any individual can record, market and distribute their own recordings at a cost that is essentially nothing compared to what it took a few decades ago. Any individual can sell mp3s at the same markup as CDs exclusively on their own website with practically no overhead. In fact, a direct sale of a comparably priced digital album on a band’s website is more profitable than selling the same album on CD.
Secondly, what is the point of the correlation between selling music products and supporting yourself financially? Who ever said that artists should be entitled to support themselves with copies of their art? Just because you have a passion for creating something then you should be able to have a career in it? This is so backwards. The point of making music is not to sell CDs or turn a profit. These things were necessary evils that manifested over the past century or so to take advantage of the invention of the record.
The point of making music, and pretty much the point of expressing any idea in a public forum is to connect with people you are communicating with. If your music connects with people, you will gain their support. If you want them to financially support you in what you do, it should derive from that connection. It should not be about a statistical value on a distribution statement or a big pink circle in an info-graphic.
If you want people to listen to your music, don’t focus on distribution. Focus on building a fan base. Play for free. Play in the street or in the subway or at open mic nights. Play for free at your friend’s sister’s cousin’s wedding. Burn CDs from your computer and give them away at street fairs. Connect with people. Don’t focus on their money before you focus on them.
And if people don’t want to pay you for your music then so what. If you love making music then keep doing it. If you still want people to hear what you’ve got to say then try something different. But if you just want to make money then get a job.
They earn a lot online cause their albums are the biggest factor for them cause many people are getting the music online and if they likes it they don’t think for the money.Any body is they have their pocket to pay for than they will not think much.
The last ones involve streaming the music and the listener doesn’t get any form of physical music to take with them for the most part. (Perhaps DRM versions can be put on a device)
I would love to see how these compare to what the artist makes from plays on FM radio. Do they make a single penny? How does that work?
I can see how iTunes is a slap in teh face to a musician but it looks like the label managed to get theirs.. Perhaps the future of music is more like the self-pressed side of the coin except that it would be self-released on iTunes and the artist would make the larger share.
Either way, I am not going to cry for the label or the artist because most of the overproduced garbage, like Britney Spears, can go away and no one would miss them. I take issue with performers who need to lip sync because their voices have been digitally cleaned and it took 100 attempts to get a single decent version of a song in a studio. I think the online music revolution has potential to make the attractive performers who are less talented less appealing to recording studios. Back before my time, a musician was usually some ugly dudes that you would not look at twice on the street but MAN HEAR THEM SING and you are made a believer! Real talent should never be made second to the “X” factor.
Well put Keeron. I’m tired of musicians who would sing about how they liked eating shit if it sold. I’m tired of “just make it” referring to a good paycheck instead of making good music. I’m also tired of people romanticizing the music business. It has its ups and downs, but it isn’t Disneyland.
My point? Make music because you love it, not for a paycheck. If a paycheck comes, cool, if not then it shouldn’t matter.
I do appreciate the effort that went into this article though. Numbers don’t just migrate into charts by themselves. And information is always helpful. My thanks to those who put it together.
some content creators favor compensation. in turn it goes to fund the music you love. accurately. it a particular song gets streamed/downloaded a kagillion times, why shouldn’t that be reflected through a share of the AD REVENUE which the curators are PROIFITTING FROM being alotted
Ha ha ha…. I am a musician and am seeing the worst of it…. a) ya gotta write and record music people actually want to hear (imagine!) and b) the figures above assume a solo artist…what is you are a band with 4-5 members…. then ya really gotta sell…..
I presently HATE the music industry…. very hard to earn a living…. we all got day jobs….
Radio? What about radio play?
Then suddenly a fresh artist comes along and the cd’s are found at thrift stores, flea markets, discount stores, wholesale outlets, yard sales, etc, etc, sometimes for 50 cents a piece…then again they may be finally dumped into the trash because nobody is interested anymore. Artists come and go but the public will still find their music if they have to wait 20 or 30 years and pay a thousand dollars for a piece of plastic…what a life!!
One thing I like about the Rhapsody “pay per play” model is that if an artist releases an album with 10 tracks and I download it to my Rhapsody-synced MP3 player, I need to play that album once per day for just 45 days to surpass what the artist would make from me buying the CD (if the artist has the “high end royalty deal”). If I keep any tracks in my shuffle after those 45 days, that’s “profit” the artist wouldn’t make if I’d bought the CD. I’ll use Rhapsody for major label artists and out-of-print albums, and keep my CD buyin’ money for indies and collected favorites.
Awfully misleading stuff. Firstly, a iTunes digital download would land the artist more per track than a 12 song high royalty CD would. Secondly, comparing Spotify streaming with CDs (and even digital downloads) is grossly unfair. It’s like comparing radio royalties with CD royalties. With a stream you don’t own the song. How does Spotify compare with radio?
I am both a musician and a music industry professional. But you are visually comparing completely different things. It is quite obvious that selling an album that contains 10 tracks, versus selling one single track will make more money. It contains the tenfold amount of tracks. And then you are comparing streaming a track to a user, versus owning a track in a certain format, which is obviously, wrong again.
Your chart is visually appealing, but more useful in proving your probably premeditated point, than it is representing reality.
And as a parting thought: you make recorded music to support your tour/live act. You do not go touring to sell recorded music.
excuse me, I posted my thoughts here, I was simply trying to express my ideas and my post got moderated.
is there an explataion for this?
Great research!
Thanks for the wonderful piece. I would really appreciate an article on the different interested parties involved when it comes to online distribution and what are the different royalty rates.
I think the bit many are missing from this is that in this new age of digital distribution you are no longer stuck with one outlet and one connection for “making money”. Digital distribution means you have a vast number of outlets. Regardless of whether spotify requires several million listens to make “minimum wage” you are obviously not taking your business seriously if you have all your eggs in one basket.
A responsible way to regard this nice research is to average all of the outlets together and you’ll find that life is not so miserable.
Every successful business has a number of distinct personalities. One of them is the salesmen and no self-respecting salesmens would admit that iTunes is the “only” place they sell music. No way no how.
The great thing about this new age is that I can sell through literally hundreds of online outlets, each one having a certain monetary value with associative pros and cons.
We’ve entered the wild west again with digital.
Great work done!
I think innovation was awaited in music field also, as the music world should also go out of releasing music on cassettes and Cds to something more and this revolution will work. How royalty will be addressed, will anyone tell?
Seems like more innovative ideas for music projects are going to eventually take over for independent artists. A guy I know (who had gone the label route in the past) more than funded his EPs and a full-length through pledgemusic.com in a couple months through pre-buys. Fans who pledged get the downloads, but can also pledge more and get physical CDs or other stuff. This model also naturally develops relationships with supporters/fans and seems to be a winner on so many marketing levels, too. I know there are a number of sites using this same sort of model, like kickstarter.com (being used by plenty of established artists, even)…I don’t know how well it would work for a brand new artist as you do have a certain amount of time to reach your pledge goals, but if they had managed to cull lots of support prior to recording, it would work just as well. Time for the system to change…
Hey, this is really cool, and pretty sad for the artists. I noticed a bunch of mathematical errors; the first entry should be 145 sales to make $1,160. 143x$8=$1144, the last should be 2,697,675, the second last should be 232,000, and a few others were off too. I’m not trying to be a hater, just helping out (hopefully.)
great article
It seems to me that singers are a dime a dozen. Writer composers are few and far between. It appears that the great majority of money comes from the tours or Vegas bookings…millions of dollars. Does anybody know what, if any, money does the composer get from those gigs? Now we could be talking many millions of dollars to the singers, right? I guess that we all know that the artists that are preforming don’t usually even mention the name of the composer of the song they’re singing….they just take credit for the song as if it’s their own creation. How about Madonna sing songs that she has written herself at her concerts? How many tickets do you think that would sell? Maybe her family and close friends would show up.
In reply to the people that think that someone should make a product and not get paid for it… just because you like to compose music…You’re living in an insane asylum, right?
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