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
386 Comments
Ted Strobman can suck a bag of dicks. What a loser.
Hello,
Sorry that I didn’t take the time to read all of the above, but as a french IT specialist, I feel really involved by this matter.
So I’d like to know how the french Hadopi law about illegal downloads and artists royalties are considered, though not yet operational, and without global french las system defects consideration…
Regards
thanks for this article, very interesting.
figures put aside, the interesting phenomenon here is that the LISTENING to music (still) represents the main benefit for the fan. he will spend maybe dozens of hours listening to songs from a specific artist, before even considering going to a live gig or buying a merchandise. seeing the artist live is rarely possible, because the tour might not come to the fan’s city more than once a year. so as a fan, you listen to the music for hours and hours, und you do so for free. and this is the main usage – listening to songs while you’re driving, chilling, shovering, commuting, dreaming, making love etc..
my point is: its a pitty that the main usage of music has no value, and that the artist has to become some sort of sponsored clown to make a buck.
Nice comparison. However the value of spreading the music through Spotify for a new band is sometimes worth a loss in sales. The loss is a bit like paying for advertising – but in this case you actually get paid for your ad.
Can’t get the figures (amount per play) listed to the right (on Rhapsody, last.fm and Spotify) to match the bubbles (the number of plays). Hopefully you can fix…
@Steve
“This is not correct. There’s a mechanical or performance royalty that gets paid for to the performer (or, depending on the deal, whoever owns the master recording).”
Performers are paid mechanicals on sales of a recording, but not radio play. Legislation has been trying to work its way through the US congress to change that, but no luck so far.
Performance royalty payments are based on random sample surveys. They pay people to listen to radio and note the songs that are played on a random basis monthly. They compare these plays to their roster of artists/publishers and then pay out quarterly from a pool of revenue generated from licensing music to various radio stations, businesses that play music over a PA, etc. The amount per random play is roughly based on this revenue, minus operating costs, divided by how many plays they randomly sampled.
I’ve been getting payments from ASCAP since the early ’90s, and each credit (roughly, but not quite equivalent to each sampled play) has historically been worth $2-$4 US. This sounds great, but in practice I don’t make that much money. Someone like Sting or Tom Petty gets significant money from performance royalties though, particularly with the homogenization of corporate radio playlists in the US.
Regarding this post, thank you for the nice graphic representation. Very well done.
It would be more interesting to me to see numbers on an independent artist rather than one doing business in the old major label business model, as the idea that you can’t make money in that system as an artist is hardly a new one. I’d be curious how the new digital marketplace treats the guy who does it on his own.
Interesting! If you make a second version you might consider including information from Magnatune – a website whose operating principle is that the artist and the publisher split the profits 50/50.
For the folks rolling their eyes and saying “oh, those poor musicians”- they’ve created something, people are enjoying it, it’s only fair that they get something for their trouble.
It’s also worth considering that while one person generally = one CD sale, that same person might generate plenty of streaming plays. Probably not 200/month (which is what it would take to compare to a single sale of a CD for an artist with a low-end royalty deal) but there’s also considerably less financial commitment up front- which, as has been mentioned, is a big part of what makes it all so difficult in the first place.
Also consider that Rhapsody, just as an example, charges only $10 a month. Easily less than a CD, freeing up cash in the consumer’s pocket to *hopefully* be spent on more direct revenue streams like merch and gigs.
I’m not saying it’s perfect, and I’m glad someone put this into perspective, but it’s important to think for a minute about what exactly the data means before a) writing off the study entirely or b) freaking out.
There’s a familiar old saw that the labels are always the bad guys. Certainly there are some terrible people out there in the music business – as there are in every business. However, as someone who spent 12+ years working in both indie and major labels, let me give you a picture from their perspective. The label (usually) takes 100% of the risk. From artist advances, tour support, paying for the making of the record, production, duplication and distribution – this is all on the label. Your band breaks up on tour the week your album gets released – who is out all the $? The label. On any given label there are a small % of the artists that are actually profitable. These artists make it possible to sign your band that sells 6K records but it cost $50K to make and release your record. It’s business and many of your favorite artists aren’t making the kind of money they “deserve” because they don’t have the listeners. It isn’t always about some evil corporation burning money away.
Hi,
dont know if anyone has written it yet, but the graphic is misleading. It compares album sales with single tracks sales. Thus, you have to divide a few of this numbers by 10. Compare for example the 1st and the 5th line. See what I mean?
All this graph and calculations are, as usual misleading. It gives the idea that to sell music you just have to place it and/or manufacture any sound carrier available at the moment and voila !!! you will be making a profit and/or a royalty as per the chart.
Unless you are already a player in the music field you are going to have to spend a lot of time, effort and $$$$ to record-produce, manufacture (even for digital you are going to have to invest some money on graphics, mastering coding, etc), promote and market your work.
Major labels today are rarely investing money on “baby” acts, how many new acts are willing or have the $$$ needed (plus the expertise) ?
What I’m taking from this is that all it takes is to sell 143 seats a month at your gigs for a net of $10 and you’re way ahead of the game. That’s just 28 low-paying customers a week (per band member), which is just one slow night in the smallest club in town, once a week, which is, in many genres and many places, not an easy task, but nonetheless for those same genres in those same towns, sustaining sales of 2000 mp3 downloads for more than a few days is going to be a tall order too, and the live performance is going to have the added plus of giving the same song to the same listener as a different experience each night, so the repeats are more frequent and quite possibly more loyal.
Just a thought
Interesting figures, although I think this does downplay the fact that independent artists can sell their albums online and make comparable money to the “self released CD” figure you start with. In fact, services like Bandcamp allow an artist to take %100 of the profit. Factor in how easy digital purchases have become (many of us can buy just about any album straight from our cell phone) and how easy it is for fans to spread the word about good music, and there are artists who could wind up ahead of where they’d be in the old world of physical albums.
I don’t believe that a band selling 3K records under a record deal would earn a living wage. I suspect the truth is they would be deeply deeply in hock to their record company.
The infinitely large bright pink piracy pie that’s not included in that graphic would put the rest of those in context
{Fair point! – David]
Most small to medium sized indie labels do 50/50 profit share deals. This data is really only applicable to major label associated acts. And by dismissing publishing income as a footnote you’re really only painting half the picture.
Where’s the row for radio play? Broadcast media (broadcast & satellite radio, TV) would be the only appropriate comparison to the streaming services.
Apologies if this was cleared up, but I don’t believe I saw this addressed in the comments. To the commenters comparing Spotify to the promotional value of terrestrial radio spins, while we can all agree that both offer exposure, the key difference is that terrestrial radio doesn’t provide on-demand access to a particular piece of music whenever the user wants to hear it. The fact that Spotify and other on-demand streaming services can replace the need to own a piece of music (which will increase to an even greater extent once on-demand streams are ubiquitous in the mobile sphere as well) is the reason that it is so important that artists are receiving a fee for the use of their music on these services.
It also seems that some users feel the need to “defend” streaming services, as if the data is saying that they are “bad” in some way. The point that is illustrated by the graphic is that it takes a HUGE amount of activity on services like Rhapsody, Spotify, etc. to generate the same amount of revenue for artists vs. transactions such as CD sales and downloads. With music consumption trending towards these models, it’s important to note that the financial return for artists is likely to shrink significantly.
To me, the problem here isn’t with these services themselves, but with the fact that over the past decade the widespread availability of music for free has de-valued it in the eyes of the consumer to the extent that $10 a month seems like a lot to pay for unlimited access to streaming music, which I find staggering. Compare that to the amount of music a listener can consumer in a month, and it’s obvious that there isn’t going to be much money to go around.
First off, GREAT POST!! This type of data is terribly difficult to come by and i’m glad you did your due diligence to unveil it. It helps artists understand the online space moreover it makes them aware.
It’s a shame to see that in almost every instance the upshot for an artist is very limited, especially in regards to independent artists. I’m glad streaming services exist, they are most certainly excellent music discovery channels. However, there viability as a revenue generator for artists is arguable; 850k streams on Rhapsody, 1.5M streams on last.fm, and 4.5M on Spotify!!? Like mentioned on The Cynical Musician, when you hit minimum wage you don’t care about streaming revenues as your source of income. Artists are also getting the short end of the stick through these business models, due to sheer density of music.
Those types of plays in a month are increasingly difficult as the volume of music grows. Downloads are a much better source of revenue for musicians and we intend to reinvent the wheel at http://www.webceleb.com so that artists can actually make money doing what they love!! Our model allows artists and fans to make money together each time songs are downloaded so that they can join forces in the music marketing / discovery process. We believe artists can form partnerships with their fans and build vested marketing teams.
It’s a movement in the opposite direction against piracy. Stop threatening to sue everyone who negatively reinforces the problem. Instead, we positively reinforce the people who buy music by giving them a Slice of the earnings. We launched 1 month ago and artists are already making money now… Check it out for yourself…
@Lee; point-taken, that the label takes a lot of the risk, in the large scale promotions. However, proportionally, the risk is miniscule – even insignificant.
Compare the complete set of resources available to:
A “typical” struggling musician attempting to gain a critical mass in popularity from nothing, with no base of wealth, no equipment, perhaps no steady income source, and a small group of family and friends who are even aware of the creative output, without the critical skills to evaluate the professional quality of the output.
Such a musician could, at an early stage in their career, very well have to choose between: purchasing a backup set of guitar strings for the gig on Friday, or, dinner.
Compare this with the complete set of resources available to:
A “typical” worldwide media corporation, able to strongarm retail chains (and even broadcast networks) into carrying releases, with access to financial resources such that hundreds of thousands, or even millions of dollars are easily (and regularly) written off as a business loss, and with access to professional staff who are educated, and have spent their entire professional careers in the business of promoting, coaching, producing, entertainment, and related products. In addition, these people have built up business relationships with manufacturers, club and venue owners, equipment vendors, sponsors, and supplementary creative talent like costumers, videographers, audio engineers, makeup artists, etc. Plus, the corporation has, on staff, lawyers, accountants, and marketeers. Many such corporations also have operations in related industries like film, television, and print media, making cross-promotion an almost cost-free proposition.
Then there’s the “market research” folks who have analyzed down to a science, what elements of music and audio engineering are most likely to generate revenue, and inject this knowledge into the creative process, in most cases, to ensure return on investment.
(I could go on).
The proposition that the record labels are some sort of Meritorious Risk-Taking Nobility is a fable.
Does this behemoth produce some kind of actual value worthy of the consumer’s entertainment dollar?
Obviously – most consumers CHOOSE to spend their dollars this way. Don’t they? Maybe it’s a blind choice, based on the limited options with which they’re presented. Digging for the other options requires effort. And nonconformity. And risk.
Then there’s the ROMANTIC FANTASY of the “creative struggling artist” that we’d all like to support, in the name of enriching our culture, and preventing a de-evolution into a bland mass-produced revenue stream for faceless corporations. There is value in that, isn’t there? 99-cents-a-track value? Who is that, exactly? The hairy scary kid at school, wearing the Slayer t-shirt with the drum set in his garage? The 10 old guys who hold benefit concerts playing big-band tunes at the methodist church on saturday afternoons? The girl with the purple hair and dog-collar, who recites tired cliche’s at the coffee shop on open mike night? The pimply-faced kid with no friends, who will lose his virginity at band camp, spends all August marching his trombone up and down the football field?
I agree with @RE. I believe labels typically “recoup” their costs from paying for studio time, mastering, pressing, and distribution before paying the artist a dime.
This suggests you’d have to sell 25,000 albums on that low-end royalty deal (with the label recovering $2 each time) before you started earning any money on the record that cost $50,000 to make.
I’ve always heard that tours and merch are where the money is, as labels are legally not allowed to recover recording costs from other revenue streams (though they used to be decades ago).
Something I read recently about books seems to apply here as well: the product (CD/book) is a calling card; the money comes from gigs. That’s just the way it is for indie artists.
wow, just to make minimum wage, very interesting!
Hmm, where did you get the iTunes revenue shares from? I assume the share shown here is for a major label deal?
A thing worth nothing is that if you add $0.99 tracks to iTunes yourself, 29 cents goes to Apple and the rest goes directly to the seller. You can easily add your tracks there through services like CDBaby or Tunecore and you won’t have to pay anything but a fixed submission fee.
Of course, in this case you’d need to do the promotion etc. yourself.
David, thanks for sharing. I like your work, it’s a beautiful and insightful visual.
I am not sure if that was intended, but an intriguing pattern in your chart is that the price for digital music is pretty close to ZERO and falling”. Every new streaming service seems to cut the payment to the artists in half.
That is an AWESOME graphic – wicked post!
For anyone interested, a similar article is flying around the net at the moment specific to dance music –
http://www.chatterbocks.com/blog/?p=86
also, cool discussions at gearslutz forum and tranceaddict forum…
By the way, your calculation of $1,160 for a minimum-wage job assumes $7.25/hour x 40 hours x 4 weeks. The average month is actually 4.33 weeks long (52 weeks/12 months = 4.33). So, $1,160 should actually be $1,257.
Really quick:
I run a record label, and in my book ost of your shares are pretty far away from common business practice.
We pay our artists approx. 1,80 € which equates to 2,47 US$. And most labels right now split their digital proceeds (iTunes, etc.) 60/40 or even 50/50 with their artists.
Majors pay their artists way less, but have a way higher marketing and promotion budget instead, so it (kind of) pans out if you are in a mainstream music world.
If you want to get some more hard data on the situation (Independent label/Europe), mail me.
However, the digital proceeds through last.fm & Spotify are pretty much ridiculous (for the moment). So if you can reca<clulate the artist/label split, then this nice overview would be much more helpful.
Regards,
Stefan
I’m no fan of the Digital Economy bill, but your graphic will undoubtedly be used by proponents of its measures as proof that they’re in the right: when digital is driving so little revenue, it’s essential to ensure that those who don’t buy CDs don’t download without any payments being made.
Unit sales is really a piss-poor way to earn a living with music. The price per unit/listen has been driven right into the ground- obviously, only major sellers have a chance of making a living.
Sponsoring your favorite artists is a much better way to go about things. A few thousand sponsors can keep some muso happily chugging away, and that sort of support doesn’t depend on the whim of the muse (as in depending on her to provide “product” like clockwork).
So how about it? The music is free for the listeners- won’t you pay to help make more?
Steam Powered Studio
This is why the artist must be the record label. On this new market, music distribution is more in our hands and with such tools I don’t see the point of a label that will do the same.
a) Anyone have any figures for revenue from radio that can be munged into this? Streaming might not look quite so stingy then
b) The numbers that need to be sold do feel a little misleading w.r.t. singles and albums. Why no Album Download line to compare apples to itunes?
c) If you really want to bait the industry show a line at the bottom for illegal download. Revenue: $0. Streaming looks less sucky then.
d) Thanks for another quality, relevant infographic David.
A lot of people here seem to think you can make up the earnings by playing live & selling t-shirts. In my area even the most popular bands are only working 3 or 4 nights a month, and making $500 USD at the MOST. $200 is the most common pay around here. Split that between 4 or 5 guys on stage (& a sound guy, in some cases) and it doesn’t go far. No one buys CD’s or T-shirts at these gigs, in fact most “fans” ask to get one for free. 80% of the audience nurses 1 or 2 drinks, the other 20% blow a ton of money getting totally bombed.
In most – maybe all- of the big cities I have spent time in, bands don’t get paid for the most part. They pay to play! They have to pre-buy a minimum number of tickets, which they try to sell. Usually they can’t sell them all, & end up giving them away in the hopes that someone will show up to their gig. And if someone does show up, they certainly won’t “waste” money on a t-shirt or CD when drinks are $7 or more a pop, & they’re trying to get laid.
This is the worst time for musicians in way more than 100 years, I think. Sure, there are some making a living at it, but the percentage is so small as to be laughable. Some say this is the “dawn of a new musical middle class” but from what I can see, the gap between the mega-stars & the average musician is far more vast than ever. I can’t earn a living as a “recording artist” and I can’t gig enough to pay any bills at $200 – $500 3 times a month. Guess I should go back to making furniture. Oh wait, I can’t do that either ‘cuz folks can buy crappy overseas produced stuff for less than the cost of my raw materials….
Great post and some excellent comments. Any dugital music service has to encourage the music collecting habit – the music in the lives of real fans is too important to be trusted to a streaming music service that cannot guarantee perpetual access to precious tracks.
I also agree that digital services, like Psonar, must enable artists to engage directly with their fans, and control that engagement, to ensure that people are getting the pleasure and value that they’re looking for and which will turn them into lifelong, and commercially valuable, fans.
I’m afraid I don’t understand the diagram at all.
I sell through bandcamp.com
I sell an album for £5 I get £5 less 37p that paypal take.
Easy maths, that’s what I like.
I’ve lost track of the number of sites people can hear my music for free, go on listen, then buy.
To reiterate Stefan’s post, these figures are incorrect. Particularly with regards to the majority of labels split with their artists but in other areas as well.
Who made this Google doc that is getting so much press?
I was just wondering if there is a way to compare the quantity of artists and successfull bands out there now with how many there were pre download era.
digitalmusicpromoter.com pays $8 to artist per album sold, albums sell for under $10. This site only charges $14 per month (a good look for artist).
Just use a digital distributor and you’ll get up to 100 % of the revenues. Here you can find a nice graph that compares the distributor recordJet with labels:
http://www.recordjet.com/blog/how-much-do-music-artists-earn-online/
so interesting.
I know the serious problem but didn’t know how much is it.
My another concern is how they play those. Thanks to high technology, we enjoy the beautiful music wherever or whenever. It can be say in a live show. However, sometimes it’s too much perfectness. Some artists are good in their CD but not in live show.
For me, live shows are the best. As the etymology tells, music is not only =art but =live.
It’s certain, by listening (or memorize) the songs, we could get much more fun in live show.
Then, my question is.
Are the music sorces for just an advertisement and process to make a live community now? – because the price won’t pay the value of pieces.
have people seen this post on the same issue by another musician, Steve Lawson? Delves into the spotify claims a bit more, mainly pointing out that those are royalties from streaming on spotify, and don’t take into account the downloads as a result.
http://www.stevelawson.net/2009/11/if-spotify-is-the-new-radio-the-artists-are-winning/
The argument being that Spotify, Lastfm etc should be part of a broad online strategy that aims to encourage more sales/downloads, rather than being an income in itself. Without the new online distribution mechanisms, its very hard for an unknown/niche artist to find 143 fans to buy their self pressed CDs.
Same as standard radio royalties – in fact, my understanding is that you get more from Spotify, LastFM etc than you get from standard radio airplay.
I really enjoyed reading this info. It gave me a bit to think about. Creative people usually don’t like dealing with the business side of things – but you have to be ‘savy’ in this day & age – thanks Cynical Musician and also thanks to Nick Tann for pulling my awareness toward bandcamp.com – sounds good to me! Best of luck everyone – it’s a BIG world out there – lots of music & audience for everyone to share! : )
I recon it’s best to build a list of loyal fans then offer you music on your own website using paypal.
This is a much more instant, much more profitable way to make a living as a musician.
AirHammer
One thing you’re ignoring here is money generated by PERFORMANCE. increasingly, record sales or the dissemination of music is seen as promotion for income from playing live shows. you should include some average of this as well.
Thanks chris.
And to the creator of the graphic display:
Information is beautiful – but only when it is correct.
Stefan
Oh, and before I forget:
Mechanical royalties are not factored into these figures either. So if you are the composer or lyricisct of the title, then you will get money form publishers or copyright institution societies as well.
So the split between phyisical sales and digital sales through a record label are much more in artists favour than displayed.
Stefan
Regards,
Stefan
I think it’s not not really correct compare for example last.fm’s number of listens and amazon’s count of cd sells but this image is impressive. Thanks
It’s brilliant to see digital music sales it broken down like this. Even ballpark accuracy gives an independent artist a fresh perspective. A friend sent me this link and as a result I’ve decided to handle most physical and digital sales through my own website.
As a musician I understand how hard it is to earn a living with music, as a business owner I understand why I have to take a percentage of each sale to earn a living. What I don’t understand is why a Independent musician would want to use iTunes, Amazon, or most of the other Internet tool to sell their music when the cost is so high. Sure if you’re a major artist you can live with $0.0005 when you sell 50 million songs and getting 1 million plays a week. If you’re a Independent artist you need to find locations who will help you sell your music and pick the one who gives you the best return and promote that one via your web site, MySpace page, or where ever you collect your fans.
If I were still writing and trying to sell my music this is what I’d do;
1.) Never allow anyone to hear the entire song on-line. (if you can hear it you can record it and this reduces your over all sales) post 90 seconds of each song.
2.) Post your songs at as many places you can find who will give you better then 85% of the total sale.
3.) Never give away free music without a sale of at least 3 songs.
4.) Create a list/database of where you post your music for sale.
5.) Create a list/database of who purchased your music and four times a year update them on your new music.
6.) If you are trying to be a professional create a web site for your music, MySpace, Facebook, Twitter aren’t real web sites.
I’ve been dealing with the Internet since 1992 and have seen thousands of web sites come and go and it didn’t matter if they were good or bad sites they just ran the course. How do you pick the best one for you? That question only you can answer for yourself but when you do answer it ask yourself why did you answer that way and would you answer that question the same way 6 months from now?
Tom