cigarette burns: Are musicians insane? Pt.1
Chris LaVigne & yuet jinn, The Peak

[Favourite band name (FBN) here] has just released their latest album and you must have it. So, early on a Tuesday morning you run to [Favourite local record shop here] and $16 later you're enthralled in the bliss that is [FBN].

And as you're sitting there listening to the CD, you momentarily wonder, "I wonder how much [FBN] gets from that $16 I just payed?"

How much do you think? Ten dollars? Five bucks? One stinkin' loonie!?!

Well, let's shatter some platinum myths:

From the initial $16, 25 per cent ($4) goes straight to the manufacturer to pay for the construction of the actual physical product. Some of that $4 also goes to the distributors, who ensure [FBN]'s product is sufficiently stocked at your local retail outlet.

We're then left with the record company who had "suggested" the remaining $12 price. (Record companies can't actually "set" prices on records because these products have low competitive rates.)

The record label gives [FBN] a 10 to 13 per cent royalty, before deducting the 3 per cent producer's take. So if, for convenience's sake, [FBN] has 11 per cent royalty rate, they make 8 per cent of that $12, or approximately $1.

Yep, one stinkin' loonie per CD.

Or even? The cuts have only just begun.

At this point, that one dollar is potentially in [FBN]'s pocket, but there are certain expenses that [FBN] is responsible for.

To begin, record labels give out a portion of [FBN]'s CDs to various magazines and radio stations in hopes of receiving good reviews and airtime. That portion usually works out to be about 15 per cent of total CDs manufactured, which is billed to [FBN] as 15 percent from their base royalty.

We're down to 85 cents.

Next on the list: returns. Remember the walls of Sugar Ray albums back when they were "fly"? There was a good chance that most of them didn't sell and had to be sent back to the record label for a full refund. This is a "return".

Record labels hold a 35 per cent return rate on that 85 per cent royalty as insurance, in the unlikely event that [FBN], God forbid, does not shift those units off them shelves. That works out to about 30 cents, which if [FBN]'s CD does well, they eventually recoup (usually two years later).

55 cents and counting down.

This next deduction will get you. Back when records were pieces of vinyl, labels would charge a 10 per cent breakage fee, assuming a portion of their shipment might just break. Two points:

1. This is the artists' fault how? Shouldn't the mail carrier be blamed?

2. Guess what, kids? Despite the CD's sturdier construction, major record labels still take that 10 per cent.

Of course, like the return rate, this is also paid back eventually, if the mail carrier was careful enough. But for the present moment, [FBN] is down to 49.5 cents.

Okay, now depending on how [FBN] works, studio costs (recording time, engineers, session players, equipment rental, etc.) can range anywhere from $150,000 to something absurd like Michael Jackson's Invincible, costing many millions of dollars.

We'll assume a $150,000 price tag. If, say, [FBN] reaches gold status with their latest album (500,000 albums sold), studio costs work out to be about 60 per cent of the remaining 49.5 cents per album after freebies, returns and breakage.

[FBN] now has a grand total of 20 cents in their pockets from your CD. Divide that by the number of band players, say four, plus the manager, and everyone comes out with only four hard-earned pennies per CD sold. That's 1/400th of your $16, by the way- before income tax.

Shit, the members of [FBN] can't even buy a stick of gum unless they pooled their money! But if [FBN] does make gold, that's $19,725 in each member's pocket, so that's not too bad, though not what you might have imagined. Remember, [FBN] would also be touring, selling T-shirts, and receiving performance/publishing royalties.

But what are the broader implications of this system?

Let's return to that initial 11per cent that formed the royalty rate. Where did the other 89 per cent go?

A large record company such as Sony uses it to pay people in their sales, marketing, promotions, and publicity departments, each of which are necessary evils if the band's intent is to develop an international fanbase.

Though it seems exorbitant, sadly this is the only system in which a band can achieve "rock star" fame. That is, musicians such as U2, Radiohead, and Elton John are not big only because their music is good, but also because of determined businesspersons who analyse markets and consumer trends.

Does this mean that the current music industry system is justified, though? Or are musicians forced into an exploitative arrangement?

We've only scratched the surface here. More to come next week. Send in your comments to cigarette_burns(at)owow.net

[ Back to issue 4 ] [ Send The Peak a comment on this story ]

The contents of The Peak are protected by copyright. For information on rights regarding specific articles (including reprinting, where applicable), please contact epeak@mail.peak.sfu.ca with the full URL of the content in question.