Record Label Economics
Have you ever known someone who justified stealing music by the argument that CDs only cost a dollar apiece to manufacture, so the artists and record companies were making insane profits on the remaining nine or fourteen dollars? Via Scott Wagner, here’s a fascinating article that blows that argument out of the water. (EDIT: 8/5/2011: Broken link removed)
The article breaks down costs a record company incurs in producing and promoting a recording. The figures in the article are an actual record company’s production budget for a project; though this (in all likelihood) was not in the Southern Gospel genre, the ballpark numbers appear to be comparable. Factor in the fact that, as I’ve been told, most Southern Gospel recordings sell under 10,000 units, and many sell less than 5,000, and you will be amazed that any record companies stay open.
Granted, established artists can cut the production budget significantly by skipping the marketing costs, but that is typically because the marketing to establish them as an artist has already been done by a label. There are exceptions, but most of today’s prominent independent artists (Chuck Wagon Gang, Dixie Echoes, and, till recently, Hoppers) were label artists in the past.
It’s a fascinating article, well worth a read.