Or should I just torrent it and throw coins at them on stage?

December 7, 2008 4:15 PM

How much money does an artist get when I buy their music online? What amount of money goes to an artist if I buy an album on eMusic, iTunes or Amazon? How does it compare to what they make from a CD sale?

Assume the artist is a moderately unpopular rock band signed to a small but well-meaning indie label; will they get more or less of my money than than somebody on a major label?
Do artists get anything at all from subscription services like Rhapsody? Or if I just play their tracks on Last.fm?
Is buying the music from MySpace any better?
I'm hoping somebody here might be on the receiving end of such payments and let me know whether it would negatively impact them if I downloaded their music without paying rather than acquiring it legitimately from eMusic or Rhapsody, where it's so cheap I can't imagine them getting much for it.

posted by nowonmai to media & arts (10 comments total)

It will depend on their contract with their record label more than the online service. It's in percentages, usually. A large label dealing with an unknown band can call the shots. (A newbie band on a major label will, the vast majority of the time, LOSE money on their initial release. This is because they are "billed" studio time, distribution costs, marketing costs, etc.--and are in the hole before the album is even released and unless that record blows up, they won't make that money back.)

A small label will usually be more fair. For instance, I think Touch & Go Records still gives 50% of net profits to the artist whereas a major label will give pennies per track (or a buck and a half or two for an album). Of course, that's different with tentpole artists who'll dictate their own terms.

As for how much the label gets from iTunes or emusic, obviously they'll get more from iTunes because you're paying a buck a track whereas at emusic you could be paying half that or less (they used to be under 20 cents a track and before that they were unlimited for $10 a month). This is why you won't see major label rock acts on emusic. They won't take that small dough. However, many indies are there because in addition to making money, they are interested in people hearing their music.

I think 70 cents or so of the $1 from an iTunes purchase goes to the label. (I can't remember the exact figure but I believe it's around there and the same regardless of the label.) After that, the 70 cents is divided by the label according to their deal with the artist (which will be different for every artist).
posted by Manhasset at 4:36 PM on December 7, 2008

Oh, and if you're trying to give the most money to the act, it's best to buy the album directly from the artist either on their site or at their show, if possible.
posted by Manhasset at 4:38 PM on December 7, 2008

from eMusic or Rhapsody, where it's so cheap I can't imagine them getting much for it.

One last thing: it's true, the amount paid by these services must be very small. However, the low cost of the tracks encourages people to buy more music than they otherwise would. I used to be on the cheapest emusic plan because I'd buy more than 1000 tracks per year. At that price (I believe it was 18 cents per track) I often purchased albums that I absolutely would not have bought in a retail store or online for full price from another service.

In addition, I've never purchased an album from iTunes and never will as to me they are too expensive. In my city, used CDs can be purchased for less than $10 without a problem. I'd rather have the hard copy than iTunes DRM nonsense. Since I only purchase from emusic and used shops, I will not purchase any artist who is not available in those forums.

So, an artists (or, more accurately, a label as that's who emusic has a contract with) must decide whether they want my pittance per track or no money whatsoever. It's a digital file so essentially their cost is nothing (or at least fixed). Now, multiply the pittance by the many people who feel the same way as I do and only shop online at emusic. It adds up. If it didn't, no acts would be with emusic. Or, at least, so few acts as to make emusic a short-lived business. However, they seem to be thriving (their web site interface is terrific, imo) so it must be working.
posted by Manhasset at 4:58 PM on December 7, 2008

The Problem With Music by Steve Albini.

RIAA Wants to Cut Artist Royalties to 9%, Apple Wants Them at 4%, Artists Just Want to Eat.
posted by mandal at 5:22 PM on December 7, 2008 [1 favorite has favorites]

I've heard major established artists on major labels can make 10 cents (label 55 center, Apple 34 cents). I suppose this means if the label is less powerful then Apple keeps more and if the artist is less powerful then the label keeps more. Artists are then billed studio time, marketing costs, etc.

It is unequivocally immoral to buy CDs or iTunes from any RIAA affiliated label because you're supporting the RIAA's vicious legal crusade against customers and new technologies. Indeed, non-RIAA labels often partner with RIAA labels for specific services, tainting them too.

Your best bet for supporting most artist is concerts. A few sell their music via more direct channels, ala Radio Head. Some internet only labels, like MagnaTune, promise that they never work with major labels & always pay the artist 50%.
posted by jeffburdges at 5:45 PM on December 7, 2008

This report (pdf) on music file sharing breaks down the iTune payout on page 22.
posted by hoppytoad at 7:04 PM on December 7, 2008

As said above, it all depends on the contract. Most of the above is correct (from my experience).

My label and associates do not have anything in subscription services because you LOSE money if you play any cover songs. BTW Apple pays out around 70 cents to the label per song; then publishing (in the US max 9.5 cents for up to a 5 minute song). After that it depends on the specifics of each contract.

Bottom line: when you buy at a gig, you know your $ are going to help put gas in the band's tank.
posted by omnidrew at 8:53 PM on December 7, 2008

So, jeffburdges, if it is unequivocally immoral to buy CDs or iTunes track from major-label bands, how exactly do you listen to major-label music if you live in a backwater town? Take up the piano and buy only sheet music? And if, like me, you've got commitments that limit your ability to attend shows (or, heaven forfend, you really don't like going to shows), is my moral obligation to give up on recorded music?

Nowonmai's question isn't about morality, but economics. The economics might suck, but them's the economics we've got. Being, as I am, in his position as an industry-outsider consumer, I've taken the low road: I've given up trying to figure out how to get the money to best flow where I want it to. I've come to grips with the fact that my meager investment makes only a tiny different in the pockets of artists (and labels): I'll no longer worry about who gets which slice of the pie. I count on the collective to make up for whatever injustices are in the system. I buy my music legally through whatever channels fit my needs at the time. My purchase demonstrates to the label that the artist has fans willing to spend the money, so eventually the label will decide to spend more money on the artist. Eventually, my ten bucks will add up with your ten bucks and the artist will have some power to negotiate something better with his blood-sucking label. Otherwise, my attempts to be sure that he gets an extra dime is a) probably based on faulty half-information and b) absolutely more work and stress than it's worth to me.

Nutshell: buy it legally and stop worrying about what's happening inside the music label sausage factory.
posted by terceiro at 9:40 PM on December 7, 2008 [1 favorite has favorites]

I'm at the receiving end, I run my own label and also had releases on an indie label. I'm a very small electronic artist.

Manhasset is right, this answer is different for every artist, it depends on the contract between label and artist. Some labels take 100%, most majors take around 80%, many indies take 50%, some take 5%...

My indie contract was 50% label/artist, which at the time (a few years ago) was considered a nice deal for an artist. This meant that, after iTunes take their percentage, I share the rest 50/50 with the label IF THE RELEASE HAD RECOUPED.

I don't have my contracts and deals available, but iTunes is by far the most prominent income source, Apple take 15-20% I *think*, the aggregator a little less, leaving me (as my own label) with 60-70% of the sale. Other retailers (Amazon, eMusic, Myspace etc) probably take the same cut as Apple.

Somebody could correct me on the percentage numbers for online stores.

But digitally then, the label ends up with 60-70% of a sale.
This amount is then shared between artist and label depending on contract, if the release has recouped the costs of producing it.

I'm sorry, I don't have time right now to break down the numbers and setup for physical releases, but my experience is that the stores (retail outlets) take a larger cut than digital stores, and it becomes more complex because there is a cost of making a copy.
posted by gmm at 2:17 AM on December 8, 2008

It varies wildly. Our label only takes 5% above costs (minus production and CD pressing costs +5% per CD) It amounts to a little over a dollar per CD. Our take is pretty nice and the label is happy. Once you get into the majors, the pie slices become much smaller because so many more people want a piece.
posted by KevinSkomsvold at 3:32 AM on December 11, 2008