Tuesday, March 9, 2010

The Costs Of Breaking An Act

Want to know how much it costs to break an act on a major label? How about a cool $1 million, according to a report from UK's IFPI. Advances, recording, marketing and promotion are the largest part of that figure. According to that same report, record labels around the world invest up to $5 billion a year on talent alone.

The IFPI also states that there are currently more than 4,000 artists on major label rosters, 25% of them signed over the past year, with 30% of all revenues plowed back into marketing and 16% spent on A&R and R&D.

The entire world-wide music sector, which includes radio, publishing, audio equipment and live revenue, is estimated to generate $160 billion annually, and employs more than two million people.

The music industry is having it's problems for sure, but it's still huge. There's a lot of money out there, but just like water, it's seeping into places it's not been before and finding a new level. What scares everyone that's been entrenched for a while is the way the balance of power is changing. But that's a good thing as the industry certainly needs a reshaping.

Music has gone stale. How much of it will be played 10 years from now? Probably not much. That $5 billion (yes, with a "b") that's being spent on talent is being spent on chasing the last hit and the next pretty face rather than developing true artists and innovators like the way it was done when music was vital and culturally significant.

That $1 mil to break an act is being spent on a legacy promotion system that returns so little for such a large investment, because the entire music eco-system is undergoing a change - some sectors more rapidly than others.

Lest I sound like I have it out for record labels in general, I understand that there remains a need for them, perhaps now more than ever before. An artist can only take the Do It Yourself route so far before he needs the infrastructure than only a label can provide to take things to the next level.

But the way business is done in 2010 should be way different than in 2000, and the label of today must become the label of the future - the one that understands Music 3.0 and the synergy of the artist and his fans - if it expects to survive.

I'm still waiting for a new label with some innovative ideas and fresh blood to take the industry by storm. Maybe tomorrow.

1 comment:

Ninetwelve said...

Looks like the pop world finally caught up to the art world in this respect. For about the past 80 years the academic music world has had basically: non-tonal and western tonal music.

A flurry of creativity and innovation (most of it bad, but you gotta break a few eggs...) in the early 20th century followed by the birth of recorded music resulted in a musical platue for so called "classical" music.

Just like the early 20th century academic composers experimented with sampling, synthesizers and mixing musical forms so too did pop music in the 60's and 70's. After a brief windfall of some truly interesting developments the creativity leveled off. Pop music has always trailed behind academic music- but they both seem to be stagnating currently.

Your Musicology Minute,

Mike

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