"So why would an act want to be signed by a music label today? For starters, the investment associated with developing new talent is substantial. IFPI estimates that music companies internationally invested $4.8 billion in discovering, nurturing and marketing artists in 2010. Record labels today invest an average of $1 million to break a new pop act in a major market. That investment supports a variety of production and promotional pursuits that most individual artists would never be able to afford on their own, including advances, recording time, music video creation, tour support and marketing.
In a world where there are 2.5 million hip-hop and 1.8 million rock acts on MySpace alone, more often than not, the addition of a music label is usually the difference between a band that offers songs to a few devoted fans online, and one who embarks on a multi-city tour, whose music is featured on a hit TV show or commercial and who goes on to earn Gold and Platinum plaques. In a noisy digital music market, it takes a label to help acts stand out in the crowd."You can read the entire post here, but what's interesting is that it references an interesting study done by the IFPI (the International Federation of the Phonograph Industry - the world wide record label trade group) called Investing In Music that supposedly breaks down the investment that a label makes in a act today.
"Investing in Music outlines the very substantial investments involved in developing and marketing successful artists. In the UK and US, it is estimated that it typically costs more than US$1 million to break a pop artist. This is spread across an advance paid to the artist, recording costs, video production, tour support and promotional work. A typical example of the breakdown of the costs of breaking a new pop act in major markets is as below:
Advance US - $200,000
Recording US - $200,000
3 videos US - $200,000
Tour support US - $100,000
Promotion/marketing US - $300,000
TOTAL US - $1,000,000"Okay, this is what you expect from record label shills - lots of good news, glowing reports, and big numbers. Unfortunately, the whole thing is based on an alternate reality.
1) First of all, artists don't want to sign deals with labels (especially the majors) because they feel ripped off. You mean you want a piece of my touring and merch sales? And I get exactly what for that?
2) Today's artists feel that they can lay so much of the groundwork themselves, thanks to social media and digital distribution. Why bother with a label that will take most of the money (if there is any) and will most likely ignore you anyway?
3) Those IFPI numbers are totally out date. They may represent a typical signing in years past, but that's not the world we live in today. When was the last time you heard of an artist getting a $200k advance? When was the last time you heard of an artist getting a $200k budget? And tour support? That went away for most signed acts in the 90s. If anything, the promotion and marketing number is low. About 5 years ago it cost $1 million to break an act the traditional way with radio and television. It probably takes more today since those methods aren't nearly as effective anymore. So sure, those $1mil deals still occur, but they're few and far between these days.
You can poke a lot more holes in both of these posts, but remember this: If you want to break big as an artist, you still need a major label, at least for now. Sorry, it's a fact of life. Look at any chart and see how many artists are indie. Not many. But here's the thing - if they don't guarantee those big dollars to you, who needs them? You're better off going it alone. Besides, it's still better to build your core audience up slowly but surely, one fan at a time. Always was, always will be.
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