[Hidden-tech] Music downloads

[Will Loving]

The following article can be found on folksinger Claudia Schmidt¹s website.
It a great description of how to buy music in a way the most benefits the
original artist.

http://claudiaschmidt.homestead.com/MusicBus.html

Music Business Economics 101
By Bill Palladino - bpalladi at nwm.cog.mi.us

Here's a little lesson in record company math.  This is not quite "new math"
-- it's somewhat closer to "voodoo economics."  But it's important to know
what artists like Claudia go through to make a living.  Go ahead, read my
text!

Unless you're a superstar with videos on MTV, VH1 or CMT, this is probably
how things work:

There are several methods of buying music: from a store, on the Internet, or
directly from the artist.  Buying a CD in a store usually means that the
artist sees little or no direct monetary disbursement for the product.
That's right!!!!  Record companies representing small independent artists
always take their cut first.  This "cut" includes the cost of producing the
recording, (musicians, studio, graphics production, duplication,
free-lunches, etc.)  This is cool -- it's how they survive at all in this
cut-throat business.  We need independent record companies, because it's
definitely a David and Goliath type relationship between them and the
biggies like Sony, Capitol, etc..

They must sell the product in bulk, at a reduced rate, to the big stores
(Tower, Borders, etc.) so already the profit for the record company and thus
the trickle-down to the artist is diminished.  In fact, the artist doesn't
see a penny from the record company until the total cost of the project is
recouped.  Then and only then do "mechanical" per piece royalties begin to
be passed on to the artist.  Claudia receives an accounting of her product
sales bi-annually from both Red House and Flying Fish / Rounder Records.
This tells her exactly how many pieces of each recording they have sold.
Any royalties she has earned are then applied to the debit amount owed them
for producing the product.  The bottom line being that she usually ends up
still owing them after it all shakes out.  We've posted some really cool
looking royalty checks for .37 cents on our fridge over the years.

You still with me?  Good - here's the good news.  The record company sells
CD's to the artist at a wholesale price.  The artist then sells CD's at
their gig or from the back of their car at the retail price.  This is the
best case scenario.  Many artists can make more from CD sales than from the
gig itself on any given night.  Many independent artists today produce their
own recordings.  They produce them cheaply and distribute them on their own
- selling them at gigs and maybe on consignment in stores. They stand to do
even better, because they can usually pay for the production costs pretty
fast. 

The bottom line is this.  If you really want to support independent music,
here's our six part priority list for you to use when buying a CD.  Higher
numbers represent less money going "directly" to the artist.  The dollar
amounts represented are based on an average CD price of $15.00, and reflect
how much an artist can hope to NET from a single CD sale using the selected
form of purchase.  This is in most cases.  Individual results may vary!

1.  Buy directly from the Artist at gigs.  ($12.00) If self-produced,
($7.50) if produced by a mid-size record company.

2.  Buy from or through the Artist's personal web page or catalog.  ($11.00)
if self-produced ($6.50)  if produced by a mid-size record company.

3.  Buy from local - small record or book stores (in the artist's community)
which often buy directly from artists.  ($10.00)
(Borders does this too for many local artists not already in their bins.)
The going rate is $10.00 for an outright purchase of CD by a local store.

4.  Buy directly from the record company.  ($.00)  If the artist is on a
mid-sized record label, the label will expect to pay off all debts towards
the production of the CD before the artist sees any mechanicals from sales.
Dependent upon the financial acumen of the company, their frugality in
production, and their voracity in promotion, this may take many years!
Assuming a zero balance on the production debt, the artist may a
predetermined mechanical fee for each unit sold.

5. Buy from large retail stores.  ($.00)  This is a layer down from the
record company, and may delay the process further.

6. Buy from large Internet purveyors. ($.00)  Same prospects as above.

Admitedly, this is a fairly horizontal view of the business.  Some would
argue that we should steer people to the record stores so they begin to see
the value in independent music, and so that Indies projects begin getting
counted on such industry measuring devices as SoundScan.  But let's face the
facts....  most of us will simply NOT make it "big".  And while we'd like to
romanticize about music as an art form, the business of music is far from
romantic or artistic.  We all need to make a living at this.

The point of all this is to ask you to put your money where it has the most
impact for the artist.  How you spend your money really does make a
difference.

Article written by Bill Palladino



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