How much does a musician earn?

An often-heard issue in the debate on the future of copyright is the skewed distribution of income between artists versus the income for record labels and other links in the distribution chain.

Informationisbeautiful.net has mapped the income of artists and how much that artist should sell to earn the (American) minimum wage. Additionally, the distribution of turnover between artists and labels has been charted. Informationisbeautiful.net warns readers that the data is incomplete and very likely inaccurate because it is hard to discover the true distribution codes. Nonetheless, it provides a good basis for discussions.

As is well known, labels receive the major part of the turnover. For example, an artist receives 30 cents an album in a (low end) royalty deal, while the label gets two dollars.

The most remarkable are the data is the distribution with digital distribution. Despite lower distribution costs, labels receive relatively more turnover per unit with digital distribution than with physical distribution.

If an artist aims to earn minimum wages, he has to sell roughly 12.000 songs on iTunes each month. Streaming audio clearly is the least interesting for artists: per stream, the artist gets only 0,00043 dollar cents. This entails that an artist needs to be listened to over 4,5 million (!) times per month to earn a minimum wage.

If this is the case, why do musicians keep on signing up with big labels, if they could well take digital distribution into their own hands (for example via CDbaby)? Fame seems to be a very important reason. Although it is often claimed that Internet provides more fame to artists, in practice labels are still the organisations that ‘make stars’ and ensure that artists become famous. Artists that market themselves online are quick to find out that the Internet is very big and so is the supply of music. Because of information overload with consumers, artists remain unknown and unloved. The fame that labels provide can subsequently be monetised in other ways: for example by way of concerts or merchandising. When viewed like this, the digital distribution deal might not be so bad after all…

15 April 2010