(11-30-2012, 01:10 AM)john Wrote: I posted this about a year ago....
How To Sell 1 Million Albums and Owe $500,000
http://www.techdirt.com/articles/2011070...0000.shtml
Thanks , I hadn't seen that.
They've got some arcane , legacy based ways of going about things....
... any profit sharing would take all of those into account but I'd think you'd start from records actually sold at a wholesale level and leave out all the adjustments based on things a company never got paid for.. obviously you don't get a percentage of what wasn't actually sold. Some fixed cost per unit for packaging would strike me as more simple than % of gross methods for allocating that but... the lawyers need to keep things complicated to keep their jobs at the record labels.
The bottom line is... the economics of the business are pretty crappy for label and artist alike. As you said above they're just not getting as much per album in today's money as they did in the past.. and far fewer are being sold in relation to the population. (mostly due to piracy... we all needed to buy our own "frampton comes alive" back in my early teens)
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Its pretty understandable to me how a record label needs to sell 1 million albums to even break even given today's cost structure. Even with 15$ face value CDs they're likely not getting more than 5$ a piece ...as few retailers get close to that higher number and that sort of item needs a pretty high mark-up to work for most retailers.... this isn't food.. luxurie items in the price range often have 60% gross margins or more (that would mean something they sold for 10$ would cost them 4$ but then they'd be paying employees and rent etc, and well I won't get too detailed about retailers...
They still do advance artists a few hundred thousand dollars I think, and if they spend that much again producing the songs and that much again on promotional tours 1 million could be a pretty conservative lower budget release for a big label. If they were seeing 5$ a piece the break even would be 200k units actually sold (not given away, or stocked but not sold, or damaged etc). Like the guy said though, expenses are likely a good deal higher.. especially if he producers need to get paid before calculating profits etc. --- I think his point was that with a properly negotiated contract an artist should start seeing money and not be in the hole at the 1 million unit mark but if poorly negotiated they would be.
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Onward
What does it mean when a label "drops" an artist ?
Clearly I understand them not wanting to pay an artist more, or to invest in a second album when the first hasn't recouped its costs.
But why would they "drop" an artist when they own an asset they can make money on?
Is that more a matter of the artist dropping the label ? .. i.e. the artist having a clause that the label would pay them a fee to renew their contract for another year or the label would need to pay for another label to "keep them signed?"
If you were an artist who had good work that hadn't sold.. wouldn't you want the company who owned that work knowing that if they promoted it still they wouldn't be paying to promote your newer music that they had no piece of ?
I just don't understand what "dropping" an artist means when they still have a large forward upside in their continued success. We already know they've been lackluster in their recent promotions.. but why would they firmly state that they don't want to be associated with an artist?
Clearly I'm missing something.
