See How Much Indie Artists Make vs. Label Artists - hypebot

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Luke McKeehan

"If their math is correct, it is a rather disheartening comparison on one end and a reason for hope on the other"

way to do your research

Kyle Bylin

That's what readers are for. I want you to tell me if the math is correct.


I already have an opinion and am more interested in hearing yours.

factcheck

It's a false equivalency. "... I make $700" - which you then need to then pay band members, management, any additional costs for promotion, travel, general marketing, etc.

iTunes and Amazon - or any of the digital distro/marketing apps - are not an end and of themselves. If you think the "new business model" is "Put my stuff on itunes and amazon, done!", you're going to fail just as bad as you would have in the "old model".

You must promote. You must tour. You must get your music in front of people. Build it and they will come and simple hope are not viable business strategies. The work involved costs - either your time or your money to pay someone to take control of parts of the business. So let's assume "The Band" take stays unchanged (though its numbers are a little shaky - equal members or sidemen?).

The real final bullet point is:
"For every $1000 in music that CRUDBUMP sells online, I make $126".
Nice. It's more than before but a far cry from the windfall suggested.

But if CRUDBUMP is a solo project and one guy takes home every penny of that $700 because he's wearing every hat in "The band"?
Then under a traditional deal he makes $130 (and the $700 in the "indie" model remains).

Certainly a better take home for him, but he's also spending more time arranging tours, booking shows, corraling merchandise, dealing with fulfillers, planning the next album, working as producer on it (and engineer? I see no cost for production). Somewhere in there, he's also in the band. But not a whole lot.

So the premise of the new model is simple: You can potentially take a bigger slice of the pie home if you are willing to do more work. But if you don't want to do all the business functions that surround "having a successful band", you'll have to delegate - and that comes at either a fixed dollar cost or points on sale.

Bottom line, and I beg people to remember this: Putting yourself in iTunes, Amazon and CDBaby does not differentiate you from the thousands of other bands who paid the account setup fee - at all.

You have to do more.

E B

I think this is slightly misleading, for a number of reasons:

1 - as an indie artist, there is still a distributor taking a cut between you and the retailer- even if it is a tunecore like model, it has still cost you something.

2 - an indie artist might still have managers, lawyers, producers, other band members, etc. (in fact most successful ones will) to split the pie with.

3 - a label will have given the artist an advance, spent money on packaging, marketing, etc., lobbied for store placements on online retailers, serviced radio/DJs/tastemakers/press, cleared mechanical licenses, etc. Now, as a standalone artist, you can do many of these things yourself, but it will cost you (a lot of) time and money that is not factored in above- wouldn't that time be better spent making music and performing?

I am not an apologist for the majors by any remote stretch, but I think the tendency to disparage record labels is a mistake - if you have a good deal with a label, you can benefit significantly. A good placement on the iTunes Store can result in you making more money in the lefthand scenario above than with no placement on the righthand scenario.

If you have a crappy deal, that's another story, but hire a better lawyer next time...

Phil Bowyer

It's a bit misleading. They breakdown the 13% from the "label side", but not on the indie side.

Doing it without labels is not free. There are costs - it's just like any other business. Artist should understand that that 70% is not profit, but revenue. You need to deduct the costs from that 70%.

Using the same numbers on the chart, each member of a DIY band will make $126 vs. the $23 on the label side.

With that said, I don't think that number is realistic because most DIY bands wont be paying percentages out for producers, lawyers as those will be fixed (work for hire). I also don't think that DIY bands need 2 different managers, one will do and that's leaves another 5% profit.

I agree with the concept of this chart, that DIY artists will make more money (and more control), it doesn't show the actual real costs of doing business as a DIY artist.


Phil Bowyer

You beat me to it. Well said.

chris

The headline should be changed to "Major Label Artists." While the independent artist has the ability to make more money today, it's still very difficult for said artist to market themselves effectively. The tools are there, but if you're new to the game it's going to be a challenge. As an independent record label owner and musician, I (we) pride ourselves on paying out at a much higher rate (50%-70% of net). While this is not as much as doing it yourself, what we offer is years of development, contacts, marketing experience, distribution (physical) etc. A blanket statement such as "Don't support record labels..." just causes harm to artists and further damages an already crippling industry.

god

you are absolutely correct.

Chuck Stubbs

Hasn't there been enough articles talking that bands are actually realizing the true DIY doesn't exist and isn't really possible, you still need a team of people. That costs $, from someone's pocket.

I work at an indie label, and we do 50/50 splits (even on syncs from the master side). The thing that isnt calculated in is the 750-1500/month for Press alone (min 3 months), radio if it makes sense, etc etc. Though most bands can diy that some, they dont understand the follow up and if things actually start moving most wont know where to go.

Also the Distributor %, I'm not sure I can fully agree 24% distribution fee is QUITE high for a major, not a small label billing under a few million a year though (On physical). Not including marketing costs, or the $ that people like itunes keeps, etc. That number just seems absurd. I know labels billing 10-15mil getting 10-12% distribution deals. It makes me think that they are looking at the price listed store price, not the wholesale price. Then again if you are going to DIY it, good luck getting into all of those stores!

Phil Bowyer

Chuck,

I've seen plenty of articles supporting the DIY model, but none that go against it. I've seen keynote speeches/presentations by those who oppose this idea, but those are from RIAA and labels- organizations that would benefit from the demise of the DIY model. If you can point us to some articles that provide a different view, from unbiased sources, I would be very interested in reading them.

chris

And read what Mr. Boyer and EB said above. A lot of what is said ties directly to my statement about contacts, marketing, etc. This takes time, knowledge and money. There are books written about this topic and if you think that one paragraph and a couple of pie charts are going to sort it out, you are sorely mistaken.

martin atkins

hi Kyle - i'd love to be able to use that chart in band:smart the soon to be happening (600 pages in so far!) sequel to tour:smart??

whaddya think??

trade you a drum track?

MArtin Atkins

Chuck Stubbs

I'll have to grab them when i get home, as i have a few bookmarked. The weird thing, is even in a discussion panel at the LA New Music Seminar they discussed, that there still really needs to be a team of people to gain real career success. I'm not saying it has to be a label, but at least a group of people guiding it, with a lot of management companies going full service - it can be that for quite a long time.

I wont deny a musician can do a lot on their own, and should - and can even create their own label, but there is a point that they will still have to hire people to help with the push, its going to be very rare that a musician has a connection into the press outlets that can really make a large difference on sales.

I'm not saying from step one though, i think labels in general have gotten so grabby with new bands, there isn't the time to see their work ethic or true sustainability.

Sorry if it came across weird when i say "True" DIY i mean them not getting any outside help at all.

Bas

How did they get their stats?

"Aw, people can come up with statistics to prove anything, Kent. Forty percent of all people know that." – Homer Simpson

Bas

And I don't mean the results; I mean the stats that they applied their math to.

Any links would be useful :)

Gil Gonalez

What the chart doesn't take into consideration is the power of volume a record label and its established channels of distribution is able to take advantage of. Because of the massive distribution power of the record label, The Band will make $1000 in an hour where it may take the Indie artist a week to make the same amount.

The Urethane Blog

Seeing how labels lose money on most artists they promote and only really make big bucks on the superstars, it is safe to assume that an aspiring artist will be losing money in the early stages paying for promotion and all the other services needed to try to get heard. Bottom line, there is no easy path to success--just hard work, skill, and not giving up. And labels can still buy attention much more easily than an individual or band can . . .

snfubar

well also I encourage every band to be their label and tell us all how much money they make AFTER covering all the label expenses... silly rabbits...

Jean Renard

yeah pretty much what everyone else has said the number on the indie side make zero sense. Also many of the solutions that this blog and others online are touting as miracles, like topspin etc are also super expensive to a band.

The math is very very misleading.

Nyles

Indie bands also have expenses like tour vans, recording, merch etc. Given, these are also transformed into sources of income, and major label bands have the same expenses - BUT I'm sure these kinds of expenses are all factored into the major label dollar whereas the indie band usually looks at each revenue stream as a sort of microcosm.

matt

the most disheartening thing about this is seeing that producers get a 3% cut while lawyers get 5% cut.

what's that about?

eroded

This is such bullshit. I put out my music on independant labels. Some mp3 distribution websites (ie beatport) take 60% then the label takes half of that and I only see 20% of the money. It aint always that easy guys.

Gerald

Hey! Isn't that the same type of accounting practices that the major record labels use!

Makes u shudder that it was published without a Hypebot disclaimer and makes u understand mainstram media complaints about Blogs & Bloggers.

CHEERS! Gerry

B Skrilla

I'll take 13% of a million over 70% of nothin' ANY day.

factcheck

Ahh... sorry, you haven't recouped yet and your deal is cross-collateralized... and as we know, the first album just didn't do so well. It wasn't radio friendly, you see.

Sebastian

If we, just for a second, rely on the math above then a solo artist would need to sell for about 8 000 USD (Just calculating roughly considering the cut that iTunes takes, VAT, taxes and so on) each month on download sites to make a decent living on his music.

Does anyone know someone who does that on a DIY basis?

That amount doesn´t allow the artist to pay people for promotion or the actual work getting the music up on download sites and pretty much doesn´t allow for any bigger cost for producing the music.

I have yet to encounter an artist/ band, except for cover bands, that can make a living on a DIY-basis but I have encountered a few with a team (be it a indie label or friends/ colleagues helping out) behind them who do fairly well and I know a few on major labels swimming in money. Then the vast majority I know in this business struggle like hell.

The general DIY idea is good but I have yet to see it work in the real world.

All the best from Sweden,


Sebastian
wonderland records- as independent as it gets!

John Loh

Great journalism. Hey, tell me if my article is right or not?

Please find actual music people to write articles.

Katie Pearlman

This article doesnt mention the expenses laid out though.

Katie Pearlman

great points! my thoughts exactly

Randy Z.

yeah but then this poses the question...do I want 70% of 100,000

or

13% of 1,000,000


realistically...indie artist aren't reaching those kind of numbers.

Mav

exactly. Who ever did the math has no concept of running a real business let alone a music business. Come on kids.

Johnson

I've been with a label for a long time . . . 13% take for the artist is a wee bit generous for smaller artists.

Huge

I'm gonna view this as slightly misleading until I see the source of the stats.

But what's missing from the picture is that, even if these figure are right, most of the band's 13% goes to the label to recoup the money advanced to make the record in the first place. In most cases, the band's cut of the sales will NEVER cover that advance, so the band doesn't even see their 13%.

Even artists like Janis Ian will never see a cent from the sales of the recordings (http://www.janisian.com/reading/internet.php) At least indies (myself included) get to see the sales revenue and pay my own costs ...

Erik

As a fully independent artist, this subject provokes constant thought and consideration. I have definitely felt more moments of optimism in this current landscape...although it's easy to dwell on the statistics that often incite the cynic in me.

I know my most effective outlet for me has always been music and as we put our album together I felt compelled to write a song about my unresolved feelings on the subject.

Basically, I wanted to make a rock-anthem out of it...which I haven't seen emerge to date. There are many clever lyric based songs about the state of the industry but I have yet to hear one that connects on an emotional level.

It's a very strange and complex time to be carving out a career path in music and although I'm excited to be a part of it, I know that we all need a consoling message once in a while.

The song can be found here for those that are interested...

http://thepostwar.bandcamp.com/track/contact-high

Love your work, Hypebot community!

Shachar Oren

If you can make it without a label, don't sign with a label.... if you need the label to (1) advance you for your living expenses, (2) pay for your studio and distribution and promotion and video and tour etc., then hey, they're in it for the money, and deserve a significant return on their investment and risk-taking. Pure economics 101. As in indie artist without a label, you will still have to pay X along the way to companies and people that help you out with various services... What's the problem?

Ictus75

The big difference is that if you are an indie band/musician and can build up a following over the long term, then you can make a bigger cut. The problem with being on a major label is that even over time, and after you are successful, the label still owns your publishing, gets points for this and that, and generally sucks the lifeblood out of you. So being an indie needs to be looked at in terms of years/a career, not as "one release and I'm making lots of cash."

I have plenty of friends who are in it for the long haul, have built up a following, and are making really great money, but they still have to work it to keep it going. Now if they were on a major label, they would be indentured servants at best, still having to work it.

Will D

Marketing... It's big money and most indies don't have the income for effective marketing.
If the Majors are backing an artist with hefty marketing, everyone wins...maybe! And when it works the label wins a bit more. Why not, they got lots of money behind it. Don't get me wrong, I'd like to see more indies doing it on their own, but it's the marketing that is the big obstacle. If the public doesn't know who or how to find the artists music, or hasn't been exposed to the artists music, it makes for an uphill climb. Factor in marketing, and the money that it takes for it to be effective, and then we might see an even clear overview of the madness.

Recording Studio Sound Weavers

This chart maybe correct but we also need to know or see the investment chart

how much does the record label spend for a CD release vs how much does an independent band/artist spend for a CD release.

Who pays?
- the label artist is paid for by the label. the CD tanks and the artist is ok financially.
- the indie artist is paid for by the artist. the CD tanks and the artist is devastated financially.

what's the scale?
- the label is working on a global sales scale. millions
- the indie artist is working on a mostly local/viral scale - tens of tohusands, the big exit for an indie is to be picked up by a record label.

just my humble opinion folksies

Jylane Clark

Like Trent Reznor says, if you don't want to be the Pussycat Dolls stay away from the labels. I know it's hard work but much more rewarding! Thanks for the eye opening info!

Jylane
Tranquilizer Records
Creating Rock 'n' Roll Time Capsules for a better future in Music!

chilleymost

5000 indie will always beat 5000 major,,,,,how many people eat off the label and its projects,that don't really care about the artist,,fuck that, surround yourself with the right hungry people,,that wont eat off your plate,but the plate they provide for themselves based off their given talents ie. web design,marketing promotions,whatever,,,and work it out,,,one thing never changes,,,gotta spend money to make money,,,,spread the wealth it'll come back if you manage your money right for sure

chilleymost

um lets not forget the label is fronting a loan,,so unless you can cut them a check for expenses,,, you are not ok financially,, you owe,,,,if you are multi-talented then you can work something out to re-coup other than that as a indie money management is the key along with resources,,,,it has been done over and over again most label dont start out major,,,remember its the grassroots that makes the trees grow

James H

I've got an issue with the validity of this:

Surely the independent artist will (at a 'signed band' level of activity) need a lawyer, at least one manager and a promotional team etc.. many of which will need paying up front without a relationship present.

At a small level of activity (possibly around or below the 'make a living' line) I can see this as more relevant, but a record label taking cuts of 63% these days wouldn't support an artist making less than 50k, would they?

Granted, the 63% you save goes a long way to pay for that though. This appears best to highlight the advantage to established artists going indie e.g. Trent Reznor, who already have a relationship with an established team and the means to regenerate funds from internal investment.

Clearly, the moneys better though and I'm not one to advocate an increasing obsolete model! I realise my numbers are all mildly educated guesses and points may have been missed... Please educate / debate if necessary!

Lorenz @ XARC Online Audio Mastering Studio

Indeed, go and support the independents, they deserve it with almost all of them financing the projects completely on their own and because it is almost always music that comes from the "heart" of them, not something a major label forced them to do for best sales in the pockets of the label.

Dennis

the two cannot be compared in such a manner. A label can provide things that an independent artist cannot. Tours,merchandise, agents, employees that will work to get you out there and rich as hell. if the independent artist continued on the track he was on sure he could play some shows and make some merch but things like contracts, accounting and financing com into play forcing an artist to either learn a shit load of stuff or hire people to do it for him. thus he would just become like the record label. probably a bit different in the value chain and resources and capabilities but the same.

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