It Takes at Least $500,000 to Break a New Artist….

500000artist

 

If you don’t have half-a-million dollars, then maybe you should go home.  According to a study released this morning by major label organization IFPI, breaking an artist in a major market requires at least $500,000, and sometimes as much as $2 million.

Overall, the IFPI counted $4.3 billion in upfront talent-scouting and marketing costs coming from labels last year alone, with virtually zero upfront investment coming from Spotify, iTunes, Google, or SoundCloud.  “Record companies remain the largest upfront investors in artists’ careers,” the IFPI noted.  “Common features of contracts signed with emerging artists include the payment of advances, recording costs, tour support, video production and marketing and promotion costs.”


It was also noted that signed artists aren’t taking much financial risk, either.  “These upfront payments are recoupable against royalties generated from the recorded music created, but in many cases artists do not break even and do not have to repay the money.”

 

“The burden of risk lies with the record company.”

The complete report can be found here.

33 Responses

  1. DNog

    “Breaking” is a very broad word to use. What exactly is considered “breaking” an artist Paul?

    Reply
  2. Anonymous

    But… I thought you just needed a 2 octaves Casio keyboard and a stolen copy of Cubase to become an artist today?

    Guess all the pirates and streaming guys were wrong, then.

    Reply
    • Anonymous

      …because when you’re on YouTube, you don’t need to spend money on talent development, recording and video production.

      It’s a miracle.

      Reply
  3. GGG

    Don’t go home. Just don’t be a bland, talentless hack who needs $500K to get people to pay attention to you.

    Reply
    • Justin Mayer / Plum Minnow

      GGG just continually showing he is either culpable or clueless of his own industry…. wow….

      Reply
  4. Anonymous

    This list may be outdated but Dnog makes a good point. Whats considered “breaking” an artist? If “breaking” means every person on the planet hearing and becoming a fan of your music then maybe you will need this kinda budget to get you started but if we’re talking just being successful enough selling albums and touring to create a good income then I think this budget is a little on the high side. With todays technology music recording and video production are much less expensive than this. If you spending over $10-20K to record one album you’re nuts and you can find plenty top notch cinematographers who will jump for joy if you told them your video budget was $8-15K. The marketing promo and tour support will probably still be your highest expense and even then these figures can be cut in half and still be effective.

    Reply
    • Anonymous

      “If you spending over $10-20K to record one album you’re nuts”

      lol

      you can find plenty top notch cinematographers who will jump for joy if you told them your video budget was $8-15K

      rotfl

      Reply
    • DaDaDa

      by “Break a new artist”, they probably mean a Billboard top 10 popstar. And even if you wanna “break” a less commercial artist ,just enough for him to make a decent living, you would probably need a hefty amount of money, just to rise above the ambient noise. Maybe 10 times less than that promo budget up there, between 20.000 and 70.000 $, wich is still a lot for indies.

      Reply
      • Joel B

        What about the band that just to put together a $150k tour that grossed $-11,000? How does that equate to a small band and a income touring? Get realistic, it will take $500,000 or more to break a small-time rock act. Breaking in this case means what you just saw a breakdown of; Advances buy equipment/food/stuff that keeps people running and making music, Album Creation being a huge part of the expense applying the formula from a producer so your music stacks against stuff on radio, video production is for that single you want to make a music video for, just one of course. Marketing and promotion are the lions share. This is the 3-4 months of touring with a production crew, salaries, rented back-line equipment, and radio station promotions.

        That is breaking a band. Breaking them to the world in the methods the masses use to discover their genre’s next big thing. And pay attention; Labels know what kind of music will make them money (Pop, KidPop, Country) and know what costs them money (everything else).

        Reply
        • Joel B

          I don’t know why my post was inline to this comment, i was trying to reply to the Annon person.

          Reply
  5. jw

    >> Overall, the IFPI counted $4.3 billion in upfront talent-scouting
    >> and marketing costs coming from labels last year alone, with
    >> virtually zero upfront investment coming from Spotify, iTunes,
    >> Google, or SoundCloud.

    The straw man to end all straw men!

    http://en.wikipedia.org/wiki/Supply_chain
    http://en.wikipedia.org/wiki/Retail

    Other retailers who also never invested up front in the development/marketing of the products they sell: Every retailer that’s ever sold something that wasn’t an exclusive or house brand.

    If these retailers were to fund the upfront development/marketing costs, they would then be entitled to a share of the longterm profits, & they would have much more say in what music gets recorded. My initial thought is that you don’t want technology companies playing this role, but after a little bit of consideration, they might actually do a better job at this than the major record labels.

    Anyways, this isn’t the first time this type of thing has appeared on DMN. And every time it does I think, “Wow, what a stupid fucking thing to say.”

    Reply
  6. Tibor Holoda

    As for future investment to artists’ careers: why comparing record companies with distribution? Apples and oranges, anyone?

    Reply
    • Anonymous

      “why comparing record companies with distribution?”

      Because the new labels — Pirate Bay, Google and Apple — are replacing the old labels. Unfortunately for consumers, they don’t invest in music production.

      Reply
      • DaDaDa

        “Because the new labels — Pirate Bay, Google and Apple — are replacing the old labels. Unfortunately for consumers, they don’t invest in music production.”
        Yeah, especially Pirate bay, lol…

        Reply
  7. ray

    They say there’s no investment coming from any of the streaming music services, but what about crowdfunding? How does that compare to what the labels are spending on the indie bands?

    Reply
  8. ja

    C’mon Paul and company. This article literally applies to no one. Can we please start talking about how there are zero, ZERO, outlets left today that can be used to seriously and successfully promote one’s music independently? Yeah, you can put a video on Youtube, it could be made of gold, but unless you can promote it widely (which you can’t) it’s worthless and has less of a chance of being successful than buying a lottery ticket. Same goes for The Best Song Ever Made that’s posted on Soundcloud – you can’t promote it effectively anymore, and Myspace is long dead and gone, along with unlimited Facebook messaging. This website better start this conversation soon because Billboard etc already has the mainstream covered, and very, very soon that will be all that is left because there is no way forward for anyone not in the club of elite rich connected “musicians”.

    Reply
    • Dreamcoastmusic

      Well put ja. Not sure who they think this article if for but certainly not indies.

      Reply
    • R.P.

      it can be promoted widely, you just have to start thinking digitally. This is why all the multimedia companies are getting into the music side. Spend more ad dollars on the internet and learn how to make the data work for you.

      Reply
  9. Redd Foxx

    Advance? Please tell me what label today is giving a large advance to an unknown artist??????

    The recording & video production costs are at best 1980 price quotes!

    Reply
  10. danwriter

    “virtually zero upfront investment coming from Spotify, iTunes, Google, or SoundCloud.”

    Yeah, exactly. Nor does radio make this kind of direct investment in artists development. Why would you specifically cite distribution outlets like Spotify…. oh, wait…. yes, of course….

    Reply
  11. danwriter

    ..and “The burden of risk lies with the record company.”

    It always has. How is this news?

    Reply
  12. JR

    You may want to actually read the report. The opening letter at least. This is a focus on copyright and how only by retaining exclusive rights can the labels continue.
    Additionally those saying that the old school retailers never re-invested in music are quite right, but then the labels were not owners of most of them as they are of streaming services whereby not only do some have stock in those companies, they also charge access fees to their catalog, fees that are invisible and come off the top leaving little for the artists.

    Digital has changed the business model for everyone. Today’s labels want to own the product (artists) they promote 100%. Their products needs to be able to tour, sell merchandise or otherwise be useful to the bottom line.

    The term breaking a new artist, means getting to a level of profitability. the issue today is not why this is happening, but how. Labels have extremely short windows to break a new artist. Artists that can catch fire quickly have always been teen oriented and so here we are. The kind of long term investment Chris Blackwell would make is no longer happening.
    If you continue to read the report you will see how slanted it is. But face it that slant will continue as the labels are all part of near monopolies and are not about to go away. Beggars group has to use majors to get worldwide traction for their artists, they could never have done Adele on their own. Think on this.

    Reply
  13. don schlonzo

    i am not an opponent of major labels, but relying on IFPI data is probably not giving the most unbiased picture.
    the article does however indeed throw up parallels between pharma and music (both have high r&d (=A&r) costs, you never know before if an investment pays off e.g., a public which suspects the companies of overcharging, etc.) – it makes me think of an article on economist.com (http://www.economist.com/news/business/21635005-startling-new-cost-estimate-new-medicines-met-scepticism-price-failure) and especially the last sentence in it:
    […]
    Indeed, what patients and policymakers need to know is not what it does cost the industry to produce a new medicine, but what it ought to.[…]

    Reply
  14. Willis

    Taking into account the expense account for limos, alcohol, etc. this figure jumps to a few million. That’s reality.

    Reply
  15. tpygmusic

    Is there any precedent for a band incorporating as an LLC and getting VC funding in exchange for equity in the band company? That was the rights stay with the company instead of a label and all profits are divided among shareholders. Is this crazy?

    Reply
    • Chicago Guy

      Ah, I see that you did delete the spam work-from-home post I was referencing and replying to.

      Reply
  16. Colin

    This whole report looks like it’s very skewed in a desperate effort to keep failing record labels in control. Sad fact is that they aren’t in control anymore. $50,000 advance? Who’s heard of an artist getting an advance anymore? These days, record labels are little better than predatory lenders.

    Reply

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