Report: $2 Million Required to ‘Create’ an Artist Success (In One Market)…

IFPI Report Shows Major Labels Invested Over $4.5 Billion In the Music Industry

Image by Moyan Brenn (CC by 2.0)

Record labels invest $4.5 billion in marketing artists a year, according to the IFPI and WIN.  But the cost to break a single artist is shockingly high.

According to a new report released by the International Federation of the Phonographic Industry, or IFPI, and in association with the World Independent Network, or WIN, music labels invested more than $4.5 billion in both artists and repertoire, or A&R, and marketing in 2015.

Astoundingly, it costs at least $500,000 to establish an artist in a major territory.  But that cost can easily hit $2 million, according to data released today.

The report, titled Investing in Music, shows that major music labels are still the primary investors of music. The report highlights “the extensive ‘behind the scenes’ work performed by teams of professionals at record companies supporting these efforts.”

Francis Moore, Chief Executive of IFPI, alongside Alison Wenham, WIN CEO, said in a joint statement,

Investing in Music highlights not just record companies’ financial investment in artists, but also the enduring value they bring to artists’ careers.

Here are a few key takeaways:

– Record companies invest 27% of revenue back into A&R and marketing. This works to discover, nurture, produce, and finally, promote artists. Investment totaled $4.5 billion in 2015.

– Of the 27% investment, record companies invest 16.5% of revenues into A&R. According to the report, this is a higher investment ratio of all the leading sectors of the EU Industrial R&D Investment Scoreboard in 2015.

– It typically costs $500,000 to $2 million to break in a major market. This includes investments like artist advances, recording costs, videos, tour support, marketing and promotion, and more.

– Music companies, along with distributors, directly invest in developing digital market infrastructure. They service more than 360 digital music sites around the world with more than 40 million tracks.

Winham and Moore continued,

“In the digital world, the nature of their work has evolved, but their core mission remains the same: discovering and breaking new artists, building their careers and bringing the best new music to fans.  These are the defining qualities of record companies’ investment in music.”

You can check out the full IFPI here.

7 Responses

  1. Nicjy Knight's thoughts

    It sounds like a lot of loot.. compared to the movie business it’s chickenfeed.. but still not to be sneezed at..

    The most costly artists are the 5 piece vocal groups because everything is so much more expensive.. hotel commendation, air flights, wardrobe and styling, suitable
    studios for vocal groups etc…

    Then you have all the personality conflicts and tantrums to deal with.. but that’s for another story..

    I guess the key markets to break are

    U.S.A./CAN (popl. ~ 345 million)
    UK (popl. ~ 64 million)
    AUST/NZ (popl. ~ 29 million)
    Germany (popl. ~ 80 million)
    ROE (Rest of Europe) (popl. ~ 100 million)
    Japan (popl. ~ 127 million)

    Because of the sums involved it’s the reason Max Martin is in high demand..
    You really need to be pretty darn sure you’ve got a hit up your sleeve..

    Reply
    • doktor audio

      excuse me, the “rest of europe” is a little bit more than that. you should visit us sometime.

      Reply
  2. copy-editing internet user

    the article 2x says 4.5 million, when it should say billion

    Reply
  3. Count Drawko

    It depends upon one’s interpretation and definition of “success.” Does money really buy happiness? Do binary digits in a banking system define a person’s character? Will you be taking cash with you when you die? Narrow minded fool’s shall perish as immortal powers shall know forever. Are transitory, earthly riches one’s safeguard against Divine Retribution? As mentioned in my lyrics for the song, “Tempt Not The Fates:” Time will come for those to know that God is not to be bargained with at all…

    Reply
  4. Dollar Bill Spencer

    Unfortunately money does help with happiness because you no longer have to work for a tyrant boss or worry about paying the gas bill or being able to afford the bus fare to the city..

    Without money, enjoying life and being optimistic about your future opportunities are so limited.. Having tons of cash does give you certain freedoms and the chance to do things that you couldn’t do if you were broke..

    Plus if you’re rich think about the cool cars you could have !!!

    Reply

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