Make up of a music sale -- where the money goes to?

CD ($18.98)

Label $5.00
Distribution $1.80
Design/Manufacturing $1.00
Artist Royalty $1.50
Mechanical Royalty $0.80
Recording Costs $1.00
Marketing/Promotion $0.90
Retail Profit $3.00

Digital Download ($0.99)

Label $0.47
Distribution Affliate $0.10
Artist $0.07
Producer $0.03
Music Publisher $0.08
Service Provider $0.17
Credit Card Fees $0.05
Bandwidth Costs $0.02

Wow artist do get paid little. At least in the dying CD trade sales of a million copies would generate $1.5million for the artist. But digital download of singles would reap only $70,000, that is if one can rack up a million purchases at all!

The Big 4

That is the term for the major labels which over the last 10 years have consolidated from the Big 6.

Universal merged with Polygram to form UMVD in 1999. Sony and BMG in 2004. Here are the Big 4s are some labels under their belts.

UMVD -- Universal Music and Video Distribution

Interscope
Geffen
Island/Def Jam
Universal
UMG Nashville
Hollywood
Disney/Buena Vista

Sony BMG

Columbia
Epic
Arista
J Records
RCA
Jive
LaFace
Razor & Tie
WindUp
RCA Label Group Nashville

WEA -- Warner Music Group

Warner Brothers
Atlantic Records
Bad Boy
Roadrunner
WSM/Rhino
V2 Records

EMD -- EMI Group

Blue Note
Capitol Nashville
Capitol Records
Virgin
EMI Latin

Will be interesting to see how these guys can reinvent themselves with the changing tides of digital singles music consumption.

Music Concerts - It's also the singles market except maybe Singapore

According to the Music 3.0 blog, music fans in the US are favoring music festivals over regular single act concerts. Why? Festival match the new listening habits - music fans no longer listen to an entire album, they listen to singles. Quote: "There are usually multiple stages, so if you don't like one act, go find another that suits you."

That may be the case in US and Europe but in a music deprived country like Singapore, it's not necessary true. Recent music festivals that I know of only includes WOMAD, MOSIAC, SingFest & Baybeats and I seem to recall more concerts of artistes & bands, courtesy of eventful's weekly emails. In a country where it's hard to get large scale quality concert it's no wonder we're seeing old acts flying in to cash in on fans of yesteryears - old school mega hair rock outfit Firehouse comes to mind with their scheduled concert on this 30th June.

Music Publishing - It's back to the singles market

Reading an interview except with a music publisher was enlightening. http://music3point0.blogspot.com/2010/06/interview-with-publisher-richard.html

Licensing Fees

There are 3 main types of income in the music industry - Mechanical royalties, Performance income & Synchronization licences.

Mechanical royalties are derived from direct sales of a "physical" copy of music. Eg. sheet music, vinyls, cds, mp3s.

Performance income are derived from playback the music. Eg. live renditions, radio, tv.

Synchronization licences are derived from using music commercially with moving pictures. Eg. soundtracks for movies & tv shows.

Apparently mechanical royalties have been on the dive ($13billion in 1998 vs $8billion in 2008) while synchronization licences have been on the rise. This is due to the increase in tv/cable networks over the years which results in more broadcasts and more shows produced, thus more music used.

It's Back To The Singles Market

Gone are the golden days of buying an album just to get the piece of music that you like. Even if you ignore the fact that most music can be downloaded for free via torrents, digital distribution of music as a business model isn't doing too well as each music stream/download pays too little. The opportunities in the cloud are great but also presents great challenges in monetization. It'll be interesting to see how things evolve in the months/years to come. Needs a google-adsense like tipping point.