Here is a great article about a new trend in making money in the music industry. This industry isn't going anywhere. Making money is still possible. Everyone from labels to unsigned musicians are figuring out a new way of doing it. This article was published in 2007. It's proving to be quite accurate:
Music's New Trickle Up Economics
by Jason Rosenbaum, The Seminal October 30th, 2007
For years, the music industry has operated using top-down economic structures. A&R men recruited bands for labels, who in turn asked artists to sign away the rights to their creations. The bands recorded albums using label money and these albums were promoted through mass media to the American public. Label executives played public taste-maker, deciding what kind of music was “in” and what wasn’t worth recording, let alone promoting. Labels controlled the means of record distribution and collected the vast majority of the profits. Bands were lucky if $1 or $2 of a CD’s purchase price made its way to their wallets. Money in the record industry flowed from the top and was collected at the top, while quality seemed to largely decline.
At one time, there was good reason for this structure. Creating and marketing an album was expensive. Recording studios, filled with esoteric gear operated by highly skilled professionals, were expensive to build and operate. Albums reproduced on vinyl, cassette, or CD were expensive to manufacture and package. Radio and television stations, as well as other mass media outlets, charged premium prices to promote musical products. Courtney Love put the cost to a label of recording and promoting an album at $4.4 million dollars. Steve Albini of Nirvana fame puts it at almost $1 million. No matter what numbers you use, that’s serious cash.
As Albini and Love point out, the artists themselves didn’t need to invest a lot (at least up front) to be signed to a label, but they didn’t realize the majority of the profits either. Love estimates that a band that sells a million records makes $45,000 a year, or about as much as they would have earned working at 7-11. Albini is more pessimistic, arguing that a band who sells 250,000 records (a more reasonable number) actually owes the record company $14,000 when all is said and done. Meanwhile, the label grossed $6.6 million or $710,000 respectively. read more...