At $1 for every CD that is sold, Madonna is the highest paid recording artist.  She has sold somewhere between 120 and 200 million albums worldwide.  Multiply that by one dollar and you can see that is no small chunk of change, but what about the other $14?  Where did it go?  Assuming a CD costs $15 these days, and Madonna is by far the highest paid recording artist per CD, are all the other artists out there justified if they consider an item from the sale of which they see somewhere between 1/30th and absolutely no part of the revenue?  Of course not.

So where did it go?  Here’s a breakdown I got from wizbangblog:

$0.17 Musicians’ unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists’ royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead

This, we have to assume, is super simplified, and I would have to disagree with it at several points.  Have you ever seen a recording contract?  I have.  My aforementioned friend Max MacVeety showed me a stack of paper several inches thick that was completely incomprehensible, and that, he made sure to mention, was just the part he had to sign.  The entire document was unfathomably long winded.  We’ll talk about record contracts in the future, but for now you can see that the price of a $15 CD is not just the songwriter and the cost of making the CD.

Do you remember our definition of product from How to Get Anybody to Try On Your Socks (Part I)?  These posts will tend to have some confluence, so you may find it helpful to go back and read some of them if you feel so obliged.  A product, for our purposes, is something produced by labor that someone is willing to pay money for.

Remember, whenever possible, don’t reinvent the wheel.  If you are thinking of your CD as your product, you are going against the most basic tenets of our economy: the law of supply and demand.

How many people want to buy your CD right now in this exact moment as you are sitting there reading this?  Be honest.  Probably none.  The law of supply and demand is constant, it never changes, but a product’s place along the continuum between “got lots of ‘em, nobody wants it” and “got a few, lots of people want it” will vary from situation to situation.  Interpreting the situation and pricing something accordingly is called arbitrage, and it’s an art form in and of itself.

So, back to supply and demand.  Right now, at this moment, nobody wants to buy your CD.  So what is it worth?  Nothing.  This is not to say that you won’t soon find yourself in a situation where some people will want to buy your CD (at a show, for instance), or that someday your CD will be distributed worldwide (and you will receive almost nothing from the sale of it… quite a catch 22!) and your CD will be worth $15, but right now your CD is in a market environment in which there is absolutely or very little demand.  This is why so many artists order that 1,000 minimum to get it pressed, and end up with 930 left over.

I’m sorry, that was all a little harsh, but I really do want the best for you and your music and if I am going to help you then we need to take a very honest look at where your CD stands in the marketplace.  And although your CD may not be in a favorable stance right now, the good news is (for that very reason) you have the time to spend on turning that around.  You can either have time or money, both are very good things to have, and in my next post we are going to talk about what exactly to do with that time so we can make your product worth more, and of course, what exactly is the product.

MuseZu… and Be Heard!

Ryan

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