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a simple but illuminating model from @createos:
if you an artist in an 80/20 label/artist royalty deal with a $300,000 advance, $80,000 recording budget and $150,000 marketing budget, your music would need to generate over 500M streams before you make just $1 on the backend.
if you an artist in an 80/20 label/artist royalty deal with a $300,000 advance, $80,000 recording budget and $150,000 marketing budget, your music would need to generate over 500M streams before you make just $1 on the backend.
play around with it >>>> https://dealsim.createos.app/
now let's plug in Kanye's contracts.
his sixth album was a 50/50 net profit split deal with an $8M advance (which is big!) and a $4M "recording fund." UMG took a ~25% "distribution fee."
with no marketing costs, Ye still needs to generate 3.2B streams to make $1 in royalties.
his sixth album was a 50/50 net profit split deal with an $8M advance (which is big!) and a $4M "recording fund." UMG took a ~25% "distribution fee."
with no marketing costs, Ye still needs to generate 3.2B streams to make $1 in royalties.
another point is that if your record does well in an 80/20 label/artist deal — which, in some circles, is "artist-friendly" — the label makes a ton of $$$ before the artist recoups! in the first example above, the label made almost $1.6M in profit before the artist made a dollar.
let's do one last example that's a bit more realistic for indie labels: $30K advance, $5K recording budget, $10K marketing budget, 75/25 label/artist royalty split.
the artist still needs 36 million streams before they recoup costs and start earning royalties. this is not easy!!
the artist still needs 36 million streams before they recoup costs and start earning royalties. this is not easy!!
you can project onto this whether you think a label deal is a good or bad idea. personally, that wasn't my point. the fact that so many people are seeing this kind of clear financial modeling around a supposedly more "transparent" industry for the first time? THAT is the story.
