Who gets paid: a look at the music industry and who really has the power

On any given CD, an individual artist is lucky if he/she makes more than 7 cents on the dollar, according to industry averages. It is the machine that drives the music--the record companies, often publicly traded and funded by your pension funds and 401k plans--that makes most of the money. Here's a look at how a typical hit record breaks down and who gets paid, based on PPD or "Published Price to Dealers":

WHAT THE ARTIST GETS

Artist Royalty (per each $12.05 wholesale price CD) 14%-3% (producer costs) = 11% or $1.32

50 CENT

CD: Get Rich or Die Tryin'

Retail Price: $19.98

Label: Interscope/UMG

Cut: 50% of gross

Cut: 12-14% of PPD

Producer Cut: 3-4% of artist cut

JUVENILE

CD: Reality Check

Retail Price: $18.98

Label: Atlantic/Warner

Label Cut: 50% of gross

Cut: 10% of PPD

Producer Cut: 3-4% of artist cut

CHINGY

CD: Hoodstar

Retail Price: $18.98

Label: Capitol/EMI

Label Cut: 50% of gross

Artist Cut: 10% of PPD

Producer Cut: 3-4% of artist cut

HOW THE MONEY IS SPLIT

Wholesale price: $12.05

Royalty X 500,000 units: $640,000

Less 10% free goods (which goes to the label, something that dates back decades): $64,000

So right now, there Is a total of $576,000 to the artist, then you have to factor in:

Less Recording costs: $250,000

Less 50% of Independent promotion: $100,000

Less 50% of video costs: $75,000

Less Tour support: $50,000 that amounts to about $101,000 to the artist for selling half a million records. That's for an entire album, and this scenario is pretty standard. And, the artist doesn't even get this in a lump sum. The record company usually holds back a reserve of about 35% to 50% in case the sales of the record were to change. That could mean that the artist gets nothing for the first statement.

COPYRIGHT 2007 Johnson Publishing Co.
COPYRIGHT 2008 Gale, Cengage Learning