How Downloading MP3s Really Does Take Money Out of the Artists’ Pockets

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I have a dear family friend who is a fairly well-known recording artist. In fact, he and his group are extremely well known in their particular musical field (think bluegrass-jazz fusion).

He was playing nearby last week, and we had a chance to catch up and chat, and so I asked him for his take on the whole MP3 downloading controversy.

Now, this is a guy, and a group, who regularly invite their audiences to make recordings of their concerts, and to trade them around, and who offer tracks for free downloading on their website. They’ve released at least a dozen albums, many of which have done very well, and won kudos and awards around the world. I figured that he would have both an interesting, and perhaps a somewhat relaxed perspetive on it all.

So, and because I really knew nothing about how this industry worked, I was a bit surprised at the vehemence in his voice, especially as he has a soft-spoken laid back voice, when he responded that illegal music downloads absolutely take money out of his pocket.

He then went on to explain why, and what he told me stunned me (again, because I’d had no idea). If you already know this, it will come as no surprise, but if not, I expect that it will stun you, too:

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Recording artists have to pay the studio back for the cost of producing their records.

The recording artists don’t get one red cent out of the sale of an album until the recording studio has recouped the cost of making the album out of the artists’ royalties!

“Let’s say,” he explained with this example, “that it costs $100,000 to cut the album. And that our royalties are somewhere between 10% and 15%. For every album that we sell, we would get $1.50 to $1.75 in royalties, only we don’t get them until that $100,000 is paid off.”

That means that in a best case scenario the album has to sell 60,000 copies before the artist sees anything. Anything. And that is with a mythical production cost of only $100,000.

That sucks.

Now, granted, none of the lawsuits by the RIAA and the MPAA have really been about protecting the artists, despite how they try to position them, and we all know that.

But the fact still remains that if someone acquires the album and someone hasn’t actually paid for it, that’s that much less going towards paying down that production cost, which means that it’s that much less likely that the artist will ever see a dime of their royalties.

According to my friend, as the sale of MP3 devices continues to climb, records sales have dropped by at least 10% across the board. Not that he was blaming MP3 devices on lagging record sales – he wasn’t. But rather we were observing that the drop in record sales didn’t track to other possible indicators of the drop being, say, due to an economic downturn. Rather than an across-the-board drop in sales in related products and industries, the drop seems only to be in record sales.

Is that directly related to the exponential growth in file-sharing? It may be that nobody will ever be able to say empirically.

But what I can say is this. If you are going to download music for free, music which wasn’t intended to be free, take a minute to think about this: if you like them enough to download their music, for gosh sakes don’t take money out of their pocket.

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16 thoughts on “How Downloading MP3s Really Does Take Money Out of the Artists’ Pockets

  1. its easy, musicians stop making music for these major’s and starve the fukers. stop being fooled by false fame flash in the pan bullshit. At the end of the video shoot all the bling goes back on the shelves and the fake ass models go home, they turn off the lights and take away the props . they market it to the young and naive and publishing sells it to phone companies and episodes of the hills. they package you advertise you and get you high rotation on radio stations they virtually own. they package you on and off line and make a mint. you are a product lets not forget its the music business. forget the indie charts too as their little sub label companies and strong hold on so called indie stations is also wrapped up. they own the up and coming they own the punters ears pockets and mind set, a few comments above show that. they keep the big name producers the big name producers, they set the studio price trends THEY OWN.
    so yep get your home studio then take it off to be mixed by a good producer and mastered by a leading facility because at least it will be close to the sound required to replicate that which the punters are used to having stuffed down their ears smashed into their faces on tv etc etc.
    but trying to reach the captured masses will be like walking into a major chain store and selling your own home brand of steak knives. so instead of crying about the people downloading for free cry about the major that is really the reason you are broke. starve them and their empire will crumble with time. maybe then the services will adjust to suit and big quality production , fair radio and exposure will be a little easier to obtain.
    Then your self distribution digital or otherwise will be able to compete and speaking as a member of a well known indie you wont mind throwing out free download that the punter only needs to purchase once to do with what they will as many times as they choose. for fuks sake

  2. When I was young it was easy to buy a record with one song that you loved. Now, this is no longer possible. You have to pay for the entire album to get one song. I agree with some of these other folks that maybe recording artists should have their own music website offering songs to be downloaded for the price of one song. There’s a lot to be said for the good old days when you could buy your favorite tune without having to pay for a bunch of others you don’t want. Until we get a way to get a song at a time, music piracy will continue.

  3. ok, but most artist have money coming in so this is chump change. tell them to cut back on all the useless stuff like booze and drugs and 50 cars and a 100 room mansion that they dont need.most ones that do the complaing are the rich,scew them i say if we bought the cd and later on that cd gets ruined we can download it cause we paid for it. but there will always be a free site out there. so keep up making thoese free sites to find.

  4. Why don’t the artist put something on there web site like paypal, And you can donate what you think is a fair donation for what mp3’s you have downloaded of them.

  5. Any “artist” who signs a contract with the devil gets what they signed up for. The rich and the famous do not get my sympathy.

  6. What Garth Brooks did to Columbia Via his deal with walmart, says it all. If the R.I.A.A. is in its death throws, so be it! They have screwed both the artist and the public long enough. More artists need to look for “other” Avenenues to sell thier product. As for myself, I hate paying good money for one track out of fifteen P.O.S. when I can go on the net and get what I like and want for a nominal fee. Artists need to start thier own .mp3 sites and sell thier own product. Most music is promoted through concert tours and radio stations that are willing to play the tracks. The recording industry has been like a cyote in the chicken house, and it’s about time someone set the stage for thier demise.

  7. If your so called friend is such a big artist, like most artist, even myself, run their own recording studios. Making that much money, they should’nt have to pay a recording studio to record their music, almost every mainstream artist out right now has there own studios, so the only monry watsed is on mass producing the cd and its accessories which is not alot compared to the money that most artist are making today, music artist are just being greedy, they already have too much money and are only thinking about themselves, should’nt it be enough that people are actually listening to their music

  8. I have nothing against anyone, including Record companies making a profit; what makes me mad and therefore inclines me to align myself as a neutral leaning towards the pirates in this fight between the so-called legal holders of rights to sell music versus free downloaders is this: When you buy a piece of music re: CD or DVD or any other format, did you buy it outright or just rent it? The store gives you a sales receipt that states you paid the obscene amount of (whatever high price) for you to then be limited to play it on your machine. Now, if they tell you that you’ve only rented this music, maybe you’d think twice about actually paying that price; as opposed to what Steve Jobs of iTunes just recently referred to as the ‘greed of the music industry’ attempting to raise the price of the current $.99 download (a fair price for a lease), in effect killing the golden goose, thereby encouraging so-called piracy all the more. If the artists are not getting a square deal here, maybe they should look for another place, arrangement, group, etc – just like the rest of us have to do when our employer ends up screwing us. The employer gets to keep or actually increase their profit margin by ungodly percentage points, lays the blame on any downturn on the employees, or the environment, or new technology – essentially playing the blame game; placing the focus like a magician on the front end, while everyone misses the point rolling across their trance inducing screens. Established major artists – if they care at all for their music should fight for owning it and be able to consult, joint venture, get those who know how to do this without ripping them off set up marketing and distribution in a new model. The internet is rife with all sorts of business mechanisms to do this; just stop complaining an get off your asses. The common joe on the street has to struggle with this every day; what makes you think you’re privileged brains full of mush any different. Did anyone react to the fact that Michael Jackson owns the rights to all the Beatles’ music a few years ago? Made the now defunct band look a little babe in the woods naive, didn’t it?


  9. Corrupt organizations set up companies in Mexico because they can don’t have to care about their employees and don’t have to worry about environmental impact. If people try to change this arrangement, the companies close shop and moves to China.

    Anytime a company/organization controls the rules on which business is conducted (RIAA/established entertainment companies), They set the rules so that anything that hurts the company hurts first the people on the bottom of the food chain.

    Just because a corrupt company/organization has set up its employees to take the suffering for any change in its business model, does not mean we should support statues quo.

  10. hey, you can rip off my music here, free: …..
    good lord, i’m screwing myself out of royalties again!!!
    somebody call that asshat in metal-lickah…….

  11. No matter WHAT it costs an artist to make a record, if downloaders STEAL the music, the artist still gets ripped off!

  12. folks need to get with the digital age.
    screw the record companies….they don’t care about art or artists, they just want all the pie for themselves….and have always been like that.
    today, you are a bloody fool to spend 100 grand or more to make a record….
    for a thousand bux or less you can do the whole thing with a computer, some peripheral hardware, and free software like AUDACITY.
    screw that; do it at home.
    these big stars can afford to….so can’t you.
    there’s early mixes of 20 some odd songs of mine at the website i listed on here….feel free to download and share them.
    F*** the RIAA…..they have made it so ya can’t even GIVE your music away if you WANT to….
    and the copywrite protection crap that is slowly being integrated into windows has gotta go, too,….god….don’t get me started….

  13. The 10% sales drop you mention may have something to do with sharp increase in CD prices in retail shops…the home spontaneous purchases of the “I just heard that on the radio” variety. Some shops are getting as much as 18.99 for a new CD release, where some shops cut prices on new releases ONLY when stimulated by the major labels to do so. The major label complaints about loss of sales because of mp3 downloads is much akin to the mafia complaining about lack of drug and gambling sales because of 12 step programs.

  14. “What’s stopping them from using alternative ways to produce and distribute the music?”


    Not the marketing done by the record companies, but the marketing they’d have to do to make this work. Production, distribution channels, and promotion (especially promotion).

    Some distribution channels exist, but they tend to ride on the offline promotion done by the record companies.

    Home recording studios are nice, but they’re no substitute for a professionally recorded album. And they’re not something you can copy from a friend’s disks. They cost more money than a lot of bands have to invest.

    All of that can be gotten around, but without promotion, it’s not going to make a difference.

    It’s interesting that a lot of the most-pirated music is also the most heavily promoted – by the record companies. Think about that.

    What you’re suggesting will happen eventually, but it won’t involve home studios for the most part. I believe we’ll see a lot more local studios, charging much less than these places do now. And you’ll find whole new industries coming up around them. But there’s a limit.

    People can only listen to so much music in a week. They will still gravitate to what they’ve heard the most about. And that comes back to promotion.

    How many bands are really good at that stuff?

    The next villains in the music industry will be the guys who learn to market bands effectively through the new channels. And they’ll be the ones filing lawsuits against pirates.

    It’ll be the same thing. Just more “democratically” distributed.


  15. I agree with patrick. There are already major internet distribution chains out there, with more on the way. Why not go with Napster, ITunes Music store, et al? If it’s such an issue the high cost of “production” via major studios, why not cut out the major studios altogether and finally end their “necessary evil”.

  16. What’s stopping them from using alternative ways to produce and distribute the music? Investing in a Home Studio and using the interweb to market their music would definitely get rid of the use of a major record label that is riding their back.

    BTW, funny thing with the google ads – the ad inside the text was a link to Limewire: “software to download the latest films, music etc”. A little ironic, don’t you think? ;)

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