Aaron Static

Electronic Music Sales: How the wealth is distributed

• 20% (~50c) -> Distributor
      Responsibilities: Uploading the track to multiple websites/services and combining sales reports/payments into one for the label
      Expenses: Staff, upload bandwidth, reporting systems
• 40% (~$1.00) -> Beatport.com
      Responsibilities: Hosting & Content Delivery. Some minor marketing through “featured” releases.
      Expenses: Staff, upload bandwidth, website maintenance etc. 
• 20% (~50c) -> The record label
      Responsibilities: Promotion, marketing, quality control, organizing remixes where required.
      Expenses: Staff (for larger labels), marketing costs 
• 20% (~50c) -> The artist/s, including split payments for remixers and/or vocalists
  Responsibilities: Music creation and delivery of final product (which most of the time includes mastering)
  Expenses: Studio equipment & software, mastering

Now what can we gleam from this information?

1. A disproportionate amount goes to the distributor and store, who’s expenses for a single download would be nothing more than a few cents in bandwidth and administration costs, which is more than likely nothing due to most systems being entirely automated anyway. With all this money flowing to the companies delivering the content as well as the digital medium costing almost nothing, a strategy of quantity over quality is more profitable than the alternative, so a large number of distributors blindly sign any two-bit label that applies.
2. The label being responsible for marketing but having no capital with which to execute said marketing strategy (due to all the profits going elsewhere) is damaging to say the least and again encourages quantity over quality. For example, let’s say a label can easily get 20 sales per release without marketing it at all, it is more profitable for them to do 50 releases a month and get 2,500 sales, than it would be to do a single quality release and employ a marketing strategy to achieve the same amount of sales.
3. If the label wants to employ big-name artists to boost their reputation through remix work paid up-front and further promote the original artist (a long-standing strategy that has been around since the vinyl days), they are forced to do so at a loss.

All this means less marketing and promotion for the end product (the artist), resulting in less sales and not enough income to support their art. While distributors and sites such as Beatport.com continue to flood the market with thousands of MP3s every day, of which they only need to sell 1 copy to turn a profit.

At this stage of the EDM industry, the artist can only make a living from touring non-stop pretty much 12 months a year. For this to be possible they need a booking agent to notice them and consider them marketable to promoters of clubs & festivals, and for that to be possible the artist needs a solid body of work released and in the public consciousness. With the distribution of wealth as it is, the artist is unable to have their music spread widely enough as hardly anyone is willing to market them. They are thereby forced to market themselves shamelessly and spend more than half of their time posting on the internet or building DJ contacts to get their music played, which used to be the sole responsibility of the label.

It’s therefore not a surprise that so many artists are giving music away for free alongside their usual releases. Even major label artists like Knife Party have been doing it. An unprecedented amount of free music is currently flooding on to the market with minimal licensing restrictions in an effort to increase brand recognition and get agents/promoters wanting to tour the artists, and this method of marketing costs the artist nothing and requires no label, distributor or online store.

In the vinyl days there were multiple levels of quality control that ensured only the best music made it to stores. A distribution company would vet every new label because they were risking money by taking them on. A label would then carefully choose each release and remix meticulously to ensure the best possible chance of breaking even once capital has been spent on getting it mastered and pressed to vinyl. Nowadays all it takes is clicking a browse button, selecting an audio file and clicking OK.

Some may say that I badmouth labels, and in past blog posts I may come across that way. In reality I know the label can take a lot of unneeded effort and responsibility away from the artist, and in the past this was true. But in today’s market the label is encouraged to slack off and just pump out less-than-average music as fast as it can.

Something has got to change.