This is actually a huge issue. The short answer? It’s the fair amount for me.
Background: You’re probably referring to the fact that most commercial CDs list for 16.95 or something like that. However, when you come right down to it, by the time that Warner Bros., the trucking company, the warehouses and the Wal-mart size record store get paid, the artist is typically left with something like $1.65 per CD. Really. That’s the reason you hear so many anecdotal horror stories about musicians going broke after selling 2 million copies. Part of it is the nature of the beast: if you’re, say a rap star, the first thing you might do is get some bling and an ‘entourage’ going. And sure that wastes a ton of cash keeping up the ‘image’. But the fact is, it’s easy to not see how little the typical artist gets from record sales. And tours get so extravagant that these are often losing propositions (ever wonder how some of those guys can afford all those ‘dancers’ on stage?) So the truth is that most ‘signed’ artists actually make the big money (yeah, the Big, Big Money, Dim) from either merchandising or licensing. In other words, T-shirts and a five second placement in ‘Law And Order’. Really. That’s the deal.
Or rather, that’s their deal. My economics are a bit different. I keep the entire cost of production, including postage and fulfillment, under $2 per unit. So do the math. I ain’t gotta sell squillions to make a living.
Oh, oh. I smell a rant coming…
And another thing: $16.95 was always a crap deal. It was a crap deal back when CDs first came on the scene in the 1980′s and it’s pretty much stayed a crap deal to this day, despite some recent price drops. It’s like the major drug companies who charge $200 a month for a drug, simply because they can, and there are no ‘market forces’ to keep things in line. If ‘the market’ had been at work, we would have seen prices come down after a few years, as they do in other areas. It made sense to charge more back in the day because they did have substantial costs in setting up new manufacturing equipment and systems. Fair enough. But after that? It turned into pure gravy. They had zero cost of development in much of their sales–after all they were simply re-packaging all of their back catalogues and selling us the same thing over again that we already had in vinyl. But still charging $16.95. OK. Wanna know the cost to manufacture a CD? When I order them in units of 2,500 it’s about $1. Now imagine what it must be for a big run for a Madonna or Jay-Z record.
So let’s add this up: You pay $16.95. But the cost of manufacture is under a dollar. And the artist is often getting less than $2. So where’s the remaining $13.95 going? Things that make ya go ‘Hmmm’.
I mention all this because there’s so much talk about the sad state of the music biz. Well, all I can say is, ‘good riddance’ to the old model. It really was a complete rip-off for both artists and consumers. Maybe some share-holders made out well and, as an ardent capitalist I say, ‘Well done to you!’. However, even without the Internet, the party couldn’t last forever. One can only wish that whatever replaces the current system will be more equitable for the artists (that would be me) and the consumers (that would be you.)