Record Label Profits Worksheet Summary

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INTRODUCTORY SUMMERY We will take a look at (The Record Label Profits) and how The Record Label Profits Worksheet is designed to help you estimate how much (or how much more) you will make when you decide to proceed with starting a record label and you release your first record on CD. It can help you get a handle on where your money will be spent for each recording project, and how much you should charge for your CDs, and allow you to budget for shipping, advertising, and miscellaneous expenses. EXPENSES: Recording costs, Copyright registration: Number of original songs/Registration fee Initial product order, Number of CDs/Price each Reorder product: Number of CDs/Price each Promo/free product: Number of CDs given away…show more content…
Independent labels that order more than 100,000 CDs a year pay approximately $.65 per CD. Labels that buy less than 10,000 CDs a year pay approximately $1.20 per CD. These costs include the printing of 4-page package inserts and tray cards. Royalty Costs Record labels pay two royalties: The first is a record royalty to the performing artist(s); the second is a mechanical royalty to composers and publishers. Some companies pay record royalties on a percentage (8% to 16%) of the suggested list retail price (SLRP) less a packaging cost, generally 15% to 25% of the SLRP. Others base royalties on the wholesale price to distributors. For a CD with an SLRP of $16.98, a common packaging deduction of 25% is $4.25 and the amount paid to the artist will be calculated as a percentage of $12.73. Thus, at a 10% royalty, artists will receive $1.27; at a 14% royalty rate, $1.78. Record labels pay composers and publishers mechanical royalties. They try to cap mechanical royalty budgets at ten songs payable at 75% of the statutory rate ($.80 per song), which equals $.60 per song under the controlled composition clauses of recording contracts. Promotional Costs Major labels budget approximately 20% of annual gross income for promotion and selectively allocate the funds according to sales projections for each…show more content…
In 2001 it succeeded in shutting down Napster (the leading on-line source of digital music), and it has threatened thousands of individuals with legal action.[10] This failed to slow the decline in revenue and proved a public-relations disaster.[10] However, some academic studies have suggested that downloads did not cause the decline.[11] Legal digital downloads became widely available with the debut of the iTunes Store in 2003. The popularity of internet music distribution has increased and in 2009 more than a quarter of all recorded music industry revenues worldwide are now coming from digital channels.[12] However, as The Economist reports, "paid digital downloads grew rapidly, but did not begin to make up for the loss of revenue from CDs."[9] The 2008 British Music Rights survey[13] showed that 80% of people in Britain wanted a legal P2P service, however only half of the respondents thought that the music's creators should be paid. The survey was consistent with the results of earlier research conducted in the United States, upon which the Open Music Model was based.[14] According to Nielson Soundscan, by 2009 CDs accounted for 79 percent of album sales, with 20 percent coming from digital downloads, representing both a 10 percent drop and gain for both formats in 2

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