How do Musicians earn now days?

[cube_b3]

I mean you got YouTube.

I haven't bought a CD... since I can't even remember 2005. Maybe.

I never got into iTunes or the whole crap of buying music online.

We had Napster and god knows how many other things labeled illegal, but now we have YouTube and yes it has commercials but can it compete with the good old record sales?

Anyone got any idea?

[melancholy]

There was an episode of Planet Money on NPR last year that covered this very topic.

Basically, when a new artist is 'discovered', they go into a record label and sign a package deal that encompasses everything that they could possibly make money on. iTunes sales, CD sales, tour sales, merchandise sales, promotional sales...if the artist makes a cent on it, so does the record label. In turn, the label then pumps out a lot of money to make the artist be known. Mastering each song costs in the neighborhood of $100,000 a song. Radio play costs $250,000. I just looked it up on NPR's site, and an economist estimates the average album cost for a major artist (like Taylor Swift or, in NPR's example, Katy Perry) costs $4 million just to get the name out there.

And then, in exchange, the label gets revenue from everything. iTunes pays out 70 cents per download. A CD sale is about an $7-8 return per disc. Spotify and Pandora pay 3 cents per single stream. And none of that factors the amount of money made from tours, merchandise sales, TV commercials, etc. All of which both the label and the artist make money from.

Basically, the industry no longer relies on moving CD's to make money. Single iTunes song downloads make them more money than a full CD sale. Consider this: Capitol Records stated that Katy Perry's album Teenage Dream sold 2 million albums, and 24 million individual songs in the US. At 70 cent profit per song, that means Katy and her label made 16 million just off of individual song sales.

...but Katy Perry is a huge artist. What about smaller artists? Well, essentially it's the same thing, just on a smaller scale. Smaller label making the album, smaller budget for producing an album, smaller return on the album sales. But in many instances, there is still profit at the end. Even if you are an individual artist promoting yourself, like in the instance of Jonathan Coulton, self promotion on the internet gives you a bigger advantage now than you would ever have had back in the 90's. According to (once again) Planet Money, Coulton's self-promotion through his own website and the word-of-mouth across the web eventually generated $700,000 in sales in an 18-month period (and I'm pretty sure that's pre-Portal figures).

I love Planet Money.

[cube_b3]

Planet Money...? Hmmm.

Anyway my point was YouTube being counter productive.

I don't know about iTunes, never used it and I don't see myself buying digital songs when they are available for free.

For several years now I've actually stopped 99% of all music music download illegally or otherise because I have a decent internet connection and I have a playlist on YouTube, which just runs in the background. My playlist is everywhere with me regardless of computer. See what I mean? Wouldn't that actually hurt the artist?

[Ex-Cyber]

Depends on whether the uploads are authorized and tied into any ad revenue, I guess. A lot of American artists are on the "VEVO" channels which are apparently controlled by the big labels and tied into the revenue stream one way or another, but there are obviously also a lot of unauthorized uploads.

Anyway, I wouldn't mind buying my music online if it came in a non-proprietary, lossless, DRM-free format, which is not something that the big boys really offer yet (and probably aren't inclined to now that Facebook has apparently made customer lock-in sexy again). As it is, I prefer to buy CDs and rip them to FLAC.

[melancholy]

Anyway my point was YouTube being counter productive.

Actually, you are completely wrong. YouTube is another source of revenue for the music industry.

Let's take, for example, the explosive YouTube success of PSY's Gangnam Style. Between the time of the song's release on YouTube and July of this year, Gangnam Style had 808 million views. This translates into nearly a million dollars in ad revenue for both YouTube and PSY's music company. They split it in half, so half a million for PSY and his company just from a single YouTube clip. That does not include any other songs he posted on YouTube, nor does it represent the 33,000 videos that reference Gangnam Style that YouTube and PSY also generate ad money from (because, here's a curious thing about YouTube: if your video references copyrighted material, a company can choose to either have it deleted, or keep it up and generate ad revenue from your reference).

So great, a lot of people watched Gangnam Style. But half a mil isn't really big money, right? Well consider this: of the 808 million people that watched that YouTube clip, 2.9 million of them went to iTunes and bought the song. Crunch the numbers, and that's $2 million raised in iTunes sales. From a single song that originally only existed on YouTube. And none of that includes his radio play, Pandora and Spotify plays, commercials, appearance on the Ellen DeGeneres show, etc.

All from a single YouTube appearance. It's no wonder that the South Korean government is trying to catch lightning in a bottle by becoming an exporter of K-Pop on YouTube.

[cube_b3]

Well you have valid points about Vevo, and Psy becoming an American pop phenomenon.
But how many artists are on VEVO?

Also I read somewhere you need to have like a 100,000 hits in order to make money.
From what I understand chances off making money on YouTube are as good as chances for indie developers to make money on WiiWare (and according to Senile Team it was a disaster).

Edit: After much thinking... and looking at VEVO artists, I see that they are quite a few.

[melancholy]

Well you have valid points about Vevo, and Psy becoming an American pop phenomenon.
But how many artists are on VEVO?

Also I read somewhere you need to have like a 100,000 hits in order to make money.
From what I understand chances off making money on YouTube are as good as chances for indie developers to make money on WiiWare (and according to Senile Team it was a disaster).

Edit: After much thinking... and looking at VEVO artists, I see that they are quite a few.

Clearly you didn't read my post fully. I specifically stated that PSY didn't make his money from YouTube. YouTube was that catalyst that brought iTunes sales, CD sales (since he's on NOW CD's), commercials, guest appearances, and all the other things a celebrity normally makes money on. So yes, someone that posts their video on YouTube and does nothing else is not going to make money. That's why people that make YouTube videos then sell their songs on iTunes, make t-shirts of the video, do appearances on TV shows, whatever it takes to make money.

I think you have a problem understanding this because you exclude yourself from the broad spectrum of marketing. You only listen to music on Youtube and stop there. You don't buy the song on Amazon, you don't see them in concert, you don't buy their limited edition 2012 tour skullcap. But considering the sheer number of songs iTunes moves in a year, you are definitely in the minority. People do buy music, and if Gangnam Style, Chocolate Rain, and the Lincoln Park Rapist are any indication, people do buy music based solely on YouTube views.

[Skynet]

Mel brings up something I was about to add. The concerts. It's my understanding musicians make a heap of their money from touring.

[Specially Cork]

I'm pretty proud of the music industry to be honest. Free music videos on Youtube, cheap streaming through various websites, DRM-free downloads across a range of competitors - they've adapted well to the market and come a long way in the last few years. Perhaps the money-making isn't quite as direct, but they're clearly giving customers what they want. I honestly don't think there's much of a "I only pirate because..." argument regarding them anymore.

Take a look at the movie and game industry though...

[cube_b3]

Clearly you didn't read my post fully.

Upon reading your post again, I realized I skipped the 2nd paragraph.

I think you have a problem understanding this because you exclude yourself from the broad spectrum of marketing.

Well that is something I certainly over looked.

You only listen to music on Youtube and stop there. You don't buy the song on Amazon...

[/quote]

See back in the day, I listened to the song and then bought the cassette. Simple.
Merchandise, concert and crazy collectibles always existed but I think most people just want to hear the music.
Isn't that why the industry felt so threatened by Napster?

Now those like me who want to listen to music can YouTube and it isn't even piracy.

[melancholy]

Well, for one you are listening to music on a computer. That already puts you in a rapidly dying trend. People are moving to smartphones, where YouTube exists, but is not exactly a viable music service when data usage and streaming quality is concerned. No, either they are using Pandora/Spotify/other streaming service, or they are buying iTunes music. Or, in most cases, both. Because in a world where the computer isn't a necessity anymore, most people find it easier to just pay the $1 for the song they want rather than try to hunt it down illegally, format it to work on their phone and sync it over. The industry has created the most efficient method of impulse music buying ever. So simple, in fact, that selling entire albums is no longer a necessity to turn a profit.

[cube_b3]

Hmm, well I would love to get it into a debate over computers vs smart phones but that would be off topic and maybe we can do it next weekend .

Good Talk, Mel. It has been insightful.