Is it the impossible dream... make money in the music business?

At Hope Sings, we're looking at all the different ways - all the potential revenue streams, time/energy cost/benefit analysis - to make enough money to make a difference (ie donating to our MF partners).

I don't recommend reading the following scree by Courtney Love if you're thinking of entering the music business and actually paying your rent. It's very lucid and very funny in a terrifying way. 

Here it is - how the label makes 11 million and the artists end up with nothing. Even with a $1 million advance.

Here she goes:

What happens to that million dollars? 

They spend half a million to record their album. That leaves the band with $500,000. They pay $100,000 to their manager for 20 percent commission. They pay $25,000 each to their lawyer and business manager. 

That leaves $350,000 for the four band members to split. After $170,000 in taxes, there's $180,000 left. That comes out to $45,000 per person. 

That's $45,000 to live on for a year until the record gets released. 

The record is a big hit and sells a million copies. (How a bidding-war band sells a million copies of its debut record is another rant entirely, but it's based on any basic civics-class knowledge that any of us have about cartels. Put simply, the antitrust laws in this country are basically a joke, protecting us just enough to not have to re-name our park service the Phillip Morris National Park Service.) 

So, this band releases two singles and makes two videos. The two videos cost a million dollars to make and 50 percent of the video production costs are recouped out of the band's royalties. 

The band gets $200,000 in tour support, which is 100 percent recoupable. 

The record company spends $300,000 on independent radio promotion. You have to pay independent promotion to get your song on the radio; independent promotion is a system where the record companies use middlemen so they can pretend not to know that radio stations -- the unified broadcast system -- are getting paid to play their records. 

All of those independent promotion costs are charged to the band. 

Since the original million-dollar advance is also recoupable, the band owes $2 million to the record company. 

If all of the million records are sold at full price with no discounts or record clubs, the band earns $2 million in royalties, since their 20 percent royalty works out to $2 a record. 

Two million dollars in royalties minus $2 million in recoupable expenses equals ... zero! 

How much does the record company make? 

They grossed $11 million. 

It costs $500,000 to manufacture the CDs and they advanced the band $1 million. Plus there were $1 million in video costs, $300,000 in radio promotion and $200,000 in tour support. 

The company also paid $750,000 in music publishing royalties. 

They spent $2.2 million on marketing. That's mostly retail advertising, but marketing also pays for those huge posters of Marilyn Manson in Times Square and the street scouts who drive around in vans handing out black Korn T-shirts and backwards baseball caps. Not to mention trips to Scores and cash for tips for all and sundry. 

Add it up and the record company has spent about $4.4 million. 

So their profit is $6.6 million; the band may as well be working at a 7-Eleven.


Big Gulp, anyone?