Record Labels Greed Summed Up

October 26th, 2005 | by amarfresh |

The Lockergnome has a great post which links to another post at DigitalMediaThoughts.com which plainly points out exactly how greedy the record labels are.

Let’s look at the numbers. Recording costs, production, artist fees, etc. average approximately $2-3 per album. The cost of pressing a compact disc, the case, liner material, and other associated manufacturing costs run approximately $2 per disc. Wholesale prices run from 50-80% of manufacturer’s suggested retail prices, so a wholesale price of $8 per CD would be fairly typical. Subtract the manufacturing, production, and shipping costs, and gross profit to the recording studio is only $3-4 per album.

iTunes, on the other hand, pays recording studios between 60-70% of gross revenues (60 to 70 cents per 99 cent song). For each $9.99 album, that’s a gross profit of $6-7.

Link: DigitalMediaThoughts.com (via Lockergnome)
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  1. 3 Responses to “Record Labels Greed Summed Up”

  2. By Brent on Mar 30, 2006 | Reply

    Many musicians, producers, and the like, have varying opinions regarding the ROI (Return On Investment) of major record labels and companies. Of course, due to the advent of online files sharing, the bottom end for record labels has arguably been negatively effected. I’m not a business expert, but I believe that the early Napster era spawned CD sales by simply giving listens an introduction to an artist’s recorded work.

    I never liked squashed mp3 files at all. I would always buy the 16/44.1 commercial CD. However, times have changed again due to Ipods and such. Mp3 format is becoming more and more mainstream. Graytowet mastering is finding many artists sending intial unmastered material in mp3 format.

    Anyways, I digress - in not so many words I believe the major record labels are still making a killing regardless of the digital world.

  3. By Derek Eady on Jul 17, 2006 | Reply

    How much does Jamster pay record labels for ringtones? How much does cellular phone companies pay Jamster. I am interested in starting a service like Jamster, but I haven’t been able to find or get any answers to see what I am up against. Please help! Thanks

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