By Jason DeRusha, WCCO-TV
MINNEAPOLIS (WCCO) — When we buy a CD or download a track from iTunes, we do it because we love that artist. We love that band. And we expect that they’re seeing a good chunk of change. But how much of every download actually goes to the artist?
“Mostly it’s between 14 and 23 cents” per dollar, according to Bob Fuchs, manager of The Electric Fetus retail music store in Minneapolis. “Fourteen cents if they didn’t write the song, 23 cents if they were the writer — is the industry average.”
So, when you spend $1 on a download or an in-store purchase, 30 cents goes to the retailer. The other 70 cents goes to the record label. The label then pays the artist, which is usually not much more than a dime.
“If you’re a major label artist selling music, you make next to nothing,” said independent Minneapolis singer/songwriter Jeremy Messersmith. He’s been touring the country in support of his CD, The Reluctant Graveyard.
“There’s other ways to monetize. People are pushing merchandise much more than before, said Messersmith. “You can make money on web traffic,” he added.
Touring is a huge source of revenue. In some ways, selling CDs is a way to generate interest for the money-making tours. Also, license fees from songs being in TV shows or video games are a major source of money.
“I’ve gotten a few placements in network television shows. It’s more money than I’ve made selling all of my records combined,” said Messersmith.
And he isn’t with a record label, so Messersmith makes the full 70 cents per dollar spent, rather than that going to the label. He uses that money to pay for his touring expenses, his band, publicity, management, etc., so he doesn’t net 70 cents per dollar, he said.
To make a monthly minimum wage, an artist with a label would have to sell more than 10,000 digital downloads a month.
“I’d rather not think about it,” laughed Messersmith. “There’s so many better ways to make money.”
But he added, “there’s no better way to have this much fun.”
According to Nielsen Soundscan, in the first half of 2010, consumers downloaded 597 million digital tracks, 42 million digital albums, and 110 million CD albums.
WCCO-TV’s Jason DeRusha Reports