Over the past few years, music revenue has doubled from 20 billion to over 43 billion dollars a year. This number includes sales from on-demand streams, CD sales, radio play, live events, advertising. Its only one crazy thing about this sitution. Out of 43 billion artist are only taking home 5 billion or 12 percent of that money. So where is the other 38 billion dollars going.
According to Rolling Stone
“value leakage” involved in producing and distributing music, e.g. the costs of running record labels, streaming companies, satellite radio and other midpoints that have to exist between artists and listeners. “When you end up tracing all the dollars, around 10 percent of it gets captured by the artist. That’s amazingly low,” Citigroup’s media, cable and satellite researcher Jason Bazinet, who co-authored the report, tells Rolling Stone. “These young artists — you don’t even understand the gory details of the music industry or how the dollars flow. You’re really not going to make that much money. There’s an unbelievable amount of leakage through the whole business.”
In an ideal world, artists would be able to deliver their music directly to fans and take the majority, if not all, of the profit. But the music business is still largely operating on the systems that it used to use decades ago, when songs were sold in stores and owned in homes and not licensed and leased via the Internet (as is the case with Spotify and its ilk). Consequently, there’s a tremendous amount of money that gets away from the artist as other players step in and help with music distribution and sales.
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