MBU 1110 Fall 2019 - Record Companies & Deals - Lecture #5

7. Record Labels
Indie vs. Major
In 2016 and 2017 Independent Labels collectively had a larger market share than the majors

8. Record Labels
Indie vs. Major –
Major Labels have 68% Share of the market.
Indies collectively have a larger market share
than any major.

9. UMG now has just under 30% market

38. RIAA (Recording Industry Association of America); industry group made up of
record companies, The RIAA also Certifies album sales figures
Gold album – U.S. sales in excess of 500,000 units
Platinum album – over 1 million U.S. sales
Multiple million sales certified as “double platinum”, “triple platinum”, etc.
Diamond album – over 10 million U.S. units
Other countries have different levels.
*Canada gold = was 50,000 units, now 40,000 after 2000, Platinum = 80,000
** Malaysia gold = 7,500 units, Platinum = 15,000 units
The RIAA (Recording Industry Association of America)

39. Royalty Calculation
How much money will an artist make on a gold
album? $500,000? $1 million? Let’s see…
Assuming the following:
Artist has 14 points
Producer gets 3 points
Recording costs: $150,000
Tour support: $50,000
Independent promotion: $100,000 (50%
recoupable)
Video costs: $100,000 (50% recoupable)

40. Royalty Calculation
 Wholesale price $9.00
 Royalty @ 11% (14% ‘all-in’ -3% producer) .99
 X 500,000 units $ 495,000
 Minus 10% free goods on 50% - 24,750
$445,500
 Minus recording costs -150,000
 Minus 50% indie promo -50,000
 Minus 50% video costs -50,000
 Minus tour support -50,000
 Total $170,250

41. Royalty Calculation
 Now, the artist doesn’t get a check for this all at once.
 Labels hold royalties in reserve against returns of the
physical copies of the album of between 35% and 50%
 First statement would probably look more like
$140,438.75 (35% held from 50% physical sales)
 What if the artist got a $150,000 advance?