does anyone know an approximate breakdown of how the profits from the sale of an album are broken down?
Chief’s Domain - http://www.seas.ucla.edu/~ravi
It all depends on the artist’s contract with the label the album is released on.
Obviously if an album is self-released, the artist would retain all the profits.
Major label albums are a totally different story alltogether. Steve Albini–a Chicago musician and engineer (he hates the term “producer”) of everyone from Nirvana to Jimmy Page/Robert Plant to Slint–I think summed it up best in a very informative article in The Baffler (warning to the feint of heart: the “F”-word appears 3 times within the article).
The scenario is real, trust Albini: he’s produced 250 albums in his career AND he’s an artist dealing with Chicago independent label Touch & Go (which has a 50/50 contract with their artists which is very beneficial to the artist interested in selling modest amounts of records outside of commercial radio and MTV).
I love Steve Albini, and I appreciate his article very much.
However, speaking as a music industry professional (ahem) let me address a few things:
(1) Record companies put a lot of money up front. With most every band (probably including the one in the article), they never recoup it. And all of that cash they spent is never gotten, made up for by superstar acts.
(2) That band had a shitty manager if he let them do some of the things they did. Just because a band’s label is willing to shell out for a bus for a baby band playing clubs, why on earth should the band do this? They should know it’s their money they’re spending.
(3) On a music industry panel I was on, a prominent entertainment attourney argued that being in debt to your label is not always a bad thing, since they have so much riding on you, they are that much more likely to continue picking up options for new records as they try and get some of it back.
Now, to answer the OP, yes, it does vary. I would suggest The Business Of Music for the intimate details on the biz (no less an authority than Cecil recommended it!), but here’s a VERY generic breakdown:
Record store sells disc for $15.00
Record label sold it to them for $9.00
Of the $9 that the label got, factor in:
Cost of the disc to manufacture: $2.00
Okay, thus far, we have on a $15 CD:
Store gets $6.00
Manufactuer gets $2.00
Label gets $7.00
Now, after recoupable expenses from the artist are recouped (almost everything - from tour support to postage on promo mailings is recoupable) the artist will get around $1.50 from that CD sale.
Now, that is a HIGHLY SIMPLISTIC overview of the process. It can easily change because larger artists will have money which is non-recoupable (theirs to keep), percentages vary by the deal, and percentages within the deal can change when an artist sells a certain number of units.
That said, if you think an artist getting $1.50 on a CD sale is chump change, the fact is that the artists bread & butter are not mechanical royalties (from sales), but from publishing royalties, which they get whenever a radio station plays them, a song is used in a movie, or even when another artists covers their material (assuming they are the song writers).
Also, touring is a major way for a band to make money. Aside from the percentages to management and a booking agent, it’s all theirs to keep.
Bands also can have a merchendising company taking care of their tee-shirts and what-not, and they keep a decent percentage of those sales as well.
All in all, while the sysyem does not seem totally fair to the artists, the fact is that if the band has good management, at least one member with a head for fiscal responsibility and a touring base, they can do okay selling a relatively small amount of albums.
Yer pal,
Satan
Satan. Wow. Your closing comment made me see an analogy to the Movie Biz. ( My world…). You can shoot a film for 40 million, show 140 million in worldwide box office, and claim a net profit of zero- UNTIL Toys, games, t-shirts, doo-dads, and VHS/DVD sales are figured in. THEN- it shows a profit. It’s amazing that the actual goal- “I wanna make a record” / " I wanna make a movie" is somewhat secondary these days. It’s the ancilliary income that adds up, and makes the real difference, isn’t it?
( And, please don’t quote me stories about how "American Graffitti was shot for $ 700,000 and has the highest return percentage in film history- or, did for a long time. I’m talking about normal budget- to- normal sales films here ).
Cartooniverse
If you want to kiss the sky, you’d better learn how to kneel.
thanks satam, you answered my question very thoroughly 
Chief’s Domain - http://www.seas.ucla.edu/~ravi