This is written by an artist named Grant Young www.grantyoung.com

Hope everyone enjoys it.

As Otan pointed out the cost is a bit more for the price of CD's. So you can use his figures as a more accurate guide.

As Mr. Sound Man pointed out this article is probably priced if you are hiring Quincy Jones and Bruce Sweiden for your project!

I just look at it as a "extreme worst case scenario" budget.

This article as it turns out is older with all of the Napster data but it will give artists a more realistic picture of where their money will go. With careful budgeting you'll do well.

_____

Buy a CD / Support The Arts


I am constantly trying to tell people what the difference between right and wrong is and what is sharing and what is stealing so I felt I needed to write another R and R about this subject.

I know I am going to piss off a lotta people out there but Napster and Gnutella is stealing not sharing.

Taking something that was not given to you or you did not pay for is STEALING not sharing. It is a black and white issue.

The manufacturing cost of a CD might be around $5.00 and the selling of that CD might be $20.00. BUT, there is a lot more cost of going into a CD that the manufacturing.

First, that $15.00 profit you think they makes is actually half that, about $7.50, to start with because on top of all the costs listed below, remember the TAXMAN gets about HALF of all profits.

Anyway, in the course of making of a CD go a lot of other processes and people who wanna get paid for their hard work. There are graphic artists that have to be paid ($100's of dollars per hour), engineers ($100's of dollars per hour), producers ($100's of dollars per hour), studio time ($100's of dollars per hour), rehearsal space ($100's of dollars per day), recording equipment ($100 000 or more), musical instruments for the band to play (a 5 piece band, probably over $50 000 in equipment), advertising the CD (paper and magazine ads can run tens of thousands of dollars per ad.) and not to forgot management fees and other expenses like food, shelter and transportation for a band. (Even a tour bus can cost hundreds of dollars a day in rent and gas and maintenance or $100 000 to buy).

Don’t forget the cost of a video these days starts at around $50 000 and can go to $1 000 000 for a professional shoot/job.

Don’t forget the cost of touring, roadies, soundman, tour bus, gas, food, hotel stays/rent, parking and others can cost $1 000 per day easily.

Where do people think this money comes from? It all starts with CD sales mostly. Ticket prices and merchandise like T-shirts is usually the profit side of the business. CD sales pay all the bills first then ticket sales cover the cost of touring was the old rule of thumb.

I live in a capitalist society. Not a socialist or communist society where everyone shares. In a capitalist society, if you don't like the cost of a product like a CD, T-shirt or Ferrari, you just don't buy it. Black and white issue. Taking a T-shirt, Ferrari or an unauthorized copy of an MP3 is STEALING. I think it is a very simple issue to understand.

There is no law in a capitalist society that says that you, as a consumer, have the RIGHT to take whatever you want without paying.

There is also no law that says you have a right to have a copy of every song you like on the radio.

Stealing hurts the artist. When the artist doesn't have the revenue from his fans, he cannot afford to produce his work in CD format and Video format or tour. Stealing and not paying for the CD or Videos will ruin the future of this art form.

Look at what happens when nobody buys an acts music. The go away like Milli Vanilli. If people stop buying U2 records or Brittany Spears of Backstreet Boys CD's they will also go away. Very simple.

Lets look at another product. The cost of manufacturing a T-shirt is also under $5.00 but the GAP and other stores charge anywhere from $10.00 to $50.00 for this product. Do you complain that the cost is too high and walk into the store and just take it off of the shelves? No. But people are willing to steal MP3’s through programs like Napster because they know they will not get caught. Where are your morals? Didn’t your parents teach you right from wrong and stealing is wrong and hurts us all down the line?

Taking something that doesn't belong to you and didn't pay for is stealing, not sharing.

Also, this argument that, "I wouldn't buy that Madonna song at the store so it won't hurt anyone if I find it on Napster" is a poor argument. Even if you do not need a T-shirt and take one outta the store, you are still charged with stealing when caught.

I heard an argument about a persons Internet Browser the other day..

Let's say you surf the Internet. All the info, jpeg’s, streaming real audio and streaming MP3's go to your TEMPORARY FOLDER or CACHE. This folder lets files into it that are temporary and time stamped and will be deleted over a certain period of time as the folder grows. As new files go in, older files are deleted. Even Html pages and others are time stamped and delete themselves. Even streaming audio and video is not accessible on your hard drive if you are off-line. The problem we have is the HARD COPY files on the hard drive.

A person also does not have complete control of thing in their temp folder or cache. Try listening to a streamed file in MP3 or Real Audio off line. It doesn't work does it?

Also, just because you buy a newspaper and there are pictures in the paper, you can't just take that picture and do what you want with it outside of that paper format. JPEG’s and other files that might be downloaded by a browser to your temp folder or cache are not on your hard drive permanently.

Also, Record Labels are not all evil.

They sign unknown bands that do not have the financial resources to get there music out to the masses. The record labels invest THEIR money in an artist and want to get that investment back and make a profit. Both the artist and the Label WILL benefit.

A major label like Sony or Universal usually invest up to $1 000 000 in a new act.

The label buys the equipment for the band, rental space for rehearsals, studio time, CD manufacturing making of videos, all touring expenses and advertising, food, shelter, hotel costs, cash advances for the band to pay their personal bill like food, shelter, etc.

I know Lou Pearlman who created the Backstreet boys and NYSNC admits that he spent over $1 000 000 on each band to create them before he ever made $0.01 on them. He spent all the money on rehearsal space, CD manufacturing, studio time, ads in magazines and papers, etc before they started making money.

The label may take up to 90% of the profit from the sale of a CD because they have to recoup their expenses in a new act. Most artists don't see the money that is spent to get them to get into the big leagues in the music business. These cost that I mentioned here are hidden to the artist.

The label usually needs to sell at least 50 000 CD's to break even on a major act. 50 000 x $20.00 per CD = 1 000 000. The cost of getting a new band in the big leagues, worldwide.

This is also why 85 % of most acts are dropped within 2 years if the do not sell enough CD's. It costs a lot of money to get an act off of the ground in the world market.

Most artists are NOT good businessmen and do not realize how much money it takes to make videos and buy recording and performing equipment and make a record/CD. The labels foot the bill for the artists.

We all want a Ferrari or a Porsche but we don't have a RIGHT like some people think to just TAKE whatever we want. That is Napster and stealing argument. You are taking something that someone worked hard at, created a product and then does not get paid for that product.

You work a day job and expect to get paid at the end of the week right? What if you didn't get your weekly paycheck AFTER you had finished you work. You would be pretty upset I bet. So why shouldn't an artist get paid for his work?

There are exceptions.

An artist like me who allows you to download some Sound Bytes or the occasional MP3 is letting YOU have this product for free. You and your friends can listen to it for free but you still legally cannot copy the files and give the file to 80 000 000 users on Napster.

You can download it directly from the artist for your personal use only. No unauthorized recordings allowed. You still do not have the RIGHT to give a copy to 80 000 000 Napster users.

The artist and the record label own the song rights. Not the consumer. You are buying "1" copy of the music onlyfor your personal use and enjoyment. You are buying the right to listen to that music anywhere you want to and at any given time you want to that is it.

The artist and record label decide who can have a copy. Not the consumer.

As soon as a person clicks "save target as" and downloads the song to a folder on their hard drive of their choosing, it becomes THEFT. People in the third world get their hands cut off for theft!

As soon as you go and click "save target as" you are taking something. Streaming video and audio is not ownership. That is just listening over the Internet. You do not have control over the file.

If you save this stuff to a folder of your choosing on your hard drive, you have THEN taken/stolen that video, mp3, jpeg, etc. (Unless you are on the artist's web site and they have approved and say that it is OK for you to copy it for YOURSELF.)

Streaming audio and video is like TV and Radio. You do not have total control over it. When you save something to a folder of your choice on your hard drive you have crossed the line from browsing to stealing.

People also say that it is OK to get a copy of that Madonna song because I wouldn't pay for it anyway. This is still the stealing a T-shirt when I don't really need a shirt argument. Whether you need the product or not it is still an illegal offence of STEALING.

Record labels also need to recoup their expenses that they incur in putting an act in the big leagues.

Artists get more money for themselves when they tour. This encourages acts to tour.

At the moment file sharing/stealing might only be less that 20% of the total market place so acts are still making money even though so many people are stealing MP3's through Napster like software but it will not always be this way unless people like the RIAA start shutting down these illegal distribution platforms like Napster.

CD sales ARE decreasing. The statistics are now in from 1998 and 1999 and 2000. Less CD's are being sold. Fact.

People think TV and radio are free so why not let the Internet and Napster guys share files? The real facts are TV and Radio and MP3.com and IUMA all generate revenue from advertising and Licensing Fees and pass this money off to the artists so that people can listen for free. You watch TV for free yet advertisers pay to have their ads in between show as commercials. These revenues keep TV shows on the air. The same with radio and web sits like MP3.com and IUMA.

The music is still there for free on the Internet. You can listen on-line whenever you want. You just cannot have your own copy off it without paying for that right to listen when and wherever you want to. That is what you are buying. The right to listen to that music where and whenever you want.

Buy a CD and support the arts.

Some artists say go ahead and download my songs for free. Some artist are not very smart because most record labels will only sign an artist as long as they give up the partial ownership of their songs. Ask any artist if the have their MASTERS in their possession. Most guys quickly find out that the record label OWNS these masters and won't give them to the artist. The labels own part of the songs along with the artist! An artist on a major record label is not allowed to give away their songs without the permission of their label because the label also owns the songs. Most guys don't read this in their contracts when they signed!

In marketing though, some guys are willing to give away 100 of something for free. This gets the word out because everyone loves free stuff and they will tell their friends and they might sell 10 CDs at cost for every 1 CD they give away. This is marketing and advertising and only works in a world where you cannot copy the said product for free. People who argue this point will see their CD sales go down to zero with 5 years because it is so easy to copy an MP3 file but it is too costly to copy a "hard" product like a shovel for free.

Napster lets one copy from my hard drive be shared with 80 000 000 other users who for NO COST can copy the file and never need to ever buy a CD ever again.

Even now, companies like Music Match, have MP3 players that allow you to store all of the liner notes bios and cover art so you don't need to ever buy the CD. There is also no reason to buy a CD because if you want a hard copy of a CD you can now just burn your own CD copy with a CD writer and put the CD in your CD storage case on your shelf and play it on your CD player.

The MP3 format and computer technology is great as long as it is used for good and used legally. I love guns but a gun in the wrong hands can be used to commit a crime.

I also like living in a capital list society. A product is priced and if you don't like that price, you don't buy that product. It is a black and white issue.

-----

UPDATED / MORE on CD costs...

Most people think a CD costs $1.00 for a CD-R and $1.00 for a jewel case. Therefore, a CD should cost just $2.00. Not even close...there is MORE to the cost of a bringing a product to retail than the Manufacturing cost..

Plain and simply, The MOST a label will earn from a CD sale is about $8.00 AFTER taxes, net profit. If you don't believe me, the president of DEF JAM records was on MTV's Behind The Music saying the same thing on his RAP labels.

For example,

An independent artist will pay close to $6 000 after taxes and shipping for 1000 CD's, ($ 6.00 per CD manufacturing cost), for a self designed CD. (Check out a reputable CD manufacturer like discmakers.com for price lists). Remember, this $6.00 is just the MANUFACTURING cost of a CD jewel case, printing the booklet and artwork, shrink wrapping, thermal graphic printing on the CD, burning the audio data onto the CD, etc...

Now, if I sell a CD at my show for $20.00 that is a $14.00 profit right? WRONG.

First, everyone forgets the TAXMAN will take 50% of your profits or $7.00 in this case. That leaves me, the artist with $7.00 per CD to pay for all this...

- studio time ($100's of dollars per hour)
- engineers ($100's of dollars per hour)
- producers ($100's of dollars per hour)
- mastering the audio ($100.00's of dollars per hour)
- graphic artists for CD designs ($100's of dollars per hour)
- photographers ($100's of dollars per hour)
- Unique Label Bar Code ($500.00 upc/isbn label)
- rehearsal space ($100's of dollars per day)

- even if I buy buy my own recording equipment to cut costs and design the CD's ($25 000 or more on a PRO TOOLS computer software and hardware, microphones, (10 mics per drum kit minimum, a good Neumann mic for vocals), cables, CD-burners, hard drives, speakers, headphones, booms, i/o boxes, studio processors/effects, software to design CD's (eg: Adobe Photoshop itself is $1 000!,) etc...
- cost of musical instruments for the band to play (a 5-piece band, probably over $50 000 in equipment at least)
- promotion,. marketing and advertising the CD (paper, magazine, and TV ads can run $10 000 to $1 000 000.)
- management fees, promoters, accountants, publicists ($10 000's of dollars)


Then, there are the other costs that a band has to pay to tour and promote themselves

- food, shelter and transportation for a band ($100's to $1 000's of dollars per day)
- tour bus (hundreds of dollars a day in rent and gas and maintenance or $100 000 to buy.)
- videos costs The cost a video these days is outrageous. Cost start at around $25 000 and can go to over $1 000 000 for a professional shoot/job like a Mariah Carey / Britney Video.) Yes, even those cheap looking Beck, Moby and Chemical Brothers video shoots cost at least $25 000 to shoot, edit, master and reproduce.
- more cost of touring includes roadies, soundman, misc equipment, parking and more can cost $1 000's per day easily.

Yes, ticket prices also help pay these cost but, a label ALWAYS pays these bills first and then recoups these costs after the tickets are sold.

And don't forget, the artist don't get paid by the hour to write more songs for more albums.

Suffice to say, most major labels will have a $250 000 recording budget for an album that might take 3 to 6 month to record, mix master and manufacture 50 000 CD's. These are the facts because I am in the business and see the bottom line on projects.

There are a lot of ways of cutting costs but unless you are selling over 50 000 copies of something, there is not a huge profit to be made after all of the expenses.

Grant Young
[This message was edited Sat May 1 14:50:11 2004 by cranshaw62]

One small thing - he lists a shipment of 1000 CDs as costing $6000. This must be an outdated article - 1000 can run as low as $1200 for the case, disc, booklet.

But other than that, it's a very depressing article. Thanks. I'm hocking all my shit and taking up chess.

White pawn to pawn shop.

Good Lord, don't do that. Hang on to the Tele and the Fender Twin.

My eyes got kind of big when I read it but it's better to understand how things go and what you are up against and just go for it.

People like Frank Zappa, and of course Prince have been able to get their music out there despite some record company situations.

Prince is changing the industry right now. This article will help us all see where he is coming from. Ironically, Madonna is having big problems with Warners and Maverick.

this article is at least a few years old. napster is now a legitimate downloading site like iTunes.

It will still give people a general idea how much an artist will have to spend and how much they and the label will expect to make from CD sales. Feel free to post any updated articles.

It's been said a hundred different ways before: if you're in it for the money, you're in the wrong business.

I don't know where did he get his prices?
If those are the prices you pay....you're a sucker.
Manufacturing cost of a CD is $5-20?
Well, damn! I guess all my clients got ripped off, because they only pay between $.75 to $2 depending on the factory they go to, the quantity, and their overall deal with them. And those prices include Jewel Case, and booklet.

$100's of dollars per hour for a sound engineer? lol, where can I sign up for a job? Engineers make between $7-15/hour if they work regularly with a studio, and about $25 if the're good and rented by the artist, and not the studio. Only the top sound engineers make more than that, and only very very few make more than $100/hour, and it's usually not for recording, but for mixing/mastering.
$100's of dollars per hour for a studio? I don't think so, unless you're going for mastering, or recording at the very top studios.
$100's of dollars per hour for musicians? True, that is if you rent Prince to play in your album! official price is around $170/session, depending where you are in the world. and usually musicians will not get that price, because they're hungry for work and need any job they can get.


And if a musician/artist wants to make steady money, they should sign up for shifts at Burger King.
[This message was edited Thu Apr 29 21:46:31 2004 by MrSoundMan]