Record companies spend a lot of money on artists as we already know, but why do they spend so much money just to get an up and coming artist and on what things do they spend it on? Also how much risk do they involve when signing a new artist?
The record companies, according to the article “How Record Labels Invest” by the IFPI (International Federation of Phonographic Industry), spend somewhere between $500,000-$2,000,000 in order to sign an artist and give them all the benefits that they get with a signing (these statistics are based on major record labels not independent record labels). This money is spent on many things like advances, recording costs, video production, tour support, and marketing/promotion.
The first part that is a bit of a risk for the record company is the advance because they are giving the artist money in order to encourage them to write songs. In my opinion this is a big risk because they have no idea what kinds of songs will come with this. It could be hit after hit after hit or all of them could be bust or anything inbetween. This can cause a huge problem for record companies because they spend around $50,000cto $350,000 on advances for artists. This number along with all of the other aspects can rise above these numbers given based on the demand for that artist and other record labels bidding against them for a new artist.
The next part that the record labels spend a lot of money on is the recording costs. These costs can really skyrocket and give the record labels lose a bunch of money if the artist doesn’t do well. The record labels spend anywhere from $150,000-$500,000 on one album for an artist. I don’t believe though that this is a huge expense to an artist because this happens with every artist I’d think with a big record label that they could get the recordings for cheaper than they actually say they are getting them for. I don’t think that these cost would also discourage a label from signing someone either because again ever artist has to be in the recording studio while making an album no matter what so it doesn’t put a big hit on them in my opinion.
The third expense to record companies is the video, which they don’t really have to make for an artist so again in my opinion this is just a statistic that doesn’t really matter. Only popular songs are made into music videos so if they aren’t popular that cost doesn’t exists, but they say they spend about $50,000 to $300,000 on videos per artist for each album.
The next cost to the record companies which I do believe can actually hurt a record company, but more so goes along with negotiating a contract for the tour costs. Now a record label doesn’t have to have a tour for a failing artist so they can write that off and not pay for it for the, but I’m sure a lot of artists want them so they might negotiate before signing a contract for a tour which would in turn cost anywhere from $50,000 to $150,000 for each tour which could be a wasted cost if the artist doesn’t do well.
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The last and final expense for the record companies is the marketing and promotion costs which can be pretty expensive and is the most important to the record company because of how much money is put into it. Anywhere from $200,000 to $700,000 are spent on each artist to try and make their career a reality and not just a one hit wonder. Since this is more than a few of the other things combined I feel that it really does make a difference between a failing artist and a supported and well-known artist. One problem for the record companies about marketing is that digital platform marketing is the best way to market for a big audience, but those costs are rising and the record companies have to keep spending more and more money to make an artist.
Overall record companies spend anywhere from $500,000 to $2,000,000 on an artist which now seems like it could actually hurt a record company if they have a lot of failing artists in their future. At first I didn’t really think that it could really hurt a record company, but 2 million dollars is not cheap for an artist and can actually hurt them. I now understand why the record companies take so much control over the money that comes in from selling albums and songs.Next I plan to research about the type of artists that the record companies usually sign.
This post made me realize just how much these record companies have to invest into artists and can only hope that something good will come out of this. It made me realize this because of the large amount of money that these companies have to put into just one person. Granted I don't know how much money the record companies make but I think this is a cool fact to know. I also think that you could compare this to a sports team signing a draft pick that they don't know how well they will do or a movie company producing a movie and the sheer cost that goes into that even if the movie fails.
ReplyDeleteI really like this becker! I never knew all of the extensive costs that record labels have to commit to when signing an artist, let alone all of the categories that they have to cover with those huge costs. this really helps put into perspective why record companies make so much while the artist makes much less.
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