By, Tony Guidry
A question for rappers…
Would you PERSONALLY give away 75,000 CD singles over a 100 day period in 75 cities in order to sell 7,500 iTunes album downloads, do 40 shows for $2,500???
This is the math for distributing the free single or sampler CD:
Below is the math behind the sales that the above legwork can generate when coupled with a consistent digital content release plan and social media promotional schedule. To add radio to the above plan would cost an additional $40-50,000, yet is still feasible once the numbers are evaluated.
So your time and a $57,250 investment stands to generate close to $175,000 – more than triple the money spent. As the artist in this example, all that’s required of you is to be hands on in passing out and placing the promo material. Whether it’s in a major city at a venue of 5,000 or on a street corner in a small town flagging cars down to share your music.
You’ve got to be motivated enough to work daily meeting fans personally, and consistent in following up with those who reach out to you via social media or other means. An outgoing accessible aspiring artist soon finds success through consistent work effort. It can be done – but this path isn’t virtual or strictly digital – this path is hands on grassroots. This is the path that creates careers vs the path that creates one hit wonders.
Before I go farther, I’ll be honest and say that, in order to make these kinda numbers realistic you need to hire a consultant. A consultant will plan your market tour and add in extensive REAL terrestrial radio play as well as thorough internet coverage which will boost both your sales and shows.
But my point is that without the personal outreach of the artist – this kind of return isn’t likely. Too many times aspiring rappers see the artists with major label deals who seemingly don’t have to do their own hand to hand promo. This leads the unsigned artist into mistakenly thinking that face to face interaction with fans is unnecessary. The majority of unsigned artists believe that the formula for success is:
• good internet numbers;
• major label artist features;
• radio play; and
• tour dates opening up for bigger acts
If the above were true, then every artist with some money and a lil sense would be successful. However, we who work with music everyday know that this is far from true. I’m sure that most people reading this know artists and/or indie labels who’ve spent millions to put the above pieces in place – yet never see any success or get a real return on investment.
This is the reason a consultant is NECESSARY for properly funded indie labels & artists. Trying to mimic or copy the major label formula leads to failure for indies, because major labels invest so much more money into each release than an indie.
What appears to be successful in breaking most major label artists is smoke and mirrors – an illusion to the general public – backed by the deep pockets of the billion dollar labels these artists are signed to and executed in a way that appears “viral” or “natural”. In the digital world, the WorldStarHipHop banners and DatPiff takeovers and blanketed blog coverage all come at a pretty penny that the majors can afford to spend, but the indies have to do on a much smaller scale.
For the sake of those who don’t understand, allow me to show you the basic differences in the monetary breakdowns for campaigns of indies vs. those of major labels. The biggest difference between the major artists and you as an indie, is that an indie artist gets to keep a fair share (if not the majority) of the money made from their project. A major artist will be lucky to make a nickel offa every dollar from sales. But even an indie artist who partners with an investor to fund the promo expense is likely to keep close to 50% of every dollar they generate from sales. I’m going to give a rough example of the money generated vs the money made by major label & indie artists. The examples are not all-inclusive – but are very realistic.
Let’s look at the major vs indie record-breaking expense and monetary breakdown.
Major Label Artist Example
Major label artist goes Gold – selling 500,000 iTunes album downloads at $13.99. iTunes takes 30% of that off top, leaving a gross of $9.793 each download. (In this example – I’m gonna keep it simple by saying that all the sales were via iTunes.) So 500,000 copies x $9.973 = $4,986,500
Artist deal is 10% ——— 10% of $4.9 million is $498,650.00
Now the artist doesn’t get a check for that amount of money. First off, the artist has to pay the major label back for all the money it invested for the artist to sell this many copies. So, lets look at what the label (claims to have) spent promoting this project:
Total expenses $545,000
Artist OWES $46,350 after selling $5,000,000.00 worth of music.
Also, keep in mind that this doesn’t include the advance that the artist got when signing to the major label, which is ALSO recoupable and must be paid back.
I kept this spending breakdown as simple as possible, but the money spent by major labels on new releases can easily exceed a million dollars.
Now lets look at the breakdown for an indie artist signed to a properly funded indie label.
Indie Artist Example
Indie artist with investor sells 50,000 downloads at $13.99. Remember that iTunes takes 30% of that off top, leaving a gross of $9.793 each download. (Once again, I’m gonna keep it simple by saying that all the sales were via iTunes.) So 50,000 copies x $9.973 = $498,650 Artist has 50/50 split on sales with investor- 50% of 498k = $249,325
As in the major label example, the artist has to pay the investor back all the money invested in this project. So, lets look at what the label (claims to have) spent promoting this project:
Total expenses $170,000. Artist EARNS $79,325 after selling $500,000 worth of music AND paying back investor.
The indie artist who sells 1/10th of the music that a major label artist sells is STILL in position to make much more money from music sales. Will the indie artist become internationally known and famous for selling 50,000 copies? No, not immediately. Will the indie artist perform at the Grammy’s, AMA’s, VMA’s, BET awards, etc? No. Will the indie artist become a pop music phenomenon?? It’s possible, eventually. Just don’t let the popularity of a major label artist confuse you into believing you need a major label deal. The examples I gave today didn’t even include merchandising online or money from website hits and youtube views. An indie artist with the proper drive and determination can make millions from their craft without the major label machine. If you work your career correctly, and then choose to sign to a major, you should first gain the leverage to actually get a great deal.
“Leverage” is a different subject for a different time tho. My next entry will be a live show breakdown of major label vs indie artists.
Being on a major label gets you high show prices and allows you to make much more money right? That’s the perception and belief of the aspiring indie artist. In a few weeks I’ll be shedding some light on the truth and showing you that the perception and belief about the riches found in show money aren’t always correct.
Thanks for the time you’ve taken to read this entry. Hopefully you’ve enjoyed reading it as much as I’ve enjoyed writing it. Much success in your future endeavors, whatever they may be.
Tony Guidry is Senior Marketing Manager for A Scratchy Throat. A Scratchy Throat – the brainchild of music industry mainstay Wendy Day – provides professional social media marketing specifically designed for today’s aspiring artists. Tony is also owner of Authentic Artists Alliance and exclusive booking contact for Trouble (Duct Tape Ent/2 Tru Ent), O.Z. Mr. 28 Grams (Fratt Boi Muzic Group) and Racked Up Ready (Bow Ent). For digital marketing services or booking inquiries email: OGTonyG@gmail.com or Tony@aScratchyThroat.com