The Music Industry

It’s often assumed that singers and musicians in popular bands are affluent. Whether or not that’s true, the artist’s most important source of income may not be what people expect. When we think of a singer’s income, the fi rst thing that usually comes to mind are CD sales. Indeed, their numbers are regularly published by companies like Billboard. However, other types of revenue tend to be far more lucrative.

Though the receipt totals for a hit CD are impressive, the recording artist only receives a fraction of that sum. Royalties are between 10- 25% of the CD’s retail price. At fi rst glance, that looks generous, particularly if the CD retails for $15 and sells more than 100,000 copies. However, recording contracts between artists and studios allow for substantial deductions. The artist is responsible for many costs, including packaging, recording, marketing, music video expenses, producer’s fees, and more. As those costs come out of the royalties, the artist can wind up earning very little.

Other income streams, such as T-shirts and posters, deliver a higher percentage of total earnings to artists. Then there are tours, which can be incredibly lucrative. All the top 20 earners of 2008 went on tour that year. Topping the list was Madonna, who earned a total of $242 million. Singers are also exploring ways to use the Internet to boost earnings. As more people buy songs on sites like iTunes, the Net is becoming an important income source. Some artists like Prince are even recording music independently and selling it directly to fans online.