Mega-Rant on Downloading and ACTUAL Costs for Small Labels

[Originally blogged 9/28/06- NOTE: THIS IS FROM NEARLY 3 YEARS AGO AND I’LL PROBABLY UPDATE IT SOON.]

Someone asked me for a copy of this and since I haven’t read it in a while (I think I wrote it before my debut came out) I thought I’d post it for anyone interested in reading it.  It certainly provoked a response at the time.

Thanks.

-Matt

______________________________________

Okay, first off, I doubt this is going to change anyone’s minds on downloading. In all honesty I’m giving this info out for both informative AND selfish reasons too, but it doesn’t make the data any less correct.

Now, second off, an admission– I’ve downloaded a shit-ton of songs. When Napster and Audiogalaxy hit I was downloading track after track to fill in gaps in my “collection,” get hard to find/rare remixes, and find new bands I’d heard about through friends. I don’t download anymore, basically because I like owning copies of the discs as well as knowing I’m supporting the artists. A second, smaller admission– yup, I get “advance” copies of CDs occassionally from friends, but I always also buy them when they come out or toss the freebie if I’m not into it.

So there, full disclosure.

Now let’s talk numbers for putting out a CD in the electro/industrial/goth/jizzcore genre, shall we?:


To put out 500 copies (which is fairly standard, unless you’re getting into the VNV/Covenant/A23 world of things), a label has to put up around this kind of money just to get the CD out, and this is the LOW END:

~$900-1200 for replication, ie making a “real” CD.
~$250-500 for mastering of the CD, so it doesn’t sound like ass.
~$100-200 for promo handbills/fliers/stickers
~$100 for promo/distro postage (radios, DJs, release parties, sending
discs to Metro/DSBP)
~$300 for a ONE TIME 1/4 page ad in Side-Line (optional, of course, but ads get the word out)

Add that all up and your label is looking at a minimal investment of around $1700 for a mere 500 CDs, and that isn’t including, for an established band, a possible small advance, website creation/support, etc. Add a remix by a “big” name (the VNVs, A23s, CombiChrists of the world) and you’re talking another 300-1500 or higher. Let’s say A23 does one for you for $300 (Tom’s going rate if I recall, and an extremely fair one let it be known), just to put us at a cool 2 grand.

Now let’s break down how the CDs will go, as you aren’t selling all of them for the full price off your website (and if you are, that’s a TON more promo money you’ll need to put forth. Let’s be realistic, you’re not THAT known yet):

500 CDs base:
-50-75 for promo/release parties
-25-50 for Metropolis @ $5-7 a pop (wholesale)
-5-10 (if lucky) @ DSBP/ADD @ $5-7
-10 or so at CDBABY @ 5-7
-2-5 @ Amazon @ 5-7

So let’s say Metro likes you and thinks your disc will sell and not end up on the “sale” page of their site within a month, so they take 50 (some of which, if not sold, could be returned). All the other sources totalled up take another 30, so technically you’ve taken care of (and hope people will actually BUY) approx 80 cds. That 80 PLUS the 75 put you at ~150 cds gone, and the promos you’ll get zero return on except for POSSIBLE club and radio play.

Let’s also say you sell EVERY ONE of those 80 CDs at $6 a pop (which is lucky), so there’s $480 in you or your label’s coffer. Hey, you’re 1/4 of the way there, right? Not bad, considering there’s 350 more CDs you can sell at shows, to your pals, and soforth, right?

So let’s do the local release party. All your friends show up and even though you give away 5 CDs to the DJs and pals that helped you put together the art for the disc you also sold 25 more at $10 a pop (why “rip off” your like pals at $14 like the online retailers, right?) So there’s another $250. You also sell another 20 or so off your website and MySpace to people all over the place for another $250 or so.

The label is now roughly at $1000 recouped in their investment with another $1000 to make up and 300 discs left. You decide to play out live and do a regional tour. You do a week and a half of shows at pretty much any goff/industrial club that’ll take you, as most “real” venues could give a crap about 3 ninnies in Hot Topic gear playing backing tracks and synths. Plus, you’ve got connections in some cities cuz of LJ and MySpace and your dad’s station wagon so you’re ready to rock.

So you’re doing this bare bones– crashing on floors, playing with local “supastars”. You sell 50 CDs on a total of 7 dates (the few off days are spent travelling and kicking it in hotel rooms), which is actually pretty good considering since nobody’s really heard of you and turnouts were low. So there’s another $600– but you had to buy the 100 CDs from the label at $5 a pop so you ACTUALLY only made $100. And the off-day hotels cost an extra $150 and the small guarantees you got (and were lucky to get, as you aren’t a draw like Icon of Coil yet, are you?) covered gas and tolls, plus, to be generous, all of your food on off days.

Note: this is also considered by most to be a successful tour.

So now you as a BAND are down $50 and the label, which you paid $500 for 100 CDs, is at 3/4 of the cash he/she/they put out. You’re stuck with 50 CDs, they’re stuck with 200, and although you got some good reviews and some play, the webrings have gotten ahold of your CD (probably through one of the DJs you trusted who fucked you) and it’s all over p2p servers both private and public, so people are downloading it, especially that hot A23 mix which is getting clubplay.

This costs the label 50-100 sales conservatively, as many people ONLY wanted a track or two, mainly the hot remix and the original version and that other one they heard on Cyberage Radio. Sure, they would have bought it 7-8 years ago just for those tracks, but fuck it, why bother when it’s ONLY those tracks, right?

So, to average that number, the label loses $500-1000 or so thanks to downloading. Probably more, as you’ve gained a lot of new “friends” on MySpace who may have just heard the snippet of your “clubhit” and dled it from a p2p after that.

This also doesn’t include all the people who simply copied the whole CD for their pals. Or copied it and sold it on eBay, or the DJs who sold their FREE copies online for $5 and someone snagged it off half.com.

Eventually the label sells another 50 copies of the disc off of the website by good word of mouth and you kicking ass playing backing tracks live, but that means the label has broken even at BEST. To put out your SECOND CD, if they can be convinced, having essentially no return on their investment and OTHER band’s CDs they wanna put out, they’ll have to use that SAME money or get it from somewhere ELSE.

The rest of the CDs, by the way, sit in the label’s “warehouse.” This is also known as their bedroom closet.

The highest echelon of artists sell between 10-25000. However, MOST bands in this scene, if lucky, sell between 500-1000 CDs. 500-1000 is considered a success story these days. Is that sad or what?

So there, in a nutshell, is why so many small labels go under. Sure, some do better and actually SELL all the non-promo CDs, but even by selling all of those CDs you’re talking about a TOTAL profit of a grand or MAYBE two grand…and some of that goes to the artist or makes you lucky enough to put out another CD. Now you may think “wow, a few GRAND!” then please take into consideration the stress of putting out the CD and countless unappreciated and unpaid hours both the label and the band put into getting the CD together, distributing, and promoting it. That amount ends up being minimum wage earnings at best.

Many successful and amazing artists on reputable labels do not see ANY royalties EVER, or some years after the fact when all recoupments for the label are made.

Sure, most labels and artists do this for love, but love kinda sucks when people are asking you to sign CDRs of your release at shows because they’re cheap asshats.

Worse still, take a label like Metropolis, where some CDs have more PROMOS distributed than actual SALES, plus actual employees (and it’s a small staff, people), plus an actual WAREHOUSE, and on top of that people download and copy Metro CDs many times more that small labels, as since they’re “top gun” they’re rolling in cash, right?

Sorry kids. Total. Fucking. Bullshit.

Considering what I know about Metropolis and their promo distribution to a few hundred radio stations and DJs, I’d say their POSTAGE for a month’s worth of releases equals around what a single 500 cd release would be for a small label. That may include 3-5 CDs in each pack, but that’s a lot of money to flush down the toilet when everything ends up on p2p sites and people copy the full CDs for friends. It’s a wonder they are now mainly doing digital distro of singles to DJs now– it saves them hundreds, if not in the low thousands, a month. Plus they have additional control over what gets to DJs and, sadly, distributed immediately online to the rest of the world.

So there you have it. These numbers of course fluctuate a bit and some bands are better promo whores than others, but it isn’t cheap OR easy to put out any CDs. Downloading fucks labels left and right, so if you have an excuse as to justify why you’re downloading all the great new CDs coming out in this scene, stuff it. If you think you can justify hundreds upon hundreds of hours of work from artists and their labels then I’d like to effectively ask you to shove it up your ass, as that’s the respect you’re giving people who work on a razor-thin profit margin if one at all. You think you don’t have any money? Try investing a few grand in a CD and getting dick for return on it because people feel justified in taking it because they can’t put off buying the new Grand Theft Auto…just because it CAN’T be stolen online yet.

Buy the CDs. If you’re a fan of an artist BE a fan and don’t STEAL from them. I consider Caustic fans friends more often than not, and I wouldn’t steal from a friend if my life depended on it. This isn’t a guilt trip measure, it’s the truth, and I think most bands would rather you NOT buy the CD right away than download it after it comes out. I completely understand people’s excitement over getting an early copy online, but if you like it BUY IT. You’re HURTING hard working people, many of which put this out on their OWN credit cards and using minimal help. Would YOU want someone to do that to you? I highly doubt it.

I know some scene labels (and I’m not even talking Metro here) which invest nearly $5000 an ALBUM to get the word out effectively, and 100-200 people stealing the music HEAVILY affects the bottom line, EVEN if it’s an established artist.

Listen, I’m only ranting here because, in some small way, I don’t think people realize exactly how much it costs someone to put out a CD, let alone a bunch of CDs on a label. MANY labels put out one CD and hope to recoup enough to put out the NEXT one, so if one does much less business than expected– bye bye label. And I know some of you swipe music left and right and I still love y’all and all that, but you’re helping destroy the scene and hard-working bands/projects by stealing what is not yours.

And, frankly, I’m gonna be selfish here: I don’t really give a shit if you download the new Nelly or Gwen Stefani. I don’t necessarily agree with it but those label’s bankrolls are much bigger than the little family I like to think our scene is and they can handle their own shit by bullying people with the RIAA. We can’t. By stealing from artists in this scene you steal from your own family and from, I would hope, a collective passion we all enjoy that brings us together. Think about that for a bit, and thanks for indulging me in a mega-rant. X-post if you like. And be defensive if you like as well– it means you were listening.:)

Note: This was inspired by people I mostly don’t know’s stupid comments, as well as Steve Albini’s amazing rant here: http://www.negativland.com/albini.html

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4 responses to “Mega-Rant on Downloading and ACTUAL Costs for Small Labels

  1. Amazing rant. I also used to download shit loads of music and I totally got some dejavu from the “filling holes in the collection” thing.

    The tipping point for me was simply getting a job – all of a sudden I had actual income and I couldn’t justify downloading music to myself. Plus I LOVE owning CDs.

    If I go to a festival I end up spending ridiculous amounts of money on music. I buy a few CDs a month and I wont even talk about how much I spend on digital distribution downloads.

    I can’t justify the acts of my past self, but I know that my story is not alone – perhaps I simply grew up?

  2. Interesting, but I am going to respectfully disagree on a few key points.

    1) The economics breakdown you have would apply just as well to a punk rock band before the internets and downloading existed. Just because you have 50-200 CDs left over at the end doesn’t mean you would have sold them if people hadn’t been downloading — those filthy gutterpunk fans of yours were probably copying tapes of your music or spending their money on 40s rather than blowing it on a CD from some local band that didn’t even compare to their idols, like the Clash or Ministry. You’re claiming that downloading is responsible for lost sales, but that’s just supposition, there’s no actual hard evidence for that (see below).

    2) New bands require promotion. The more people they can expose to their music, the more people who might like and listen to them — and yes, but their CDs. Promotion means exposure, and exposure is the same whether they hear you at show, on the college radio, a friend’s mix-tape, or download it from the Pirate Bay.

    3) Now, lets; talk hard evidence. Read this (it’s about book piracy, but IMO the impact is the same):
    http://www.boingboing.net/2009/06/08/more-hard-data-on-th.html

    and this:
    http://www.boingboing.net/2009/04/20/norwegian-p2p-downlo.html

    IOW, for small-scale artists, free downloading actually *increases* sales. In fact, downloading is considered a form of progressive taxation. If nobody’s ever heard of you, downloading is your friend — it’s more exposure, thus more sales. If you’re big but not huge, it’s a break-even effect. If you’re MJ or Metallica, well downloading probably cuts into your profits, but at that point you’re such a huge cock star that no one cares if you can’t buy another Porsche.

    Seriously, look at the research. Don’t take my word for it. There are other studies and they all universally indicate the same thing. For small artists, downloading may in fact be the key to your success. There are numerous cases now of unknown artists who achieved some level of success by giving their shit away for free (maybe asking people to pay whatever they feel was an appropriate amount) and/or cheap.

    That all said, I think it’s good you broke down the economics for folks. I fully agree that people need to support local artists, and it helps for people to know how tight those numbers are. And I fully agree — if you like it, buy it.

    As to labels … well, there’s a whole discussion about outdated biz models there perhaps saved for some other time.

    (PS — just to deflect the inevitable “you’re not an artist” backlash debates like this tend to develop — while I am not a musician, I am a writer/game designer, and I make a living off of creative production that can also be stolen/downloaded — but I don’t care. That’s why I Creative Commons license the stuff I create/own.)

    • Thanks for responding– actually I was just re-reading this for the first time all the way through and although at the TIME I wrote it the points were a bit more valid. I’m actually planning on doing This Rant V2.0 and including some of the info you provided (or I’ve found myself).

      It’s amazing how fast this shit’s changed, as well as some of my own viewpoints…:)

  3. Fajnie sie czytalo! Bardzo lubie tego typu strony jak
    u Ciebie. Zapraszam na firmowa strone o tematyce: kantor Warszawa

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