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Record labels pay two royalties: one to artists, and another to composers & publishers. Artists can receive 10% 15% of suggested album retail minus packaging costs. Composers and publishers receive 30% or more.
Independent record labels make money the same way the big players do. They choose the artists, arrange for recordings, have the tracks mixed and mastered, get cover art designed, and put the music out into the world, either on CDs or digitally.
Most will pay approximately 50 cents per CD if they purchase more than 100,000 per year. The cost rises dramatically for the independent label who purchases less than 10,000 units per year. They have to pay over double what the major label pays which is $1.20 per unit.
If you make $3,000 because a song you made got streamed on Spotify many times, you'll be splitting those royalties with your record label. Generally, the record label releases albums through a distributor. The money gets paid to the distributor, then to the label, and then to the artist in the form of royalties.
An independent label, also known as an indie label, is a record label that is independently funded and not connected to one of the big three major labels Universal, Sony and Warner. Indie labels range from home-based hobby labels to highly profitable, large businesses.
Record labels rely on sales to make a profit, and it's a risky business investing a lot of money into an artist if they don't sell enough to recoup the expenses of production and promotion. Owning your own production company is probably more profitable. Just because people really don't buy records anymore.
Per IFP, a record label will typically invest anywhere from $500,000 to $2,000,000 in a newly signed artist. That's a wide spread to be sure, and a large amount of money from the perspective of most. Here's the basic breakdown of how these funds are allocated: Advance: $50,000 to $350,000.
Large labels pay about $0.50 to $0.55 per CD on orders of 100,000 or more. Labels that buy less than 10,000 CDs per year pay approximately $1.20 per CD. Record labels pay two royalties: one to artists, and another to composers & publishers. Artists can receive 10% 15% of suggested album retail minus packaging costs.
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