Music Diary News: Major Label Artists Get $0.08 for Each Digital Song Sold for $1!

Music Diary News: Major Label Artists Get $0.08 for Each Digital Song Sold for $1!

This week we got news of rapper Chuck D suing Universal Music Group (UMG). As part of the court documents analyzed by Digital Music News, his lawyers revealed the payout process … and if you can figure out what all of the stuff in the image at the top MEANS – let me know!

The bottom line is that on a $1 recording sold on iTunes (or Amazon MP3 for that matter), Apple gets 30%, the artist gets 8% and the label gets 62%.

Looking deeper, the document is based on 1,000 unit sales – which would be $1,000 … we start with the total units, but then suddenly there is a discount taken – in terms of units! This means that 15% comes off the top, not from the MONEY but from the units sold. I can only guess that this is a way to keep the contract numbers high while taking a larger cut.

So now we have only ‘sold’ 850 units as far as the artist is concerned. Fine. Taking the 70% remaining after the iTunes cut, we have $595 (of the $700 UMG collected), which then gets cut by 25% for a “Container Charge for Audiophile Records”, leaving ~$450. The next line tells us the artist is SUPPOSED to get 24%, so this should be ~$112, right? Wrong – because that “audiophile deduction” is back to take 25% of THAT away … leaving the artist with just over $80!

I am not suggesting that the label shouldn’t get a sizable chunk – they are shouldering most of the risk and the overhead etc. But as shown on the document above, they are SUPPOSED to be getting 24%. Shouldn’t that mean that the artists would get $168 out of every 1,000 copies sold? I mean, that IS a simple 24% of the 70% cut UMG gets from the 1,000 sales. And, in fact, it is how many other places like TuneCore work.

But like so much in the music business … nothing is ever quite as it seems.

About the Author

Michael Anderson
I have loved technology for as long as I can remember - and have been a computer gamer since the PDP-10! Mobile Technology has played a major role in my life - I have used an electronic companion since the HP95LX more than 20 years ago, and have been a 'Laptop First' person since my Compaq LTE Lite 3/20 and Powerbook 170 back in 1991! As an avid gamer and gadget-junkie I was constantly asked for my opinions on new technology, which led to writing small blurbs ... and eventually becoming a reviewer many years ago. My family is my biggest priority in life, and they alternate between loving and tolerating my gaming and gadget hobbies ... but ultimately benefits from the addition of technology to our lives!
  • Anonymous

    There’s a great deal of pertinent information missing here.

    How much did the label spend to produce this particular recording and market it? How many units were sold? Is this the arrangement before or after the upfront costs incurred by the label have been recouped?

    An 8 percent residual would not fair at all assuming all the actual (non-inflated) expenses are paid, but 8 percent is probably fair until all expenses are paid off.

    • There is only so much info available.  But from similar leaks:
      – You get pretty much nothing until the label recoups.
      – The terms are negotiated without regard to promotion, sales or whatever … that is all part of the recoup.

      That is why I think that 24% would be fine … but it seems like they promise the artist 24%, but then monkey with the numbers until that 24% becomes 8%.

      Like I say, this isn’t the first time we’re hearing little pieces of these things.  And all of them sound similar enough that this one was finally worth posting about …