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.