I must be misunderstanding. For the band to make 100k at $0.15 per unit they'd have to sell around 670k units, not 100k units. 100k units would only generate 15,000 for the band out of the 1.2 million total revenue.
Yes- you're dead right on the dollars, my error.
Remember, kiddies:
1) never do your math while sleep deprived (my Grandfather has Alzheimers- he called several times during the night to ask when he was being picked up...)
2) always check your math
3) stay away from programmable calculators for doing the simple stuff- you have less of a chance of hitting the wrong buttons and getting wonky answers.
If you really mean pennies per unit for the band, the system is designed to make those who don't create the material money.
While it is the case that the labels are in it for the money, you do have to look at the way one of these contracts is drafted. Its not all gravy. Ignoring the profits from the label's subsidiaries (which may include manufacturers, distributors, and recording studios), a label only takes about $1-3 profit per unit themselves (depending upon the contract, of course).
The label fronts the money to the band (an "advance" of $100k+) for them to record an album. That is supposed to cover everything from recording studio time ($50-500/hour), studio musician salaries, engineering, post-production, and so forth. Bands that take their sweet time in the studio often exceed their advance- which may be increased- but the advance is a loan that has to be repaid.
You want Babyface or Rik Rubin to produce your album? The label will get them if they're available, but unless you're a personal friend, you'll get charged a premium.
The artists & photographers who design the sleeves must be paid. If its a major artist or one the label thinks will become a major artist, there is an ad campaign to design and fund.
The CDs must be manufactured and shipped (one of the major bennies of direct downloads is it eliminates this cost). Some of the companies that do this are wholly owned subsidiaries of the major labels. In that case, there is a price break, but its only pennies per unit. Some CDs will be defective, stolen, broken, or used for promotional copies- that cuts into the number of "units sold" for calculating royalties.
The agent gets his 3-10%. As does the band manager. And their lawyer.
That video? It cost between $50k-1M to make.
That mansion the band stays in while recording in Beverly Hills? The limo they take to the club? The salary of the assistant whose job it is to make sure the band's bowl of M&Ms has no brown ones in it, or gets them a steak dinner at 3AM, and all the other things in the band's rider? That all comes out of the sales of the CD.
Yes, the labels make a lot of money, but a smart band can control a lot of their costs by exhibiting a little self control, and every bit they DON'T spend goes to them because everything else is set in stone. For example, smart bands get their stuff together in practice and lay their tracks down in hours or days rather than months. This saves them as much as $40K in studio time- more if they go to an inexpensive studio (hope they still sound good)... And if they spend only 60K of their 100k advance recording their album, that leftover is THEIRS.
Which is why I always tell my artists to practice practice practice (so they don't eat up studio time) and to check their egos at the studio door. If you're in a $100/hr studio and spend 5 hours arguing in the studio, you still owe those guys their $500.
Doesn't the internet method of distribution of new music essentially make (or will make) the previous necessity of a label scout not nearly as important?<snip>They can make a tremendous difference in the success (or lack of) of a band, but they look to me to be part of a system that is becoming more and more antiquated.
There is a lot of truth to what you say. With entry barriers as low as they are for music production, almost anyone can get international attention without requiring a major label... There are, however, still excellent artists out there who can barely afford an instrument to play, and don't have even the least expensive home studios. (That, too, will change with time & tech.)
And unfortunately, for each action, there is an equal and opposite reaction. Just as its easier for the musician to reach his audience, its also easier for the pirate to steal his stuff. And unfortunately, the minor labels and self-published artists simply don't have the cash to go after the pirates directly.
Its one thing to know that a Russian website is selling your CD without permission, its quite another to be able to take legal action against them in Moscow. For the little guys, all you can do is report them to the companies that process their credit cards and watch. You won't get any money back.
Copyright infringement in the form of artists stealing songs (or portions of them) for their own use is also easier in the digital age, and filing or defending against such a suit isn't getting any cheaper, either.
At this point, the only companies that can adequately defend their artists' IP are the major labels.
Much like Magic and D&D subsidize purchasing other products with slower turn rates for FLGS.
Sorta, except with the label, the subsidy is within the company that produces the goods, but in the FLGS, the subsidy is within the company that distributes them to the end consumer.
