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A lot of much misinformation here. No, most artists don’t make all their money from touring and merchandise. Firstly, for mid-level artists, touring actually loses money – that’s why labels have historically always paid artists ‘tour support’ money. They did that in the knowledge that the tour would increase exposure and thus sell more records. If no one buys the records, clearly that model doesn’t work. In terms of merchandise, sure, some make a load of money. Back in the 90s, PWEI sold more t-shirts than records. They were a band with a strong logo, a strong brand image. But only a comparatively small percentage of bands wants or is capable of being a ‘T-shirt band’ – and only a comparatively small percentage of people who listen to music want to wear band T-shirts.
As for recording monies, here in the UK the typical cut for the artist was always 10%. Sounds a bit low, and it was. But two points here: 1). The label would provide an advance for the band, which was paid back out of record sales. If there weren’t enough sales, the band still got to keep the advance. 2). 90% of records didn’t recoup their costs. Please let that fact sink in: 90% of records didn’t recoup their costs! So whilst the artists got to record their album and keep the advance, the label lost money. In effect, it was always the big hitters, the other 10%, that allowed the label to ever take chances on new artists. So, on the surface, this may appear to support your claim that the artists aren’t losing out. But, of course, it isn’t that simple, because labels see that they’re not selling records right now, so they pay less in advances and take less chances when signing artists. Which means two things: 1). those artists who do get signed will most definitely be relying on record sales to get paid, and ii). labels will probably not sign original or challenging artists at all. This is just one example of how those who illegally download music are damaging the future of musical innovation for everyone.
While I’m here I’ll also address the point in the original text that says CDs only cost a few cents to make. The cost of a blank CD may be only a few pence, but the cost of the record was never in the physical product; it was in the musicians, the instruments, the tracking engineers, the mix engineers, the mastering engineers, the producers, the studio time, the artwork producers, the marketing and promotion teams, the radio pluggers, the distributors, the administrators, and probably a few more links in the chain I’ve forgotten about. Record labels and artists are trying to cut these costs to the bone right now, but the bottom line is that someone needs to do this work for a record to get made and released. It’s nonsense to expect these people to all work for free. Considering all the work that goes in to making a record, £10 is more than fair. It’s clear that those people who say otherwise have no conception of what goes in to making one, but I also have to question whether they value music at all. I have albums which I’ve owned for over twenty years that I still listen to regularly – they’ve been the soundtrack to so many experiences in my life, the basis of so many memories… I couldn’t put a price on that, but certainly no one is going to tell me that it isn’t worth ten quid.