*repost*
No big explanation just the facts, here is an example of a typical record deal for a rap group (3 person) whose hot.
.Royalty Rate: 10% - Lets assume a group of 3, everything is split evenly.
·In todays times everyone produces their own tracks. No outside production.
·Suggested retail list price: $14.98 less 20% packaging deduction,
$11.98 gets paid on 85% of records sold
$10.19 is what is left, so the artists 10% is equal to
about $1.02 per CD sold
Assumption:
The single goes gold. (a rare feat for a 1st record).
Gold Record = 500,000 units sold x $1.02 = $510,000. Not bad right? Hold on, now big business kicks in. The math, first the label remember them they have to recoup, expenses such as, ½ the cost of the video, tour support, promotion, those lex, coupes, bimmer and benz you were pushing, oh don’t forget the up front money, etc¦.. you get the picture if you do not here is the math:
· $510,000
- $50,000 up front money (advance)
- $30,000 half the promotion (independent)
- $50,000 half the video
- $20,000 tour support, trips, etc….
- $150,000 studio, recording costs
- $210,000 is left after costs, not bad for a 1st single, right? Hold on, big business is now in effect. Now a third of the $510,000 stays in reserve (someone has to account for items returned from retail stores, you didn’t think the record company would absorb these costs did you) for a year or so depending on the length specified in the recording contract. So the money is actually subtracted from $341,700 (the other 168,300 is in reserves for a year and a half)
Now there is also the artists manager who is entitled to 20% of all entertainment income. This equates to 20% of $510,000 or $102,000 for the manager and remember the group has yet to be paid.
Put it this way the each group member actually receives $36,000 for their gold album. In a year and a half when the reserves are liquidated, IF they have recouped they will receive another $56,000. Again IF they have recouped and where talking about the record company you be the judge. Oh by the way guess who keeps track of this accounting? The LABEL.
This process did not happen over night and took this group approximately 3 years to sign the above deal. Math time: $92,000 for a 3 year effort equates to $30,666 a year not including taxes, clothing etc
Are rappers really RICH ?
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