I know it's cool to hate record labels, but I can't stand to see this issue debated without looking at the big picture. The assertion that an artist sees $1 or less for every $16 CD sold, while compelling, misses the point.

First, it ignores the fact that artists make most of their money off of touring, merchandise sales, endorsements, etc. The record label invests a considerable amount of money in developing, marketing, and placing an artist on the radio, on store shelves, etc. This promotion not only sells CDs, but drives ticket and merchandise sales as well, it makes the artist a commodity. Artists happily sign contracts giving them $1 per CD sold because they know that the $4 going to the record company will bring them far more of a return than if they tried to self-promote. These aren't the days of early Motown, artists have many options and if the consumers like their product, they will not starve. This also isn't an indie v. major label issue, the above economics apply generally in all cases. Bands on indie labels are no richer per CD sold than if they were on major labels, in fact the opposite is probably true because their label-created audience is much smaller.

Second, it conveniently ignores where the money for the rest of the CD goes. Unless you are lazy and/or stupid, you don't buy your CDs for $16. The typical Suggested List Retail Price (SLRP) for a new release is $18.98. Yet, new releases are sold by mass-merchants such as Wal-Mart and Best Buy for $7.99. The average new release sells for about $12-13. Where do you think the difference comes from? Record companies are getting squeezed by retailers to pay them enough for price and positioning to reduce that SLRP so much that they often take a loss just to get the added exposure of being placed in a display next to the check out in Wal-Mart or in a Best Buy circular. Major labels operate off of volume. If a major doesn't sell 250,000 CDs (half way to gold) for an established artist, chances are they won't break even. They can not afford to walk away and refuse to deal with the largest music retailers, so they are forced to agree to their terms. That's where a big chunk of the money you're spending goes, the rest goes to manufacturing (about $1), production, distribution, song-writer royalties, videos, etc. It adds up.

Third, whether you sympathize or not, major labels are hurting. They are struggling through a period of massive lay-offs, slashing of artist rosters, and consolidation. I know the "c" word strikes fear in everyone and you should be weary, however, the labels are not always motivated to consolidate to take over the world, they do so to save money. If they can combine executive, A&R and marketing functions, they can operate more efficiently. With all of the variables to competition in the music industry today (internet piracy, payments to retailers, etc) the labels have to be much leaner to compete. While I know it's easy to imagine record industry execs a bunch of evil Mr. Burns type characters, they simply aren't sitting back and enjoying fat profits like they once did.

The bottom line is this -- an artist gets much more than a buck when you buy their CD, your purchase allows them to keep their contract with a label who drives their career. If that weren't true major artists would walk away from their contracts after their recording commitments were done and handle the business themselves. Besides Pearl Jam and artists you've never heard of, I can't think of any that do.

I know most will read this as a defense of the record labels. It's actually more of a reaction to the major fallacies constantly shoved down my throat in this hip new campaign against labels. There are two sides to every story and this one is definitely not as black and white as these cool indie kids at downhillbattle.org want you to believe it is. Do some research, find out for yourself, but don't ever take any one's word on this issue as gospel because it rarely is.