Record Label Chorus: High Risk, Low Margin

I recently came across to this very interesting 2001 LAT article:

To bolster their point, executives from Vivendi Universal, AOL Time Warner, Sony, Bertelsmann and EMI Group provided The Times access to internal budgets and cost-analysis data for dozens of recording projects, from marquee stars to failed unknowns.

The information was disclosed on condition that no specific artist would be named in this article.

Executives for the companies agreed to be interviewed on the condition that they would not be identified.

The documents disclose the following:

* Only one of 10 acts ever turns a profit.

* It costs about $2 to manufacture and distribute a CD, but marketing costs can run from $3 per hit CD to more than $10 for failed projects.

* Successful acts thwart the existing contract system by refusing to deliver follow-up albums until they extract additional advances.

via the Los Angeles Times.

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