Sunday, October 08, 2006

CD Costs

I found this pie chart in a David Byrne blog post showing how the costs are distributed for a CD sold at retail.
I've heard that the artist only makes about 10% of the CD sale price, but wasn't sure how the rest of it broke down. This also shows the distribution based on a $15.99 retail price. I wonder what it would look like for discounted CDs. I would assume the retailers take the hit there. It's also not clear to me how many companies, organizations or whatever are taking a piece of the pie. Do the labels get the label overhead, marketing/promotion, label profit, distribution and packaging/manufacturing? If so, they end up with 55%. The retailers are getting 31%. Granted, a much smaller percentage is actual profit. Anyhow, I could see how an artist might benefit from alternative promotion and distribution methods like doing it themselves or working with one of the new breed of record labels like Nettwerk Music Group, Nonesuch Records or Magnatunes. I also like the name for the organization that is the source for this pie chart - the Almighty Institute of Music Retail.

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