The truth about the music industry: revenue models, contracts, and hidden economics that most artists never see
"It's not just unfair. It's engineered to break you."
You've probably heard it before — "Just get signed." But what they don't tell you is the math behind the music. The music industry operates on financial models specifically designed to maximize profits for companies while minimizing artist earnings. This documentation pulls back the curtain on these mechanisms.
Artist's share from a $10 album
Label cuts from all revenue streams
Per stream on major platforms
When you hear about streaming revenue, platforms often promote the total payouts to the music industry. What they don't emphasize is how little of that makes it to the actual artists. Here's the breakdown of where your streaming money actually goes:
At the average streaming rate of $0.003 per stream, an artist would need:
The streaming model creates an environment where only the top 1% of artists can survive on streaming alone. For everyone else, it becomes supplemental income at best, not a sustainable revenue source.
Meanwhile, streaming platforms generate billions in revenue, primarily benefiting shareholders and major labels with large catalogs, not the creators producing the content.
A 360 deal (or "multiple rights deal") allows a record label to receive a percentage of income from ALL of an artist's activities, not just record sales. This can include touring, merchandise, endorsements, acting roles, and any other income stream.
A typical 360 deal may include these revenue shares:
While labels take from all income streams, they typically only invest in:
The advance mechanism is key to maintaining artist dependency. What appears as upfront money is actually a loan that must be recouped from the artist's small percentage of revenue before any additional money is paid out.
With high recoupment thresholds and low royalty percentages, many artists remain in perpetual debt to their labels even while generating millions in revenue.
Recoupment is the process by which labels recover their "investment" in an artist before the artist receives any royalty payments. This creates a system of perpetual debt for many artists.
In this scenario, the label has already made $400,000 in profit while the artist is still $450,000 in debt according to the contract. The artist would need to sell an additional 300,000 albums just to break even.
This recoupment system creates a significant power imbalance, keeping artists financially dependent on labels for basic living expenses while their work generates substantial profits for the company.
The goal of the Artist Empowerment Platform is to create a sustainable alternative to the traditional exploitation model, placing control and earnings directly in the hands of artists.
Under an independent model, an artist with just 10,000 dedicated fans can often earn more than an artist with 1 million casual streaming listeners under a label deal. Examples:
Agent Lee can answer your specific questions about industry practices, contracts, revenue models and more.
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