Complete 8 pages APA formatted article: The Music Entrepreneur. These percentages are bound to differ across countries. This percentage is also bound to be affected by other issues including the structure of the deal entered into, the company in question, the clout of the artist, and various deductions thereon.
The traditional way is for the recording label to peg the royalties on the records market price after deducting packaging cost. Therefore, we look at the marked price and less any discounts on the record. From this, packaging cost is calculated on the net dealer price and the royalty calculated at a percentage of the difference. However, another method is to have a split deal. Here, the revenues are split between the recording company and the artist in a given ration. The amount of spilt is normally the net profit made by the recording company. Hence, out of the sales revenue, the company would want to cover its costs such as rent, legal, and distribution costs before splitting the resulting profit with the artist.
All in all, this is one area where we have a labyrinth of issues and laws and it is important that artists are aware so that they are not exploited. On the other hand, the recording label would be keen to avoid making losses given that they have o be sure that their investments are paying off. Hence it is important that they have an understanding of their cost structures and break-even points.
This report is going to delve into the issue of music royalties by answering a number of questions such as the distinction between various costs of a recording label specifically the fixed costs, variable costs, and the semi-variable costs. Besides, the importance of the breakeven point will be analyzed. Ways of calculating royalties due to artists will also be covered.
A business has many types of costs that go into the production of a given output. These costs can be broadly be classified as fixed costs, variable costs, or semi-variable costs. Fixed costs are those costs that do not vary with fluctuations in output.