Follow the Money

It happened to me again this past week. I was talking with a good friend of mine and they told me about how evil stores like Beatport were. How they were taking 70% of the sale and leaving nothing for the artists. It was all justification to them to shop elsewhere for their EDM and of course it’s a great sob story. But that’s all it is for the most part. Sadly, when you hear someone talking about stats like that, they don’t have a clue as to what the reality is.

Before we get into real numbers, let’s pretend that 70% is accurate. The assumption in that argument is that the 70% is all profit, but it isn’t. Before any of that can be considered profit, Beatport has to pay its bills. That includes their high-bandwidth internet host, their staff of roughly 90 employees, their multiple office spaces, advertising and so on. All of which are legitimate expenses for any company to have. Oh… and then there’s the company’s taxes. What is left AFTER that can be considered profit. But, as stated before, they don’t get 70%. In reality, depending on their contract with labels and distributors, they get roughly 25-30% of each sale. That’s less than half of the highly rumored 70%.

Now that the foundation has been set, let’s look at a few stores and their cuts vs. what an artist & label might receive.

You may have noticed that the artist and label seem to have a 50/50 split. That’s pretty much the going rate these days. If you are an artist and making less than 50%, you need to get a new label.

You’ll also notice that distributors seem to make between 15-30%. The distributor is an important mechanism in the industry because they assist labels in their marketing efforts as well as acting as a liaison between the label and the stores they sell product in. Beyond that, they’re a workhorse and are responsible for delivering all of the music to the stores. A label only has to upload the release to one store and the distributor takes it from there. Always show love to your distributor. You never know when you’ll need them to go to bat for you.

Now that you’ve seen some of the numbers, please spread the word. None of the major store players in EDM are taking undue advantage of the labels and artists they represent. Yes, there may be some payment and sales reporting issues, but the sales percentages are within reason given the services offered. Let’s put to bed the idea that Beatport or any store is taking 70% or more of the profit.