Tuesday, 25 November 2014

Record labels say they invest $4.3 annually in A&R and marketing

Record label body the IFPI has published a report saying that record companies’ total investment in A&R and marketing tops US$4.3 billion annually and more than US$20 billion over five years. The IFPI’s Investing in Music report says that labels’ investment in A&R and marketing is up from 26% to 27% of industry revenues over the last two years. The report was unveiled at ‘Friends of Music’ evening for MEPs in Strasbourg, hosted by IFPI chairman Plácido Domingo.

Interestingly the Report details the costs of breaking an artist in a major market remain substantial at between US$500,000 and US$2 million.  The cost typically breaks down as payment of an advance (US$50,000-350,000), recording costs (US$150,000-500,000), video production costs (US$50,000-300,000), tour support (US$50,000-US$150,000) and marketing and promotional costs (US$200,000-700,000). It may be worth noting that artists themselves pay for some of this - as labels seek to recoup a good chunk of those payments - something the Report skirts around. yes indeed - its ARTISTS who pay for a lot of this!

The Report also argues that liive performance has not replaced recordings as the driver of the music industry.  While record companies invest US$2.5 billion in A&R, there is little evidence of such substantial investment in new music coming from any other source saying "All of the five top grossing live tours of 2013 were by artists who first released albums nine or more years previously, with one group having recordings going back 50 years.  Few artists can achieve a scalable, sustainable music career without producing recorded music."

Frances Moore, chief executive of IFPI, says: “Investing in Music highlights the multi-billion dollar investment in artists made every year by major and independent record labels.  It is estimated that the investment in A&R and marketing over the last five years has totalled more than US$20 billion.  That is an impressive measure of the qualities that define the music industry, and which give it its unique value.” Alison Wenham, chair of indie label's group WIN, says: “Most artists who want to make a career from their music still seek a recording deal.  They want to be introduced to the best producers, sound engineers and session musicians in the business. They need financial support and professional help to develop marketing and promotional campaigns.”


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