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Ever wonder how a record company makes money? How much does a record company makes off of a million seller? According to music industry pioneer Diane Rapaport, at common discounts, record companies receive approximately $10.00 per CD based on a $16.95 SLRP (Suggested List Retail Price).Thus, projected record company gross income is ten million dollars.

Out of this 10 mill the record company will spend approximately $625,000 in manufacturing costs and around $1,000,000 in promotion. After packaging costs are deducted and money advanced to the band is recouped, $1,780,000 in royalties goes to the artists (at 14% of the SLRP of $16.95). The record company will pay $600,000 in publishing royalties (at 75% of statuatory).

So, after subtracting $4,005,000 from its ten million gross income, the record company has a gross profit of $5,995,000. Of course this is simplified but you get the general idea.

Do you have what it takes to make a record company 5 million + dollars? Does your band have its act together? Are you gigging regularly? Do you have a huge fan base? Are you playing your own songs and selling merchandise at your shows? If this describes you then what are you waiting for? What will you do next? What should you do next? We'll discuss that in a future article.