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The Global Music Machine
  The rise of pop music
  Dominating the music industry
  Competing in a world market
  Becoming a star
  The power of radio
  Fighting piracy
  Digital age
Becoming a star

Outsiders view life in the music business as a life filled with glamour, wealth and luxury. Although it can be this way for the most successful artists, trying to break into the industry requires a great amount of tenacity, talent and luck on the part of the individual.

However, once the first steps are taken, many artists find that the industry involves financial constrictions that can prevent even seemingly world-famous stars from making money.

It is clear that a relationship with one of the major labels is the key for artists to make the kinds of money that so many of them enter into the industry to earn. This is because the Big Five record companies account for over 90% of the music that is heard and bought around the world.

Recording contracts have been under much scrutiny in recent years, however, with some analysts going as far as to compare them to indentured servitude.

Most recording contracts are for five or seven albums. Labels are keen to point out how much they invest in their artists, and just as keen to protect this investment over the lengthy terms of the contracts.

Recording, marketing and promotion cycles last as long as two years for each major release, and so a full-length contract can last many years longer than other industries’ legal maximums of seven years. With this argument, the recording industry successfully fought the US government for an exemption against the seven year rule.

This points to a surprising anomaly of the global pop music industry: Even seemingly successful artists make very little money from their recording contracts. With the pressure on corporations to deliver to their stakeholders, the world of music is rife with stories of artists being dropped early into their careers, as their record sales fail to generate enough revenue for the companies that produce them.

Although many artists survive and sign new deals, being dropped can often spell the end of a brief career. And the individuals concerned will still be in a large amount of debt to their label. The debt that artists incur is largely due to the advance system, where they receive a sum of money before recording, money that is then repaid to the record companies from the royalties they should be receiving.

It is estimated that 99% of releases sell less than 10,000 copies each, but a record label will need to sell around 750,000 copies to recover their costs on a typical major release. For the small percentage that makes money, the rewards can be significant, but the majority of artists never reach this position.

A high proportion of the money made by artists comes from touring and merchandise sales. Traditionally, record companies have considered these activities to be outside of their domain, as the benefit to the corporation comes from the increased publicity and therefore increased sales of the product they own.

If the amount of money an artist can earn from touring is reduced, it puts them in even more difficult financial circumstances. Touring is often a gruelling process for artists, as they stretch themselves physically and mentally to entertain their audiences. If the money they can earn from the tour is reduced, it could mean even more time spent ‘on the road’; a situation that could have serious consequences.

Michael Kurtz of Music Monitor, a company that works with record companies and retailers in the US, tells of a tragedy that befell rock outfit Drowning Pool. He says, “They just stayed on the road constantly. The lead singer died, probably from exhaustion. It is very difficult to be an artist. I meet them on the road and I see what they’re going through and I see their living conditions and it’s horrible. I wouldn’t wish it on my worst enemy.”

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