I can assure you many, many labels lose money on certain CDs. However, the
majors aren't just labels they are also distributors. Operating as
distributors they never lose money...whatever they sell they take a
percentage, whatever gets returns they take a fee, whatever doesn't sell
they return (or destroy!) at the label's expense. So for example MCA may
lose money on a CD but Universal (MCA's distributor and part of the same
parent company) can't. How does a label lose money--spending more than they
can recoup. Either by paying a large advance, overspending on promotions or
marketing, making too many CDs that don't sell, etc. In many cases ON PAPER
the artist(s) will actually owe that money back to the label and if they
keep recording for that label the money will be deducted from future
payments...however, if the band is dropped or never makes back that money (a
common occurrence) the money is lost. You never hear of a label trying to
get its advance back..(they will take the money from your next record..but
they won't ask for a check :)
Dirk van den Heuvel (dirkv@groovedis.com)
Groove Distribution
http://www.groovedis.com
Your Guide To The Underground
-----Original Message-----
From: angedella isafella [mailto:notmusic@hotmail.com]
Sent: Friday, June 16, 2000 3:14 AM
To: acid-jazz@ucsd.edu
Subject: Labels
Dear list: I heard that labels rarely ever lose on a cd. After all the
artist is charged for everything.If an act is dropped its only because the
label felt they could earn a HIGHER return off the same effort invested
elsewhere plus there is the issue of scheduling [plant time for A
versus B. baby bands always make the labelmoney. superstars with big
advances Can lose on the huge advance. Then again the label can carry an
item for years > the Blue Note catalog has earned its cst back by the time
they moved it to cd.
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