There’s a case study in the NYDaily News — apparently a propos nothing but this Sunday’s Grammy Awards — that breaks down the cash flow of a hypothetical hit album by a hypothetical rock quartet. It illustrates all the people that get paid along the food chain, including some odd recoupable record company expenses, like a 25 percent “packaging deduction” and a 15 percent “free goods charge,” off the top, most of which the label keeps.
The bottom line is that a gold record (500,000 copies) selling at $16.98 will gross roughly $8.5 million, of which each member of the hypothetical quartet will pocket about $40,000. (The case study doesn’t take songwriting royalties into account.)
So for every $16.98 album you rip, you’re costing a performing artist about 34 cents, and the lawyers, producers and labels about $16.64.