Sunday, January 12, 2014

Music Business/Law Tips - "Record Company Profit"

Record companies have a choice when they release a record as to what configurations they will create for the market. Those decisions are generally based on cost, profit and demand. The 3 main configurations are (1) CD, (2) digital download, and (3) vinyl. CD album: Wholesales for approximately $8.29. Manufacturing cost is approximately $1.15. Label gross profit is approximately $7.14. Vinyl album: Wholesales for approximately $10.50. Manufacturing cost is approximately $3.50. Unsold stock cannot be returned so have to be careful on units produced. Label gross profit is approximately $7. Digital album: Wholesales for approximately $6.99. Manufacturing cost is $0. No shipping costs. Label gross profit is approximately $6.99. Although vinyl has had a resurgence, since it costs the most to make and sells the least, it is a limited market, with digital sales becoming the dominant trend since there are no costs to produce and there are now fewer stores to sell CDs. Ben McLane Esq Benmclane.com

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