IFPI Report shows typical cost labels spend breaking an artist

The new Investing In Music report by the International Federation of Phonographic Industries (IFPI), has detailed the value of record companies worldwide.

The report, released in association with the World Independent Network (WIN), states the typical cost of breaking a worldwide-signed artist in a major market (like the US or the UK) costs between US$475,000 and US$2 million.

The report notes the typical cost is the upfront investment only and is the reason for multi-album artist contracts because the cost may or may not ever be recouped by the label on a specific album.

The investment, broken down below, includes US$50,000 – $300,000 in advances, US$50,000 – $150,000 for tour support and US$150,000 – 500,000 for recording costs.

IFPI’s report notes that record labels have remained the biggest investor in music for the past few years. In 2015, record companies globally invested more than US$4.5 billion, or about 27% of their revenues, into A&R and marketing.

The report notes labels have sustained this level of annual investment in spite of two decades of revenue decline in the industry.

IFPI said, “No other segment of the music sector invests in artists on anything like this scale. No other third parties or music distributors invest any comparable sums in artists’ careers.”

Labels invest 16.9% of revenues in A&R alone, which is more than the equivalent research and development (R&D) investment ratio of industries like industrial engineering, software and computer services and pharmaceuticals.

Elsewhere in the report, IFPI found brand partnerships for be one of the most lucrative new revenue streams for artists. There’s good reason as to why artists like Beyonce, Gwen Stefani, Coldplay and Charli XCX are increasingly inking collaborative brand partnerships. IFPI notes individual artists commonly earn up to 90% of the revenues earned from a branding partnership. Meanwhile, a label may have as many as 200 long-term brand partnerships active on behalf of their artists at any point in time.

View the Investing In Music report in fullhere.