Since artists receive on average only 15% of album sales revenues, whereas they receive on average 50% from concerts and 80% from collected remunerations, the decline in music sales means “record companies, not the musicians, (are the ones) who are losing out.”
One of the main arguments that record labels have used in the war against illegal file-sharing is that the decline in music sales they wrongly attribute to the practice results in less revenue for artists, and therefore a decreased incentive for them to create new music.
However, a new study carried out by Richard Bjerkøe and Anders Sørbo, master’s degree students in business and economics at the BI Norwegian School of Management, the largest business school in Norway and the second largest in all of Europe, refutes that assertion by concluding that since the advent of digital music the income of the average musician has increased by some 66%!
“The only losers in the digital music revolution are the traditional record companies,” they say in a press release.
According to their master’s thesis, ‘The Norwegian Music Industry in the Age of Digitialization’, the rise in the average musicians’ income is due to an increase in revenues from concerts, remunerations and government subsidies between 1999 and 2009 even though actual record sales declined by 50% during the same period.
From the study:
- Revenues from concerts increased by an average of 136% between 1999 and 2009.
- Remunerations from TONO, Gramo and others increased by 108% between 1999 and 2009.
- Government subsidies increased by 154% between 1999 and 2009.
- The number of active artists has risen by approximately 28% during the same period.
- All figures are adjusted for inflation.
They found that the drop in record sales has had a “negligible impact” on individual musicians since they receive on average only 15% of those revenues, whereas they receive on average 50% from concerts and 80% from “collected remunerations.”
“In the interviews we conducted with a number of musicians and music products, the musicians said that they were losing a lot of money due to digitisation, while the figures show that it is the record companies, not the musicians, who are losing out,” say Bjerkøe and Sørbo. “The drop in record sales also means that the record companies are losing their significance as a launch pad for new artists and that recordings are to an increasing extent serving as business cards, or advertising opportunities, for drawing audiences to the concerts.”
A study from earlier this year found that the average musician only makes $23.40 for every $1,000 in music sold, also contradicting record labels’ claims that declining music sales are the ones most adversely affected.