IFPI Report: How Much Are Labels Investing in Music?

March 9, 2010 (reprint)

A new report from the IFPI (International Federation of the Phonographic Industry) breaks down how much the music industry spends annually investing in their artists. According to the IFPI's data, approximately $5 billion is "invested" in artist rosters, with 30 percent of the labels' revenue spent on artist development and marketing. This includes approximately 16 percent of sales revenue going to A&R, which the IFPI says "exceeds the proportionate research and development expenditure of virtually all other industries."

The IFPI breaks down the costs in "breaking" a new artist, figuring that it takes approximately $1 million to do so in the U.S. and U.K. The breakdown includes the artist's advance, recording, filming three videos, tour support and promotion/marketing.

John Kennedy, IFPI Chairman/CEO says, "Investing in music is the core mission of record companies. No other party can lay claim to a comparable role in the music sector. No other party comes close to the levels of investment committed by record companies to developing, nurturing and promoting talent."

He continues, "One of the biggest myths about the music industry in the digital age is that artists no longer need record labels. It is simply wrong. The investment, partnership and support that help build artist careers have never been more important than they are today. This report aims to explain why. Investing in Music is about how the music business works. It explains the value that music companies add, helping artists to realise a talent that would typically go unrecognised and get to an audience they would otherwise not reach."

"Much of the value added by music companies is invisible to the outside world. Yet it is the investment and advice from labels that enable an artist to build a career in music and which, in turn, creates a beneficial ripple effect throughout the wider music sector."

The report can be found here via the IFPI website.