Wednesday, April 21, 2010

Another Look at the Thousand True Fans

The Information is Beautiful Blog posted a wonderful graphic illustrating how much musicians earn online.It examines income streams from all of the different venues available, and looks at independent artists vs. those signed with labels. For many, the chart prompted despair -- 1.5 million plays on, for example, earns a solo artist $1,160 -- the monthly minimum wage.

I suggest looking at it in a different light, though. Kevin Kelly's articulated the concept of the One Thousand True Fans as a way for independent artists to achieve success. Basically, if you can connect with one thousand fans who are willing to spend $100 on your downloads/albums/merch/concert tickets, then you can make a decent living catering to a niche market.

So let's look again at the numbers from our chart, and instead of looking at minimum wage, look at what happens if those One Thousand True Fans voted with their dollars and each made a purchase.

Self-pressed CD @$9.99 -- $8,000 to the artist
CD Baby Album @$9.99 -- $7,500 to the artist
CD Baby iTunes Download @$0.99 -- $570 to the artist

Look what happens when the artist signs with a label.
Retail album CD @9.99 list -- $2,000 to the label, $300 to the artist
iTunes album download @$9.99 list -- $6,290 to the label,$940 to the artist
Amazon MP3 download @$0.99 -- $630 to the label, $90 to the artist

Notice anything?

Traditionally, the advantage to signing with a label has been that the resources of the label could be used to boost the artist's profile, increasing their fan base. But look at it from the artist's perspective. To match the income ($8,000) from a self-released CD, the artist now needs 26,000 fans to by the album at retail. OK, that's not impossible. And when those 26,000 fans purchase, the label will make $52,000.

How about downloads? In order to net the same $570 you netted as an indie artist from your One Thousand Fans, you only need 8,220 folks to download your song -- and make $5,186 for the label in the process.

Now of course, labels measure success in terms of hundreds of thousands of fans. So if you had 250,000 of them (sort of the bare minimum), you'd then have $22,500 coming to you from your downloads -- while the label pockets $157,500.

Hmmm. Maybe it's best to keep those One Thousand Fans to yourself.

- Ralph

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