Music Business

A Musical Artist's Royalty Calculation based on a Hypothetical Contract

The Music Telegraph | Text 2024/08/02 [17:24]
Music Business

A Musical Artist's Royalty Calculation based on a Hypothetical Contract

The Music Telegraph| 입력 : 2024/08/02 [17:24]

© Pixabay (photo by stevepb)

 


A Musical Artist's Royalty Calculation based on a Hypothetical Contract

 

The following line outlines a royalty calculation for a musical artist based on a hypothetical contract with typical industry terms. This contract includes physical sales (CDs), digital sales (MP3s), and streaming revenues, as well as different royalty rates and recoupable costs.

 

 

Hypothetical contract Terms

 

1. Advance: $100,000 USD

2. Royalty Rates:

  • Physical Sales: 15%
  • Digital Sales: 12%
  • Streaming: 10%

3. Album Sale Price:

  • Physical: $20 per album
  • Digital: $12 per album

4. Units Sold:

  • Physical: 100,000
  • Digital: 100,000

5. Streaming Revenue: $0.004 per stream with 10,000,000 streams

6. Deductions:

  • Physical Sales: 25% for packaging and distribution
  • Digital Sales: 10% for digital distribution fees

7. Recoupable Costs:

  • Advance: $100,000
  • Recording: $50,000
  • Promotion and Marketing: $50,000
  • Music Video: $25,000

=====  =====  =====  =====  ===== 

 

Steps to Calculate Roylaties

 

1. Calculate Gross Revenue:

  • Physical Sales: 100,000 units x $20 = $2,000,000
  • Digital Sales: 100,000 units x $12 = $1,200,000
  • Streaming Revenue: 10,000,000 streams x $0.004 = $40,000

Total Gross Revenue: $2,000,000 + $1,200,000 + $40,000 = $3,240,000

 

2. Calculate Deductions:

  • Physical Sales: 25% of $2,000,000 = $500,000
  • Digital Sales: 10% of $1,200,000 = $120,000

Total Deductions: $500,000 + $120,000 = $620,000

 

3. Calculate Net Revenue:

  • Physical Sales: $2,000,000 - $500,000 = $1,500,000
  • Digital Sales: $1,200,000 - $120,000 = $1,080,000
  • Streaming Revenue: No deduction, so $40,000

Total Net Revenue: $1,500,000 + $1,080,000 + $40,000 = $2,620,000

 

4. Calculate Royalty Earnings:

  • Physical Sales: $1,500,000 x 15% = $225,000
  • Digital Sales: $1,080,000 x 12% = $129,600
  • Streaming Revenue: $40,000 x 10% = $4,000

Total Royalty Earnings: $225,000 + $129,600 + $4,000 = $358,600

 

5. Calculate Recoupable Costs:

  • Advance: $100,000
  • Recording: $50,000
  • Promotion and Marketing: $50,000
  • Music Video: $25,000

Total Recoupable Costs: $100,000 + $50,000 + $50,000 + $25,000 = $225,000

 

6. Calculate Net Royalties:

  • Royalty Earnings: $358,600
  • Recoupable Costs: $225,000

Net Royalties: $358,600 - $225,000 = $133,600

 

 

 

 

 

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