Here are some interesting facts and figures from digitalnews.com:
â€œAccording to the RIAA earlier this month, shipments of physical configurations to US retailers topped 705 million units in 2005, an 8.0 percent drop from the year earlier. And since peak year 2000, overall shipments have dipped a substantial 25.2 percent. Meanwhile, the digital story helped to soften the blow in 2005, contributing $1.074 billion to an overall $12.270 billion purse, creating a dip of just 0.6 percent year-over-year.â€?
â€œA total of 11,070 new releases from major labels during 2005, and 49,261 from independents. Of that combined total, just 32 new releases crossed the one million (platinum) mark, averaging 1.79 million units each. Furthermore, an additional 62 titles crossed the 500,000 (gold) mark, often a minimum break-even level for many releases.â€?
Why did independents release over 38,000 more records than major labels? Perhaps because they are only spending a fraction of the money. For an independently released album to compete on a major level it takes at least a $100k investment by the label. Majors will spend that much on shrimp cocktail at a signing party. Most indies, however, have little interest in competing in the mainstream and invest more along the lines of $50-75k. With an absolute minimum investment from a major label for an album being in the ballpark of $750k (not including salaries), itâ€™s no wonder they are having such a difficult time breaking even. Indies can sell around 30k records and turn a profit, but if majors donâ€™t hit the Gold or Platinum mark, itâ€™s considered a failure due to the financial loss. With a major label staff making in a year roughly what an indie label would spend on putting out records through its entire existence, it really is no surprise that major labels are trimming down while indies are staffing up.