In his blog about Nate Silver, Paul Krugman makes a passing comment about Arcade Fire’s finances:
I believe that Arcade Fire makes a lot of its money from live performances rather than record sales, and in any case they have not become wealthy. This is OK for music — great music can be made without super-profitable record companies…
Maybe I’m reading too much into this, maybe I’m just defensive because I do a lot of work with the band’s label, but the subtext here is the now-common argument about supposedly unfair record deals and unscrupulous record labels.
But here’s the thing: there are different types of record deals. And generally speaking, deals with indie labels are far more fair than the traditional record deals that are used as examples in these debates. (…and as moral justification for illegally downloading music, but I digress…)
The traditional record deal that people harp on about is as unfair and complex as they say. But that’s not the deal Arcade Fire (or other artists on good indie labels) have.
The fact is, the deal with Merge Records (or Touch and Go Records, or Drag City Records, Secretly Canadian, ad infinitum) is a fair one: the artist and label split the expenses and the profits equally. It’s easy to understand as well; if you can balance a checkbook, then you can figure out the indie label profit-split deal.
Soooo… I hacked together this spreadsheet to give you an idea of who actually makes what in each scenario. Aside from the Record Sales figures (taken from Wikipedia), these figures are best-guesses pulled out of thin air. Specific figures are nobody’s business except the band’s and the label’s, but the point is a universal one.
To get even more perspective, here’s a different version showing sales and expenses for a low- to mid-level indie band.
This doesn’t mean all indie labels are benevolent, altruistic entities. But it does mean that they should be given the benefit of the doubt..
It’s good to see some numbers in this whole conversation.