It’s been awhile since my music industry and business classes, but here goes.

The music industry has a funny way of counting money. Standard artist contracts are 12.5% royalties on the wholesale price of the album. When an album “goes platinum” that’s wholesale sales, not actual sales. So all those albums that don’t make it off the shelves get sold back at a discount to the labels–and the artist has to pay that money back to their label.

So, what happens all too often is that albums are recorded (usually with loans to the artist from the labels), the album is sold wholesale and the artist gets a check, a large chunk of which goes back to pay the label for the loan. And there are countless middle men here that get a cut of every transaction; lawyers, manager and promoters all take around 12.5 to 15% of the money per transaction.

Then when an album under-performs, and most do, the artist pay back the label out of pocket and managers and lawyers get more money.

Kinda like 1 for you, 1 for me. 2 for you; 1, 2, for me. It’s ridiculous, but most artists take it because labels had serious promotion power and a lock on most radio stations.

Obviously, they’ve lost their stranglehold and artist can drop a lot of the middle men, or at least, cut down on their interactions with them.