Labels spend $4.5b annually on A&R and marketing, but where are all our new artists?

Labels spend $4.5b annually on A&R and marketing, but where are all our new artists?

What exactly does $4.5 billion buy a record label these days? Not a great deal, apparently, given the barren new music landscape that has become a defining factor of 2016.

A new report from the IFPI has declared that that's how much money labels are ploughing annually into A&R and marketing. And while some of the figures divulged in the report are pretty substantial, we have yet to see a debut UK record achieve platinum status this year.

According to the report, record companies remain the largest investor in music, spending that $4.5 billion, or about 27% of their revenues, in 2015. It also says that labels have sustained this investment during recent years, even as the industry weathered two decades of revenue decline.

Of course, not all of that money is being ploughed into new acts, and plenty of artists are producing substantial ROI way beyond their first album. But elsewhere, the report found the typical cost of breaking a worldwide-signed artist in a major market such as the UK or the US is now estimated to be between US$0.5 million-2m. The typical investment from labels in a new major artist can be broken down as follows:

Advances US$50,000-350,000
Recording costs US$150,000-500,000
Video production US$25,000-300,000
Tour support US$50,000-150,000
Marketing and promo US$200,000-700,000
Total US$475,000-2m

So, why aren’t we seeing more breakthrough acts? Evidently there is good will and significant financial backing ready to be bestowed upon any up and coming acts ready to make a play for it, yet still we find ourselves at the tail end of 2016 with very little to show for it.

Is this due to the fact that the current crop of artists simply aren’t good enough? Take the time to dig around and there are plenty of gems out there, be they burgeoning grime MCs or up and coming indie rock acts. But as for a major, mainstream pop outfit in the mould of an Adele or an Ed Sheeran, things still look pretty thin on the ground.

Some would argue that the ever-shifting consumption habits of music fans has had an impact on the punch new artists can pack nowadays, and that the industry needs to re-evaluate what constitutes a ‘hit’ record, or just how long it takes to break a new artist. Others will say this year’s new acts just aren’t up to snuff.

On a more positive note, when a new act does break, their debut record seems to be destined for a long shelf life. 2015 debuts from James Bay, Jess Glynne and Years & Years were all in the Top 20 albums for the first half of 2016.

But whatever the reason for this year’s distinct lack of breakthroughs, to see some of the vast sums revealed in the report yielding such meagre results is arguably a more worrying than encouraging sign for the industry. If investment levels are to remain this high, then 2017 surely needs to deliver some brand new hits.


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