I have seen breakdowns of how much money an artist might expect to make, and I have seen foul-mouthed breakdowns of how much money an artists might expect to spend, but I keep thinking that there is something missing. And of course there is. It is how much money the labels make, and how much money they spend.
For example, that first link describes how the label keeps "packaging deductions" and "free goods" and of course the entire wholesale price as well. But what does the label pay for packaging and physical production and so on? Does anybody know? In that same story, the label is out $400,000 before a single album is sold, which is only paid back after that album sells a half-million units or so, so what happens if the album never sells that well? Does the label just eat it (or hope to make it up if another label signs the same artist), or is the artist somehow on the hook for more money than he's likely to ever earn in a lifetime of flipping burgers?
Steve Albini's piece goes into a little more detail on the label's side of things, but still seems to get some things wrong and leave some things out. The cost of physical production and distribution, for example, is calculated based on the number of units sold. That assumes, obviously, that all of the units manufactured actually sell. If not, the label has spent the money to produce and distribute them anyway. Or are CDs unlike books, and retail locations cannot returned unsold goods for a full or partial refund? What about those "free goods" and the illegal money the labels are paying to radio stations for airplay?
And so on.
I've actually got other problems with Albini's numbers, as they seem to (1) disagree with other reports such as the first link above on various percentages and unit costs, both higher and lower, and (2) not account for the fact that at the end of the day, the band ended up with more than just $16,000 cash. They all got new "fancy" instruments worth about $15,000, some new clothes, a $15,000 "band fund" (whatever that is), all lodging and food bills paid for a month or two, and so on.