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Why is this a better deal for artists than buying their album, or listening to them on streaming services?

Last Updated: Nov 22, 2011 04:17PM PST
An artist signed to a record label probably makes about $0.09 per each iTunes download, and a fraction of a penny for each Spotify play. A CD album (people still buy those?) might net $1, probably less. And that’s assuming that the band has already paid back their advance to the record label - which most bands haven’t. If they haven’t paid back every dollar of their advance, that $0.09 is effectively $0 for them, since it goes straight into the label’s pocket.

Even on the low end, an $8 profit on a shirt is equivalent to about ~3200 streams on Spotify and ~90 iTunes downloads after the label and music service have taken a cut. There’s certainly a range to record label terms, and independent artists can take a larger piece of the pie, but these numbers are in the ballpark for the majority of the bands you listen to...and this doesn't factor in the ~95% of music downloads that are pirated and pay no royalties at all. No wonder so many sad songs get written each year.
Compare that to the $8-12 a band can profit from selling a shirt and you can see why this is a big difference. Record labels don’t typically touch merch sales, so the artist gets to keep every dollar of profit when they sell a shirt.
This infographic explains the situation better than I can:

Music Industry Income Distribution Infographic
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