It’s no secret that breaking a new artist costs money, but the exact numbers are pretty astounding. According to the above graph from global label trade group IFPI, the average major label is spending anywhere from $750,000 to $1.4 million on a newly-signed artist.
Every aspect is expensive, but the lion’s share goes to marketing and promotion. Check out the numbers above, read what exactly is going into that marketing/production budget below and get a more complete breakdown of spending over at DigitalMusicNews.
Marketing and promotional costs are usually the largest expense for a record company. It is this heavy promotion that brings an act to a wide audience, enabling them to develop a broad fan base and opening up the opportunity for an artist to secure revenue from a wide range of sources from live touring to merchandising. A record company can spend between US$200,000 and US$500,000 trying to break an artist in a major market.