Moses Avalon is one of the nation’s leading music-business consultants and artists’-rights advocates and is the author of a top-selling music business reference, Confessions of a Record Producer. More of his articles can be found at www.mosesavalon.com.
It is a known fact that many acts get stuck in limbo once signed to a major record label, neither being released nor advanced to the next level. How many of the acts that majors sign ever actually get released or make a second album? Does staying indie increase the odds of commercial success or keep them about the same? The following answers, from the new tell-all book, 100 Answers to 50 Questions on the Music Business, by music business veteran Moses Avalon, are real eye-openers.
In Las Vegas, the odds to each game are readily available: roulette, 33:1; blackjack, 1.5:1 (if played optimally); craps, anywhere from 2:1 to 9:1. But what about the chances of getting signed and having a successful career recording albums? Sure, there are a lot of factors — like talent — but what about the raw odds? The “Vegas” odds?
I did some research and was intrigued to find that there are no published stats on this. Here, perhaps for the first time, are the Vegas odds of going major verses staying indie. (Update: While tweaking this piece, a new article came out on Music Think Tank with more data on this subject.)
*Note: All math equations are noted by a number in parentheses (#), and the equation is at the bottom of the post. I do this to maintain the narrative flow. (Also, I hate math.)
According to my sources at the various major labels, each year, approximately 43,000 demos are sent to the 35 major labels. (Up from about 30,000 10 years ago.) I consider these 35 labels “major,” as they are directly connected to the four major US distributors or their affiliates. Out of those 43,000 demo submissions, a total of about 30 (down from about 150 in the early 2000s) get that rare multi-album deal of yesteryear, which includes a large advance and all the perks. But if you count all the demo, development, P&D, and various forms of 360 and licensing deals, it adds up to about 1,000 new deals each year. It’s not an even split. Between Universal, Warner, Sony/BMG, and EMI, it can get pretty lopsided, with about 500 deals parsed throughout the massive family of Universal labels alone.
So the Vegas odds of even getting signed to one label, if you submit your demo to all four major labels, is about 1:42. Just a little bit worse than playing double-zero on the roulette wheel. But now, let’s drill down.
Getting signed is one thing. Getting released is another. And actually fulfilling your five-album commitment is yet another thing entirely.
In the past, out of these 1,000 aggregate label signings, only around 250 would have been released to the public or promoted from “demo deal” to “album deal.” But since 2008, this number has been reduced to the current level of about 100 per year. So the odds of being released, after you beat the 1:42 odds, are about 1:9. Big leap. So far, this brings the aggregate odds of going from minimum-wage pizza-delivery guy to low-six-figure playa’ to about 1:429. (1)
Of the 100 albums released, only 50 will sell enough records to justify a second album. Of that 50, about 30 will make a third. Of the 30, only about 20 will make a fourth on the same label, or will have their contract “up-streamed” to a parent label.
We are now in roughly the sixth year of the multi-album deal, and it is usually here that is the tipping point for the artist — the point at which he can now feel secure that he will never have to return to his day job. (A sell-through of 70 percent of units shipped will earn you a next shot. If you have an out-of-the-box smash-hit record at any point in this process, you leapfrog immediately into year six or fourth-album status.)
I think most of us would agree that this benchmark is “success,” no matter how you measure it: doing music and nothing else to pay the bills. By album four (roughly six years into the major-label deal), the artist can remove that bachelor’s degree in computer science from their den and replace it with a gold-record plaque. They will buy a new house — maybe several — hire relatives to work for them, and become a demanding pain-in-the-ass to the label.
When major labels say that less than five percent of the artists they sign “make a profit,” this is the basic concept that they are referring to. However, this is misleading. In essence, even if most major-label signings don’t result in the creation of a superstar, the dropped or “failed” acts still generate enough ancillary interest (read, “income”) to create mini empires with myriad revenue streams. These are the “one-hit wonders” that still tour and generate mass appeal off their single hit from 20 years ago. They sell records of new releases in respectable numbers and can still fill a 3,000-seat venue. And remember — these artists are considered the “failures” by major-label standards. It ain’t a bad way to fail, if you ask me.
So that brings the Vegas odds of going from basement tape to having a major label release your album to about 1:429. The aggregate odds to go from garage dope to Grammy hope (or at least making it to your fourth option period) are now at a whopping 1:2149! (2)
The Longer You Play, The Harder You Stay
But the odds have an interesting dynamic if you survive the major-label game a few years. Now this gets a bit complex, and rather than make this piece 10,000 words with graphs, here’s the simple math:
Let’s say you’re one of the 500 signed to a label in the Universal family. In year one, you’re competing with the other 499 freshmen, plus the already existing 1,500-or-so senior acts that have survived and have product in the UMVD retail pipeline. You’re actually competing with about 2000 acts for promotion/marketing money from the label.
This is hard enough, but by your third release, it will be year four. That means you will have the 500 acts signed that year, the 1,500 senior acts (The senior number remains constant because large distributors budget for the same amount of releases, more or less, each year.), the remaining 50 from the class right after you, and the 20 remaining in your class. So about 2,070! (500 + 1500 + 50 + 20 = 2,070)
Now remember that this expansion is happening at other labels as well. Even though the math is convoluted, you can see where this is going. The longer you survive, the larger the field becomes (contrary to what you probably thought). Just like Vegas, the longer you play, the more challenging it is to win; as the stakes rise, so too does the quality of the competition.
So the 1:2149 odds are probably too low as a constant and will actually increase as you approach superstar status. Remember that now you are in the 1:2149 club, and everyone else there wants to be the million-to-one superstar. History has taught labels that even if you sold millions of your last release, this does not mean you’ll repeat that level of sales in your current release. With each new release, you have to prove yourself to the marketing team. And every year, there are more artists entering in that particular competition (as they survive each level in this game) and the harder it is to get attention from your sugar daddy, the major label.
What will you do to stand out? Now that you’ve beaten some of the toughest odds on the planet, what will you do to hold on? Just about anything.
Now you know why break-out acts seem to do stupid things just to get publicity. Or why some artists’ sounds remains consistent to a formula from one album to the next. They are trying to duplicate the 1:2149 odds. They are trying to make lightning strike twice, because guess what? The inverse of those odds also resembles the odds of getting dropped. Like most competitions, you get more desperate towards the end-game as the challenges ramp up to a steep gradient. And 1:2149 is pretty steep.
Think your chances of quitting your day job are better without a major label — or any label, for that matter? No one to compete with for marketing dollars? Guaranteed release of all five albums? Less pressure to stay on top. Could be. Let’s see.
According to SoundScan, in 2009, all labels/artists of every size in the US released a total of approximately 100,000 titles. But just a little over 2,000 titles sold more than 5,000 units. Which, for an indie record label or DIY artist, is often thought of as the (break-even) point that financially justifies an investment in a followup release. (Although, many will make a second album, whether it’s financially justified or not.)
In simple probabilities, this means a two percent chance of success, or odds of 1:49 (rounded to nearest whole number), which is on par with the major-label odds of getting any deal at all! Sounds great, right? But…in the DIY scenario, you will not be getting the support of a marketing department, professional publicist, SEO people, producers, A&R guidance, and let us not forget — advances. And…
To reach the same plateau of success of the artist who has beaten the 1:2149 odds on the major, you have sell in the top two percent consistently for six years in a row, as well as having year after year of profitable tours and merchandise sales. All with virtually no corporate safety net.
There is no way to calculate those odds without a team of actuaries, but we do have some anecdotal data from which to draw a raw math formula. Imagine going up to a roulette wheel with 50 numbers on it (remember, in this scenario 1 out of 50 releases sells enough to warrant a second release) and hitting the winning number six times in a row. The probability is 50 to the sixth power, or about 15,624,999,999:1. (Yes, that is 15.6 billion!) (3)
Okay, that is preposterous. Certainly many artists have beaten those odds in the DIY world, right? So how about this: let’s say that each year that you make it into the two-percent group, your odds are twice as good as getting into the two-percent group the following year. So instead of a probability of 50:1 in year two, you’re at 25:1. And the next year, the same thing, and each year, your odds of success improve because of increased fan base, sponsorship, established tour route, and just basically knowing what you’re doing. So year three is 12.5:1, year four, 6.25:1, year five, 3.13:1, and the benchmark “tipping point” year six is a fantastic 1.6:1. Now we’re talking, right? This sounds eminently reasonable, yes?
So what are the aggregate odds now that we’ve made the assumptions more sensible — the odds of going from emerging wannabe to indie Sotheby? Get ready…
Around 1:477,000! (4)
Hmm…not the million-to-one shot often hyperbolized, but still, 1:2149 is starting to sound like a sure thing.
Now you know why indie success stories are so infrequent. With roughly 2,000,000 acts with fan pages on MySpace and Facebook, we can expect, using these assumptions, a yield of about half-a-dozen breakout acts. And when you think about it, that’s about what we have seen from the indie world since the dawn of the Internet age in 1998. A very small handful of acts that have really distinguished themselves exclusively in the indie world have gone on to…you guessed it… sign with a major.
Now remember this is a piece is about raw odds. There is much that can be done to mitigate them, like knowing more about the business, great management, persistence, and of course, talent.
But if you’re looking at the Vegas odds for your chances of doing music and nothing else, a major-label deal, sucky as it can sometimes seem to be, is still, by far, the best bet in the house, and one that you must at least consider if you’re in this for the long haul.
Next time, a twenty-something artist tells you that he is not even considering a major because he has over 3,000 fans, followers, friends, and an aggregator to get him on iTunes, do him a favor and show him this article. You might just be saving his life.
Want more? A very interesting angle on this exact question was responded to on Music Think Tank by a UK blogger. He uses entirely different assumptions, but oddly enough, comes up with some similar answers about succeeding without a record deal.