BABSON
COLLEGE
Fight the Power
"The fear [in the recording industry] is that a highway
is being built...We only have Model T Fords on it now, but these legal
departments know there will be trucks doing 90 miles an hour doing mad
traffic.
Public Enemy Rapper, Chuck D
MP3
The
Rebel - MP3 MP3
Background
The Recording Industry
One reason that artists considered distributing their music with
MP3 technology was that traditional channels of distribution rewarded them
with only a small percentage of the revenue after distributor and retailer
markups. The percentage of net sales that an artist received (royalty)
varied from 9% to 20% of the record company's revenue, depending on the
size of the label and the artist's status in the industry. It averaged
12%. From the sale of a $15 compact disc, for instance, a record company
would receive $8.25 and an artist only $1. (See the Economics
of the Recording Industry through the flow of money through the value
chain from the sale of an average artist's $15 CD).
Some Other
Neat Links to Explore
Return to e-Campus
Retailers Record
Companies The
Artist Artist
Companies
Babson College Case
Development Resource Center
Graduate Fellow Adrian Alleyne prepared this case with
the assistance of David Wylie, Director of Babson College Case Publishing
under the supervision of Professor William Lawler, all of Babson College,
as a basis for class discussion rather than to illustrate either effective
or ineffective handling of an administrative situation.
Copyright © by Babson College, 1999 and licensed for publication
at Babson College to the Babson College Case Development Center. To order
copies or request permission to reproduce materials, call (781) 239-6181
or write Case Development Center, Olin Hall, Babson College, Wellesley,
MA 02157. No part of this publication may be reproduced, stored in a retrieval
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