Record economics

Prompted by the discussion in the bargain thread, but something i’ve wondered for a while what the economics of a piece of vinyl are. You used to get pie charts for CDs, when all the discussion about how expensive they were was going on, showing how much went to artist/retailer/a&r/label/cost of production - I’m interested in how it works for a record, and in particular how much actually ends up with the artist.

I travel around the country a bit (not at the moment obvs) and see very indie record shops popping up in very unlikely places (Manningtree, Carlisle and Wokingham spring to mind). Try and buy things there when I can but wonder what their margins are on a £20 piece of vinyl, and how the shops can be economically viable. (Although those three shop examples I’ve given also do other things - wine, cafe and hi-fi equipment, respectively).

Not sure about the UK but I’m certain here in Italy record shops need a secondary business as well - selling/repairing hifi, books/clothing, cafe etc.

Main thing I’ve been wondering about recently is am I supporting the artist more or less by buying the vinyl/cd/tape compared to the digital copy direct from bandcamp and also compared to physical copy from independent record shop. I actually value what local record shops do so as much as I think buying direct is great I’m not really sure what the best thing to do is.

Edit - I love having records but maybe I should just spend the money that would have gone on shipping on extra downloads direct from the artist?

This is all off the top of my head, but I worked in music retail for years so it might be wrong, but it’s probably not that wrong

If they’re selling a record for £20 they are probably buying it for around £10-12, so getting a margin of 30-40% once VAT is taken off and making approximately £6 off each sale. That has to cover rent, business rates, wages and utilities before they see any profit, so they need to sell a fair few records, or look at other products with higher margins, like coffee or clothing, to keep things ticking along.

Of the £10-£12 that was paid out, the distributor they’ve bought it from will take their cut. The majors tend to look after their own distribution, so will keep that money (but I’d imagine a percentage will be allocated to distribution costs rather than the record itself), but a lot of smaller labels will be distributed by a third party, eg Proper. No idea what cut Proper et al take, but I’ll stick my finger in the air and call it 25%, so maybe eight quid goes back to the label. How much of what’s left after tax etc makes it to the artist is total voodoo, but I’d be very surprised if it was more than a third (and I’m being generous there) - I reckon they’d be lucky to get £1.50 off each £20 sale, although this is very much a guess, and figures will vary wildly between labels. I’d imagine you’d get a much better deal from Dischord than you would Warner Bros.


two other points now the edit window has passed

  • if you’re an artist who runs their own label, you’re getting all of that eight quid, which is nice (but you’ve had to pay to get the record pressed etc)

  • I’m told Bandcamp take 10% on physical sales, and 15% on digital, so percentage wise they are better for the artist, although considering prices are often lower there I’m not sure what difference it makes to the final cash in pocket number. You’ve also possibly had to pay an aggregator to get it on there in the first place.


Just a note that you don’t have to pay an aggregator to get on Bandcamp, it’s super simple. Generally when we were running a label, Bandcamp was by far the best option for us and band.


In addition to what others have mentioned, an example for most of the artists with deals with larger indies (eg labels like Sub Pop, Ninja Tune, Domino, Beggars etc) will get a 50/50 or 60/40 split once all costs have been recouped (that’s the artist’s advance, recording costs, artwork and video costs, and any press costs they’ve outsourced). The artist won’t see a penny until that’s been recouped, though they will have had an advance when they delivered the album to enable them to pay rent and live.

For smaller indies or artists doing it DIY, there’s less outlay for videos and press and whatever, so it’s a shorter timeframe before a record breaks even.

For artists on a major label, it’s often 70/30 split after costs have been recouped.

Basically if you want to buy an album on any format, even if it’s digitally on Bandcamp, you’re helping the artist out in the long run.


VAT won’t affect margin, as they’ll reclaim the input VAT from the purchase of the record as well as paying output VAT on its sale.


No aggregator as people can upload directly but it’s worth keeping in mind that on top of Bandcamp’s cut of every sale you mentioned, there’s also Paypal fees taken on top. So it’s often better for the label if you download from their own online store, if they have one (I know most of the larger indies do).

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Interesting replies, thanks all. More questions as I’m interested in how this all works.

So would I be right in saying a band isn’t getting much more off a sale of vinyl than they are from a CD? (Unless you are buying it from them directly?). Or are the economics of a £10 CD sale worse for a band than a £20 record?

And am I also right in saying that it probably doesn’t make a difference to the band’s bottom line if you buy from an indie shop, an indie online seller or Amazon (but not Bandcamp or direct at a show obvs) they are going to see the same amount of money?

Is it still the case that most vinyl is manufactured in Czech Republic? What’s the unit cost of an LP being produced? (appreciate this will vary widely on the number produced).

And why are some label’s LPs so expensive? (Hello Southern Lord/Castleface). I guess just about creating a premium product vibe around the records and (hopefully) giving more to the artist? Or is there something else going on?

CDs (and cassettes) are considerably cheaper to manufacture compared to vinyl by a good few quid, so it’s more likely the money going ‘back into the pot’ is more from a CD sale. It’s why labels were pumping out £16 CDs back in the 90s.

More than any of these it’s better to buy direct from the label or band’s webshop, because more of that is going to be profit for them vs buying from a third party. Though second choice would obviously be from an indie store as money is going back into the ecosystem that helps out labels and artists.

There’s a number of pressing plants, not just in the Czech Republic and it vastly depends on the amount pressed, type of packaging, type of vinyl, where you’re getting it shipped. Roughly for an indie label to press 300 vinyl in basic packaging it’ll be about £5 a unit (that doesn’t include recording/mixing/mastering costs of the record itself), and that decreases the more you press.

Different packaging, vinyl type, printing techniques all cost extra money on top of the base cost of pressing a record. Southern Lord obviously are really good at scarcity tactics and making sure everything’s on limited vinyl, coloured vinyl, etc. which makes people want to purchase it, and it also has a healthy resale life afterwards unlike a lot of labels so they’re seen as an investment piece.

Source for all of this: worked at a label a couple of years ago.


True, but they’ll still be paying more than they claim back though, won’t they? 20% of (say) £12 coming back, 20% of £20(ish) going out.

I’ve switched from using Paypal to just debit card on Bandcamp recently (partly because when you buy something in a different currency Paypal’s conversion rates are always less favourable than the figure on Bandcamp). Don’t know if there are still any fees they have to pay for that facility or not?

Interesting. From their FAQ:

For transactions greater than or equal to $8.07, the transaction fee is 1.9% + $0.30 when your fan uses PayPal, 2.9% + $0.30 when paying with a gift card, and 2.2% + $0.30 when your fan uses a credit card. For smaller transactions (under $8.07) we minimize the fee by automatically switching to the payment processor’s alternate rate of 5% + $0.05. When we send you a bulk payout, PayPal’s fee is 1% of the total payout amount. Fees may vary depending on geographic location or payment method.