| 23 Jul 2024
Recording companies invest greater proportion in A&R compared to R&D in other sectors

MUMBAI:  Record companies' total investment in A&R (artists and repertoire) and marketing is more than US$ 4.3 billion annually and more than US$ 20 billion over five years, according to IFPI's ‘Investing in Music’ report. The report further states that music industry investment in A&R (16 per cent) exceeding the R&D investment of industries including software and computing (9.9 per cent) and the pharmaceutical and biology sector (14.4 per cent).

Labels have invested 27 per cent of their revenue in A&R and marketing, up from 26 per cent in 2011.

It is estimated that more than 7,500 artistes were signed to major labels' rosters in 2013 and somewhere around
10,000 more for the independent labels. The report also stated that one in five artistes in the labels’ rosters is fresh talent as they are the new signing.

According to a research conducted with the Unsigned Guide, UK, it is found that 70 per cent of unsigned acts wanted a recording contract. Most of them wanted the recording contract for marketing and promotional support (76 per cent), tour support (58 per cent) and getting upfront financial support in the form of an advance (45 per cent).

In a major market, the cost of breaking an artiste can come between US$ 500,000 and US$ 2 million which will include payment of an advance (US$50,000-350,000), recording costs (US$150,000-500,000), video production costs (US$50,000-300,000), tour support (US$50,000-US$150,000) and marketing and promotional costs (US$200,000-700,000).

The recording industry invests heavily in local repertoire. In 12 of its leading markets, local repertoire accounts for more than 70 per cent of the sales of the top 10 albums. In countries like Japan local acts in the national top 10 albums of 2013 is 100 per cent; for Italy, Sweden, US and Brazil is 90 per cent; and for Spain is 86 per cent.

The report stated that while record companies invest US$ 2.5 billion in A&R, there is little evidence of such substantial investment in new music coming from any other source. All of the five top grossing live tours of 2013 were by artistes who first released albums nine or more years previously, with one group having recordings going back 50 years. There are artistes who can enjoy a sustainable music career without producing recorded music.

IFPI chief executive Frances Moore said, "Investing in Music highlights the multi-billion dollar investment in artists made every year by major and independent record labels. It is estimated that the investment in A&R and marketing over the last five years has totalled more than US$20 billion. That is an impressive measure of the qualities that define the music industry, and which give it its unique value."

WIN chair Alison Wenham said, "Most artistes who want to make a career from their music still seek a recording deal. They want to be introduced to the best producers, sound engineers and session musicians in the business. They need financial support and professional help to develop marketing and promotional campaigns."

The study was conducted on record companies and case studies from around the world, including studies on Ed Sheeran, 5 Seconds of Summer, Lorde, MKTO, Negramaro, Nico & Vinz, Pharrell Williams and Wei Li-An.

The report was revealed at 'Friends of Music' evening for MEPs in Strasbourg hosted by IFPI chairman Plácido Domingo.