Record companies are spending $4.5 billion per year on developing talent, according to the latest IFPI “Investing in Music” report.
About $2.7 billion of it is spent on A&R, with the rest going to the various marketing campaigns needed to support new product.
The figure is about 3.6 percent down on what the labels were spending on A&R in 2008, but the trade value of the global industry has declined by 16 percent in the same period.
In terms of spending as a percentage of revenues, the A&R budget has actually increased by about 15 percent since 2008.
Comparisons based on the European Commission’s 2011 “EU Industrial R&D Investment Scoreboard” show music industry investment exceeds that of industries including software and computing (9.6 percent) and the pharmaceutical and biotech sector (15.3 percent).
“‘Investing in Music’ highlights a simple truth – that behind the highly visible world of artists who touch people’s lives there is a less-visible industry of enormous diversity, creativity and economic value,” said IFPI chief exec Frances Moore.
The costs of breaking an artist in a major market remains substantial at up to $1.4 million. The cost typically breaks down as payment of an advance ($200,000), recording costs ($200,000-$300,000), video production costs ($50,000-300,000), tour support ($100,000) and marketing and promotional costs ($200,000-$500,000).
“Investing in Music” was published by the IFPI Nov. 12 and represents the recording industry worldwide, in association with WIN, representing independent labels internationally.