Label Investment in A&R Mirrors Previous Years: IFPI Report
Record labels invested $4.5 billion in A&R and marketing in 2015, according to a new report from music industry trade body the International Federation of the Phonographic Industry (IFPI).
Record labels invested $4.5 billion in A&R and marketing in 2015, according to a new report from music industry trade body the International Federation of the Phonographic Industry (IFPI).
If that figure looks familiar, it’s because it’s the same level of spending as five years ago, and only a marginal increase on 2013 — the last time that IFPI reported on the size and scale of record label investment.
Back then, record companies’ combined annual spending on A&R and marketing totalled $4.3 billion.
Last year, it rose slightly to $4.5 billion, according to IFPI’s latest “Investing In Music” report, with labels investing 27 percent of their revenue in A&R and marketing (the same percentage as 2013).
Of that 27 percent, record companies invest $2.8 billion in A&R (up from $2.5 billion in 2013), which IFPI says equates to a higher proportion than equivalent research and development (R&D) investment in the pharmaceuticals and biotech, software and computer services and aerospace and defence sectors.
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IFPI says that some labels estimate the ratio of commercial success to failure within the A&R business as being 1 in 4, while others consider the chances to be as low as less than 1 in 10.
Record company spending on marketing and promotion totals a further $1.7 billion annually.
As with previous years, the “Investing in Music” report includes brief case studies on a number of breakthrough and established artists (Sia, The 1975, Justin Bieber, Christine and the Queens, Brazilian singer Anitta) alongside reporting on the typical costs involved in breaking a new artist.
It states that at the top end, breaking an international signing in a major market such as the U.S. or U.K. will cost between $500,000 and $2 million, with the two biggest areas of investment being recording costs (between $150,000 and $500,000) and marketing and promotion ($200,000 to $700,000).
Labels will additionally spend between $50,000 and $350,000 on advances for a major new signing, while video production will set them back anything between $25,000 and $300,000.
A constant throughout all the years that IFPI has been reporting on investment in music has been that record companies remain the largest investors in music.
A joint statement from IFPI chief executive Frances Moore and WIN CEO Alison Wenham said that the report highlights “not just record companies’ financial investment in artists, but also the enduring value that they bring to artists’ careers.”
“In the digital world, the nature of their work has evolved, but their core mission remains the same: discovering and breaking new artists, building their careers and bringing the best new music to fans. These are the defining qualities of record companies’ investment in music,” stated Moore and Wenham.