Record Labels Spent $4.5 Billion for A&R and Marketing In 2015

A new IFPI report has found that record labels remain the largest investors in music, investing more than US$4.5 billion for A&R and marketing in 2015.

The new ‘Investing In Music’ report by IFPI, in association with the World Independent Network (WIN), details record companies’ global investment in uncovering, nurturing and promoting artists and their music. It is also designed to highlight the work performed by teams of professionals at record companies supporting these efforts.

According to the report, record companies invest an average of 27% of revenues back into A&R and marketing, totaling US$4.5 billion in 2015. It also revealed that record companies managed to sustain this level of annual investment in spite of two decades of revenue decline in the industry.

Of that 27%, record companies were found to invest 16.9% of revenues in A&R –a higher proportion than the equivalent research and development (R&D) investment ratio of all the leading sectors included in the EU Industrial R&D Investment Scoreboard 2015. This reports economic and financial information on the world’s top 2,500 companies that invested €607.2 billion in R&D over the last fiscal year.

Elsewhere, the report found the typical cost of breaking a worldwide-signed artist in a major market like the UK or the US to be between US$0.5-$2 million. The typical investment from labels in a new major artist was broken down as follows in the report:

Advances US$50,000-350,000
Recording costs US$150,000-500,000
Video production US$25,000-300,000
Tour support US$50,000-150,000
Marketing and promo US$200,000-$700,000
Total US$475,000-2,000,000