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BenCovingtonOffline
Post subject: The Economics of Arhoolie 1970 style  PostPosted: Jul 13, 2013 - 11:00 AM
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I wonder what the production costs are for todays CDs?

Unfortunately the columns of costs etc are fine in the preview but when posted the format is lost and all just ranges left. I've italicised the "high" column in an attempt to make this clearer.


Whatís Involved In Making Arhoolie LPís
(Arhoolie Occasional 1971, p.1)


Since many people think that records are very profitable, let me try and present to you some of the facts especially as they pertain to a small independent label like Arhoolie with a lot of long playing but slow selling records in their catalog!

When you decide to record someone the first expense is the advance to the artist. This fee is usually an advance against royalties of about 20-30c per LP sold. Such advances will vary from a few hundred dollars to thousands depending upon how many musicians and the popularity of the artist. When dealing with Pop records such advances reach astronomical figures! Then comes your studio timeóbut here you can go out to the singer's house and record him with your own tape machine thus saving those fees. But tape does cost money and you always use a good deal of it. If you are recording in a studio and a band is involved you will need the 4 track or even eight track tape which is much more expensive. Once you have your original tapes you have to go to a studio and "master" the album. If it was recorded on your own tape machine you can equalize the sound and even make a nice stereo master tape from it. - When you dub down from 4 or 8 track tape all this takes more time which means money! Now you have your "master tape". Again you needed more tape! From the master tape you get an acetate master disc cut. From this master disc the pressing plant will make metal parts (mother, master, and stamper), one of which, the stamper, is put on the press to make the actual LP pressings. So much for the disc!

Your jackets and the work that goes into them is a very big expense and the printing business is geared to mass production and small quantities are relahvely costly. Here is a summary of the costs involved:

A) Fixed costs: low high
artist's fee $200 $2000 + up!
studio for recording 00 500 * up!
tape for recording 30 130 + up!
mastering + dubdown 60 300 + up!
tape for mastering 20 30
master acetate disc 60 80
metal parts 50 60
cover art 100 200
type 50 100
negatives 30 100
$600 $33500

B) Costs per 1000 discs:
labels $20
printing of covers 50
printing backs 10
assemble jackets 70
1000 LP discs 350
Total $500

So the first 1000 LPs will cost you at least $1100.00 or $1.10 each or on the high side $4.00 each. (+ up!!) Since the average LP selling at a list price of $5.98 in record shops brings only about $2.25 from the distributor you can see that things don't look very bright if your record sells only 1000 copies! The important thing is to keep the costs down when you make records of limited appeal! Color covers are prohibitive and I only use duo-tones which mean two colors. Often when I have a really fine photo the cheapest and most effective is a black and white cover.

However after a record sells over 2000 copies things become more rewarding. On the low side 2000 LPs cost you $1600 or 80c each and on the high side they cost $4500 or $2.25 each thus just breaking even since that is what you got for them if you sold them via regular distributors. In addition to these expenses you must include the artist royalty which was included in the first 1000 discs by his advance but which adds about 25c to the cost of each record beyond that figure. If you used songs owned by other publishers you will have to add another 24c for the use of 12 songs on each LP! The reason many record companies can afford to dump their records at 98c or such, is the fact that once you run off large quantities the cost per unit drops way down and usually no royalties are paid on such "close-out" LPs!

Unfortunately Arhoolie LPs are not pop records and we can not sell thousands of copies of an LP right off - far from it. In 1969, Arhoolie best year so far, the best seller in our catalog sold a little over 1700 copies, and our slowest seller sold 69 copies! The average came to about 400 copies sold of each item in our catalog.
 
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PaceyOffline
Post subject: RE: The Economics of Arhoolie 1970 style  PostPosted: Jul 14, 2013 - 08:07 AM
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Great stuff Ben, thanks for posting this up!
 
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BenCovingtonOffline
Post subject: Re: RE: The Economics of Arhoolie 1970 style  PostPosted: Jul 14, 2013 - 09:23 AM
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Pacey wrote:
Great stuff Ben, thanks for posting this up!
There were only two issues of Arhoolie Occasional, the second of which came in 1973. For fifty three years Chris has kept his enterprise going and long my he do so. A remarkable individual.

Part II What's Involved in Making Arhoolie Records

The article outlining the actual cost in dollars and cents of making a phonograph record in the first issue of the ARHOOLIE OCCASIONAL brought no doubt the most reaction from readers and several sources requested permission to reprint this cost breakdown. If you are interested and did not see the first issue sending in 50c will bring it to you!

The costs noted in that article were those of simply making an LP record without any of the overhead involved in running a record label or company. Here it is harder to come to any specific figures because the size of the company will very much determine the amount. Warehousing space is expensive and if you have a large catalog of slow selling items it's quite costly and that is of course one reason why big labels don't carry slow selling LPs in their catalog very long they delete them. Also distributors don't like large slow moving catalogs because they, also have the cost of warehousing and the cost of checking inventory. If you go to the major record retailers you will find they also have a hard time keeping good inventory control on slow moving items.

Inventory is costly. I try my best to keep all LPs in stock at all times because I feel that if the LP was worth doing once, it's worth keeping it available and I like to believe that most of the music heard on Arhoolie is timeless. Most pressing plants will usually press a minimum of 200 copies of an item at a reasonable price (smaller orders would raise the unit price considerably) and so you will have on hand between 50 and 200 (or more) of each LP in your catalog. Since one pays the pressing plant upon delivery this stock is money just sitting there locked up until you sell the records.

Staff is very expensive but so far Arhoolie has been a one-man operation except for the shipping department where Houston White has been doing a fine job on a part time basis.

In one way or another one has to let people know the records exist. You may call it advertising, hype, propaganda, or what ever but no matter what, it will cost some money. Here again the costs will vary with the size of the company. The press has so far been very good to Arhoolie and generally good reviews have no doubt helped greatly to make people aware of what Arhoolie has to offer. This kind of publicity is generally free except you have to send copies of the records to various good people who will write about them. I now
mail out about 350 copies of a new release to reviewers and radio stations plus some DJ copies to each of the distributors to do with as they see fit in their area. Anyway pressing and mailing these promotion copies costs money!

Actual advertising is also very expensive except in the specialty or fan magazines. I have been a hit lax in this department mainly because of lack of time to make up appropriate ads. Space in the mass circulation magazines like Rolling Stone is very stiff. The same with radio: small college stations who will readily play esoteric music do not reach very many, people but the big powerful FM rockers hardly touch anything outside the pop area and advertising is too expensive and probably not very effective.

However I am lucky that I do not specialize in 45 rpm or R&B records since in
that field payola is still rampant and formats hardly allow anything but the most common denominator in music. Fortunately I have had many comments from radio stations letting me know that Arhoolie Records enhance their usually rather monotonous pop programming and I am always anxious to hear from any radio station or magazine not now on Arhoolie's mailing list!

The most surprising response I have ever received as the result of one article in a relatively small magazine was Jim Crocket's story about Arhoolie in the GUITAR PLAYER magazine (note their address under periodicals on page 19) reprinted in this issue. I would guess that close to 500 requests for catalogs came in as the result of that story usually I get about 30 or so catalog requests per week! On the whole it appears that our best advertising is byword of mouth. This is a slow process but yet another reason to keep all Arhoolie LPs in
print!
 
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KentTOffline
Post subject: RE: Re: RE: The Economics of Arhoolie 1970 style  PostPosted: Jul 24, 2013 - 08:55 AM
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I am a blues and soul DJ in the clubs and also program it in Chattanooga on public radio with a colleague. We play some older Arhoolie titles. And to very great response. I program a lot of it from home. We are Super Sonic Soul and (Blues thrown in). Please PM me. I would at least like a catalogue. And will give you all the exposure we can.
 
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BenCovingtonOffline
Post subject: Re: RE: Re: RE: The Economics of Arhoolie 1970 style  PostPosted: Jul 24, 2013 - 11:19 AM
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KentT wrote:
I am a blues and soul DJ in the clubs and also program it in Chattanooga on public radio with a colleague. We play some older Arhoolie titles. And to very great response. I program a lot of it from home. We are Super Sonic Soul and (Blues thrown in). Please PM me. I would at least like a catalogue. And will give you all the exposure we can.
Personally, I've no connection with Arhoolie other than having been buying their blues LPs since 60s until the advent of the CD. Catalogues can be downloaded at their website http://www.arhoolie.com and their history at http://www.arhoolie.com/about-us.html

The following may also be of interest.

http://www.wirz.de/music/arhoofrm.htm
 
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