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Thursday, 9 August, 2001, 14:13 GMT 15:13 UK
Counting the cost of a hit
By BBC News Online's Brian Wheeler
UK single sales were down 10% over the past quarter - normally the cue for middle-aged music fans to start predicting the death of the format.
The financial risks involved in mounting an assault on the UK charts have never been greater.
According to research carried out by BBC News Online, securing a top ten hit in the UK in the current climate is likely to cost a minimum of £113,700.
And the returns are likely to be a fraction of that.
Of course, it is not possible to literally buy your way into the charts.
No bribes actually change hands - and nobody is forced to buy a record they don't like.
But ever-increasing amounts of cash are being thrown at promotion in the hope that a single will be picked up by TV, radio and, perhaps most importantly, the major retailers, in order to secure the highest possible chart entry.
The major labels are cagey about the actual costs involved, arguing that the amount spent varies widely from artist to artist.
But some costs are relatively easy to predict.
The biggest expense is normally the promotional video, which for a mainstream artist starts at about £40,000 and can cost anything up to £1m.
Then there are the remixes.
Under chart rules companies can put out singles in three formats, which might typically consist of a CD single, 12 inch vinyl single and a cassette.
Remixes are needed to get fans to fork out for more than one version of the same single.
They can cost as little as £200, but for a big name DJ or producer, such as Fatboy Slim, they can cost upwards of £10,000.
You then face the tricky problem of getting the single into the shops.
According to one independent label BBC News Online spoke to, it is common practice for the big retailers, HMV, Our Price and Virgin, to charge record companies for promoting a single in their shops.
According to our source, this comes in the form of a "singles pack", which guarantees a prominent position for the product in the shop.
There are also bonuses to be paid to the sales force and a retail "strike force" to check that the single is being properly promoted instore.
Another big expense are the record pluggers, whose job it is to cajole Radio One, and big commercial stations such as Virgin and Capital, into putting a new-release onto the all-important playlist.
This guarantees a minimum number of plays for a track on daytime radio.
Given that an average top ten hit will sell about 20,000 copies in its first week and perhaps as much again as it slides down the chart, it should be relatively straightforward to recoup costs.
But chart records are deeply discounted.
The full dealer price for a CD single is about £2.70.
But when a record is being pushed hard, dealers will be offered big discounts in an attempt to shift units in the all-important first week.
In these circumstances, singles can retail for as little as 99p.
Record companies have even been known to give new singles away with other releases, in the hope that shops will sell them on at a bargain price.
More typically dealers will be offered two for one deals.
When these are taken into account, a single will be sold to the dealer for 93p and retail for £1.99.
One independent record dealer told BBC News Online: "The true royalty value of the product is £2.79.
"That's how much a single should cost the dealer - to cover the cost of recording and marketing it."
So, even taking the low end of the costs range - without TV and radio advertising, and going for the cheaper video and remix options, that still adds up to a grand total of £113,700, to achieve 40,000 sales.
And when all the costs are taken into consideration it would lose the record company £76,500.
This is, of course, based upon UK sales alone. A hit in other territories will help mitigate fixed costs such as video and remixes.
And if the record goes to number one in the UK, the figures start to look more palatable - most significantly because a number one single normally translates into big album sales.
But the risks involved are still enormous.
So why do they do it?
Four minute adverts
Singles are essentially four minute adverts for albums.
Apart from a few dance labels with minimal overheads, nobody expects to make money on them.
Single sales guarantee chart places and, in turn, radio play - and that is why record companies persist with them.
They are little more than loss-leaders for albums, where the real money is made.
The problem is particularly acute in the UK.
The singles chart - compiled each week by the Music Information Chart Services (CIN) and broadcast by Radio One every Sunday - has always been the cornerstone of the British music industry.
More singles are sold in the UK than anywhere else in the world - including the United States, where the album remains king.
Big selling albums from Destiny's Child, REM and Shaggy helped lift UK album sales 12% in the first half of 2001, but singles have fallen further the latest music industry figures show.
The British Phonographic Industry (BPI) said a record 46m albums were sold in the usually quiet second quarter of this year, pushing up revenues by 18% - but singles sales sagged by 10%.
Single sales have sagged before, as fashions in music ebb and flow.
In 1993, it took an average of just 68,000 sales to secure a number one compared to 107,700 in 1984.
But the structure of the UK chart has changed in the past few years, to reflect the increasing competition between big, multinational record companies.
A record can be deemed a failure if it does not enter the top five in the first week of release.
In order to ensure a high entry, singles are released to radio weeks in advance of their retail release date to build up anticipation.
Peter Quicke, of independent dance label Ninja Tune, said: "The cost of launching a single is absolutely ridiculous.
"The big labels are taking a major gamble a lot of the time, which is something we, as independents, cannot afford to do."
"Radio One sees it as its duty to play the products that people want to hear - and everything follows Radio One."
But, Mr Quicke adds, "If an artist goes on to sell 500,000 albums, then the figures involved in the launch of the single start to look insignificant."
In this climate, it is possible for an artist to consistently have top ten hits and still be a liability to their record company.
Former Boyzone star Stephen Gately was recently dropped by Virgin after his last single reached Number 13.
Ex Spice Girl, Geri Halliwell was reported to be dismayed this week when the second single from her album entered the chart at Number eight - perilously close to the drop zone.
This high risk atmosphere can also breed conservatism, critics say, as major labels try to back a winner every time.
It also means major labels are less likely to spend time developing less overtly commercial artists.
Is there another way?
Many industry insiders think the singles market cannot continue in its current form.
One possible escape route is the radio-only release, where a track from an album is promoted to radio, but not actually available to buy.
This is often used in the USA, where there is less emphasis on single sales, and the singles chart is largely based on radio play.
Coldplay's recent single Trouble, from their top-selling album Parachutes, was promoted in this way.
Paul Williams, news editor of trade magazine Music Week, said: "It's a chicken and egg situation.
"Record companies would very much like to go down that route (radio release). Certainly with more mature artists.
Radiohead's decision not to release a single from their recent Kid A album might have been a daring anti-capitalist gesture.
But, in the circumstances, given their substantial fan base, they were probably doing their record company a favour.
When the former boss of Oasis' record label Alan McGee set up his new Poptones label last year, the idea was to shun expensive videos, promotional gimmicks - and singles.
But the company, which is listed on the alternative investment market (AIM), has recently had a change of heart.
The first single by Poptones signing Cosmic Rough Riders entered the charts at number 35 last week.
The track, Revolution, sank without a trace the following week - but not before it had secured the band coveted appearance on that week's Top of the Pops.
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