Music Streams and Contribution Margins

When observing the success of an artist through the lens of the record label, we can agree that the amount of money that the artist brings into the company is what matters. Record labels understand that the artist can’t bring in enough money to give them profit so they have expanded their services into different sections of the music industry, such an example could be Live Nation. Live Nation has record labels, venues, box offices, and stores in which they can bring in as much revenue from one artist without having to move around too much. We can observe that Beyonce has become a worldwide household name and the popularity of her music has increased exponentially through the years, but how can we prove that. The final product for the success of an artist is sold-out concerts so I decided to crunch some numbers for Beyonce, and I did a quick overview of one of her sold-out shows compared to how much it will cost to produce it. One show grossed about $ 5,226,215.43 which was more than enough to breakeven and create a profit! The fixed cost of producing this concert divided by the contribution margin of the tickets/merch/meet & greets/ etc… exceeded the breakeven amount and made this concert one of the most successful in music industry history!