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Originally posted by popmusic
Gurl, sales have never been artists main source of money. Touring >>>>
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This is true, and furthermore...
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For example Gaga: She sold ~40m albums WW (w/ TEA). How many she gets?
40m minus packaging deduction (20%) = 32m
Standard PPD price: $7.5
Label income: $240m
Gaga's royalty 22% (let's say): $53m
(don't forget about producers' and manager's fee)
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This is extremely optimistic. It's likely that when Gaga signed her initial deal with Interscope her royalty rate stood at 10-15% (20%+ is reserved for the artists who can negotiate it, not the newbies).
Also, before Gaga receives any kind of royalty check all of the costs of making the album and promoting it will be fully recouped by the record company - producers, musicians, songwriters, engineers, mixers, and masterers all have to be paid, and studio costs (amongst other things) for a major label pop album are substantial. And we all know how extravagent Gaga's music videos and promotional performances can be (though product placement may contribute).
Then her remaining royalties are paid into some kind of personal company (Gaga's is called 'Mermaid' or something IIRC) so she only pays corporation tax (as opposed to losing ~50% on personal income tax) - that's where her managers, agents, lawyers, and various other staff/creative types get paid.
Then she may take dividends from the company, which she has to pay more tax on.
Many artists never see a royalty check in their lives - they live off advances, and take loans from their labels (recouped from royalties), and (as you said) make money on the road - this was especially true before industry-wide regulations were introduced.
I could go into other stuff (like the 10% "breakage clause" which was allowed for in case vinyl stock was damaged in-store or in-transit, but still hilariously applies to digital albums) but there is a myriad of ways artists can get screwed over. I'd lower your estimate of Gaga's income significantly - that goes for the touring as well, but to a lesser extent.
David Byrne's book 'How Music Works' is excellent, and worth checking out if you're into this kind of thing.