The IFPI recently release a report that on average it takes $1 million to break an act, with a 10-20% success rate.  While in reality these figures from case to case – they suggest that it takes between $5 and $10 million to break one act successfully (factoring in the 80%-90% that don’t break).    While the major labels have reduced their costs over the last decade, the basic investment model remains.  Sign artist –> record album –> market artist w/multi-single radio campaign.  This is high-cost, push model that was built for a much different market.  

That isn’t to say that labels haven’t adapted (albeit slowly).  They greatest innovation has been on the distribution and marketing front.  Music is monetized across multiple platforms and formats.  Digital marketing places a significant role in every campaign.

But the same level of innovation hasn’t taken place with respect to the artist investment process.   It needs to.  The artist development companies that prosper will be those that combine a strong creative pipeline with a lower cost artist development process.