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The Digital Skeptic: Justin Timberlake Is Just Getting By

Sales Mr. Timberlake will never, ever touch.

In its debut week, The 20/20 Experience did a Whitney-like 980,000 in disc sales. But by week four, music industry news service Digital Music News said just 97,696 units moved. It's not just that it was a 89.9% drop in less than 30 days. Houston's sales for "The Bodyguard" are simply out of reach.

Album sales just "isn't a high that lasts very long anymore," wrote Digital Music News' Paul Resnikoff.

Not the living it used to be
Now comes the tantalizing question: What's JT's actual cut of the The 20/20 Experience action? That's like asking how Google (GOOG) searches the Web or how FICO calculates your credit score. I literally got mocked by industry insiders when I tried to find out. But in this Internet age, there are no secrets. Anybody can put together a reasonable guess.

Steve Knopper did an oft-cited Rolling Stone piece in 2011 called The New Economics of the Music Industry. He put artist royalty rates in the 12% to 20% range. But Donald Passman, a longtime industry lawyer, in his book All You Need to Know About the Music Business pointed out that the artist pays all his expenses out of that cut, including managers, lawyers, accountants, marketing and travel. Cord Jefferson, on the African-American news and culture website The Root, estimates that, after backing out all said costs, artists -- even major ones such as Timberlake -- actually take home just 2.34% of every record-dollar sold.

Using the iTunes price of $13 for the 10 songs in The 20/20 Experience, assuming 2 million discs sold, that's $26 million in top-line sales. Assuming a 3.5% cut, which could be high considering promotion costs, JT's net take-home year-to-date on the album is probably well less than $1 million.

Or what Whitney Houston probably made in less than two weeks!

Even worse, according to SoundScan, JT's disc was the only album that sold more than 1 million this year -- meaning Timberlake's take is the absolute tip of the music industry-earning iceberg. After that, the industry's biggest stars -- including Mumford & Sons, Bruno Mars and Blake Shelton -- make much, much less.

It's what Warhol forgot to mention about 15 minutes of fame in these digital days: Being a "superstar" means learning to get by with less.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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