Example: A consumer downloads the following songs on iTunes: John Mayer’s Say, Tim McGraw’s When The Stars Go Blue, and an independent artist’s song. This is an educated guess of how the money works out on those songs.

First, the consumer pays $.99 to Itunes. Depending on the distributor, ITunes and the music distributor take the first $0.29, leaving about $0.70. After that, the numbers depend upon the specific song.

Say: John Mayer wrote all of the music and lyrics to this song. He is the sole composition owner and his record label is the sole owner of the sound recording. Since John is the composition owner. He gets $0.09 cents per download as the songwriter. (Leaving $0.61). He also gets paid a royalty on the sound recording that he assigned to the record label. Royalty rates vary widely for artists. For a superstar like John Mayer, let’s assume that the royalty is on the high end at $0.15 per download. However, the royalty is not paid to Mayer until his advance is repaid out of the royalty points. Only after this happens, does the $0.15 royalty go to Mayer’s pocket. (Leaving $0.44). Also, Steve Jordan produced the track and likely received about a $0.03 royalty per sale. (Leaving $0.41). This remaining $0.41 goes to the record label.

When The Stars Go Blue: Ryan Adams wrote the song. Adams gets $0.09. (Leaving $0.61). Tim McGraw is a mega-country star and likely gets a high royalty rate from his label. Let’s assume $0.20 per download. (Leaving $0.41). The producer also likely gets a piece of the pie of around $0.03 per download. This leaves about $0.38 to the record label.

Indie Song: Let’s assume that this is an acoustic and vocal song and the indie artist wrote, sang, and played guitar on it. In that case, the full amount of $0.70 would go to the indie artist.

As you can see, the indie artist makes much more money per sale than does John Mayer or Tim McGraw. However, Mayer and McGraw sell millions of downloads. Whereas, the indie artist sells hundreds, if he is lucky.