The Grammys 2013: The Financial Winners

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The Grammys 2013: Just how much money do artists and producers make from the Awards? Image credit: William Golden

The Grammys 2013: Just how much money do artists and producers make from the Awards? Image credit: William Golden

The Grammys have been breaking records over the last few years, reaching millions more viewers, setting astronomical prices for commercial breaks, and providing the opportunity for unrivaled success for its performers. Just how much money does CBS make from those 30-second advertising slots, and how much money do the winning artists go on to earn when the show’s over?

CBS: Increasing Viewing Figures, Increasing Profit

A dip in viewing figures during the mid-2000s led to some uncertainty as to whether CBS would continue as the network chosen to air the awards show. In 2012, however, the cost of a 30-second commercial break during the airing of the Grammys reached an all-time high, an average of $800,000, which was an increase of more than $170,000 from the previous year. In 2010, commercial slots sold for around $426,000, meaning that the cost almost doubled in two years – welcome news for CBS.

Compared to the notoriously expensive advertising slots during the Superbowl earlier this year (estimated at $3.8 million per 30-second time slot), commercials during the Grammys arguably offer better value for the money. With around 40 million viewers, the cost to advertisers is nearly half the amount paid by Superbowl advertisers, who reach an audience of approximately 100 million.

Growing competition for advertising slots is to be expected following a dramatic rise in viewing figures. CBS, which has aired the Grammys for the last 40 years, recorded a staggering increase in the number of viewers in 2012 (39.9 million compared to 26.7 million the previous year), with the cost of commercials consequently rising in line with demand.

Record Sales and Concert Tickets: The Financial Implications for Artists

Grammy-winning records mean big business in the music industry.

Gotye, who received the 2013 Grammy for Record of the Year for Somebody That I Used to Know, already reached 6.8 million downloads of the record in the US alone last year, making the song the top-selling single of the year.

Fun, who won the Song of the Year Award for We Are Young, has already achieved the third-highest sales for a song, with an estimated 5.95 million copies downloaded by the end of 2012.

Historically, performers and winners at the Grammys see a 55% increase in concert tickets, meaning that artists such as Gotye and Fun will be seeing the financial rewards of their already successful records well into the next financial year, with increased royalties en route to producers, song-writers, and record labels as well.

The Grammy Effect

As Zack O’Malley Greenburg at Forbes pointed out last year, Bruno Mars saw his nightly gross take grow from $130,000 to over $202,000 following his first Grammy Award win (an increase of 55%), whereas Taylor Swift saw her earnings per night surge from $125,000 to $600,000 after her first Grammy – an increase of a staggering 380%. In Swift’s case, the ‘Grammy effect’ lasted well into the following year of her first win. Following that 380% initial increase in nightly earnings in 2010, her 2011 earnings soared to $1.1 million per night, highlighting just what the earning power of the Grammy Award winner can be.

Resources

Hogan, M.Grammys 2013: From Justin Timberlake to Frank Ocean, Music’s Biggest Night Lives Up to Its Name. (2013).Huffington Post. Accessed February 11, 2013.

Greenburg, Z. The Grammy Bounce: How Much is an Award Really Worth? (2012). Forbes. Accessed February 11, 2013.

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