Hell, if you can parlay indie success into multi-platinum sales, you're probably making a profit on the jump. I think the interesting economic point, though, is that with lesser sales, the artist and label are making better money per CD sold. The blaring question is: How can this be?
Economies of scale should be working for the majors. Thing is, they don't seem to find a way to push enough product to run a profit for themselves and the artist on the majority of their releases, with a few enormous sellers making the bulk of their money. I think maybe Bob has their dirty little secret pegged, that there isn't really a mass market as they claim there is. All the push towards mass market music consumption (ClearChannel radio, chain record stores/Best Buy/Walmart, and consolidation of venue ownership) should in theory make it easier to sell mainstream records to a mainstream audience, except something isn't working with the equation. They spend phenomenal amounts of money to get sales figures that, in their economies, don't justify the expense.
So how do the indies make more money per unit? (Or, to use a favorite media exemplar of a few years past, how does Ani Difranco do this?) Funny thing is the new thing in advertising is what they call viral advertising, what used to be called word of mouth. The corporate viral model now has people payed to endorse a product in a public or social setting without revealing they are a payed endorser (probably just as legal as payola . . .) in an attempt to win over those who don't trust advertisement. Thing is, those really into music have been championing their favorite bands and artists for no compensation for years, and I've always gotten better tips from reliable sources word of mouth than from any music mag. This sort of spread of audience, from one enthusiast to another, along with a busy touring schedule, is what built the SST records bands, what gave Ani Difranco such a big and loyal following, and what led to the grunge explosion that record execs still don't understand.
I'd have to figure that blockbuster indie sales figures are about the average cap for fans of the artist who can be counted on to support a career. Listen to an 80's channel on the radio and it's not hard to see too many of those bands had their quick hits with novelty songs and gimmicks, and didn't put forth the substance to sustain a career. Some bands break the mold and sell multiplatinum for a career, but if most can afford the house and make a middleclass living, I think enough who are really dedicated would stay with music, and we're better without the megalomaniacs we'd sift through.
So the question is, are the majors ever going to change their business model, or do we have to stick to our guns and rebuild the indie network that was, only broader, better, and more diverse? (That is to say not just punk influenced.) I'm guessing the later, and we're probably the better off for it. Cool, I've wanted to start my own indie for a while.