1. The Traditional Royalty Model for Physical Media

Historically, artists earned royalties from physical media based on a percentage of the wholesale price, minus various deductions. This model often involved recouping advances, and the artist would only see a payout after the label had covered its manufacturing and marketing costs. For independent artists who self-funded, it meant buying hundreds of units, hoping to sell them, and then trying to track individual sales against their upfront investment. It was a linear, one-time transaction.