#ArtistTip: Making Money in the Music Industry
#ArtistTip: Let’s face it – getting a job is hard enough in today’s market. Making money as a musical artist seems like an even more daunting task. All too often artists are falling off because they cannot support themselves with music, nor do they know effective methods of making money in the music industry. Too many artists are focused on numbers and streams while neglecting five other highly monetized aspects of music (or building a brand in general).
People say, “because of the Internet there are infinite ways to make money,” but I believe that creativity is at the root of making money. In my experience, there are six proven methods of building an income through your music platform. To fully understand the economics of music, we must take a step back to see how record labels, and large independent artists, make money.
Firstly, very little profit is generated from streaming and downloads. The marketing expenses to push a single to a national or global scale may be recouped, but chances are the label/artist is taking a loss. This marketing expense, however, is offset by the increase in either a: ticket sales, or b: booking fees. The brand awareness that pushing a record can bring is solely for raising brand value, which in turn raises the price an artist can charge for private-bookings, festivals, and ticket sales.
Secondly, brand awareness drives merchandise sales, as well as potential brand partnerships/sponsorships, bringing large sums of revenue into the equation. Having a vast audience comes at a high price, but the audience is monetized through many means, not just music. For example, Pharrell’s partnership with Adidas in 2014 is still generating reoccurring revenue, solely because he had an audience that fits Adidas target demographic. Monetized exploitation of a fanbase is one of the most common forms of revenue in the music and entertainment industry.
Many record labels own and operate studios or production/media agencies, which can bring in consistent profit. In other words, record labels (or artists like Nipsey Hussle) effectively take their brand prowess and offer a valuable service to paying customers, in turn creating a new market for their business.
Diversified income is crucial, especially in a volatile industry like music. Below, I have outlined the six means of making money in music that I believe any artist can start with today:
Streams, Downloads, and Licensing
Typically, the first form of revenue we think of in the music industry is album sales or royalties. Although modern streaming sources have a low payout-to-stream ratio, it is not out of the question to see large sums of consistent cash coming in with an engaged audience/fanbase. Licensing is one of the most valuable, yet overlooked forms of bringing in money through your musical works. Product placements and film placements can be an exceptional use of your records, without over saturating your audience.
Merchandise is a pretty self-explanatory game, but I think many artists can go a step beyond what we usually see. Having branded merchandise, related to your music is great, but many artists have successfully taken a different route to sell merchandise. Having a non-music-branded merch line that sells to anyone can be a great way to both generate income while building a customer base to which you can also market music.
Tickets and Shows
Playing ticketed shows can be a decent form of revenue, but independently produced shows can be time-consuming and costly. A technique many artists have successfully used is by scoring a weekly/monthly residency at a local venue. The business is simple: the artist brings people in on a slow night, the venue makes money from door fees and drinks, the venue and artist split the profit. If you are a developing artist looking for a consistent gig to build your audience, I would highly consider looking into this.
One of the most overlooked forms of making money as an artist is simply using (or building) new skills/services to offer. If you are a singer and also great at accounting, launch a personal service to help artists, bands, and managers with their accounting. Also, if you are an excellent audio engineer, offer your services as an engineer. If you are a professionally trained singer, offer voice coaching. The list goes on, but I’m sure you get the point. Never assume that a non-musical skill can’t be paired with the music industry.
Collaborations and Features
For artists looking to grow their audience, skills and their bank account, offering paid features and production can be an excellent extra source of income. It takes time and effort to consistently sell features and production, but the increase in brand value is well worth it.
This can be a controversial idea, but A&R work, or as I like to think, monetizing your network, can provide a valuable service to artists looking to make leaps and bounds. If you have a professional network of industry connections, an excellent reputation and an eye for talent, this could be a great fit for you. The A&R/consulting business is one of the most exciting, but difficult industries to enter, especially in today’s environment where scams and frauds abound. If you think this is for you, be careful to always go above and beyond with your service, while always respecting the artists with which you work.
As always, I would love to hear about your experience as an artist as well as if you think I left anything out!